I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.
Real estate investment trusts (REITs) are excellent investment choices for high-interest, potentially volatile markets, such as the one coming up in 2023.
In particular, industrial REITs have seen rapid growth in recent years, a trend that shows no signs of stopping.
Choosing the best industrial REITs to invest in can be difficult as there are dozens of companies to consider. Fortunately, you don’t need to do all the research alone.
According to our methodology, these seven industrial REITs are the best choices to make good returns in 2023.
Top 7 Best Industrial REITs
- Prologis REIT – Best industrial REIT
- Plymouth Industrial REIT – Best industrial property REIT
- Rexford Industrial Realty, Inc. – Best industrial REIT stock
- Warehouse REIT – Best warehouse REIT
- Industrial Logistics Properties Trust – Best industrial REIT ETF
- Americold Realty Trust – Best cold storage REIT
- STAG Industrial – Most diversified industrial REIT
There are many criteria you can use to determine if a REIT is likely to be a good investment. For the observed industry and current market, we looked at the following criteria:
- Dividend ratio
- Stock price
- Level of risk
- Opportunities for growth
Prologis REIT (PLD) – Best Industrial REIT
Douglas Abbey, Hamid Moghadam, and T. Robert Burke founded AMB Property Corporation (today Prologis) in 1984. At the time, the company was focused on community shopping centers — a focus they changed with the internet boom in 1999.
Today, the company has more than $160 billion in assets and an annual net operating income of $3.7 billion. An astonishing 2.5% of the world’s GDP runs through Prologis.
The Prologis REIT (NYSE: PLD) invests in logistics properties across the globe. It has warehouse investments on four continents in more than fifteen countries.
PLD stocks have an annual dividend yield of 2.72%, which suggests substantial capital reinvestment and potential for significant future profit.
Why we chose Prologis: Historically, Prologis has been ahead of the curve in understanding where to focus its real estate investments.
The number of properties it operates, combined with decades of expertise, make PLD a strong investment choice for 2023.
Plymouth Industrial REIT (PLYM) – Best Industrial Property REIT
The industrial REIT that Plymouth operates (NYSE: PLYM) was founded in 2011. Since then, it has grown into a company that manages 207 buildings in the U.S.
Plymouth is primarily invested in U.S. markets — specifically on the east coast. While this company is not as large as others on this list, it is still a significantly sized operation.
Plymouth operates more than 34 million square feet of industrial space. Plymouth has a high annual dividend yield of 4.38%, which makes it an excellent choice for investors looking for cash flow options.
Why we chose Plymouth Industrial REIT: This mid-sized REIT has experienced consistent and steady growth since its inception.
The company also has a high dividend yield, making it a good choice for investors needing regular payouts.
Rexford Industrial Realty, Inc. (REXR) – Best Industial REIT Stock
The Rexford Industrial Realty Trust (NYSE: REXR) was founded in 2013 and currently has its headquarters in Los Angeles, CA.
Rexford exclusively operates industrial properties in Southern California. The company manages more than 300 properties with nearly 42 million square feet of rentable space.
REXR currently has an annual dividend yield of 2.34%, demonstrating that it is reinvesting significantly to increase warehouse space.
As trends move toward distribution centers being closer to last-leg delivery and consumers, industrial REITs with U.S.-based properties will likely see an upswing.
Why we chose Rexford Industrial Realty: Rexford operates its logistics in the U.S., and current trends show distributors are increasing warehouse space nearer to customer bases because of supply chain issues.
Warehouse REIT (WHR) – Best Warehouse REIT
Tilstone Partners—a U.K.-based company—founded Warehouse REIT (LON: WHR) in 2013. The company operates 8.8 million square feet of space and has an occupancy rate of roughly 92%, high enough to turn a significant profit but low enough to leave room for asset management activities.
WHR is a smaller company but is remarkably well-managed with a focus on sustainable growth. The company has a very high annual dividend yield (5.66%).
WHR has a focus on properties close to urban town centers. This strategy is increasingly popular with distributors, which puts WHR in an advantageous position for 2023.
Why we chose Warehouse REIT: The management of warehouses in crucial growth districts, combined with the high dividend yield, makes this a perfect choice for 2023.
Industrial Logistics Properties Trust (ILPT) – Best Industrial REIT ETF
Industrial Logistics Properties Trust (NASDAQ: ILPT) became a publicly traded REIT in early 2018.
ILPT has two primary growth focuses: internal and external. The company grows externally by acquiring new industrial spaces and internally by increasing rent and warehouse value.
ILPT operates a highly diversified portfolio, with properties in more than 35 states in the U.S., including Hawaii.
ILPT has a low dividend yield — only 1.17%. This dividend ratio suggests a strong focus on rapid growth and future acquisition.
Why we chose Industrial Logistics Properties Trust: The low stock price and rapid growth make ILPT an ideal investment for the long term.
This is an opportunity for investors to get in right before rapid growth.
Americold Realty Trust (COLD) – Best Cold Storage REIT
Americold Realty Trust (NYSE: COLD) was founded in 1903 with just three warehouses.
