Opportunities abound for self-storage, making it an asset class that shouldn’t be overlooked. This holds especially true for investors seeking to compound wealth and grow the net worth of their portfolio because of the flexibility and adaptability of the asset. Unlike other, more fixed-use type asset classes, self-storage can take on many different shapes, meaning the property can be quickly and easily adjusted depending on location, local needs, and changing market conditions.   Read more →

At SIG, we’ve always done things differently and put our values at the heart of everything we do. And, coming out of a tough 2023 and still achieving above-average growth, we know this difference is what creates success for us. Our core values – honesty, integrity, gratitude, giving back, and growth – have allowed us to grow a measurably excellent CRE brokerage service and a best-in-class company. 

Our Values

Our values mean that we are not a group of real estate brokers who look at each deal through a single-minded transactional lens. Instead, we are strategic advisors who build long-lasting partnerships with our clients. These partnerships are based on honesty and integrity – ensuring the best deals are done, with the best outcome for all involved, while still maintaining a premium quality of service.

Our values also mean that we cooperate and collaborate, internally and externally, to add value and drive growth. This drives better deals for our clients, giving them access to wider databases, more choices, and better outcomes. 

Make no mistake though, our brokers are also fiercely competitive. But uniquely, they work hard and compete in an environment where they can show up and be seen as their whole selves and grow as human beings while also being an integral part of growing our business. 

SIGives – Giving Back

One of our core beliefs for the past 14 years is that SIG is bigger than us, and that with success comes responsibility. This is reflected in our values of gratitude and giving back, and in the work we do to contribute to the wider community outside of the real estate bubble through SIGives.

SIGives is a program that donates a percentage of our revenue to organizations that work to improve the lives of others. This means that when you work with us, you’re doing more than just contributing towards our bottom line.

We also donate our time and effort. Every quarter, our team members in each of our offices go out into the community to get involved with causes making a difference. Some of the community projects we support include Habitat for Humanity, Special Olympics and our local pet shelters.

Why the SIG Difference Matters to You

For real estate investors, wherever you land on the investment spectrum, the SIG difference means we can offer you a full suite of CRE services across industrial, office, medical, multi-family, and shopping centers. We partner with you to understand your investment goals and work across our network to find the right deal for you, with a premium quality service level that delivers results.

Check out our recent listings here

For tenants, our ability to support your business expansion goals extends beyond our net lease specialization to full brokerage services. The quality of service and values-based relationships you already know us for will continue to strengthen this year.

Our team, and CRE professionals who want to work or collaborate with us, can be at the top of their CRE game while cultivating their very best selves, having a voice, and succeeding and growing while staying in alignment with their core values. 

On the topic of our team, we’re growing our office footprint in 2024, so check out our careers page to join SIG. 

So, Why Do We Think This Values-Based Approach to CRE Brokerage Will Work?

Because it already has. We have proven the model over the last 14 years with growth that we are very proud of. Last year we listed and sold almost $4 billion, comprising more than 700  properties – and we plan to continue the growth trajectory in 2024. We have achieved significant traction as we build on our net lease foundation to expand our portfolio of brokerage services: we reached $300 million in industrial deals and $250 million in shopping centers in 2023. We achieved this growth with a small, agile team, and an industry-leading real estate marketing platform. 

But don’t just take our word for it. Inc. Magazine has ranked us in their list of the 5,000 fastest-growing private companies in the US for four years in a row.

Many in the industry might be facing 2024 with trepidation, given the rough ride we had last year. But we are confident that our values-based approach to commercial real estate and our laser-sharp focus on providing the best quality of service, underpinned by our people and platform, will maintain our growth trajectory this year.

 

August 28, 2023 – By Max Freedman.  What makes up the ideal investment? Investors typically want lower risk, while also getting higher yield. The early education real estate asset class ticks both of these boxes but remains a niche investment today. This is because people are often unfamiliar with the sector’s for-profit business model and somewhat atypical, specialty purpose buildings. Here we’ll unpack the opportunity in the early education real estate sector for triple net investors to demystify it.

 

Risk Profile

Commonly, the early education asset class is immune to what is happening in the wider market. In a downturn, child care is a necessity so that parents can maximize their income with dual-parent full-time jobs. In an upturn, it’s a privilege because parents have disposable income and can afford child care. This means that there is demand for child care in both good times and bad. 

