When we talk about real estate investing, most people think of single-family rentals, short-term vacation properties, or multifamily apartments. But there’s one commercial asset class that’s gaining traction among the most sophisticated investors – and it’s starting to get on the radar of physicians looking for passive income and diversification.
I’m talking about industrial real estate.
It may not be as flashy as other asset classes, but industrial real estate has quietly been one of the most resilient and in-demand sectors over the past few years. And now, individual investors, including physicians, are getting access to opportunities that were once reserved for the big players.
Let’s take a look at why this sector deserves your attention.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial, legal, or investment advice. Any investment involves risk, and you should consult your financial advisor, attorney, or CPA before making any investment decisions. Past performance is not indicative of future results. The author and associated entities disclaim any liability for loss incurred as a result of the use of this material or its content.
What Is Industrial Real Estate?
Industrial real estate includes properties used for the production, storage, and distribution of goods. You’ve probably driven by these buildings without thinking twice but they’re central to how our economy functions.
The main types include:
- Warehouses and distribution centers (think Amazon and FedEx facilities)
- Light manufacturing (assembly or packaging operations)
- Cold storage (for food or pharmaceutical distribution)
- Flex spaces (hybrid office-industrial)
As online shopping, same-day delivery, and supply chain diversification continue to grow, the need for well-located industrial properties has followed suit.
Why Industrial Real Estate Makes Sense for Physicians
If you’re a busy physician, you’re probably looking for investments that offer:
- Consistent cash flow
- Minimal active involvement
- Recession resilience
- Diversification from clinical income and the stock market
Industrial real estate checks many of those boxes.
Here’s why.
1. Strong Long-Term Demand
E-commerce is here to stay, and it’s driving huge demand for last-mile delivery hubs and regional warehouses. At the same time, many companies are “reshoring” their operations and moving production closer to home. All of that creates demand for logistics and manufacturing space.
According to industry data, every $1 billion in e-commerce sales generates demand for approximately 1.25 million square feet of industrial space.
2. Tight Supply
Construction costs, zoning restrictions, and financing challenges have slowed new development. That means many markets are experiencing a supply crunch, which supports rent growth and occupancy, good news for investors.
3. Stable, Longer-Term Leases
Industrial tenants often sign multi-year leases and spend significant capital customizing the space for their business. That leads to longer stays and less turnover.
For passive investors, this can mean more predictable income compared to retail or residential tenants.
4. Inflation Protection
Many industrial leases include built-in rent escalations or triple-net structures where tenants pay for taxes, insurance, and maintenance. These features can help investors preserve purchasing power over time.
A Market Reset = New Opportunity
In a recent conversation I had with Jonathan Spitz, Head of Capital Formation at Lightstone Direct, we talked about how the current economic environment is creating opportunity in industrial real estate.
“When you look at where valuations have reset and the demand picture, industrial is one of the more favorable sectors going forward,” he shared.
With less speculative development and more focus on essential logistics, the fundamentals are strong even in a higher interest rate environment.
What to Consider Before Investing
As with any real estate investment, not all industrial deals are created equal. Here are a few things to keep in mind:
- Location matters: Properties near ports, highways, and major metros are typically in higher demand.
- Tenant quality: Look for tenants with strong financials and long-term business needs.
- Asset type: Not all industrial buildings serve the same function. Understand what kind of tenant the space is built for.
- Access structure: Most physicians invest in industrial through syndications or private funds. Know the sponsor and evaluate the terms.
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Is Industrial Right for You?
If you’re a physician thinking about how to build a diversified investment portfolio, industrial real estate is worth considering.
It offers strong fundamentals, reliable income potential, and low correlation with other asset classes, all important factors when designing a portfolio that can support your long-term goals.
Like any investment, you have options. You can take the time to learn how to source and manage these deals yourself. Or, you can choose to invest alongside professionals who specialize in industrial real estate and already have access to high-quality opportunities.
The key is to be intentional. Whether you go the DIY route or partner with experienced operators, the goal is the same: to build a portfolio that supports your financial freedom and peace of mind.
Want to Learn More?
If you want to go deeper on this topic, check out my recent Passive Income MD Podcast episode with Jonathan Spitz of Lightstone. We talk about:
- Why industrial is attracting more investor attention
- What market reset means for physician investors
- How to evaluate opportunities in this space
🎧 Listen to Episode #288: Why Now Could Be the Best Time in Years to Invest in Real Estate
And if you’re ready to build the confidence to invest passively in deals like these, we walk through the entire process step by step in Passive Real Estate Academy. Learn more or join the waitlist here!
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Peter Kim, MD is the founder of Passive Income MD, the creator of Passive Real Estate Academy, and offers weekly education through his Monday podcast, the Passive Income MD Podcast. Join our community at the Passive Income Doc Facebook Group.
