What does “owner-user” commercial real estate mean? Are you considering taking that next step with your business or portfolio and investing in commercial real estate?  Keep reading to learn why it may be a smart choice for you as a small business owner. 

Understanding Owner-User Commercial Real Estate

A commercial real estate property that the owner intends to occupy and operate their business from is commonly called an owner-user property. These properties can be warehouses, office buildings, retail storefronts, and more. Unlike investment properties that are solely for rental income purposes, the distinguishing factor is that the property is for the owner’s operating use, with any additional rental income serving as a bonus.

Let’s say you’re a small business owner who runs a bakery. You’ve been leasing a commercial space for a few years, but now you’re ready to invest in a property that you can operate your business from. You come across a commercial real estate property for sale that was previously a retail storefront. The property is in a great location with high foot traffic, ample parking, and a reasonable asking price. After doing your due diligence and consulting with a commercial investment advisor, you decide to purchase the property and convert it into your bakery. Congratulations, you are now a small business owner with an owner-user commercial real estate investment. Why did you make the decision to purchase instead of lease?

Benefits of Owner- User Property for Small Business

Cost Savings

One of the main advantages of purchasing and investing in a commercial real estate property as an owner-user is the potential for cost savings. Leasing a commercial space means you are subject to rent increases and the landlord’s control over the property. In contrast, owning the property allows you to control your costs, avoid rent hikes, and enjoy long-term stability. Additionally, when you purchase your property, you can build equity over time instead of paying rent to a landlord.

Commercial owners can also benefit financially by deducting the interest on a commercial real estate loan or writing off other building-related expenses and investment on their taxes.

Customization

Owning your own commercial real estate that you operate out of also means you have the ability to customize the space to suit your business’s unique needs. When you lease a commercial space, you may be limited in your ability to change the property. On the other hand, owning the property gives you greater control over the space’s design, and modifications. As an owner you also increase equity on any improvements you make to the property. 

Stable Location

When leasing, landlords can decide to sell or increase rent causing potential disruptions in your business, budget or even potentially forcing you to relocate. When you operate as an owner-user, you ensure stability and maintain control of your business and location, allowing you to focus on variables outside of your control that will help you grow.

Financing Opportunities

Finally, being an owner-user will often help secure more favorable financing opportunities than investment properties. Since the property is for the owner’s use, lenders often view the tenancy as more secure and therefore a more stable investment and are able to offer better financing terms. Additionally, operators of owner-user property may be eligible for government-sponsored programs that can provide favorable financing terms.

 

If you’re interested in investing in an owner-user property for your small business, reach out to Sands Investment Group, a leading real estate brokerage firm specializing in commercial real estate investments. Our experienced agents can help you find the right owner-user property that fits your unique needs and can provide long-term stability and financial benefits. Contact SIG today to learn how we can help you make the right investment decision for your business.

 

The dollar store industry has experienced growth over the last five years, as operators adopt new strategies to sustain growth. Total dollar store industry revenue is forecast to increase an annualized 1.6% over the next five years, reaching $109.7 billion. The industry retails general merchandise at a discounted price. The discounted merchandise sold ranges from apparel, food, furniture and home goods. 

Four Major Players In The Dollar Store 

The dollar store industry is characterized by a high level of concentration, with the three largest operators combined anticipated to account for nearly 70.0% of industry revenue in 2022. While the industry is concentrated at the top, the remaining share of the market is mainly composed of small- to medium-sized operators catering to localized demand.

1. Dollar General comprises 34.6% of dollar store market share and annual growth has increased 9.6% in the last five years.
2. Dollar Tree comprises 26.3% of total industry revenue and an increased of 4.1% in industry revenue in the last five years.
3. Big Lots accounts for just 6.3% of total industry revenue and saw a 4.1% increase in industry revenue in the last five years.
4. Five Below only accounts for .3% of market revenue but has seen a 10.5% increase in industry revenue in the last five years

Factors to Consider When Investing in Dollar Stores

According to recent reports, the dollar store sector is experiencing significant growth thanks to its ability to provide affordable products during times of economic uncertainty. By understanding the market trends, you can make informed decisions on where to invest your money. Overall, the combination of these trends has driven growth.

