An Introduction To Industrial Asset Class Investing – Chad Griffiths


One of the best-performing assets right now is industrial real estate. With the rise of eCommerce over the years and Amazon leading the way, there needs to be more room for demand. This is where industrial comes in whether they’re in warehousing, manufacturing facilities, or flex properties. Industrial is rising and will only continue to rise. Join your hosts, Ava Benesocky and August Biniaz as they talk to industrial real estate broker and investor, Chad Griffiths about all things industrial real estate. Chad has worked in the industrial real estate industry since 2004 and has completed over 500 deals. He is also the host of the Industrial Real Estate Podcastwhere he talks more about this asset class. Get educated today as Chad breaks down why industrial is so strong right now. Discover the problems of inflation and what recession might do. Learn about the future of the industrial asset class and where it’ll go. Become an expert in industrial real estate today!

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About Chad Griffiths

Chad Griffiths has worked in the industrial real estate industry since 2004. As a member of a global commercial real estate company and a partner with his local firm, Chad has completed over 500 deals with clients ranging from small companies to large institutional owners. In addition to being the host of the Industrial Real Estate Show, Chad is honoured to have been a guest on over 30 other real estate podcasts as well as being interviewed numerous times by national media. Chad earned both SIOR & CCIM designations, and an MBA and is proud to have recently been named an Industrial Influencer by


An Introduction To Industrial Asset Class Investing – Chad Griffiths

We are excited because we are switching things up. We have an industrial guy on our show.

Coincidentally, a report was published by Marcus & Millichap about the industrial asset class, which beat every other asset class, like multifamily, retail, and the S&P 500. We are very excited to have our guest on, get right into all of those details, get a crash course on industrial asset class, and see what is all up through there.

I can’t wait. I’m going to do a little introduction because the man himself is going to give us that crash course. Let me tell you a little bit about Chad. He has worked as an industrial real estate broker since 2005. As a member of the global commercial real estate company and a partner with his local firm, he has completed over 500 deals with clients ranging from small companies to large institutional owners. In addition to being the host of The Industrial Real Estate show, he is honored to have been a guest on other real estate podcasts as well as being interviewed numerous times by national media. He earned both SIOR and CCIM designations, an MBA, and is proud to have been named an industrial influencer by

REID Chad Griffiths | Industrial Real Estate

We get a lot of content from there. We send that content to our investor community as well.

We believe this interview with Chad is going to bring great value to both passive and active investors looking to learn more about the industrial asset class and why this asset class has been the best performing asset class over the last years, beating the S&P 500.

Thanks for being here, Chad. Welcome to our show.

Thank you so much for having me on. I’m a fan of both of you guys. It’s an absolute honor to be on the show. I love talking about industrial real estate, and I always like to say that no questions off-topic. I am happy to answer any question you throw at me regarding it.

Let’s start off by you telling us about your background and your start in real estate please.

I got into residential real estate first. I had bought and sold a few houses with some friends. I saw an opportunity to get into that as a career. In 2004, I got licensed and joined the residential real estate brokerage. I quickly discovered that wasn’t what I wanted to do long-term, so I started pursuing the commercial real estate route.

2005 is when I got introduced to a few different brokerages. The one that I ended up getting hired in 2005. I’m still at that company. We are at several years now that I have been at the same brokerage. At that time, I didn’t know much about what industrial real estate was. I thought commercial real estate was big office towers or shopping malls, more of that glamorous aspect of commercial real estate. It so happened that the brokerage that I ended up joining was heavily focused on industrial. I like to think that I stumbled into industrial real estate. Perhaps even people reading this episode might not have a good understanding of what industrial real estate is either. I’m happy to share how I started gaining knowledge and experience with it. I started investing in it myself in 2014.

We were hoping you could give us a crash course on the industrial asset class, what industrial entails, and who are the players in this space. By players, we mean investors, institutional, and retail. Who’s buying it? Tell us all about it, please.

It’s evolved considerably over the last decades, and in that report that Marcus & Millichap would have put out about it being the best performing asset class. Even over the past years, industrials have gone from being this obscure asset class that a lot of people don’t know to knowing everybody is familiar with an Amazon distribution center.

In Vancouver, you would have a ton of industrial going up in high-profile areas now. Whereas before, industrial was largely tucked away outside of the public purview for a good reason. The public planners didn’t want to have a large industrial facility manufacturing something right next to a bunch of houses. It was specifically tucked away out of an industrial park. Now we see massive industrial facilities on major highways and close to airports. With that, people seem to be a little bit more familiar with the supply chain and all of the supply chain disruptions over the last years. Vacancy rates being low. I heard in some of the port cities like Vancouver and LA. They can see rates are under 1%.

I like to break industrial real estate into three sub-categories. The first would be warehousing and that’s what most people are familiar with now. Those are the big buildings where there are racks of storage, things basically come in, sorted, might be stored for some period of time, and then it gets sent out.

To familiarize people with that, everybody knows about a warehouse because they have been in one, such as a Costco or Home Depot. These are large warehouses that have racks of storage. Customers come and pick stuff up and they take it out. It’s in a retail location but it is a warehouse. That’s the warehousing section, and that’s what’s coming into the public knowledge a lot more.

The other major one would be manufacturing, and this is where things are made. It can be raw materials coming into the building. It’s assembled, manufactured, and produced. There’s something that happens to that raw or semi-raw material. It gets converted into the finished product, and then it gets sent out.

An example I always give for a manufacturing facility is not far from you guys. It’s the Boeing factory in Everett, outside of Seattle. It’s a 4 million square foot building, and most people can’t even wrap their heads around how large 4 million square feet are under a single roof. If you think of the average house being 2,000 to 3,000 square feet, you start getting an appreciation for how large this building is.