In addition, the federal government considers early education so important that it backstopped with billions of dollars during the pandemic – the American Rescue Plan alone committed $24 billion to child care. What better guarantee of your ability to collect rent as a landlord? (By the way, this amount excludes generous state subsidies as well.) 

Even so, potential investors can get stuck on the opportunity to re-lease early education real estate assets, especially if they’re more familiar with fast-moving industries such as restaurants. But early education flips the model. Leases in the early education sector are often longer than average. The lease for an early education property is typically 10 – 15 years, providing stability for both the landlord and tenant.  

In addition, the early education business model has a much lower break-even and profitability threshold than businesses such as restaurants. There is constant, growing, unmet demand for child care: as an asset class it only grew by 0.6% between 2017 and 2022 yet the need for early education continues to increase as the US population grows.

So, where tenant replaceability is an issue with other triple net deals, the stickiness of early education businesses more than compensates for the risk of having to re-lease the building. As mentioned, early education tenants are safe tenants. They are government-backed, demand for their service outstrips supply, and their success doesn’t depend on current trends and whims of the market. 

 

Higher Yield

Irrespective of what is going on in the markets, such as the price correction in real estate over the last 18 months, early education typically trades in the 6% to 7% yield range, an above-average yield over comparable triple net assets. This means that, with interest rates rising, early education is a great asset class that still gives investors a positive cash flow with today’s market interest rates. 

Couple that with credit profiles that are at a premium compared to franchised triple net assets, and it’s not surprising their early education is starting to attract interest from investors who had previously disregarded it. With early education, landlords get more yield and a better balance sheet to back their lease, which is a compelling combination. 

 

Financial Accessibility

It’s also worth pointing out that although the average price of early education assets we have listed at Sands Investment Group is $5 million, the range is broad, starting at $1 million through to $7 million+, making this an accessible asset for many investors. Too good to be true? 

Investors might be now wondering what the gotchas are. Despite these obvious strengths and benefits of the asset class, how do investors choose the best individual deal, and what should they look out for? 

Firstly, investors need to know that this is a highly fragmented market and there are implications if they choose to invest in an independent operator versus a corporate owner. The corporate-owned portion of the markets is typically more predictable and lower risk but makes up less than 10% of the entire market. So simply finding a deal can be a challenge. Part of the discovery process is knowing how the education business model works to evaluate the right real estate opportunity. Next, investors need to match the deal with the best credit. 

This is where the Sands Investment Group team comes in. Our access to developers and the largest corporate operators in the early education space gives us inventory beyond the open market. Based on the investor’s target yield, we can best match early education triple net deals to the right credit profile for their portfolio. 

 

Consult a SIG Early Education Real Estate Advisor

If you’re looking to get started, we have a team that specializes in Early Education Real Estate. We work with Franchisees and Corporations across the country as an outsourced real estate arm to assist with their growth and expansion. 

View our Early Education Listings to explore available properties. 

From a single unit Franchisee to Publicly Traded Companies, we can provide a multitude of financing and construction options to fuel growth.

We’re truly a one-stop-shop for all of your real estate needs. Call 844.4.SIG.NNN or contact us here to learn how we can support your next investment.

 

In an ever-changing economic landscape, finding recession-resistant investment opportunities is paramount for smart investors. One sector that has consistently proven its resilience, even during economic downturns, is the medical office industry. With a growing demand for healthcare services and evolving trends in the healthcare landscape, medical offices present an enticing investment opportunity for commercial real estate and investment firms. In this blog post, we will delve into the reasons why medical offices are a good investment and explore their recession resilience.

 

Strong and Stable Demand

Healthcare is a fundamental necessity for individuals, regardless of economic conditions. In fact, the demand for healthcare services tends to remain stable or even increase during times of recession. People continue to require medical attention, and doctors and healthcare practitioners need suitable spaces to operate. This unwavering demand ensures a steady stream of tenants and offers long-term stability for investors. 

