INDUSTRIAL BUILDING USE

Industrial real estate has a diversity of use not found within other sectors of real estate.  For example, office buildings can

accommodate a variety of businesses classified under various business standard industrial classification codes (SIC).  However, the

overall use of the space is relatively uniform.  Industrial facilities accommodate not only a wide variety of businesses, but a wide

range of activities as well.  Each activity requires a specific environment and physical structure.  The activities of manufacturing ,

testing, warehousing, and distribution directly correspond to four of the primary industrial real estate categories: manufacturing,

flex, warehouse distribution and freight.

These industrial activities can be further  specialized.  Manufacturing includes raw materials processing, product assembly and

maintenance.  These activities correspond to the secondary categories within Manufacturing:  Heavy Manufacturing, Light Manufacturing

and Airport Hangar.

An industrial real estate classification “tree” can be constructed by focusing exclusively on the building’s characteristics. 

However, building use is also an important classification tool.  Building use can confirm classification by physical characteristics

and in some cases, serve as the final determinant.  For example, truck terminals are identified by their physical exterior appearance.

 Light manufacturing buildings are identified by their activity or use.  Certain physical characteristics also are not visible, such

as power, floor load and floor levelness.  Additionally, building use varies more than the number of property types.  R & D Flex

buildings can have a variety of uses within physically identical buildings.  Multi- tenant facilities can have a number of activities

within one structure.

Certain industrial real estate categories also have flexible physical characteristics that can accommodate multiple activities.  While

R & D Flex facilities cannot perform freight forwarding without a total redevelopment of facilities, a manufacturing company can

perform light manufacturing within a bulk warehouse.  The facility in this case could be classified by its use (light manufacturing)

rather than its physical characteristics (bulk warehouse).  When a building’s physical flexibility in design allows for multiple uses,

building use is the final classification approach.

Essentially, the classification of an industrial building type by use is as important a process as classification by physical

characteristics.  It is important to thoroughly understand the physical characteristics of the primary and secondary categories of

industrial real estate.