For investors at virtually all levels, it can be a smart move to invest in the commercial real estate market. Not only can commercial property investments provide you with a significant return, but they can also give you a great way to diversify your financial portfolio.
However, before you invest in commercial real estate, it’s essential that you first understand as much as possible about the kinds of investments you can make. There are many different types of commercial properties available, as well as different commercial rent structures. That being said, here are a few of the most popular commercial property investments to compare once you’ve decided to invest in the commercial real estate market.
- Retail space. Retail spaces are one of the most popular types of commercial properties among investors. Tenants who rent these properties may be more likely to sign a triple net lease, which can make it easier for you to project future profits. Typical triple net leases may last five to 20 years, with reliable commercial rent increases every two or three years. Even if the tenant’s taxes and property expenses start going up, your return on investment will only improve with each rent increase. However, it is especially important to look into the location of the property if you choose to invest in a retail space. A retail space without any reliable foot traffic could soon mean an empty property without tenants.
- Office buildings. Office buildings are similar to retail spaces in the sense that you may find yourself with tenants willing to sign long-term leases. These spaces are usually in high demand, so you can find tenants whether you’re in a large city, a sprawling suburb, or small town.
- Industrial properties. Unlike retail and office spaces, industrial properties can be a little more challenging for investors to determine demand. Demand is something you want to keep an eye out for because it’s what determines whether or not you’ll have a steady stream of potential tenants. As such, keep an eye on the broader market if you intend to invest in these types of properties.
- Storage units. Storage units aren’t often the first type of commercial property investors think about, and they certainly aren’t as trendy among commercial real estate investors as student housing, luxury apartments, and multifamily housing. Even so, these spaces do have a lot of potential when it comes to finding reliable tenants. Storage is needed in both small towns and large cities alike, which means the overall market and commercial rent are likely to remain steady.
Approximately $74.24 billion worth of commercial buildings were constructed in the U.S. in 2016 alone, and with rising consumer confidence, the future outlook is positive. Because commercial real estate properties are so in demand, and because they can provide great returns, it’s important to know as much as you can about the different types of investments you can make. For more information on investing in commercial property, commercial lease types, and triple net properties, contact Sands Investment Group today.