CRE Terms #1: Industrial Drill-Down

Welcome to our first edition of our commercial real estate (CRE) terms and definitions blog series. This month, we’re delving into some sub-categories and terminology associated with industrial real estate.

Industrial 101

So first off, let’s get the basics out of the way: an industrial building is one used primarily for functions including production, storage, and distribution of goods. The three main or most common types – according to the NAIOP Terms and Definitions booklet – are manufacturing, warehousing or distribution, and “flex.” Industrial buildings can – and typically do – include some percentage of office space, but considerably less than is dedicated to production.

Manufacturing Facilities

These facilities are where goods are mass-produced using machinery and labor, involving processes like production, assembly, and quality control.

Warehouse or Distribution Facilities

A facility mainly utilized for storing and distributing goods, materials, and merchandise.

Flex Facilities

With “flex facilities” or “flex industrial”, an industrial building is designed specifically to be used in multiple ways, so as to not unnecessarily limit the potential tenant pool. We would often see this kind of option in an industrial park space.

With strategic and creative design choices – high ceilings, wide doors, and so on – a flex space can be used just as easily as a showroom or service center.