Industrial Tops Commercial Real Estate Investment Picks For 2025, Expert Says

Many commercial real estate firms are optimistic that 2025 will mark a resurgence across the industry after months of turbulence.

Michael Thom, an attorney specializing in business and finance at Obermayer, is particularly focused on the industrial sector. The industrial market offers several compelling reasons for investment, according to Thom. One key factor is the strong fundamentals.

Rising Rents

“Rents for industrial spaces are increasing, making them solid investments for commercial landlords. Vacancy rates remain low, especially when compared to other sectors,” said Thom, who specializes in real estate transactions and legal matters.

A recent report from CommercialEdge revealed that national industrial rents in November rose by three cents month-over-month, totaling $8.25 per square foot, representing a 6.9% year-over-year increase.

Stability And Lower Costs

Thom also highlighted that warehouse operational costs are lower compared to other real estate asset classes, particularly in suburban areas where rents are generally more affordable and tenant improvement requirements are minimal.

“There’s not much in the way of tenant improvements needed for industrial properties,” Thom explained. “For instance, you can convert a warehouse into a sports facility by simply laying down turf, and you’re done.”

Additionally, Thom pointed out the greater stability of industrial assets compared to other sectors. For example, he described the office market as “scary” due to the rise of remote work post-pandemic. Although there are signs of recovery, the office market still faces uncertainties, with occupancy levels significantly lower than pre-pandemic numbers. In contrast, the industrial sector doesn’t experience the same volatility.

“Office workers might be able to do some tasks remotely, but the people doing the day-to-day work in industrial settings, like operating forklifts or managing logistics, can’t do that from home,” Thom said.

Multifamily Market Potential

Thom also sees opportunities in the multifamily sector, given the increasing unaffordability of housing, which has led more people to rent.

“New multifamily units are in high demand, and if you have the chance to acquire a property, whether it’s a five-unit building or a 30-unit complex, it’s going to fill up quickly,” Thom noted.

However, Thom remains particularly optimistic about the industrial sector because of its lower risk and fewer tenants needed to fully occupy a property.

“An industrial space with a good location and access will always attract tenants,” Thom emphasized. “Landlords can also get creative with tenant improvements and rents to secure high-quality, creditworthy tenants.”

Patience Is Key For Buyers

With interest rates still high but beginning to decrease, Thom advises potential buyers to exercise patience. While there are opportunities to secure “value deals,” it’s important not to rush the process.

“It’s about finding a good deal that can be held and resold for greater value in a few years,” Thom explained. “You may come across spaces with challenges, but with the right team of brokers and professionals, you can add value quickly and make a solid profit.”

Source: GlobeSt