 

Aging Population and Chronic Disease Prevalence 

As the baby boomer generation continues to age, the demand for healthcare services is poised to soar. This demographic shift is a significant driving force behind the increased need for medical facilities. Medical offices cater to a range of services, including primary care, specialists, diagnostic centers, and outpatient procedures. Additionally, the prevalence of chronic diseases, such as diabetes and heart disease, has increased over the years. Investing in medical offices positions you to tap into this expanding market and benefit from the growing demand for healthcare services. 

 

Lease Stability and Longer-Term Tenancies

Medical office leases typically span several years, often ranging from ten to fifteen years with renewal options. These longer-term leases provide stability and minimize vacancy risks and tenant turnover, which can be particularly valuable during recessions. Additionally, medical office tenants are often creditworthy and financially stable, as they include healthcare providers and institutions with solid financial backing. This reduces the likelihood of lease defaults and ensures a more reliable income stream for investors. Furthermore, medical practices tend to establish deep roots in their communities, making relocation less likely. This ensures a consistent and predictable rental income for investors. 

 

Limited Competition and High Barriers to Entry

The supply of real estate for healthcare is often limited due to the high barriers to entry in the healthcare real estate market. Constructing medical facilities requires compliance with strict regulations and building codes, making it difficult for new competitors to enter the market. Additionally, the development and construction of medical offices demand considerable capital investment and expertise, further limiting the number of new properties entering the market. This limited supply, coupled with the steady demand for healthcare services, contributes to the resilience of medical office properties during recessions. 

 

Technological Advancements and Changing Healthcare Model 

Advancements in medical technology and changing healthcare models are driving the need for modern and specialized medical office spaces. As the industry evolves, older facilities may become obsolete, creating opportunities for investors to acquire and upgrade properties to meet the changing demands of healthcare providers. By staying ahead of these trends, investors can position themselves for long-term success. 

 

Diversification and Risk Mitigation

Investing in commercial medical office spaces allows for diversification and risk mitigation in investment portfolios. These properties offer a unique asset class with low correlation to other sectors, reducing portfolio volatility. The stable demand for healthcare services regardless of economic conditions provides a reliable revenue stream. By diversifying within the medical office sector, such as through geographic location or healthcare specialties, investors can further spread risks and enhance the resilience of their portfolio.

 

 

Investing in medical offices is a strategic move for investors seeking recession-resistant opportunities. The stable and growing demand for healthcare services, the aging population, favorable industry dynamics, longer-term leases, limited market competition, and the evolving healthcare landscape all contribute to the resilience and profitability of medical offices. By capitalizing on these factors, investors can secure steady income, potential appreciation, and long-term wealth accumulation, even in times of economic uncertainty. As you explore investment options, consider the immense potential offered by medical offices—the future of healthcare real estate investment.

 

If you’re interested in exploring investment opportunities in medical office properties, consult with a professional real estate investment advisor. They can guide you through the process and help you make informed decisions to maximize your investment returns while minimizing risks. With the right guidance and due diligence, investing in medical office properties can be a valuable addition to your investment portfolio, even during economic downturns.

 

In recent years, convenience stores have emerged as a promising investment option, attracting attention from savvy investors seeking stable income streams and long-term growth potential. According to Statista, the convenience store industry in the United States generated revenues of $648 billion in 2020. With an annual growth rate of 1.5%, the industry is projected to reach a revenue of $692 billion by 2024. With such impressive numbers, it’s no surprise that many entrepreneurs are considering investing in convenience stores.

In this blog post, SIG explains why investing in convenience stores right now could be a game-changer!

1. Strong Industry Performance 

As mentioned above, the convenience store industry is thriving, with steady growth projected for years to come. Convenience stores have a high industry performance due to their focus on consumer convenience, extended operating hours, essential product offerings, adaptability, and diverse revenue streams. Their ability to adapt to changing consumer needs, embrace technology, and cater to the demands of a fast-paced society contributes to their ongoing success and industry performance.

 

2. Multiple Revenue Streams

Unlike single-focus businesses, convenience stores offer multiple revenue streams beyond traditional retail sales. Additional income can be generated through services like fuel stations, ATM machines, lottery ticket sales, and partnerships with food and beverage vendors. This diversification reduces dependency on any single revenue source, ensuring more stable and robust cash flows.

 

3. Franchise Opportunities

Investing in franchise real estate provides franchisees with a proven business model and access to resources that can help them succeed. Franchise models offer established brand recognition, proven business systems, and ongoing support. Investing in a well-known convenience store franchise allows investors to leverage the strength of an established brand while benefiting from an existing customer base.

