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How to Minimize Risks in Austin’s Booming Industrial Market?

The demand for industrial real estate is soaring high in Austin. Keeping pace with historic high demand is the record development of 20.1 million square feet new industrial space, including a steady supply of highly speculative projects (Co-Star). Anchored by long-term leases, the industrial market has traditionally been viewed as a relatively low-risk investment among commercial properties. While record-low vacancy rates and sky-high rent growth have propelled markets like Austin to new heights, industrial real estate has also become more prone to financial risks.

However, working with a professional industrial real estate agent in Austin can not only help investors reduce risks, but maximize their property’s returns. Below are four ways that an industrial agent can help you as an investor achieve this.

  1. Understand the market and your submarket

 

Industrial real estate investments can require a significant amount of capital. Therefore, it is important to analyze the Austin market thoroughly before you proceed. Understanding the market involves evaluating a number of factors, such as supply and demand, future trends, new developments, probable appreciation, interest rates, inflation, and unemployment.

At the same time, it is important to understand why the demand for industrial real estate is increasing in Austin. One of the primary reasons behind this is Austin’s collaborative market. Large-scale companies like Samsung, Amazon, and Tesla, combined with the growing eCommerce market, are driving major suppliers to consume warehouse spaces and manufacturing facilities.

Additionally, the city is also offering lucrative incentives for industrial development, such as Chapter 313 tax breaks. Industrial rental rates are growing steadily, driving more investments across most types of properties, including manufacturing, nuclear energy, R&D, computer data centers, and renewable and clean energy.

  1. Perform due diligence

 

When you hire real estate brokerage services in Austin, you can be assured of complete due diligence that can help mitigate the risks. This includes:

  • Location of the property
  • Proper zoning for intended use Building amenities
  • Accessibility and proximity to major thoroughfares and transportation hubs
  • Available on-site utilities
  • Applicable ordinances, entitlements, restrictions, etc.
  • Title commitments

  1. Asset Diversification

 

When it comes to managing risks, diversification can be just as useful to industrial real estate as in stock picking. Consider investing your capital across Austin’s different types of industrial properties like warehouses, flex spaces, and manufacturing facilities. This enables you to not only hedge your risks, but optimize your overall returns through the ups and downs of the economy.

  1. Have an exit strategy in mind

 

One of the best ways to mitigate your risks while investing in Austin’s industrial real estate marketis to plan an exit strategy. A well-planned exit strategy will allow you to maximize profits, while navigating economic booms and busts. Whether it’s a commercial flip, a portfolio sale, or a 1031 tax-deferred exchange, an industrial brokerage firm can help you determine the right exit strategy.

Conclusion

 

To meet your real estate investment goals and secure your financial future, it is important to assess the Austin’s industrial market thoroughly and measure your risks. An industrial real estate agent in Austin can help identify potential investment risks and take strategic measures to mitigate the same.