Industrial & Logistics

Editor’s Note: This is a 2026 update from a series post­ed in 2022.

Introduction

Indus­tri­al real estate has evolved into one of the most sought-after com­mer­cial real estate asset class­es in the Unit­ed States. While indus­tri­al prop­er­ties have always played a crit­i­cal role in the move­ment, stor­age, assem­bly, and dis­tri­b­u­tion of goods, the growth of e‑commerce, domes­tic man­u­fac­tur­ing ini­tia­tives, and sup­ply chain mod­ern­iza­tion has ele­vat­ed indus­tri­al real estate into a cor­ner­stone of insti­tu­tion­al invest­ment port­fo­lios.

“Indus­tri­al real estate has become the back­bone of the mod­ern econ­o­my,” says Al DiNi­co­la. “Near­ly every prod­uct we pur­chase, whether online or in a retail store, spends time inside an indus­tri­al facil­i­ty before reach­ing the con­sumer.”

Today, indus­tri­al prop­er­ties are fre­quent­ly includ­ed in Delaware Statu­to­ry Trust (DST) offer­ings and con­tin­ue attract­ing inter­est from both cash investors and 1031 exchange investors seek­ing long-term pas­sive own­er­ship oppor­tu­ni­ties.

Understanding Industrial Real Estate

Indus­tri­al real estate encom­pass­es a broad range of prop­er­ty types, includ­ing:

• Dis­tri­b­u­tion cen­ters
• Logis­tics facil­i­ties
• Man­u­fac­tur­ing facil­i­ties
• Ware­house prop­er­ties
• Last-mile deliv­ery cen­ters
• Cold stor­age facil­i­ties
• Research and pro­duc­tion facil­i­ties

For the pur­pos­es of DST invest­ing, most offer­ings focus on larg­er insti­tu­tion­al-qual­i­ty assets rather than small­er flex-space prop­er­ties.

“Many DST offer­ings involve prop­er­ties occu­pied by nation­al­ly rec­og­nized com­pa­nies oper­at­ing mis­sion-crit­i­cal facil­i­ties,” explains DiNi­co­la.

These facil­i­ties may serve as region­al dis­tri­b­u­tion hubs, man­u­fac­tur­ing cen­ters, or strate­gic logis­tics loca­tions with­in a broad­er sup­ply chain net­work.

Why Industrial Has Become So Popular

Sev­er­al pow­er­ful trends con­tin­ue dri­ving investor demand.

E‑Commerce Growth

While e‑commerce growth accel­er­at­ed dur­ing the pan­dem­ic years, online shop­ping remains a long-term struc­tur­al trend.

Con­sumers increas­ing­ly expect:

• Same-day deliv­ery
• Next-day deliv­ery
• Expand­ed inven­to­ry avail­abil­i­ty

Meet­ing those expec­ta­tions requires sig­nif­i­cant logis­tics infra­struc­ture.

“Con­sumer expec­ta­tions have per­ma­nent­ly changed,” says DiNi­co­la. “The indus­tri­al sec­tor con­tin­ues ben­e­fit­ing from the need to move goods faster and more effi­cient­ly.”

Supply Chain Reshoring

One of the most sig­nif­i­cant devel­op­ments since 2022 has been the reshoring and nearshoring of man­u­fac­tur­ing oper­a­tions.

Com­pa­nies have increas­ing­ly sought to reduce sup­ply chain dis­rup­tions by:

• Expand­ing domes­tic pro­duc­tion
• Diver­si­fy­ing sup­pli­ers
• Increas­ing inven­to­ry lev­els
• Build­ing region­al dis­tri­b­u­tion net­works

Fed­er­al incen­tives sup­port­ing man­u­fac­tur­ing invest­ment have also con­tributed to increased indus­tri­al devel­op­ment.

“Many com­pa­nies are recon­sid­er­ing how much pro­duc­tion and inven­to­ry should remain over­seas,” notes DiNi­co­la. “That shift con­tin­ues cre­at­ing demand for indus­tri­al space.”

Artificial Intelligence and Data Infrastructure

The growth of arti­fi­cial intel­li­gence, automa­tion, robot­ics, and advanced man­u­fac­tur­ing has cre­at­ed addi­tion­al demand for spe­cial­ized indus­tri­al facil­i­ties.

Mod­ern facil­i­ties increas­ing­ly incor­po­rate:

• Robot­ics
• Auto­mat­ed pick­ing sys­tems
• AI-pow­ered logis­tics soft­ware
• Advanced inven­to­ry man­age­ment
• Smart build­ing tech­nolo­gies

The result is a new gen­er­a­tion of high­ly effi­cient indus­tri­al assets.