Essentially, it’s all the raw products that come in that go into manufacturing the airplanes. It’s produced, it’s assembled, there’s some manufacturing that happens there, and then the airplane goes out the door to the end customer. That manufacturing side is still a massive component of the industrial real estate space, but most people don’t see that because it’s out of the public view. It’s tucked away in these industrial parks, but that makes up a huge portion of the industrial market.

Industrial is the best-performing asset class in real estate. It's gone from being obscure to something everybody's familiar with. Click To Tweet

The third one is a little bit of a catch-all, as you could almost call it a miscellaneous group. The industry will call it flex properties. Flex properties are all the properties that are zoned industrial that aren’t necessarily compatible for either manufacturing or warehousing, and there are tons of examples. You might see churches in industrial zoning and self-storage. A car dealership is another one because there’ll be a showroom at the front where they have their cars, but at the back will be the garage where they physically work on the cars that need repairs.

In one building that we own, we have a full office tenant in it. It’s an industrial zone building in an industrial park, and it’s a full office tenant that’s in there. That flex property is meant to catch all the other properties that could be used for manufacturing or warehousing, but they will be used for other non-conventional uses.

The next question here is more about your opinion. We talked about John Chang from Marcus & Millichap. We discussed their report and it talks about how industrial, over the last several years, beat the S&P 500, multifamily, R-asset class, and other asset classes. The question to you is, in your opinion, if you have any data to back it or not, what do you, why do you believe industrial was the winner? What was the reasoning behind that? This is not short-term over COVID or something else that happened. Talk to us about that.

The easiest answer to that, and if you wouldn’t have it available to you right now, but if you were to overlay eCommerce sales and how eCommerce has grown, that would be a twenty-year trajectory. eCommerce started in the late-’90s, but it didn’t start getting significant traction until the early-2000s, which coincidentally is right when you see that graph start. It took a good ten years before eCommerce started hitting a critical mass where they were starting to eat more market share from the traditional brick-and-mortar retailers. Once it did, you could see that hockey stick curve.

If you see the graph, that graph was still on its way up before that hockey stick increase. Even though it’s doubled the retail, the next in line, you can see that the trajectory was there to beat the other asset classes as well, but please keep going.

I was buying stuff online myself, dating back that far. Probably not in the early-2000s, but in 2008 and 2009, I was buying things online. What contributed significantly to the under-industrial asset class performing so well is that all this eCommerce requires considerable amount of warehouse space along the supply chain.

There are markets all over the world, which had to increase their warehouse capacity to handle the demand, and that demand was all fueled. You could call it the Amazon effect. Amazon was the main driving force, but they were far from the only ones. There are a lot of retailers that have started eCommerce divisions. Walmart and Costco being another big one.

All these products are stored in warehouses in various locations, and often they are stored in multiple locations. A product that might come from overseas in China that lands at a port on either of the coasts and then get shipped in by truck or rail, that product might see the timing 4 to 5 different warehouses before it meets the end consumer. That supply chain required a tremendous amount of industrial space. Where you see that exponential growth was with COVID, we are all familiar with how the pandemic physically forced some retailers to shut down where they couldn’t even be open.

All of a sudden, said to people who were perhaps resistant to shopping online, that now forced their hand where that was the only way they could get things. It changed a lot of patterns. People before were reticent to start shopping online and had no other choice, and when that boom came of people ordering so much stuff online, it required that much more industrial space. There was that much more demand.

In some hot markets right now, the vacancy rate for industrial is under 2%, and in some ultra hot markets, it’s under 1%, which when you get to that level, there’s essentially zero vacancy. There are pockets here and there that come up, but it goes to speak to if you have a market where you are getting that little vacancy rate and you have a corresponding increase in rental rates as a reflection of the low vacancy rates, that makes the returns look pretty compelling.

I’d say as a whole, the market has been very unsexy, tucked away, and steady asset class for many years before this, for decades. A lot of institutional investors were skeptical of it. They didn’t see the big returns compared to the more glamorous office or retail properties. Now when you see so much demand picking up for an asset class, you see that being relatively stable as these consumer patterns are probably changed permanently. At least to some extent, then all of a sudden becomes that much more of an attractive asset class, and that’s why we have seen a lot more institutional money flock into it.

We have got some more questions later on about the institutional money coming into it.

I have a question for you, Chad, and I’m curious. Could you describe to us what an anchor tenant is? Is it fair to say that the more tenants in an industrial site has, the less risk is associated with vacancies?

REID Chad Griffiths | Industrial Real Estate

Industrial Real Estate: Industrial can be split into three sub-categories: warehousing, that’s what most people are familiar with; manufacturing facilities where things are made; and, flex properties which are for miscellaneous.


It’s a topic on where there’s a lot of debate, so it’s a great question. I have had people on both sides of the story talk about what they prefer, but to answer the first part of your question, an anchor tenant is pretty common in retail where it will be like a grocery store in a neighborhood shopping center. That grocery store will be considered the anchor tenant because the customers that come into the grocery store drive some ancillary traffic and business to the smaller retailers.

In industrial, it can be common as well, where you might see a million-square-foot building where one large tenant takes up 300,000 square feet of it, and that could be the anchor tenant there. We have one in our market as an example. Amazon has a million-square-foot building, and it’s just their building. They are the only ones that are in that building.

It’s interesting how there are different perspectives on this. I would have thought as well when I first started in the career that having a multitenant would be better because you can diversify your risk. If you have ten tenants in a building using an arbitrary number and one leaves, you have a hard time filling it. In theory, you’ve only lost 10% of your income versus if you have one tenant and that tenant leaves, you lost effectively 100% of your income.