Today, due to its temperature-controlled warehouses, the company is uniquely positioned in the warehousing and industry sector.
Americold operates 1.5 billion cubic feet of refrigerated industrial spaces on four continents. It has a mid-range annual dividend yield of 3.09%.
Why we chose Americold Realty Trust: This is the only REIT that operates in refrigerated storage. Their unique market placement makes it a resilient investment in a potentially unstable market.
STAG Industrial (STAG) – Most Diversified Industrial REIT
STAG Industrial (NYSE: STAG) was founded in 2010 and has seen rapid growth ever since.
STAG Industrial is a U.S.-based REIT with a focus on single-tenant industrial properties. The company has a highly diversified portfolio with properties in every region of the U.S.
The company has a high annual dividend yield of 4.52%. It leases over 13 million square feet of industrial space to 95 customers.
STAG’s focus on single-tenant industrial space allows it to make solid, long-term agreements with customers and promote company stability.
Why we chose STAG Industrial: The company has many stable investments and a diversified portfolio, making it a good choice for any type of market.
What Are Industrial REITs?
REITs are companies that own profit-producing commercial real estate. REITs fund operations through investors that they back through dividends.
Warehouse and distribution centers — and thereby industrial real estate — are essential for eCommerce delivery (such as Amazon) and retail store stock management (such as Target).
Benefits of Industrial REITs
Because of their unique placement in the market, industrial REITs have many benefits you won’t often find in other investments.
eCommerce growth – eCommerce has seen rapid growth in recent times. Now more than ever, consumers want to be able to purchase anything they want and have it delivered within the same week.
This demand has drastically increased the value of industrial spaces in recent years.
Improved supply chains – Supply chain issues have caused many companies to rent additional industrial real estate, particularly in the U.S., to be closer to delivery recipients.
As more companies move their logistics to the U.S., industrial REITs with properties in the country will likely see profits increase.
Steady cash flow – Purchasing industrial REIT stocks with high yields can provide you with cash flow that other investments don’t offer.
Long-term leases – Industrial properties have longer leases than most other asset classes. This allows companies to estimate future income better and have tighter asset management.
Dividend income – REITs are similar to dividend stocks and must pay out 90% of their taxable income in dividends.
Dividends give investors access to cash flow where otherwise they would not have seen the benefits of their investments until they cashed out.
Recession-resistant – Industrial REITs have much longer leases that are difficult for customers to back out of. This offers industrial REITs some stability if there are brief market dips.
Risks of Investing in Industrial REITs
While industrial REITs have historically been high-performing investments with great total returns, there are some risks you should consider before you invest.
Overbuilding – The demand for square footage in distribution centers has grown mainly because the COVID-19 pandemic kept a large portion of the population from shopping in person.
While this growth has been incredible for industrial real estate demand, some experts and investors are concerned there is more than enough industrial real estate, and there may be a crash.
High interest rates – Recently, interest rates have risen in an attempt to slow inflation. These high interest rates may slow demand for consumer goods, which will cause the demand for industry to drop rapidly.
High interest rates may also cause a REIT’s expenses to go up if they have an outstanding debt with a floating interest rate.
Financing risks – Recent interest rate increases risk impacting a REITs ability to finance new properties. When a REIT cannot fund expansions, the share price will stagnate, making investors suffer.
Economic uncertainties – As interest rates rise and inflation continues to concern consumers and economists alike, many people are concerned about a potential economic downturn.
A recession would significantly reduce consumer spending and the need for logistics property.
How to Invest in Industrial REITs
All stocks on this list are bought and sold on the stock market, making it easy for anyone to invest. To invest in any stock, you can follow these steps:
- Choose where to have an investment account: There are many places to open a brokerage account that will allow you to invest in traditional markets. If you’re new to investing, you can look for an account that allows partial shares for smaller investments.
- Input your information: A brokerage account will need a lot of information from you for tax purposes. It’s easiest to set up an account if you have your social security number, ID, and financial information on hand.
- Budget how much you’re willing to invest: Before you decide on a stock, you should consider how much you want to invest. Never invest more than you can afford to lose — no stock investment is guaranteed, no matter how large the company.
- Buy shares: You are ready to buy any stock you believe in.
- Industrial real estate stocks are recession-resistant, making them a good choice for the potentially unstable market coming up in 2023.
- There is likely to be a lot of growth in U.S. markets for innovative industrial properties as distributors look to solve supply chain issues.
- Industrial REITs provide investors with a manageable investment and high dividends. You can get expert help to invest in industrial REITs.
Industrial REIT FAQs
Here are some common questions about industrial REITs.
Are industrial REITs a good investment?
Yes, industrial REITs can be a good investment, especially if you invest in eCommerce options.
What is the largest industrial REIT?
Prologis is the largest industrial REIT. It is also one of the largest overall.
What is the difference between industrial and non-industrial REITs?
The main difference between the two is that non-industrial REITs also include properties that do not participate in storage or manufacturing, while industrial REITs do not.