5 Workforce Risk Factors Industrial Real Estate Investors Should Watch Out For
Industrial real estate has been booming in recent years, and especially since the 2020 pandemic that caused a big shift away from office space and into industrial. If you’re a first-time investor looking to get into industrial real estate, there are tons of risk factors you should weigh when considering what property is right for you. If you’ve previously invested in residential or office buildings, some of the risk factors will be totally different than what you’re used to. One big factor? Labor. Here are five main labor-related risk factors industrial investors need to consider.
How much employees get paid varies hugely depending on industry and location. For a company to be profitable, they’ll need to be able to pay employees competitively, which factors into the overall cost of doing business. Do employees in the area make way below or above the national average? This kind of data will affect your property investment.
In some areas with high costs of living, companies must bus in workers from other locations who can’t afford to live near their employer. This is an added complication and cost that will affect what companies can use your space. However, in other locations there is a huge labor pool nearby, which may make your space more attractive. Being in-the-know will allow you to make an informed decision about your property.
What happens if there is plenty of labor available now, but as the workforce gets older, younger employees just aren’t filling in the gaps? The availability of future workers varies by industry, location, and immigration trends. The longevity of your property value hinges on understanding these kinds of factors.
Local Crime Rates
Everyone knows that general crime rates vary by location — but had you thought about all the niche ways to categorize crime data, and how it could be useful to you? For instance, maybe residential crime is low but the rate of violent crime against businesses is high. Some industries have a higher rate of employee theft than others. To really know what you’re getting into when you buy an industrial property, you’ll want to know how crime affects the businesses that would lease your space.
Access to Labor
Is the property near public transportation, or have a big parking lot? Are local employees home owners, who plan to stay nearby for a long time? Or do they frequently jump around? Are local employees generally happy? These kinds of questions represent important qualitative and quantitative data sets that will help you assess the risk of your potential property.
Now you have a good idea of what kind of labor related factors need to be taken into account when you’re assessing a potential industrial property. But this is just the tip of the iceberg when it comes to industry real estate risk assessment. Luckily, you don’t have to do it by yourself. That’s what Okapi is here for. Our state of the art AI risk assessment solution for industrial properties covers every topic you could ask for (and many wouldn’t even think to ask!), so you can confidently weigh the pros and cons of any potential investment. For more information about the industrial real estate world, check out our podcast interview with Ohad Porat.