What a lot of industrial investors, particularly larger ones are sophisticated ones, think is that it’s much easier to manage 1 tenant versus managing 10 tenants. They look at it from the perspective that they can scale their business much easier if they could add one building that’s worth $100 million versus adding $10 billion worth $1 million each.

My math is right on that. If my math was wrong, you get the point on how they look at it from the standpoint that it’s easier to scale. Of the properties that I own, I only have one that has a single tenant in it, but everything else is multitenant. I don’t have big institutional pockets where if my tenants all left, I can’t afford to float it forever.

I liked the idea of having multitenants as well. You can appreciate it if you were to compare an industrial building to a multifamily building. Let’s say an arbitrary $5 million building. You could get a $5 million industrial building with one single tenant in it, but if you had to get a $5 million multifamily property, you might have 20 to 30 tenants in there.

From a management perspective, without getting too much into the nuts and bolts of it right now, which we certainly can later, it’s a lot easier to manage one tenant where they take care of everything themselves versus 20 to 30 residential tenants who have demands and needs. You are constantly turning things over. That’s one of the biggest reasons investors would say they like single tenants better, but I don’t know if there’s a right or wrong answer to it. It does depend on the investor’s preference and risk profile.

Focusing on the tenant and these one tenant or main tenant, mainly big institutions, you talked about Costco, Home Depot, Amazon, and other large institutions or businesses that are in need of industrial building. We know that the McDonald’s restaurant business model was in the business of purchasing land and then leasing it back to their franchisees.

Why aren’t large groups like Amazon purchasing their own land and building their own industrial warehouses because they are also putting up an industrial building looking at it as far as the work that goes into it, comparing it to a multifamily, high-rise, or other types of structures is much easier to put up? Is there a trend where these large companies are purchasing their own land and building their own buildings? Why should there even a market exist for tenants when they have enough capital to go and build their own buildings?

It comes up all the time from investors who are worried that they won’t be able to find tenants. It comes up from smaller companies that wonder why they would want to lease when they can own something. The comment I’m sure you’ve heard as well as tenants always think they are flushing their money down the toilet when they are renting.

Amazon is one of the world’s largest occupiers of warehouse space as a tenant. They rent the vast majority of space that they have. Although they are starting to do some more stuff with their own capital to invest in it, why would it be one of the world’s top companies with a lot of cash on reserves? Why would they rent property instead? It comes down to how they look at what return they would make on their money.

If they were to buy their own property or buy land and develop their own property, they would do some projection on what they could expect to earn on that money over a 10 or 20-year holding pattern, and they would basically be evaluating it from a real estate investment standpoint. Conversely, they would say, “If we took that money, we would have invested into the real estate and invested in the company.”

Maybe it’s adding in a new product line, more inventory, or expanding into another market. Can they earn a higher return growing the company with those resources than they would earn on real estate? As a shareholder of Amazon, I simply want them to maximize every dollar of investment that they have. I don’t care if that’s in real estate or if it’s adding another product line.

Companies should be able to earn a higher return inside of their company. Otherwise, they should just get into real estate. Click To Tweet

For the most part, companies should be able to earn a higher return inside of their company, whether it’s more inventory, new locations, or expansion. They should be. Otherwise, they should get into the real estate business if they can earn better returns on that. There are stewards for financial capital, mine and millions of other shareholders out there.

That’s the main reason that companies won’t is they have determined they can make a better return and grow their company as opposed to growing a real estate portfolio. That’s great for the real estate investment community because then, if you are an investor, and I don’t have companies anywhere near nearly as large as Amazon in my portfolio, but there are a lot of sophisticated and institutional owners that do. You’ve got a captive tenant that is invested in that space and wants to rent there because they have determined that’s the best thing to do for their business.

You must have had some experience on that answer.

That comes up often. I hear that question all the time. That’s why people wonder. If you are Amazon, I don’t know what their balance sheet looks like right now, but I’m assuming they have got billions of dollars of cash sitting there. It’s a natural question to say, “Why would they have that cash sitting in a bank account when they could go and own their real estate?” It’s a great question to ask, but that’s usually why it is.

If I was advising them, I would say long-term, buy land and build your own buildings. Particularly when it comes to close to airports where you know that airport is going to be there for the next 100 years or even more. Let’s continue the conversation. Let’s talk about this concept of loss-to-lease that we were very familiar with in multifamily and define loss-to-lease. It’s the spread between the market rent and the current rent the asset is generating. I got to describe multiple asset classes here. We are talking about hospitality, multifamily, and industrial. Let’s differentiate those three.

In a hospitality asset, the loss-to-lease is non-existent because your prices fluctuate and change daily if there’s an event in a town, people are coming in, and a lot of demand. In low vacancies, you increase your rates for hotel rooms, even short-term rentals, or any hospitality. You are able to change those rates on a daily basis.

In multifamily in the regions we invest in, there are very landlord-friendly regions. There are red states, the Sun Belt states in the US, and it allows us to change those rents annually to either increase the rents or not renew the lease. That’s not possible in most places in Canada because of the strict rent control laws. On the industrial side, I’m not sure if we are labeling it correctly. Is it called an anchor tenant in industrial as well as it is in retail?

You certainly could. I don’t think there’s anything wrong with calling it an anchor tenant. You could even call it a tenant for simplicity, whether it’s a AAA tenant or a small local mom-and-pop shop. I probably wouldn’t differentiate it in my market anyways, but there certainly could be markets out there that do call them anchor tenants.

