Warehouses and industrial units have become one of the most sought-after types of UK commercial property. Online shopping, tighter supply chains and a limited supply of well-located land have all increased demand from occupiers. For individual investors, the challenge is that a single warehouse can cost millions of pounds.
Ways to invest
Buy a unit outright
Small industrial units and trade counters can be bought directly. You need the full purchase price or a commercial mortgage, you take on the tenant relationship, and your money is concentrated in one building.
Fractional ownership
You buy shares in a company that owns a specific warehouse. You receive your share of the net rent and of the sale proceeds when the building is sold. You can spread money across several buildings and leave the management to the operator. Shares are not listed, so they can be hard to sell before the property is sold.
Industrial REITs
Several listed real estate investment trusts specialise in logistics and industrial property. They are easy to buy and sell through an investment account but their share prices move with the stock market.
Property funds
Some funds focus on industrial property. They offer diversification across many buildings but you do not choose which ones, and some funds limit withdrawals.
What makes a good warehouse investment
- Location: close to motorway junctions, ports, airports or large populations.
- Tenant strength: a financially strong occupier on a long lease reduces income risk.
- Building specification: eaves height, loading doors, yard depth, power supply and energy rating all affect future demand.
- Lease terms: length, break clauses, rent review basis and who pays for repairs.
Risks
Warehouse values are sensitive to interest rates and investment yields. Tenants can leave or fail, and an empty warehouse can take months to relet while the owner pays business rates and insurance. Read the risks of fractional property investment before investing.
See warehouse investment by location and our guide to fractional commercial property.
This guide is general information, not financial, tax or legal advice. If you are unsure whether an investment is right for you, speak to a regulated financial adviser.