All posts by singlemalt

Native Angeleno and Industrial real estate agent since 1994.

Types of Industrial Properties Explained

Industrial Property Types

Industrial is one of 4 commercial property types (industrial, retail, office or multi-family) and is a broad category encompassing many different types of buildings. Here are brief descriptions of eight major industrial property types:

Warehouse/Distribution Buildings

Warehouse/Distribution buildings are very large, single-story structures used primarily for warehousing and the distribution of business inventory. These buildings range from 5,000 to hundreds of thousands of square feet under roof and have up to 60-foot ceiling heights to accommodate extensive racking and storage systems. These buildings may have a small amount of office space as numerous loading docks, truck doors and large surface parking lots to semi-trailers. Some buildings may be served by rail cars.

Manufacturing Buildings

Manufacturing facilities (also called heavy industrial buildings) are designed to house specialized equipment used to produce goods or materials. In addition to providing three-phase high capacity, electric power, these industrial properties may include heavy ductwork, pressurized air or water lines, buss ducts, high capacity ventilation and exhaust systems, floor drains, storage tanks and cranes. A subset of this is food manufacturing which often includes refrigeration, clarifiers, boilers, sloped floors for drainage, and other specialized food facility equipment.

Refrigeration/Cold Storage Buildings:

Refrigeration/Cold Storage are specialized industrial buildings that offer large capacity cold storage such as cooler (34 deg F) and freezer (-10 to 0 deg F) rooms. They are often used as a distribution center for food products such as meat, produce, prepared meals, dairy, etc…

Telecom / Data Hosting Centers

These are highly specialized industrial buildings located in close proximity to major communications trunk lines with access to an extremely large and redundant power supply capable of powering extensive computer servers and telecom switching equipment. These buildings have reinforced floor slabs capable of supporting the weight of the electrical and computer equipment as well as backup generators, and specialized HVAC. They may also include raised flooring to handle cooling and extensive cabling. These buildings may also be called Switching Centers, Cyber Centers, Web Hosting Facilities and Telecom Centers.

Flex Buildings:

This versatile building type (short for “Flexible”) covers a broad range of uses and often is used to combine one or more uses in a single facility, including office space, research and development, showroom retail sales, light manufacturing research and development (R&D) and even small warehouse and distribution uses. Because of this versatility, flex buildings are sometimes listed as separate category. Flex buildings typically have ceiling heights under 18 feet and have a higher percentage of office space than larger industrial buildings.

Light Manufacturing Buildings:

Flex buildings can be used for light manufacturing that do not require extensive physical plant and space requirements that heavy industrial buildings provide; such as light assembly.

R&D Buildings:

Flex buildings are popular in high technology industries such as computers, electronics and biotechnology because they effective support a hybrid of office, manufacturing and warehouse space housed in a single location. Often these types of space users prefer locating in campus-like business parks featuring extensive landscaping, shared architecture design, and lots of surface parking and open space.

Showroom Buildings:

Similar to flex/office buildings in basic construction and layout, showroom buildings combine retail display space with extensive onsite storage and distribution. Typically up to 50% of the interior space in showroom buildings is dedicated to sales.

Biotech (Wet Lab) Buildings:

Biotech buildings are highly specialized flex buildings that support a range of laboratory space where chemicals, drugs or other material or biological matter are tested and analyzed. This type of building requires extensive plumbing and water distribution, direct ventilation and specialized piped utilities. In addition, some may offer accurate temperature and humidity controls, dust control, and heavy power. Often these types of buildings are located together in campus-like fashion with extensive landscaping, extensive surface parking and open space.

California State Payroll taxes :(

Anyone who is considered an employer in California must comply with payroll tax obligations, whether or not you may object to them! Yes, some of the programs they fund have questionable track records of abuse by workers. Nevertheless, this article is a good summary provided by Gehres Law Group. Excerpt below.

There are four payroll tax programs in California which are administered by the Employment Development Department. These payroll taxes include:

  • Unemployment tax: Unemployment tax must be paid on the first $7,000 in wages employers pay to each employee during the calendar year. Employers pay this tax on a quarterly basis. Tax rates vary based on factors including whether the employer is a new employer as well as the employer’s experience with the unemployment program. Taxes could vary between 1.5% and 6.2%. This tax funds unemployment payments for workers who are laid off from their jobs.
  • Employment training tax: Employment training tax is charged at a rate of .1% of the first $7,000 in wages employers pay to employees during each calendar year. The tax provides funding to train employees in industries necessary to keep California businesses competitive. Employers pay this tax.
  • State disability insurance: State disability insurance is funded by a tax on employee wages. Employees pay this tax. Employers must withhold .9% of the first $110,902 in wages that are paid to employees during each calendar year. The taxes fund short-term disability payments and paid leave for eligible workers who take time off to care for a new child or for a sick child, parent, grandparent, sibling, spouse, or other close relative
  • California personal income tax withholding: California personal income taxes are paid by workers on income they earn within the state of California. Employers must withhold an appropriate amount of money from an employee’s entire salary based on the information provided by employees on their W-4 forms.

Employers are responsible for the payment and/or collection of each of these payroll taxes as well as for the timely submission of payroll tax forms and payments of all taxes due.

City of Los Angeles Approves Recreational Cannabis Regulations. Boon to Industrial Property Owners

The Los Angeles City Council voted and approved new regulations for recreational cannabis businesses. Recreational marijuana will officially spread like wildfire on January 1, 2018, per California state law. This will be a boon for industrial real estate landlords as cannabis growers and cultivation operations typically pay premium industrial rental rates compared to regular warehouse and manufacturing users. Pot growers often pay in excess of 2X the market rate. Some key rules are below from the L.A. Times article. The mayor is expected to sign the ordinance soon.

Under the new regulations, pot shops can open their doors only in specific commercial and industrial zones and must operate at least 700 feet from schools, public parks and libraries, child care centers, alcohol and drug treatment centers and other “sensitive” sites, as well as from other pot retailers.

Other kinds of marijuana businesses, including growers and manufacturers, would be confined to industrial zones and banned within 600 feet of schools. And marijuana manufacturers that use volatile solvents would also be prohibited within 200 feet of residential areas.

To prevent an “undue concentration” in neighborhoods, city leaders also decided to cap the number of pot shops, growers, manufacturers and marijuana “micro-businesses,” which do a combination of things, allowed in each community.

Los Angeles Business Portal

The City of Los Angeles developed The LA Business Portal, which provides all of the information you need to plan, start, manage, and grow your business.  This is a good resource for business owners moving into the city limits. There is guidance on zoning, compliance, employees, registration, etc…

http://business.lacity.org/