Industrial Real Estate Investment Strategy: How Institutional Investors Decide When to Buy, Build or Sell

By Sam Laird

How long an owner holds a warehouse often comes down to one thing: the type of capital behind it. In institutional industrial real estate, a disposition is often the final, planned step of a strategy set in motion the day a building was acquired. The same forces that determine when to sell—capital structure, return targets and leasing demand, among other factors—also shape which properties get bought or developed in the first place. Andrew Goodman is senior managing director of Investments at Link Logistics, where he oversees acquisition and disposition activity across the company's portfolio of warehouses and logistics properties. In this Q&A, Andrew explains how disposition strategy actually works, what's driving industrial real estate values in 2026, and where he sees the strongest opportunities to buy, develop or sell industrial real estate right now.

What is a disposition strategy, and why is selling real estate sometimes part of the plan from the start?

Andrew: A disposition strategy is the plan for monetizing an asset in order to return capital to investors. It's largely dictated by the type of capital behind the deal and the goals of the underlying investors. When investors put money into industrial real estate, they typically have return targets they're working to achieve, and the type of investment vehicle involved shapes whether, and when, a sale is part of that plan.

A private, closed-ended fund is a good example. Investors in that structure expect the fund to acquire assets and execute a business plan—which might mean leasing up vacant space or bringing under-market leases up to current rates—and then monetize the investment and return capital, ideally with a profit that achieves the targeted total return (which is often called the IRR, or internal rate of return). The final step is the disposition.

Not every investment vehicle works this way. Open-ended vehicles, public vehicles and some family offices—all typically long-term holders of assets (think 10+ years)—often don't have a disposition strategy at all. This is because there's no fixed end date driving a sale, which usually means these investors are primarily focused on cash flow rather than total return.

Link Logistics operates both types of vehicles. Its closed-ended funds are structured to eventually return capital to investors, though there's no rush to do so. Its open-ended vehicles have no termination date and can be held indefinitely, so disposition is less central to that side of the business.

How do institutional investors decide when it's time to sell a piece of real estate?

Andrew: Institutional investors typically sell an asset once they feel the business plan has been executed and the time is right to generate a profit, most commonly somewhere between three and seven years after acquisition. There's no single formula that dictates the exact timing.

In some cases, a sale could happen very early on within the hold period, if an opportunity arises to exit quickly at a strong return. More often, that three-to-seven-year window reflects how long it takes for the value of an asset to appreciate enough to generate a return that meets or exceeds what investors expect.

What factors drive industrial real estate values today?

Andrew: There are numerous factors that drive industrial real estate values, and different investors may focus on different aspects. But generally speaking, three main factors that investors focus on are: leasing rates and demand, growth projections and each investor's individual cost of capital. 

Leasing is arguably the most significant of the three. This involves in-place rents, current market rents, and what market rents can potentially grow to over the projected hold period as leases roll to market. Interestingly, buyers will often have a very different viewpoint on this.  

In addition to current market rents, how an investor projects growth plays a big factor in valuation. When underwriting an asset, investors need to project how all of their assumptions will perform over their hold period. Will rents grow every year? If so, by how much? Will expenses grow? How much capital improvement will the asset need? What will the exit cap rate be (in other words, the cap rate that the next buyer will pay when the asset is sold)? All of these assumptions, plus more, play a huge role in valuation.

Cost of capital is the third factor, and it's more specific to each investor. The return threshold a given fund or buyer needs to hit will determine how much that buyer is willing to pay for a building.  

All three of these factors, plus others, can and will have different outcomes for each potential investor—which means the same asset can be valued very differently depending on who's underwriting it.

What makes an industrial real estate property attractive to buyers in today's market?

Andrew: Leasing is everything. An asset's attractiveness comes down to tenant demand and leasing velocity in its specific location, meaning how quickly a vacant space could be filled, and how many tenants are actively looking in that market.

Infill industrial properties, meaning properties close to major population centers, tend to be more desirable: They typically have stronger, more consistent tenant demand and leasing velocity than more remote locations, where the pool of tenants looking for warehouse space is far smaller. Supply also factors in. In markets where tenants have many competing options for the same size requirement, that added competition puts downward pressure on rental rates, which affects both leasing outcomes and overall desirability. Therefore, it really comes down to each individual investor's investment strategy. Infill locations typically have stronger leasing demand but that also means more investors are seeking these assets, which creates strong competition among buyers. Conversely, an investor may face less competition chasing deals in more remote locations, although those assets may carry less leasing demand. So there definitely is an art to it. 

How do institutional owners decide whether to buy an existing industrial building or develop a new one?

Andrew: The decision to buy an existing building or develop a new property comes down to a trade-off between risk and profit potential. Development projects generally offer more upside, but they also generally carry more risk than acquiring an existing, cash-flowing asset. Some companies focus exclusively on one strategy or the other, and some, including Link Logistics, do both. Investors have to weigh how much risk they're willing to take on for a higher potential return, versus accepting a lower but more certain return with less risk. Every firm approaches that trade-off differently based on its own risk tolerance and capital strategy.

Where are the most compelling industrial investment opportunities right now?

Andrew: The most compelling investment opportunities can come in a variety of shapes and sizes, depending on where the investor sees current value and potential growth. Link Logistics isn't focused on any one asset type within logistics. We invest across small bay, mid bay and large bay bulk assets, spanning most of the subsectors within industrial and logistics real estate.

Geographically, our focus typically stays on infill locations within primary and secondary markets across the country, wherever population growth and leasing fundamentals are strongest, and there are high barriers to adding new supply. That currently points to the Sunbelt, as one example, but market performance is cyclical and the specific markets in favor can—and will—shift over time. The constant is a focus on locations where there's strong visibility into leasing velocity in supply-constrained markets.

Learn more about Link Logistics' portfolio of industrial and logistics properties in North America.