Let’s say you got a primary tenant and a large corporation is renting the space from you. Most times, these contracts are a five-year contract and correct me if I’m wrong, or a ten-year contract and they are triple net. We can discuss what triple net is, but how do investors, property owners, or landlords mitigate the fact that rents could go up exponentially, but now they are in contract with the tenant for a long-term contract. How do they mitigate that loss-to-lease? Educate us about this topic, please.

Perhaps we could start with defining a triple net lease because, for people that haven’t explored commercial, it might be a bit of a foreign topic for them. For most commercial leasing, and this is what extend to office retail and industrial, you’ll see triple net leasing. To explain it without getting into too much detail, but at a high level, you’ll typically see two types of rent paid from a tenant to a landlord. The first is going to be the base or the net rent, which will be a contractually agreed upon rate for the duration of the lease. It could be a flat fee. Most rates are quoted on a per square foot basis, unlike residential, which is quoted as an amount per month.

It will be on a per square foot basis. The base rent and the net rent will be contractually agreed upon for the whole term of the lease. It could be $10 a square foot every year. It could be $10 a square foot with escalations. Maybe there’s a $0.50 a year escalation so that it ends at X amount after year ten, but that amount is agreed to and paid to the landlord regardless.

There are also additional rent or operating costs sometimes called different markets are treated differently. The terminology might vary, but the whole intent with that is that there are operating level expenses of the building. Generally, that’s property taxes, building insurance, common area maintenance like landscaping or snow removal, and management fees. Those are the operating level of expenses that are required to keep that building functional.

Those costs all flow through to the tenant. It’s usually provided as an estimate. At the beginning of 2022, the landlord would make a budget and say, “This is what we expect property taxes, insurance, commonary maintenance, and management fees to be.” They will do that on a 1/12th basis so that the tenants pay those expenses a budgeted amount every month for the whole year.

REID Chad Griffiths | Industrial Real Estate

Industrial Real Estate: The rise of eCommerce is what led the industrial asset class to be so strong. All this eCommerce requires a considerable amount of warehouse capacity to handle all the demand.


At the end of the year, the landlord reconciles all the bills and determines what the actual cost was. They will either give credit to the tenant if they are overcharged or they will invoice them if they undercharged. That amount flows through. If property taxes go up in year three and they go up 20%, those property taxes flow right through to the tenant.

That is a key thing to keep from eroding that contract rent from the landlord. You can appreciate it if a residential landlord leased out a space to a tenant for ten years, and it was a gross amount and charged the same amount for the whole term. In year 3 or 4, their property taxes, especially with what we have seen in property taxes, could completely erode all the amount of money that they have coming in.

The beauty of commercial leasing, particularly industrials, as we are talking about right now, is that you’ve got the ability to flow through any expenses. That’s the nature of a triple net lease. Your question about that loss-to-lease scenario is excellent to ask because that is a very sensitive topic right now in a lot of these hallmarks. There are some leases that will tie the base rent, like CPI increases. The lease rate might say $10 a square foot and the base rent might say $10 a square foot plus CPI increases. That’s a very common conversation that’s happening right now because we saw inflation going up. We are 6.5% in Canada. You are 8% in the US. That’s a huge discussion.

It’s worth looking at it as well that there’s the query of perhaps undercharging a tenant for a market that’s hot. There’s the opposite where you could be overcharging a tenant in a market that’s cool. I’m in a market that had heavy oil and gas exposure for all that manufacturing side which the last years haven’t been overly kind to you.

It’s improving now, but we were in a provincial recession for years. All those leases that were in there could conceivably have been less than what the landlord was charging from a market standpoint, but they were contr obligated to it. It’s a blessing and a curse from the standpoint that you are a landlord trying to get a fair market rate, but you are locking in your lease term for a long-term. As you said, 5 to 10-year leases in industrials are uncommon at all.

What is an Amazon lease? Is it a 5-year or 10-year? If you had a building and you were going to lease it to Amazon, what is the industry standard term?

They would be doing anywhere from 10 to 15 years. There’s one going up in our market, which has a whole bunch of robotics going into it. I’m not privy to what that one is, but I wouldn’t be surprised if that was even a twenty-year lease because of how capital intensive it is to get everything in there and get it built specifically for them. It’s a multi-story industrial building and lots of robotics. If Amazon were to leave, it would be very difficult to find another tenant for it.

I see the need from the corporation side. Amazon’s side of things is literally part of the supply chain, so they want to be in that location long-term. I see the need there. Now pre-inflation. The potential recession that’s coming up here pre this situation were investors and landlords taking into account inflation, which was historically like 2.5%. Was that a part of the calculations we were doing when they were assigned a 5, 10, or 15-year lease? Has that increased that amount? How did that calculation work?

There are very few investors I have talked to who had the foresight to expect this type of inflation. Even looking back on it, it should have been pretty obvious with how much money they printed. There weren’t many landlords that were forward-thinking. They might take it into account without direct consideration.

They might say, “I’m using arbitrary numbers again.” Let’s say we get $10 a square foot. If we can get a $0.25 a year escalation, that’s 2.5% a year, so we are keeping pace at least with the Federal bank’s guidance on what they have. That was pretty common. I didn’t see many leases structured from 2021 and before, that tied it to CPI. That’s coming in quite frequently now. There are a lot of landlords trying to insert that language. It wasn’t prevalent before 2022.

Is it fair to say on that logic that there’s a loss of lease in this space that returns have beat every other asset class? Could those numbers have even been much higher because the rents are not at market on many of these properties across Canada and the US?