• Population: Population growth is an important component of industry growth. As the population increases, so does the number of potential industry customers. The population is expected to increase in 2022, representing a potential opportunity for the industry.
• Location: Location is a key factor to consider when determining the potential for success. It’s important to choose a location that is in a high-traffic area and caters to the demographic that the store serves. For example, if the store is located in a low-income neighborhood, it should offer affordable products.
• Demographics: The most substantial platform for change within the industry has been its customer base. While the industry has historically targeted low-income earners, this consumer pool has expanded in recent years to include middle-class and even some high-income earners.
• Market Saturation and Competition: Further, expansion in industry product portfolios to include different categories, such as healthcare products, has enabled larger operators to compete with other discount retailers.

Products and Services of Dollar Stores

This segment’s share of revenue has expanded consistently over the last five years as dollar stores have added grocery products to their inventory. Recently operators started stocking national brands of food items as well as some private labels. To increase revenue with existing customers and to attract more foot traffic, industry operators continue to expand their product offerings. It’s interesting to take note of the current products and services to determine where the largest potential for growth may be.

Navigating the market for dollar stores can be complex, and working with a real estate professional can make all the difference. An experienced professional can help you understand whether a nnn lease is the right decision for you, and provide valuable insight into the market. With the right guidance you can confidently invest in the dollar store market and achieve your financial goals.

At Sands Investment Group, we specialize in helping investors find the right investment opportunities in the retail sector, including dollar store NNN investments. Contact us today to learn more about our services and how we can help you achieve your financial goals.

We’re currently seeing a high demand for childcare centers.  The COVID-19 pandemic caused many childcare facilities to close their doors leaving a shortage of childcare centers when the country went back to work. The market share concentration is low and the industry is very fragmented. Only 5.5% of the 120,000+ facilities are made up by the early education “major players”. Connected Real Estate Magazine notes that “childcare is becoming the new anchor tenant for shopping centers and retail properties.” This would mean that this asset class now brings enough traffic to shopping centers to draw other tenants. This is becoming increasingly attractive to real estate owners and investors.

Key Drivers of the Childcare Center Industry Growth

The childcare industry in the United States has seen steady growth over the last 5 years, with an average increase of 4% annually. The current market size is $61B, and expected to reach $100B by 2026. This growth is projected to continue in the coming years due to:

1. The growth in dual-parent working households
2. An expansion in federal subsidies
3. An increase in disposable income
4. An anticipated increase in children ages 9 and under

A Low-Risk Investment Opportunity

If you’re looking for a low-risk investment opportunity, investing in childcare centers is a great place to look. Many factors contribute to the success of investment properties but childcare centers check all of the boxes.

Low Tenant Turnover

They have a lower tenant turnover rate compared to other types of commercial real estate. Once parents have established a relationship with the facility and its staff, they are less likely to move their children from one daycare to another.

Long-term Leases

They have long-term leases, which means a more stable and predictable income as the property owner.

Recession Proof

They are generally recession proof. Even during economic downturns, parents still need to work and continue to require childcare services for their children.

Stable Income

They can generate income through government subsidies. Many parents receive financial assistance from the government to pay for childcare services. This ensures that daycare facilities can enjoy a stable source of income even during tough economic times.

Plus, the tenants are responsible for maintaining the property, which minimizes your maintenance costs.

Ready to Invest in Childcare Centers?

What are we saying? Childcare centers are a growing industry market with high demand and low risk. It could be the perfect investment opportunity for those looking to diversify their portfolio and secure a stable source of income.

If you’re interested in investing in childcare centers Sands Investment Group (SIG) has a team of Early Education experts ready to find the best investment for your portfolio. Contact this crew today to get started.

Let’s hear it for the girls! In honor of Women’s History Month, our team did some digging into stats and sentiments to get a good temperature on the progress of women in commercial real estate. We spoke with Marianne Christian of Sands Investment Group who says,  “To succeed as a woman in commercial real estate you have to be exceptional. When you are a woman in a male-dominated field, you stand out – use that to your advantage“.  

