Industrial Warehouse and Logistics Real Estate ModelFree Financial Model Download
Forecast warehouse and logistics facility returns by modeling tenant lease escalations, operating expense reimbursement, and facility utilization. Track individual tenant leases with staggered expirations, vacancy assumptions, and cap rate or DCF valuation.
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About this model
This project finance model values an industrial warehouse acquisition (150k sqm, multi-tenant NNN) by forecasting net rent escalation, CAM recovery, operating expense pass-through, and calculating unlevered and levered IRR over a 7-year hold. Answer: do rent escalations and tenant rollover mark-to-market growth (15–25%) support 8–11% unlevered IRR and 12–16% levered IRR at 65% LTV?
The workbook projects warehouse base rent (£8.50/sqf, 93% occupancy Year 1, 5% vacancy Years 2–7) and office rent (£18/sqf, 90% occupancy, modified gross structure). Both escalate 3% annually per lease. CAM recovery (92% of operating expenses) offsets landlord opex, leaving 8% non-recoverable + 4% management fee deducted before NOI. Property taxes (£1.20/sqf), insurance (£0.30/sqf), and maintenance (£0.50/sqf) are mostly recovered. Tenant improvement reserves (£0.75/sqf/year) and leasing commissions (3% on rollover) are funded but non-recoverable. Senior debt £9.6M (65% LTV on £14.8M purchase) at 6.5%, 25-year amortisation with 2-year IO period. Exit: forward NOI (Year 8) / 6.5% cap rate.
Used by logistics and real estate sponsors, institutional investors deploying capital in e-commerce-driven warehouse space, and lenders underwriting industrial CRE mortgages. The model captures Prologis economics: 94–97% institutional occupancy, 70–75% NOI margin (NNN pass-through), negative working capital (collect rent before paying suppliers). Rent growth on rollover (15–25%) is the primary return lever in secondary markets; entry-exit cap rate differential (25–50 bps expansion) is the key risk. Benchmarks: Prologis trades 5.0–5.75% entry cap in primary markets, 5.75–6.5% in secondary; hold periods typically 5–7 years.
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- Brand-ready
- Institutional grade
- Fully auditable
What's included
- Tenant mix by industry (3PL, e-commerce fulfillment, manufacturing, cold storage)
- Net lease rates and escalation schedules (typically 3% annual)
- Operating expense reimbursement and NNN triple-net lease structures
- Vacancy and leasing assumptions including turnaround time and commission
- Cap rate valuation and leveraged cash flow analysis
Multi-tenant portfolio management
Track individual tenant leases with staggered expirations, escalations, and renewal probabilities to forecast consolidated revenue and occupancy trends.
Operating expense recovery modeling
Separate recoverable NNN costs from non-recoverable costs, model escalations, and forecast free cash flow to equity holders.
Development and value-add scenarios
Model land acquisition, construction, pre-leasing, and stabilization to compare development returns against stabilized acquisition returns.
Frequently asked
What cap rates are typical for industrial warehouse properties?+
Modern Class A industrial cap rates range from 3.5-5.5% depending on location, tenant quality, and lease terms. Class B/C assets trade at 5.5-7.5%, with prime logistics markets commanding lower cap rates.
How should I model operating expense recovery?+
NNN leases pass through property taxes, insurance, and CAM to tenants as a base year plus escalation. Model the base year, an inflation escalator (typically CPI or 3%), and a cap on recoverable expenses.
What rent escalation should I assume on renewal?+
Market rent growth for industrial is typically 2-4% annually in stable markets and higher in tight markets. Renewal rents are often 5-10% above expiring rent if market-driven.
Who uses industrial warehouse financial models?+
Real estate investors, logistics REITs, warehouse owners, and industrial developers use these models for portfolio acquisition, tenant renewal strategy, and capital structure analysis.
Can this model handle both net and gross lease structures?+
Yes. The model separates NNN and gross lease tenants, applies different expense recovery mechanics to each, and consolidates to a single NOI and cap rate valuation.
Alex Tapio
Founder of Finamodel • Professional Financial Modeller • Ex-Deloitte
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