Absolutely. There are tenants that are going to be coming off longer-term leases. They are in year 9 of a 10-year lease. When their lease comes up, they are going to see a considerable bump in their rent, and it’s going to hurt. You are right. If there wasn’t this tendency to sign longer-term leases like 5 to 10 years, we would have even seen more inflation there as a result of landlords trying to ask more rent than the companies that have to pay that rent charge in the end customer more. I agree. I think that this inflationary problem is problematic, and that’s why the Feds are trying to do it. The US said another 50 basis points. They are behind the eight-ball on this and trying to play catch up. It’s a lot of turmoil in the market right now. It’s even hard to predict what’s going to happen.

Everybody is following it every single day like, “What’s going on now?”

The beauty of commercial leasing, particularly industrial, is the ability to flow through any expenses. Click To Tweet

We are sitting on the sidelines where we have got some great deals coming across our desk. We’re very cognizant of what’s happening with the markets.

It’s an offense and defense at the same time. Let’s discuss industrial long-term. Tell us the good, the bad, and the ugly. We asked the ugly because of what happened to the office space, as an asset class that no one expected to be underperforming.

Talk to us about the long-term. It’s all great what’s happening with technology and things changing up. What is your view long-term about this industrial asset class, where it’s going, and what’s happening?

Long-term, it will stabilize and normalize to be more in line with inflation in general. What’s the driving factor behind warehouse space and the need for warehouse space is consumer spending. If people stopped spending money on consumer goods, we’d have much less of a need for warehousing space. To a large extension, we will move somewhat lock and step with the market as a whole.

In the short-term, there are still going to be a lot of problems in the supply chain with the shortage. In some of the markets that you are in like LA or New York, they have got physical land constraints where they can’t even add new inventory. That’s where you’ll start seeing multi-story industrial properties go up and prices continue to escalate in other markets where vacancy rates are more normal. It will be interesting to see how that responds to any potential dip in the economy.

I never want to predict a recession, but there’s a lot to think that a recession is on the horizon, but 2 in 10-year treasuries flipped. It’s usually been a historically pretty accurate indicator for a recession. I had this conversation with somebody and they’re like, “I don’t think a recession is necessarily a bad thing.” It gets a lot of negative news publicity, but it’s two-quarters of negative GDP growth.

You are talking six months of an economic pullback. It doesn’t need to be dire. It needs to be negative GDP growth. That might not be a bad thing with how inflated we have been over these past few years. It seems like a real fake economy in my mind where there’s a lot of government spending and programs. I was leery of how this was all going to play out in the end. It looks like it’s plain old by that cycle of inflation up and the Fed is after increasing interest rates. You then see some economic pullback, and then it repeats itself. That cycle probably continues.

I don’t know what’s going to happen in the medium term other than there’s a chronically low vacancy, and it’s taken a while to get new supply onto the market. In the next years, providing there’s an outright depression, it’s too difficult to get a new product on the market and there’s so low vacancy rate. The market is still going to do quite well in the next years. They will then start trailing off as more inventory gets added because that’s what happens every time there’s a boom. It is that developers see an opportunity.

I decided I’m going to develop something, someone else decides, and then we all decide, and nobody is talking about coordinating with it. Then there’s all this new inventory that comes on the market. At some point, eCommerce sales are going to have to taper off because there’s only one pie. There’s one pie of economic spending that people spend all their money on, bricks and mortar retailers equal a big portion of that, and eCommerce equals a growing share of that, but it can only grow so much.

I’m sure it’s the same with you guys. I still love going to stores if you are looking to buy a suit jacket or a shoe. You want to go to a restaurant, which is in a retail space. There’s always going to be a need for physical brick-and-mortar retail space. eCommerce sales we’ll have to taper off. There’s no question about it. Whether that’s 5 or 20 years out or how much of that share can grow, there will be a leveling out at that. The piece of industrial construction won’t level out at the same amount. A will overbuild is what I’d say in a roundabout way.

We’ll have too much industrial inventory at some point in the future, and there won’t be enough demand to pay for it. It would be somewhat of a reversal. You’ll see increased vacancy rates and lower rental rates. That would be my guess for what would happen twenty years out, but I also don’t think that’s necessarily a bad thing for an investor that’s looking to have for twenty years because we are in such an inflated market right now.

Nobody can build their proforma off double-digit growth for multiple years. That’s nonsense to even think that you could do that. If you have steady growth, you are keeping pace with inflation, managing an asset responsibly, paying down debt, keeping your tenants happy, keeping that property, and maximizing it for the best case of what the market conditions are, real estate is still an unbeatable investment vehicle. It realizes that there’s going to be a lot of cyclical pressure on that and uncertainty for the next 10 to 20 years.

You dissected the asset class into three categories, and manufacturing was one of those. Let’s talk about the Achilles heel of the industrial space, particularly the manufacturing sector. With manufacturing jobs over the last years moving to China, it’s still shocking to see industrial. As that continues, inflation is one of those main reasons why jobs go overseas and manufacturing physically shutdown. Do you see any concerns there as far as the need for manufacturing facilities and that type of real estate?

REID Chad Griffiths | Industrial Real Estate

Industrial Real Estate: If there wasn’t this tendency to sign longer-term leases, there would be more inflation. Landlords would be asking for more rent, then the companies that have to pay that rent charge the customer more.


I’m going to throw something wild out there. This is too controversial, but I hope that this makes some sense. As a society, we should be making a case for de-globalization. I say that because there are some things that we certainly need to make in other countries like computer technology. We don’t have the actual resources to address that, but there are a lot of things that we could easily make in North America. Instead, we are having made in a country with substandard environmental regulations and almost a disregard for the environment with agenda for profit first. We are having something made in these countries that are literally shipped across the world in a cargo ship, which is not environmentally friendly from a fuel consumption standpoint.

