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Warehouse REITs see higher returns despite a weak economy

By James Fletcher 2 July, 2023 3 mins read

Industrial REITs are seeing increased returns, despite a sluggish economy. One of the primary drivers of their outperformance is e-commerce, which continues to grow at an accelerating pace. Another driver is the low initial investment and the ease of re-leasing. Let's take a look at some of the reasons warehouse REITs have done well. These are just a few:

E-commerce drives second-half performance of industrial REITs

The ecommerce boom is good news for industrial REITs. According to U.S. Commerce Department sales of ecommerce increased 44% in June-end quarter. eMarketer predicts eRetail sales will make up 14.5% of U.S. retail revenues in 2014. This is good news especially for industrial REITs which are benefiting from the increased demand from ecommerce companies for industrial spaces.

While many sectors are struggling, the COVID-19 regulations seem to have little effect on the industrial sector. An increase in ecommerce activity has led to an increase in the demand for distribution centers and warehouses. High-income industrial properties that are last-mile have seen strong rental and occupancy growth, as well as pricing. E-commerce is another driver of performance in industrial REITs.

Modern, strategically located centres

For investors looking for the best risk-adjusted returns, industrial REITs make a good investment. Warehouses in the last mile' of their distribution network should benefit from the trend of retailers moving supply chains closer to consumers. These warehouses have a tendency to generate more cash flow and create greater value than their counterparts. Here are some things to watch out for in these warehouses. These warehouses are more modern and efficient, making them a great investment.

First, REITs need to consider modern tenants' needs. They need mezzanine space and rooftop solar panels. These are important considerations. Logistics customers also require flexible facilities. Automation is changing how industrial space is planned and designed. For example, in 2012, Amazon acquired Kiva Systems, which allows robots to sort inventory and move pallets. If you are a company that relies heavily on robots such as these, it is a good idea to be near existing labor sources.

Very low initial investment

For investors looking to diversify and earn income, a warehouse REIT can be a great investment option. These investment vehicles have been around since decades and provide growth, income and diversification. The past history of REITs has shown high returns and attractive dividend yields. They are also a good inflation hedge. In addition, REITs are easy to purchase and trade. If you do not want to pay high fees for financial advisers, you have other options.

Warehouse REITs allow investors to access rapidly growing areas of the economy. Healthcare facilities are one the fastest-growing industry in America. Retirement communities and outpatient treatment centers are two other options. Warehouse REITs are a great option because they can offer excellent returns. They are not only high in growth but also more manageable, less complicated, and more liquid than real estate investments.

Re-leasing is easy

You can increase your investment return by investing in a REIT. This type of investment can be profitable because they are often in high demand. Selecting a region with high housing prices, steady rents and low vacancy is key. San Francisco Bay Area, for example, is a profitable area for a REIT. In San Francisco warehouse rents rose by 7% in quarter one.

FAQ

What is an REIT?

A real-estate investment trust (REIT), a company that owns income-producing assets such as shopping centers, office buildings and hotels, industrial parks, and other buildings is called a REIT. These publicly traded companies pay dividends rather than paying corporate taxes.

They are very similar to corporations, except they own property and not produce goods.

What's the difference between a broker or a financial advisor?

Brokers specialize in helping people and businesses sell and buy stocks and other securities. They take care all of the paperwork.

Financial advisors are experts on personal finances. They help clients plan for retirement and prepare for emergency situations to reach their financial goals.

Financial advisors may be employed by banks, insurance companies, or other institutions. They can also be independent, working as fee-only professionals.

If you want to start a career in the financial services industry, you should consider taking classes in finance, accounting, and marketing. Also, it is important to understand about the different types available in investment.

How do people lose money on the stock market?

Stock market is not a place to make money buying high and selling low. It's a place where you lose money by buying high and selling low.

The stock market offers a safe place for those willing to take on risk. They would like to purchase stocks at low prices, and then sell them at higher prices.

They hope to gain from the ups and downs of the market. But if they don't watch out, they could lose all their money.

Statistics

Our focus on Main Street investors reflects the fact that American households own $38 trillion worth of equities, more than 59 percent of the U.S. equity market either directly or indirectly through mutual funds, retirement accounts, and other investments. (sec.gov)
Ratchet down that 10% if you don't yet have a healthy emergency fund and 10% to 15% of your income funneled into a retirement savings account. (nerdwallet.com)
US resident who opens a new IBKR Pro individual or joint account receives a 0.25% rate reduction on margin loans. (nerdwallet.com)
"If all of your money's in one stock, you could potentially lose 50% of it overnight," Moore says. (nerdwallet.com)

External Links

hhs.gov

sec.gov

SEC.gov

npr.org

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How To

How do I invest in bonds

You need to buy an investment fund called a bond. You will be paid back at regular intervals despite low interest rates. This way, you make money from them over time.

There are many options for investing in bonds.