4. Brand Recognition

Brand recognition is a significant benefit of investing in a convenience store. It attracts a loyal customer base, provides a competitive edge in the market, and benefits from established reputation and consumer trust. Brand recognition can also lead to marketing support, expansion opportunities, and increased value during a potential exit strategy.

 

5. Lower Risk

Investing in convenience stores offers lower risks in business due to their steady consumer demand and recession-resistant nature. Their focus on essential products and services ensures a consistent cash flow even during economic downturns. Additionally, convenience stores often have lower tenant turnover rates, reducing vacancy risks and providing more stable rental income for investors.

6. Flexibility 

Investing in convenience stores provides flexibility through their adaptable business model, allowing for quick adjustments to changing market trends and consumer preferences. Their extended operating hours and diverse revenue streams offer flexibility in capturing sales at various times and through different income sources. Additionally, convenience store franchises offer investors the flexibility to leverage established brand recognition and proven business systems while maintaining some autonomy in managing their investment.

7. Scalability

Investing in convenience stores provides scalability through the potential for expanding store locations and leveraging economies of scale. With a successful convenience store model, investors can replicate the business in multiple locations, tapping into new markets and increasing their overall revenue potential. The ability to scale the business allows for increased profitability and growth over time.

8. Low Startup Costs

Investing in convenience stores offers low startup costs compared to many other types of businesses. The compact store size and focused product offering reduce the need for extensive inventory and large retail spaces, resulting in lower initial investment requirements. Additionally, convenience store franchises provide investors with a pre-established business model, reducing the costs and risks associated with starting a business from scratch.

9. Established Supply Chain

Convenience store franchises provide a significant advantage with their robust and well-established supply chains. These supply chains are carefully developed to ensure franchisees have seamless access to a wide range of products, enabling streamlined operations and minimizing the time and resources required for sourcing inventory. By leveraging the strength of the franchise’s supply chain, franchisees can focus on running their businesses efficiently and effectively, ultimately optimizing profitability and customer satisfaction.

10. High Customer Demand

Finally, convenience stores are experiencing soaring demand, especially in densely populated urban areas, where consumers prioritize convenience and efficiency. This heightened demand translates into a consistent flow of foot traffic, ensuring a steady stream of revenue and making convenience stores a highly appealing investment opportunity. By capitalizing on the ever-increasing demand for accessible and time-saving shopping experiences, investing in convenience stores allows investors to tap into a lucrative market and seize the potential for significant financial returns.

 

In conclusion, investing in a convenience store franchise can be a smart decision for entrepreneurs looking to build a profitable business. With strong industry performance, multiple revenue streams, franchise support, and brand recognition, convenience stores offer a lower risk and more flexible option than many other businesses. Additionally, with established supply chains, low startup costs, and high customer demand, convenience stores provide a great opportunity for entrepreneurs looking to invest in a proven business model with significant growth potential.

 

If you’re interested in investing in a convenience store franchise, Sands Investment Group can help. Our team of experts specializes in commercial real estate investment sales and can guide you through the process. Visit our website to learn more about our services and view our current inventory of convenience store real estate for sale. 

 

When it comes to real estate investments, industrial commercial properties have emerged as a profitable option for savvy investors. With the ever-growing demand for industrial space driven by e-commerce, logistics, manufacturing, and technological advancements, investing in industrial commercial real estate presents numerous advantages. The importance lies in its crucial role in supporting various economic sectors and facilitating business operations. In this blog post, we will explore the top benefits of investing in industrial commercial real estate properties. 

Stable Income and High Cash Flow

One of the key advantages of industrial commercial real estate is its potential for generating stable and consistent income. Industrial properties, such as warehouses, distribution centers, and manufacturing facilities, often attract long-term lease agreements with reliable tenants. These leases typically have extended terms and provide a steady stream of rental income, offering investors a high level of predictability and cash flow stability. In addition, the rent of industrial properties tends to be higher than most other residential real estate. 

Resilience in Economic Downturns

Industrial real estate tends to exhibit greater resilience during economic downturns compared to other asset classes. Industrial commercial properties form a critical part of the supply chain and logistics network. With the rise of e-commerce and globalization, the demand for efficient distribution and fulfillment centers has surged. Regardless of the economic climate, businesses require storage and distribution facilities to support their operations.