It is then shipped from a pickup truck or a semi-truck to another warehouse and it’s stored in a warehouse. It’s shipped by train, then it gets shipped by another truck, and that whole supply chain, to get a product that we could easily make in North America does not seem very environmentally friendly to me. I’m a big capitalist. I love and chase profit. I celebrate anybody that figures out how to make profit.

All these companies right now, especially the big companies, have a heavy focus on ESG, the Environmental Social Governance, and they are all trying to find ways to be environmentally friendly and more sustainable. They have got to take a hard look at themselves on whether they are virtue signaling or accept that they can take less profit and have things made in North America and not have that same environmental burden that’s involved with shipping it all across the world.

I’m not privy to any of the conversations that these guys are having, but ESG is a dominant conversation with these big publicly traded companies. It seems to me that it’s empty talk if they are prioritizing profit over having some of these easy things to make like toilet paper, textiles, or anything that we use on a day-to-day basis that isn’t complicated to ship all the way across the world. It goes against this ESG mantra.

I’m agnostic on whether ESG is what they should be talking about or shouldn’t be. I’m not smart enough to have that conversation, but I know they are having it. If they are not prepared to acknowledge all the environmental risk that comes with that, then it’s a lot of empty virtue signaling. I would be a big proponent of de-globalization from the standpoint that certain things should be made in the same continent that it’s consumed. We could easily make things in Mexico if they still want access to less expensive labor. There’s going to be a new rail line. CP is merging with Kansas City Southern, and that’s going to create a single-line railroad that will connect Mexico, US, and Canada.

There’s no reason that we can’t manufacture things and reshore back to North America. Manufactured in States that have low labor or in Mexico, and then have that distributed without having to have the cargo ship and lower environmental standards that it seemed to be made in the first place in China. There’s an opportunity to reshore a lot of this stuff, which would be great for the North American economy and the environment.

You would have a long-term effect of helping our continent be that much more sustainable. It goes in line with a lot of these big corporations that are preaching right now with ESG. It’s a long-winded answer, but I agree that the trajectory has been taking manufacturing out of North America, and that’s feeding our desire to have cheaply made goods at a cheap price. We should be looking to have much more stuff made in the same place as we are consuming it.

REID Chad Griffiths | Industrial Real Estate

Unfortunately, the Canadian government and the US government are so inclined to make it even harder for manufacturing as far as the jobs, unions, and many other items there. They have so many restrictions and the taxes they pay. I was talking to a friend of mine who is a factory worker who operates a machine, and he was talking about how they are restricted to only being open five days a week and all these other restrictions that exist. It’s a cardboard manufacturing company that he works for. That’s not very pro-business. That goes against everything we believe in, and no wonder companies are going overseas, but it’s a great conversation.

Back to industrial because I’m very curious about this, let’s chat about the investors of an industrial asset class. Who buys industrial and why? Moreover, our syndicated investments in the industrial space are as common as multifamily because, in multifamily, we syndicate all of our investments.

To add to that question a bit, we are very familiar with the multifamily space. We know who’s buying these multifamily assets, and we are talking about institutional multifamily assets. It’s a large 100 to 200-plus unit multifamily asset purchased by REITs, large funds, large institutions, or pension funds. They are purchased by public traded companies but also by these syndications. These groups like us come together and buy an institutional asset, but they do it through syndication, which allows a general partner to bring on retail investors who own fractional ownership in this space. The question is, who is buying industrial, and are you seeing the syndication model being utilized within this space?

I’d say there’s a full spectrum of buyers. I am a good example of the far one end where the first property I bought was a small industrial condo which was $400,000. It was like the price of an average host in our market, and then you can go all the way up. There is a huge sale in the US in 2021, a single building leased by Amazon that sold for $247 million. It’s a full spectrum all the way down from a small guy like me. The Mormon church was behind the purchase of that big building, but you have a full spectrum. You can have big institutional players like real estate investment trusts and pension funds. These large buyers buy at scale all the way down to small local investors.

I own the syndicate side. That one is intriguing to me because I haven’t seen much on the industrial side. There’s one firm called Artisan Industrial, which is doing it, and they are having some success. I know that there are some other ones spread out in different markets, but it’s surprising that more people haven’t looked at that as an opportunity to pull some money, be the GP, find the deals, organize them, and bring some limited partners. Maybe there’s somebody out there reading that can spearhead that and get in on it because there are very few people doing that. It usually seems that it’s a couple of partners, a small investor like myself, or big companies that are doing it. I haven’t seen a whole lot on the syndication side.

As the capital grows, we are looking to get involved in the industrial space, so we’ll be chatting.

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I am sure you guys know multifamily very well. If you ever want to explore another one, industrial is a great one to have for a long-term outlook.

Let’s discuss the US. I did some research on you prior to getting ready for our show, and I noticed that you speak on a lot of US podcasts and platforms. You are very familiar with the US and Canada because you speak to both audiences. Let me discuss industrial asset class, and we will discuss the reports with Marcus & Millichap. We are talking about the US, but I’m assuming that the growth has been similar in Canada and the US. We know what’s the difference between multifamily in Canada rather than in the US. It’s mainly the rent-to-value ratios that cashflow is non-existent in Canada.

The cap rates are still compressed, so there is no yield for us to chase. Appreciation is there, but to have cashflow and appreciation is non-existent. It’s difficult to be able to pay your mortgage payment to pay the debt from the rents you collect, but in the US, it’s because of their rent evaluations. Mainly in these red states. The Sun Belt states, not California and New York. Talk to us about what you’ve noticed in your involvement in this space between Canada and the US when it comes to the industrial sector. Is there a particular area that you feel more bullish about? You have a dog in the race because you are located here in Canada, an investor, and a broker. You are in this industrial space in Canada, but you are also involved in the US. Tell us about your experience.