Barriers that Still Exist

Despite the progress made, significant barriers still prevent women from achieving full representation in the commercial real estate industry. These barriers include:

• Gender Bias: It’s true, many women still face gender bias, which can make it difficult for them to advance in the industry. This bias can manifest in many ways, including unequal pay, lack of opportunities for advancement, and being overlooked for promotions.
• Lack of Diversity: The CRE industry still lacks diversity, with many top positions held by white men. This lack of diversity can create an environment that is unwelcoming to women and other underrepresented groups.
• Work-Life Balance: The CRE industry is known for its long hours and high-stress environment, which can make it difficult for women with family responsibilities to succeed in the industry.

Progress for Women in Commercial Real Estate

The past decade has seen the most change in the representation of women in commercial real estate. According to a study by CREW (Commercial Real Estate Women) Network, women now make up 43% of the industry’s workforce, a significant increase from the 36% recorded in 2010.

According to a recent article published in CIRE Magazine, women CCIMs have grown from just 100 in 1984 to over 550. Furthermore, women have made significant gains in leadership roles, with women now representing 33% of senior executive positions in the industry.

What Women Contribute to Commercial Real Estate

We believe we are only seeing the “tip of the iceberg” when it comes to the contributions women will make in the industry. Despite the barriers we face, we can already note many significant contributions: 

• Creativity and Innovation: Women bring a unique perspective to the industry, which can lead to new and innovative approaches to problem-solving. Women bring value to projects with special attention to documentation and personal presentation. We’re not saying the industry is boring, but women will certainly bring a new and fresh perspective.
• Relationship Building: Women are known for their ability to build strong relationships. Being good listeners that are observant and able to pivot conversations when necessary are examples of high emotional intelligence, and qualities that do and will continue to have a big impact on the CRE environment.
• Community Involvement: Many women in the industry are actively involved in their communities. According to a study by the Women’s Philanthropy Institute, women are more likely to volunteer their time and contribute more volunteer hours per year than men. Women’s involvement in volunteering activities is crucial for community development as it helps to build trust and establish long-term relationships and networks while providing essential services to the community.

Factors Making an Impact on Women in Commercial Real Estate

There are many factors that contribute to the growth of women in commercial real estate. We believe these factors are making the biggest impact:

• Mentorship Programs: Mentorship organizations like the CREW Network exist for women in the commercial real estate industry to provide guidance, support, and valuable insights into the industry. Networking helps women to establish relationships and build connections that can lead to career opportunities, partnerships, and referrals. 
• Industry-Wide Recognition: The CRE industry has also started to recognize the value of diversity and inclusivity in driving innovation and growth. GlobeSt’s annual “Women of Influence ” conference celebrates women who drive the CRE industry forward. They discuss critical issues in CRE, what it means to be a woman in business today, and what the industry can do to position itself for a more inclusive future.
• Entrepreneurial Opportunities: Women are increasingly starting their own CRE firms, which provides them with more control over their careers and allows them to create more inclusive and diverse work environments (lowering the ladder down for more women to climb).
• Changing Industry Landscape: The industry is undergoing significant changes, including technological advancements, changes in consumer behavior, and a greater focus on sustainability. These changes are creating new opportunities for women to bring their unique perspectives and expertise to the industry.

We Invite You to Join Us

Sands Investment Group’s core values, Honesty, Integrity, Gratitude, Giving & Growth are lateral to qualities that contribute to women succeeding in CRE. We are dedicated to supporting women in the commercial real estate industry and to equity in the workplace. We strive to create a work environment that is inclusive, diverse, and welcoming to all. We are committed to promoting fairness and equality in all aspects of our business, from hiring and promotion to compensation and benefits. By prioritizing equity in the workplace, we believe we can attract and retain the best talent, build stronger teams, and achieve greater success. 

Join us in our mission to create a workplace where everyone feels valued and respected. Tyler Herzog, our top female recruiting associate would love an opportunity to answer any questions you may have about SIG or a career in CRE.

Sands Investment Group specializes in the buying and selling of investment properties for private institutions and investors nationwide. What separates SIG from our competition is sub-sector product type specialization, a shared company database, a unified team approach, our core values, and a focus on giving back. Our company of distinguished experts brings a proven track record to the table with over 3,900+ transactions in 48 states and $7.6 Billion in commercial real estate transactions—and counting.