Limited Tenant Turnover

Many industrial tenants invest substantial capital in customizing industrial spaces to suit their specific operational needs. This deters tenants from relocating frequently, leading to lower tenant turnover rates compared to residential or office properties. As a result, investors can experience higher occupancy rates, minimizing the potential for extended periods of vacancy.

Potential for Appreciation and Value Enhancement

As urban areas become more densely populated, available land for industrial development becomes scarce, driving up property values. The increasing demand for industrial space, particularly with the rise of e-commerce and logistics, further contributes to the appreciation potential. Additionally, investors have the opportunity to enhance the value of industrial properties through strategic improvements and upgrades. Value-add initiatives such as upgrading infrastructure and optimizing layouts not only improve the property’s functionality and appeal but also increase its market value.

Diversification

Due to their low correlation with asset classes like stocks and bonds, industrial properties often demonstrate independence from broader market trends. This means that the performance of industrial properties is less affected by fluctuations in the overall market. By diversifying their holdings, investors can mitigate risk and reduce the impact of volatility, enhancing the stability and resilience of their overall investment portfolio. Moreover, investors investing in industrial real estate can rent out to manufacturing companies, production companies, retail companies that need warehouses, etc.

 

 

In summary, investing in industrial commercial real estate properties offers numerous compelling advantages, ranging from stable income and cash flow to resilience in economic downturns and diversification of a portfolio. The growing demand for industrial space, along with limited supply, provides a strong foundation for long-term appreciation and value enhancement. As part of a diversified investment strategy, industrial commercial real estate can offer attractive risk-adjusted returns and serve as a reliable income generator for investors seeking stability, growth, and portfolio diversification.

 

 

If you’re considering investing in industrial real estate, contact us at SIG Sands Investment Group, and we’ll guide you through the process and ensure that you invest successfully. 

The restaurant industry is a thriving and constantly evolving market. Digitalization has been a major driver of growth in the restaurant industry, with online food ordering and delivery platforms generating over $22 billion in revenue in the United States alone in 2020. According to the National Restaurant Association, sales are projected to reach $997 Billion by the end of 2023 and $1.2 Trillion by 2030. The projected growth in restaurant food sales provides valuable insights for stakeholders in the restaurant real estate industry, guiding their decision-making processes, investment strategies, and expectations for future market conditions.

Why You Should Lean On Us

“Restaurant operators face numerous challenges and are asked to wear too many hats when expanding or opening new locations. The economic factors of interest rates, labor, and the supply chain exert pressure on prime costs, demanding meticulous management. Moreover, operators must swiftly adapt to changing consumer trends, advancements in real estate, and evolving technologies, often requiring substantial capital investments”. – Rahill Lakhani

Access valuable data: We provide data and demographic information about the local restaurant market, helping you analyze business locations and identify your trade areas.

Connect with trusted professionals: We have a wide network and can refer you to top lawyers, architects, contractors, and other industry professionals you may need for buying land or property remodeling.

Stay compliant with regulations: Our specialized Restaurant team understands and can guide you through federal, state, and city real estate regulations, as well as health department requirements, ensuring you don’t miss any legalities.

Save time and effort: We do the heavy lifting of finding suitable restaurant spaces, saving you time and delivering the best prospects to you and your team.

Best First Steps When Investing in Restaurant Commercial Real Estate

Conduct Market Research: Before investing in real estate, especially in the restaurant industry, conduct thorough market research. Analyze the local market, including demographics, competition, and consumer preferences, to identify potential opportunities for success. Stay updated on industry trends and emerging technologies to explore areas for growth and innovation.

Consider Your Investment Goals and Risks: Consider your investment goals when investing in restaurants. Determine if you prefer long-term, steady income or higher-risk, high-return opportunities. Understanding your goals will inform your investment decisions and structure. Restaurant investments carry risks such as changing consumer trends and economic downturns. Be aware of these risks and have a contingency plan to mitigate potential losses.