I liked the Sun Belt states. I closely follow Texas. That’s probably the market outside of my own that I follow the most. I would be very bullish on Texas as a whole right now. Even more specifically, I’m bullish on the market called Corpus Christi. It is incidentally a port city, which will be a major port connecting that rail acquisition that I mentioned.

Corpus Christi is going to be a big market to watch. I know someone in Dallas that I said, “Find a deal that I’m interested in.” That’s going to be a big market. They are going to have a tremendous amount of boom there and anywhere in those Sun Belt states. Florida is another interesting one to watch. If you are following that trend, industrial is going to grow in direct relation to consumer spending.

You can extend that population growth. It’s going to lead to consumer spending increases which are going to lead to more warehouse needs. I like Florida as well. There are a lot of markets that I like there. I also think that some of those that rust belt still have an opportunity in it if manufacturing does come back, not even withstanding my own thoughts on the carbon issue in the ESG. There’s some demand to reshore manufacturing so that we are not as dependent on bottlenecks in the supply chain. China right now is locked down. It’s very difficult to even get manufacturing capacity from them. If it gets on a cargo ship, there are backlogs at the port to get the ships there. It’s causing all these delays in the supply chain.

If some of these companies say, “We need to have more of a safety net on this,” and they bring back manufacturing, if, for no other reason than they want to avoid these delays, there’s a lot of infrastructure and workforce in those rust belt areas. I liked the US. There are some headwinds on the horizon with a potential recession on what that could do in the short-term, but I’d be very bullish on industrial and a number of markets in the US right now. The two that I’d stay away from, I wouldn’t invest in New York and California, but that’s just me. There are people out there that love those markets. California is a beautiful state, but I think that that’s been too overbuilt.

It’s a non-business-friendly government. There are too much taxes. There’s very room for even continuing to grow that rail expansion that they have mentioned a couple of times now. That has the potential to circumvent those markets by stuff coming into a port in Southern US or Mexico so that it can avoid a lot of that.

That market is so susceptible to a breakdown that if some big businesses leave, whether they are tired of paying taxes or the anti-business government, the governments will be forced to collect more taxes from the residents that are already there. It creates a vicious cycle for people there. Those are the two markets that I have zero interest in investing in. I’d hate to talk someone out of that because I’d love to live in LA and New York. I would be very skeptical about putting my own money in there right now.

I can’t wait to book a call with Chad and talk about syndicating some industrial projects together all over the place, Texas, Alberta, or everywhere. We appreciate all your knowledge. It feels great to have an expert guest and learn so much. Over the last couple of years, we have had close to 100 guests on, and it’s always an educational course for us, so I appreciate that.

I told everybody getting into this that Chad is going to give us the whole thing of industrial. You sure did. Thank you so much for just being so knowledgeable.

I love those questions. I could talk about that all day.

You’re super knowledgeable. We appreciate it, but I’m excited because we want to dive into your brain and start on the next segment of our show called the Ten Championship Rounds to Financial Freedom. Whatever comes top of mind, I’m going to start off with the first question. Here we go. Who was the most influential person in your life?

REID Chad Griffiths | Industrial Real Estate

Industrial Real Estate: Recession isn’t a bad thing. It’s two-quarters of negative GDP growth with maybe six months of an economic pullback. It’s not so bad with how inflated we’ve been over these past two years.


I would say I’ve had a lot of people that I looked up to. I don’t know if there’s one that jumps to the top. Other than I could easily point to a handful of different people that all shaped my life. My parents were great. They were always encouraging and supportive of whatever crazy idea that I had. I had an uncle that was an architect that helped me early on in my career and still is a good guide for me. The person who introduced me to the commercial real estate business when I was looking, a guy named Jimmy Hayward, was an amazing human being. I haven’t followed up with him in a while. I owe a lot of my success just to him. Instead of pointing to one, I think there’s a handful of people easily, and then I can even point to people that I rely on. My wife is a big source of power for me. Instead of one, I’d say that I’ve been fortunate to have multiple ones.

What is the number one book you’d recommend?

I just finished a good book called Behemoth, which was the history of the factory, written by a guy named Joshua Freeman. That one jumps to mind because it was very topical for me. I love the history of industrial real estate as well, and he’s a professor based out in New York. He came at it from a history professor standpoint.

A layman, from my standpoint, has been in the industrial real estate space, but it’s just fascinating. He dove into the labor movement, the industrial real estate revolution, and all the different complexities there. One of the things that reinforced me is that there’s nothing black and white in this world. Everything is very nuanced. There’s so much complexity with everything that you can take a hard position on one thing because there could be a polarizing answer on the other end, which is equally powerful. They have to stop and appreciate how many things are at play as opposed to taking a hard position and drawing a line in the sand.

If you had the opportunity to travel back in time, what advice would you give your younger self?

I would say to my younger self, spend more time at the beginning building quality relationships. Don’t spend money on anything that’s unnecessary. I was guilty of that when I was younger, buying things that I did not need. Whether it’s trying to impress someone or thinking I have a little bit of money, so I should spend it. I would have focused more on saving and trying to build quality relationships.

What’s the best investment you’ve ever made?

Becoming a partner in my firm is, without question, the best investment I’ve made. I became a partner in 2014. By doing that, I also started having some more influence on growing it and shaping the future for it. It’s been financially rewarding, but it’s also been rewarding to help develop people and other agents. We renovated our entire office. It’s exciting to think about the future of our office, and I wouldn’t be there if I wouldn’t invest in that in 2014.

