Finding and Refurbishing Underperforming Properties

 

Finding and Refurbishing Underperforming Properties

Investing in underperforming small bay industrial properties presents a unique opportunity for investors to revitalize assets and achieve substantial returns. By implementing a strategic approach to identify, acquire, and refurbish these properties, investors can transform overlooked assets into profitable ventures.

1. Identifying Underperforming Properties

Begin by targeting small bay industrial properties exhibiting signs of distress or underutilization. Indicators include high vacancy rates, outdated facilities, deferred maintenance, or mismanagement. Focus on properties in strategic locations—such as urban infill areas with limited development opportunities—which are highly coveted due to their proximity to end consumers and last-mile delivery advantages.

2. Conducting Thorough Due Diligence

Once potential properties are identified, perform comprehensive due diligence to assess their viability. This includes evaluating structural integrity, environmental compliance, existing lease agreements, and financial performance. Understanding the local market dynamics, such as supply and demand, rental rates, and economic drivers, is crucial to determining the property's potential for appreciation and income generation.

3. Developing a Refurbishment Plan

Create a detailed refurbishment plan that addresses necessary repairs, modernization, and potential reconfiguration to meet current market demands. Upgrades may include enhancing loading docks, increasing ceiling heights, improving energy efficiency, and updating mechanical systems. Tailoring the property to accommodate a diverse tenant mix can enhance its appeal and reduce vacancy risks.

4. Implementing Effective Management Practices

Post-refurbishment, establish robust property management practices to maintain the facility’s condition and tenant satisfaction. This includes regular maintenance schedules, responsive tenant relations, and proactive marketing strategies to attract and retain tenants. Effective management ensures the property's long-term performance and value appreciation.

5. Monitoring Market Trends and Adjusting Strategies

Stay informed about emerging trends in the small bay industrial sector, such as the growing demand driven by e-commerce and the increasing importance of last-mile logistics. Understanding these trends allows investors to adapt their strategies, capitalize on new opportunities, and mitigate potential risks associated with market shifts.

“Refurbishing underperforming small bay industrial properties isn’t just about fixing a building—it’s about unlocking a market opportunity that others overlook. With the right upgrades and management, these assets can become some of the strongest performers in your portfolio,” says Cody Payne, small bay industrial expert and co-host of the Invest in Flex Space podcast.

By systematically identifying and revitalizing underperforming small bay industrial properties, investors can unlock hidden value and contribute to the growth and efficiency of urban industrial landscapes.