Factors To Consider When Looking at Restaurant Commercial Real Estate

Size and Capacity: Choose a building size based on your business vision. Consider how the space will accommodate tables, customers, and operational needs. Plan for a suitable seating capacity, including a bar area and dining area if applicable. Allocate enough space in the kitchen for staff, ingredients, and necessary equipment. Detailed floor plans can help you visualize and optimize the property’s potential.

Foot Traffic and Visibility: Ensure your restaurant stands out to potential customers. Make sure the restaurant sign is clearly visible from the street or sidewalk. If your concept is more discreet, develop a strong strategy for attracting business through other means. Accessibility is also crucial, as easy parking and smooth entry and exit routes increase the likelihood of customer visits. Account for factors such as medians and roadways that may impact accessibility to your property.

Lease Agreements: Review lease agreements carefully when investing in restaurants. Pay attention to rent, lease term, renewal options, and important terms and conditions. Understanding the lease agreement ensures a fair deal and informed investment decisions. Consider the history of the space and previous occupants. Understand their duration and reasons for leaving. Multiple failed restaurants in the same location should prompt investigation into the underlying causes.

In conclusion, investing in restaurants can be a smart move for those looking to diversify their portfolio and capitalize on the industry’s growth potential. By researching the market, understanding your investment goals, and carefully evaluating potential opportunities, you can find the right restaurant investment for you. If you’re interested in investing in restaurants, Sands Investment Group (SIG) can help. Our extensive listings include a wide range of restaurant properties for sale, and our team of experienced professionals can help guide you through every step of the investment process.

A Special Forces Team for Restaurant Assets | Experienced Advisors—Proven Results
What separates SIG from our competition is sub – sector product type specialization, a shared company database, unified team approach, our core values, and a focus on giving back. We have divided our company into product type specialization and our advisors focus solely on each of the sub – sectors within the net lease arena. We have a team that specializes in Restaurant Real Estate. We work with operators around the country as an outsourced real estate firm to assist with their growth and expansion. We also work with single unit operators to publicly traded franchisors in advising financing options, site selections and construction management through our industry leading partnerships.

Charlotte, NC – May 10, 2023| Sands Investment Group is proud to announce that Alex Wenzel has been recognized as the recipient of CoStar’s Q1 2023 Power Broker Quarterly Deal Award. This prestigious accolade showcases Alex’s exceptional expertise, dedication, and outstanding achievements in the real estate industry. With his commitment to excellence, market acumen, and client-focused approach, Alex continues to drive success for both Sands Investment Group, and its valued clients. Read more →

Atlanta, GA – May 17, 2023 | Sands Investment Group is proud to announce that Wyatt Groseclose has been recognized as the recipient of CoStar’s Q1 2023 Power Broker Quarterly Deal Award. This prestigious accolade showcases Wyatt’s exceptional expertise, dedication, and outstanding achievements in the real estate industry. With his commitment to excellence, market acumen, and client-focused approach, Wyatt continues to drive success for both Sands Investment Group, and its valued clients. Read more →

If you are in an exchange, or considering doing one, SIG has a proven track record for seamlessly assisting our clients with the process. Over 65% of our business involves working with 1031 exchange clients and we have yet to have a client of ours not satisfy their exchange. Because 1031 exchanges help investors to increase wealth, save on taxes with tax deferrals, and grow portfolios, they are incredibly popular. We’ve dedicated this week’s blog posts to our most “frequently asked questions” regarding 1031 exchanges.