Location Still Matters

Real estate pro­fes­sion­als have long empha­sized the impor­tance of loca­tion, and indus­tri­al real estate is no excep­tion.

“Loca­tion remains one of the most impor­tant dri­vers of indus­tri­al per­for­mance,” says DiNi­co­la.

Suc­cess­ful indus­tri­al prop­er­ties often ben­e­fit from prox­im­i­ty to:

• Inter­state high­ways
• Major ports
• Rail infra­struc­ture
• Air­ports
• Pop­u­la­tion cen­ters
• Man­u­fac­tur­ing clus­ters

The abil­i­ty to move goods quick­ly and effi­cient­ly direct­ly impacts oper­a­tional costs for ten­ants.

Logistics and Distribution Networks

Mod­ern sup­ply chains rely on a hier­ar­chy of facil­i­ties serv­ing dif­fer­ent func­tions.

Bulk Distribution Centers

These large facil­i­ties may exceed one mil­lion square feet and serve as region­al inven­to­ry hubs.

Regional Distribution Centers

These facil­i­ties dis­trib­ute prod­ucts to spe­cif­ic geo­graph­ic regions.

Last-Mile Facilities

Last-mile facil­i­ties are strate­gi­cal­ly locat­ed clos­er to pop­u­la­tion cen­ters and facil­i­tate final deliv­ery to con­sumers.

“The last-mile seg­ment has become increas­ing­ly impor­tant as deliv­ery expec­ta­tions con­tin­ue to short­en,” explains DiNi­co­la.

Many indus­tri­al DST offer­ings now include logis­tics assets posi­tioned near major met­ro­pol­i­tan areas.

Building Design Has Changed Dramatically

Indus­tri­al facil­i­ties today are sig­nif­i­cant­ly dif­fer­ent from those con­struct­ed decades ago.

Higher Clear Heights

The indus­try stan­dard has evolved dra­mat­i­cal­ly.

Where 24-foot clear heights were once com­mon, today’s insti­tu­tion­al facil­i­ties fre­quent­ly fea­ture:

• 32-foot clear heights
• 36-foot clear heights
• 40-foot-plus clear heights

High­er ceil­ings increase stor­age capac­i­ty and oper­a­tional effi­cien­cy.

Larger Footprints

Mod­ern dis­tri­b­u­tion cen­ters con­tin­ue grow­ing in size.

Facil­i­ties exceed­ing:

• 500,000 square feet
• 1 mil­lion square feet
• 2 mil­lion square feet

are increas­ing­ly com­mon in major logis­tics mar­kets.

Expanded Truck Courts

Effi­cient move­ment of goods requires sig­nif­i­cant out­door space.

Mod­ern facil­i­ties often include:

• Expand­ed truck courts
• Trail­er park­ing
• Employ­ee park­ing
• Fleet stor­age areas

“The activ­i­ty out­side the build­ing is often just as impor­tant as what occurs inside,” notes DiNi­co­la.

Sustainability Features

Many new­er facil­i­ties incor­po­rate:

• Solar pow­er sys­tems
• LED light­ing
• Ener­gy-effi­cient HVAC
• Water con­ser­va­tion sys­tems
• Elec­tric vehi­cle charg­ing infra­struc­ture

Cor­po­rate ten­ants increas­ing­ly pri­or­i­tize sus­tain­abil­i­ty ini­tia­tives when select­ing facil­i­ties.

Cold Storage and Specialized Industrial

One of the fastest-grow­ing seg­ments of indus­tri­al real estate involves spe­cial­ized facil­i­ties.

Cold Storage

Demand for refrig­er­at­ed and frozen stor­age has increased due to:

• Online gro­cery deliv­ery
• Phar­ma­ceu­ti­cal dis­tri­b­u­tion
• Food logis­tics

Advanced Manufacturing

Facil­i­ties sup­port­ing:

• Semi­con­duc­tor pro­duc­tion
• Aero­space man­u­fac­tur­ing
• Med­ical device pro­duc­tion
• Elec­tric vehi­cle sup­ply chains

have attract­ed sig­nif­i­cant invest­ment.

Life Sciences Production

Spe­cial­ized indus­tri­al facil­i­ties serv­ing biotech­nol­o­gy and phar­ma­ceu­ti­cal com­pa­nies con­tin­ue expand­ing nation­wide.

Tenant Quality Matters

One of the most impor­tant con­sid­er­a­tions for indus­tri­al DST investors is ten­ant qual­i­ty.

Many offer­ings fea­ture ten­ants rang­ing from pri­vate­ly held region­al oper­a­tors to invest­ment-grade pub­lic com­pa­nies.

