Invest in the industrial real estate boom

Invest in the industrial real estate boom

Since the pandemic shifted the working and shopping environments for Americans, commercial real estate has struggled, with negative three-year returns. The one bright spot has been industrial real estate, which is the only sector with a positive three-year return, and by far the strongest 5 and 10-year returns as well. As a result, both retail investors and institutional investors have been increasing their allocations to the category.

Why Invest in Industrial Real Estate?

Industrial real estate is a broad category that encompasses warehouses, data centers, distribution centers, storage facilities, factories, truck terminals, and more. There are a number of reasons why it has shown resilience during the overall downturn for commercial real estate and why it has outperformed the other sectors. The rise of e-commerce, which has more than tripled its market share in the past decade, has significantly boosted demand for industrial properties and led to an increase in leasing activity. Other factors, such as the reshoring of manufacturing and the exponential growth of data center demand due to AI are driving investor interest in the asset class.

Industrial real estate sales reached $33.8 billion in the first half of 2025, a 15% increase year-over-year, and while vacancy rates have risen in the past couple of years, that was due to a surge in construction with supply outpacing demand. Now, vacancy rates are stabilizing, and in-progress construction and completions have declined, so supply is likely to get tighter, which should reduce the vacancy rate going forward. A recent survey conducted by CRE Daily found that commercial real estate investors have the highest confidence in industrial among any CRE sector.

Like other real estate classes, industrial gives investors both potential cash flow and appreciation, but there are other unique characteristics that make it an appealing investment. Most industrial leases are longer-term than other real estate leases, with built-in rent increases, leading to greater stability and predictability, making it demonstrably more resilient during downturns. Net lease structures are common in industrial, bringing operators additional downside protection and cost control. There are also a number of local and federal government incentives that can help developers, as there is political will to continue onshoring manufacturing and build technological infrastructure.

For investors, one roadblock to investing in industrial real estate is a lack of access. Individuals typically do not have the capital or access to funding to buy whole assets, which leaves funds or syndications as the only options. Many of those are also difficult to access and require high minimum investments, while many of the platforms and funds available to the public lack institutional-grade deals.

Who is Lightstone DIRECT?

Lightstone DIRECT is a new offering from Lightstone, one of the largest privately held real estate investment firms in the U.S. Founded in 1986, Lightstone’s portfolio has grown to $12 billion of assets consisting of roughly 25,000 multifamily units, 15+ million square feet of commercial and industrial properties, and more than 5,000 hotel rooms across the country. Prominent holdings include the 66-story Manhattan luxury condominium building 130 William Street, the 430-unit Brooklyn luxury apartment building 365 Bond Street, and award-winning Moxy hotels in New York, Miami, and Los Angeles.

Lightstone was founded by David Lichtenstein, who built the company from a single-family investment in 1986 into a multifaceted, institutional real estate owner/operator that has played in all the major CRE asset classes. In 2012, David partnered with Mitchell Hochberg, who has decades of experience developing residential, commercial, and hospitality properties. After four decades, David remains CEO of Lightstone and Mitchell is the current President. Both David and Mitch were recognized on Commercial Observer’s 2025 Power 100, and Lightstone has been named one Crain’s Best Places to Work in NYC the past three years.

Now, for the first time ever, through its Lightstone DIRECT arm, the company is inviting the public to co-invest in single-asset multifamily and industrial assets – the very same that Lightstone pursues with its own capital. Lightstone DIRECT will offer individual investors direct access to institutional-grade real estate investments across asset classes. These are high-quality projects that have historically eluded individual investors, with the first opportunity coming in the booming industrial sector.

Why invest with Lightstone DIRECT?

Lightstone DIRECT gives investors the unique opportunity to invest alongside an operator with decades of experience and a successful track record of performance. Over its dozens of realized investments across 27 states, Lightstone has achieved a 27.6% IRR and a 2.54x multiple on invested capital (MOIC) on deals exited since 2004. This performance has come through multiple market cycles across asset classes, showing its expertise in a number of situations.

Every Lightstone DIRECT project is a Lightstone project that has been vetted by the same investment committee and has met the same requirements. Lightstone itself will invest a minimum 20% of the equity into each Lightstone DIRECT deal, and oftentimes will invest a considerable amount more. By opening up these deals to the public, it enables Lightstone to source more capital and invest in more projects, expanding their portfolio further.

Up to now, investors wanting access to these types of investment opportunities have had to choose between crowdfunding and direct-to-sponsor platforms or semi-liquid private REITs. Beyond the relative lack of experience and track record of many of these platforms, they are generally reliant on investor money to close deals. Lightstone DIRECT has the benefit of a strong balance sheet and it bears repeating that their deals would be closed with or without outside investment. While REITs can offer investors access to a large portfolio of assets, they don’t offer investors the ability to pick and choose their projects, and are often pressured to deploy capital quickly and overpay for assets. Lightstone can afford to be selective and has the resources and capabilities to move quickly when opportunities arise.

With Lightstone DIRECT, there is no middleman, and all incentives are aligned. Investors get the benefit of decades-old institutional infrastructure to manage the projects. Every property will be managed by Lightstone’s experienced in-house asset management teams, which already successfully manage around 25,000 multifamily units and 15 million square feet of industrial space nationwide. Investors will also be supported by in-house accounting and operational teams. The fee structure is simple and transparent, with no hidden charges, ensuring that Lightstone wins when you win.

Co-invest with an established institutional player

Industrial has been one of the hottest sectors in real estate, and it is rare for individuals to get the ability to invest in high-quality offerings. With Lightstone DIRECT, you can co-invest into highly-vetted deals with an established institutional player in the space to generate passive income and equity appreciation.