Warehouse & industrial cost segregation

Distribution centers, light industrial, and flex space — don't depreciate the dock as a wall.

Industrial buildings look simple from the outside, but a typical warehouse hides dock equipment, dedicated process power, racking, fencing, paving, and yard improvements that all qualify for 5- or 15-year recovery. TDA's engineering-based study captures the line items most book-method approaches miss entirely.

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Warehouse, industrial & logistics

Specialty electrical, racking, and dock equipment reclassify aggressively.

Warehouse-specific assets — loading dock equipment, dedicated 480V electrical for material handling, racking systems integral to building, specialty HVAC for temperature-controlled storage — are textbook 5- and 7-year personal property under IRS Asset Classes 57.0 and 32.2.

On industrial properties, we routinely identify 25–40% of basis as accelerated-depreciation eligible — especially for cold storage, distribution centers, and manufacturing facilities.

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Asset Class 57.0 / 32.2 specialtyEquipment-heavy properties unlock the largest 5- and 7-year buckets.

What we reclassify in industrial

5-year personal property

Dedicated process electrical (drops to specific equipment)
Compressed air, process water, dust collection
Battery rooms, charging stations
Pallet racking systems
Specialty lighting in production areas
Dock levelers, dock seals, dock shelters

15-year land improvements

Heavy paving, truck courts, trailer parking
Yard lighting and security fencing
Drainage, retention, and detention basins
Site signage and gate systems

Reclassification benchmark

Standard warehouses reclassify 15–25%. Specialty industrial — cold storage, food processing, light manufacturing — can reach 30%+ due to dedicated process systems.

Industrial pool	Typical %
39-year real property	75–85%
15-year land improvements	10–15%
5-year personal property	5–10%

Sample — $8M distribution center

~$1.4M

First-year deduction with 20% reclassification on $7M depreciable basis under 100% bonus.

FAQ

Industrial cost segregation, answered

Is cost segregation worth it on a warehouse?

Yes — though warehouses typically reclassify a smaller percentage (15–25%) than retail or hotels. The dollar impact is still substantial because industrial properties tend to have very large basis and significant site work.

What about manufacturing equipment installed in the building?

Manufacturing equipment is typically already classified as 5- or 7-year personal property. The cost segregation focuses on the building components — but dedicated process electrical, dust collection, compressed air, and process plumbing supporting that equipment are often missed and qualify for shorter recovery.

What about cold-storage facilities?

Cold storage is among the highest-reclassification industrial property. Refrigeration systems, insulated panels (when removable), and dedicated process electrical can push the reclassification past 30%.

Distribution centers, light industrial, and flex space — don't depreciate the dock as a wall.

Specialty electrical, racking, and dock equipment reclassify aggressively.

What we reclassify in industrial

5-year personal property

15-year land improvements

Reclassification benchmark

Industrial cost segregation, answered

Free feasibility on your warehouse