Exam­ples may include:

• Logis­tics providers
• Man­u­fac­tur­ing com­pa­nies
• Dis­tri­b­u­tion firms
• Con­sumer goods com­pa­nies
• Auto­mo­tive sup­pli­ers

“The strength of the ten­ant often becomes a crit­i­cal com­po­nent of the invest­ment analy­sis,” says DiNi­co­la.

Investors should eval­u­ate:

• Cred­it qual­i­ty
• Lease dura­tion
• Renew­al options
• Rent esca­la­tions
• Indus­try out­look

Sale-Leaseback Opportunities

Many indus­tri­al DST offer­ings orig­i­nate through sale-lease­back trans­ac­tions.

Under this struc­ture:

1. A com­pa­ny sells its real estate.
2. The com­pa­ny remains as the ten­ant.
3. Long-term lease agree­ments are exe­cut­ed.
4. Cap­i­tal is rede­ployed into busi­ness oper­a­tions.

“This can be a win-win arrange­ment,” explains DiNi­co­la. “The ten­ant unlocks cap­i­tal while investors gain a long-term occu­pant.”

Sale-lease­backs remain a pop­u­lar source of indus­tri­al invest­ment oppor­tu­ni­ties.

Industrial DST Structures

Indus­tri­al DST offer­ings can vary con­sid­er­ably.

Single-Tenant Properties

These offer­ings may fea­ture one long-term ten­ant occu­py­ing the entire facil­i­ty.

Multi-Tenant Industrial

Sev­er­al ten­ants occu­py por­tions of the prop­er­ty.

Industrial Portfolios

Mul­ti­ple facil­i­ties pro­vide geo­graph­ic diver­si­fi­ca­tion and broad­er ten­ant expo­sure.

Many offer­ings uti­lize mod­er­ate lever­age to sat­is­fy 1031 exchange debt replace­ment require­ments.

Some spon­sors also struc­ture:

• All-cash offer­ings
• Low­er lever­age strate­gies
• Debt replace­ment solu­tions
• Zero-dis­tri­b­u­tion pro­grams

The spe­cif­ic struc­ture depends on investor objec­tives and spon­sor strat­e­gy.

Risks Investors Should Consider

Although indus­tri­al real estate has per­formed excep­tion­al­ly well, investors should still eval­u­ate poten­tial risks.

Supply Growth

Over­build­ing can impact occu­pan­cy and rental growth.

Tenant Concentration

Sin­gle-ten­ant prop­er­ties may be depen­dent on one occu­pant.

Economic Cycles

Man­u­fac­tur­ing and dis­tri­b­u­tion activ­i­ty may fluc­tu­ate dur­ing eco­nom­ic slow­downs.

Technological Obsolescence

Old­er facil­i­ties may require upgrades to remain com­pet­i­tive.

Sponsor and Management Quality

Expe­ri­enced spon­sors often play a crit­i­cal role in asset selec­tion, man­age­ment, and even­tu­al dis­po­si­tion.

Why Investors Continue to Favor Industrial

Indus­tri­al real estate con­tin­ues attract­ing insti­tu­tion­al cap­i­tal because of:

• Long-term demand dri­vers
• Sup­ply chain mod­ern­iza­tion
• Pop­u­la­tion growth
• E‑commerce expan­sion
• Man­u­fac­tur­ing reshoring
• Logis­tics infra­struc­ture needs

“Indus­tri­al has become one of the most insti­tu­tion­al­ly favored real estate sec­tors because it sup­ports so many aspects of the mod­ern econ­o­my,” says DiNi­co­la.

Conclusion

Indus­tri­al real estate has evolved from a tra­di­tion­al ware­house sec­tor into a high­ly sophis­ti­cat­ed logis­tics and sup­ply chain plat­form. Sup­port­ed by demo­graph­ic growth, e‑commerce, domes­tic man­u­fac­tur­ing ini­tia­tives, and tech­no­log­i­cal inno­va­tion, indus­tri­al assets con­tin­ue to play an increas­ing­ly impor­tant role in com­mer­cial real estate port­fo­lios.

“The demand for indus­tri­al space is ulti­mate­ly tied to eco­nom­ic activ­i­ty and the move­ment of goods,” con­cludes DiNi­co­la. “As long as con­sumers con­tin­ue pur­chas­ing prod­ucts and com­pa­nies con­tin­ue pro­duc­ing and dis­trib­ut­ing those prod­ucts, indus­tri­al real estate should remain a vital com­po­nent of the com­mer­cial real estate land­scape.”

For DST investors seek­ing diver­si­fi­ca­tion, income poten­tial, and expo­sure to one of the strongest long-term themes in com­mer­cial real estate, indus­tri­al real estate remains a com­pelling asset class wor­thy of con­sid­er­a­tion.

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