Industrial property covers buildings used for storage, distribution, manufacturing and trade. It ranges from huge distribution sheds next to motorways to small units on estates used by local businesses.
The main types
- Big box logistics: very large distribution warehouses, often let to a single national retailer or logistics company.
- Mid-box warehouses: medium-sized units used for regional distribution and light manufacturing.
- Urban and last-mile logistics: smaller warehouses close to towns and cities for fast delivery.
- Multi-let estates: rows of smaller units let to many separate businesses.
- Trade counters: units with a showroom or counter at the front, used by builders' merchants, plumbing and electrical suppliers.
Planning use classes
In England, storage and distribution falls within use class B8, general industrial within B2, and light industrial within Class E. The permitted use affects who can occupy a building and how flexible it is.
How industrial property earns income
Tenants pay rent under a commercial lease, usually with periodic rent reviews. Many leases are on full repairing and insuring terms, so the tenant pays for repairs and reimburses insurance. The owner's main costs arise when a unit is empty.
What drives value
Rental growth, lease length, tenant strength, the building's condition and energy rating, and the investment yield buyers are willing to accept. Rising interest rates generally push yields up and values down.
Read our page on fractional industrial and logistics investment.
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.