What’s the worst investment you’ve ever made, and what lessons did you learn from it?

Pretty much every stock that I have an insight or track on if you have a bad investment. I’ve made so many bad investments in the stock market that I always think that I can see something that no one else sees, and then it turns into a flop. It’s reinforced to me that either by something that you know, which in my case is real estate, or buy an index fund where you don’t even have to think about it.

Unless you’re an expert in the stock market and prepared to devote an entire amount of your day to it, it’s hard to outperform the market. I had one bad real estate investment that I made, but I learned a mistake from it. It cost me a little bit of money, but it wasn’t something that catastrophically affected my life. Making the wrong real estate decision can also be costly. Not just stocks, but any investment that you make a mistake on can be costly.

There was a famous person, either Warren Buffett or someone else, who said, “There are no bad investments. They’re just bad investors.”

How much would you need in the bank to retire? What’s your number?

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I will never retire. There is no number that would make me retire because I genuinely enjoy what I do. I love being on podcasts. Any energy that I have, I hope it comes through because I do love this. If I could jump on a podcast every day, I would because I like talking to like-minded people that have the same type of enthusiasm.

I love doing stuff like this. I love working at the office and on deals. There’s no amount of money that I would retire on, but I would certainly slow down. I wouldn’t be working as hard as I am right now and spending the same time with the hours. At the same time, hours at the office. A great number that I’d like to get to would be somewhere in the $20 million to $25 million range that you can live very comfortably off those dividends, and then you’re leaving a good nest egg for future generations or donating at some point. $20 million to $25 million would be my life goal.

If you could have dinner with someone dead or alive, who would it be?

Warren Buffett. Speaking of that quote by Warren Buffett. I’ve watched the majority of things that he says that his AGMs. He’s such a fascinating human being. There’s nothing necessarily magical about him other than he’s a smart financial guy who was very patient. I love to bend his ear and hear some of the stories he has of dealing with these hotshot brokers who all think that they had the answers for it, and he just came out ahead all the time. For many years, he’s been a winner. He’d be the first one.

“I don’t invest in stocks. I invest in companies.” I love that quote.

Another one if I can share about Warren Buffett, “Never invest in a business that you don’t understand.”

That’s where syndication, unlimited partnerships, and all of this stuff that comes into play that we have to educate our investors on because it’s difficult to raise capital when the investor doesn’t fully understand what that is.

REID Chad Griffiths | Industrial Real Estate

If you weren’t doing what you’re doing now, what would you be doing now? For sure, it’s not a residential realtor.

If I was smart enough, I probably would have gone down the law school route, but I didn’t have the work ethic, and I don’t think I would have passed the LSAT or the bar exam, so I never did go down that route. I’d like to think that if I could buckle down for a while and work hard, I would love to have had that Law degree background.

I’ve got a tremendous amount of respect for lawyers, even though we butt heads with them quite often. I’ve got a deep appreciation for their knowledge of an area, which is very specialized. That would be what I would do if I went the education route. If I could choose to do anything, I’d want to be a venture capitalist. I’d love to hear and invest in startup companies or companies in need of seed capital or are doing their Series A. I’d love to be investing in that. At some point, I will try to add that to my investment portfolio.

My favorite question. Book smarts or street smarts?

I would say both. I know that’s a cop-out of an answer, but I believe that you do need both in balanced proportion. Someone can have street smarts, but if they don’t understand the theory or the academics behind it, it’s only going to take them so far. Book smarts don’t necessarily even need to be formal education. Book smarts can be reading a good book written by a successful real estate investor who’s already done this.

I’d classify that in your book smarts, and that takes extra effort versus going out and doing it. I would be very reticent to invest myself if someone wasn’t combining both of them. I don’t want someone that is fresh out of having a PhD in business. I don’t think that’s going to serve anyone well. I don’t necessarily want someone that’s a gunslinger, going out, and trying to learn trial by fire. There has to be some balance. I’d want both.

REID Chad Griffiths | Industrial Real Estate

Industrial Real Estate: There should be a case for de-globalization. There are still a lot of things that could be made in North America, instead of having them made in a country with substandard environmental regulations.


If you got $1 million cash, it’s liquid, you can make one investment, and you got to do it now, but the markets are closed in the next couple of days or 24 hours, and we got to deploy all of that, what would you do?

My natural inclination was to park it in real estate, but also I’m a big believer that real estate due diligence takes time. I wouldn’t want to make a decision with that time deadline on it. I always recommend to people that you spend the time to do your due diligence. Instead of saying real estate, which if you were said three months, I would have said I find a great warehouse deal either in my market or in a market like Corpus Christi. That’s where I would have saved in 3 months with 1 day, and I’d park it in cash. Maybe park it in an area where I can earn 1% on it and be able to access it at moment’s notice, or I take that $1 million that’s invested in that term deposit. I then turn it into a warehouse deal in three months.

You got to love it because he’s transparent, honest, and risk averse. We appreciate you being here. The last question is, what is the best way people can reach you?

I always try to reply to my email every day. It’s, or check out my YouTube channel. I talk about warehouse space nonstop. I like to pride myself that I never mention what city I live in, and I don’t even mention what company I work in. I just try to provide as much information as I can.

You’ve provided so much value to myself. I know to August and our readers. Thank you so much for being here. We appreciate you.

You guys are great hosts. Thank you so much for the thoughtful questions. I loved it. As I said, I love doing podcasts and you guys are awesome. As professional as you are, it makes my job even more fun.

You’re the best guest. Thank you so much.

Thank you very much.