INDUSTRIAL SERVICE FACILITES
What is an ISF
Value Continues Going up
Characteristics of ISF's
Benefits to Investors
What is an ISF
ISFs are used to store, maintain or dispatch bulk materials and equipment. Usually, only 25% or less of the land on these properties are occupied by buildings, and the rest is accessible open space.
Some of the most popular types of ISFs are truck terminals, material and container storage yards, and equipment maintenance facilities. They are industrial-zone properties.
Characteristics of ISF's
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Fragmented Ownership
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Deal size: $2-10 million
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Too small for institutional investor
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Too big for individual investor
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High in demand
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Ex: 1.5% vacancy rate in Atlanta​
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Much higher than average rent increase
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Ex: Rent increased from $1500/acre to $2600/acre in 3 years; suggesting an annual rent increase of 21%​
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Small or no building on site
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Low maintenance; Low capex​
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Institutional players starting buying
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Brookfield; Alterra-JP.Morgan​
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Value Continues Going Up
With the growth of E-Commerce and the current era of a globalized economy the demand for ISFs has never been higher. The demand for trailers, trucks and containers have all gone up due to the growth of E-Commerce.
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The supply of ISFs is also very stable. Government limits availability of Industrial Zoned land due to its perceived damage to environment and human health.
Benefits To Investors
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Lower buying competition
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Better capital growth at exit
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Stable income
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Excellent inflation hedging
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Higher NOI at exit
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Stable NOI
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No unexpected expenses
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Compressed cap.rate at exit