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pm | | INDUSTRIAL REAL ESTATE (17th Feb 25 at 5:19pm UTC) | | Industrial real estate is a type of premises designed to serve a particular industry. In this case the term industry is defined as an area of activity mostly related to the primary or secondary sectors of economy, i.e. natural resource development or the manufacturing of goods, respectively.
Industrial property is sometimes described as a part of commercial real estate, and sometimes these areas do overlap, but, in general, industrial buildings serve a range of highly specialized purposes, whereas the main aim of commercial estate is to be rented out, and it should be more flexible in usage. Typical examples of industrial property are: power plants, goods production factories, warehouses, refineries, forges, sawmills, etc.
Dealing with industrial property (with the possible exception of warehouses) also includes a range of considerations not typical to other types of real estate. One of these is the supply of energy. The manufacturing of goods and extraction of resources takes a lot more energy than any commercial or residential building demands. A related issue is the use of specialized, often cumbersome, machinery, which demands ample space. And, finally, there is the question of waste materials and waste heat, which, in a lot of cases, is dangerous for the environment and must be utilized in a special way.
Industrial property in Latvia
The industrial property market in Latvia is now in its growing phase, with the total industrial area increasing each year. Moreover, this development is not only quantitative, but also qualitative - recent years saw the differentiation of industrial property rent rates in Riga (the capital) and Riga Region, effectively creating two new sub-markets.
Supply and demand
As of 2017, the total amount of available industrial space is approximately 944 100 m2. Out of this, 67.5% is general (speculative) space, designed to accommodate a wide range of tenants, and 32.5% is built-to-suit premises, which were from the very beginning designed and constructed to suit a particular company. Approximately 42% of all the industrial space is located within the administrative territory of Riga. It is projected that the supply will increase by 59 700 m2 by the end of 2017, whereas 140 000 m2 are currently in planning. In Riga and Riga Region, there is the following distribution of industrial real estate space:
19% - 5 000 m2 to 10 000 m2
18% - 10 000 m2 to 20 000 m2
22% - 20 000 m2 to 30 000 m2
41% - bigger than 30 000 m2
As for the demand, it increased by 61 100 m2 during the last year, with an average space occupied by each company being 1 700 m2. The most active developments have been observed in distribution and delivery industries, with the increased interest in warehouses and storage yards. The main reason for that is Latvian market's active involvement in e-commerce and online retail, which relies on parcel delivery as the main way of transferring goods to clients. | |
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