1. What is a 1031 exchange?
   A 1031 exchange is a tax-deferred exchange that allows investors to sell one investment property and use the proceeds to purchase another “like-kind” property, without paying capital gains taxes on the sale of the first property. It is named after section 1031 of the Internal Revenue Code (IRC).
2. How does a 1031 exchange work?
   In a 1031 exchange, the proceeds from the sale of the original property are held by a qualified intermediary (QI) and used to purchase the replacement property. To qualify for tax deferral, the replacement property must be of like-kind and the transaction must meet certain timing and identification requirements.
3. What is an example of how a 1031 exchange works?
   If an investor sold a commercial property for a $500,000 profit, and your capital gains tax rate is 20 percent, then that investor owes $100,000 on the sale of that property. However, if they choose to do a 1031 exchange, then that investor can just reinvest the $500,000 profit into another commercial property that costs the same or more than the one that just sold. That investor would then avoid paying taxes on it!
4. Who is a qualified intermediary (QI)?
   QIs can be banks, trust companies, attorneys, accountants, or other independent third-party companies that meet the IRS requirements. When selecting a QI, it’s important to do your research and choose a reputable company with experience facilitating 1031 exchanges. It’s important to note that the role of the QI is strictly limited to facilitating the exchange, and does not include providing investment advice or guidance. Investors should consult with their own tax and financial advisors to determine if a 1031 exchange is appropriate for their specific circumstances, and to evaluate the potential tax and investment benefits and risks.
5. What are the benefits of a 1031 exchange?
   The benefits of a 1031 exchange include tax deferral on the sale of investment property, the ability to reinvest the proceeds in another property, and the potential for increased cash flow and appreciation.
6. What properties qualify for a 1031 exchange?
   Any investment property held for business or investment purposes can qualify for a 1031 exchange. Examples include rental properties, commercial properties, and land held for investment purposes.
7. Can I do a 1031 exchange for a vacation home?
   No, a vacation home does not qualify for a 1031 exchange because it is not held for investment or business purposes.
8. How long do I have to identify replacement property in a 1031 exchange?
   Taxpayers have 45 days from the date of the sale of the original property to identify potential replacement properties. There are specific rules regarding the identification process, such as the three-property rule and the 200% rule.
9. Can I use a 1031 exchange for a rental property?
   Yes, rental properties can qualify for a 1031 exchange as long as they are held for investment purposes.
10. What happens if I don’t reinvest all the proceeds from a 1031 exchange- can I do a partial 1031 exchange?
    It is possible to do a partial 1031 exchange by using some of the proceeds from the sale of the original property to purchase a replacement property, and paying taxes on the remaining proceeds.

At SIG, we understand that 1031 exchanges can be a powerful tool for investors looking to increase wealth and save on taxes. With over 65% of our business involving working with 1031 exchange clients, we have a proven track record of helping our clients seamlessly navigate the process. Whether you’re new to the world of 1031 exchanges or looking for expert guidance on a complex transaction, our team of qualified intermediaries is here to help. Contact us today to learn more about how we can help you achieve your investment goals through the power of 1031 exchanges.

A common worry among commercial real estate investors is the risk of economic downturns or market fluctuations that can negatively affect the demand for real estate properties. Investors should understand the impact of macroeconomic factors such as interest rate changes, trade tensions, and geopolitical instability on the real estate market among other things. We won’t say industrial real estate is recession-proof but with the right expertise (or right Sales Investment Advisor) and strategies in place we are confident to recommend it. 

During the 2008 financial crisis, industrial real estate performed relatively well compared to other commercial real estate asset classes. According to data from Real Capital Analytics, industrial property prices fell by only 15% from their peak in 2007 to the bottom in 2010, while office and retail property prices fell by 37% and 43%, respectively.

“Our team has the expertise and market knowledge to help investors navigate these complexities and identify high-quality industrial properties that generate strong returns. Successful industrial commercial real estate investment relies on a deep understanding of supply and demand dynamics, as well as factors such as transportation infrastructure, labor availability, and technological advancements in the industry.” 

 -Amar Goli, Senior Industrial Investment Sales Advisor of Sands Investment Group

Industrial Real Estate: A Rock-Solid Investment Opportunity

These factors make industrial commercial real estate an attractive choice for investors in normal economic circumstances but when the economy is rocky this asset class holds strong.

• Stable Income Stream: Industrial properties typically have longer lease terms and stable cash flows, making them less volatile during an economic downturn.
• Essential Services: Many industrial tenants provide essential goods and services, such as manufacturing, warehousing, and logistics, that are necessary even during a recession.
• Low Vacancy Rates and Limited New Supply: According to a report by CBRE, the vacancy rate for industrial properties in the United States was only 5.5% in the fourth quarter of 2021, down from 5.9% in the previous quarter, indicating strong demand and limited new supply.
• Portfolio Diversification: Including industrial properties in a portfolio can provide diversification and help mitigate risk during a recession.
• Government Support: During a recession, governments may provide incentives for businesses to invest in industrial properties, providing additional support for the asset class.

Industrial Real Estate: Strategies for Success

Strategy is crucial to a successful industrial commercial real estate investment because it allows investors to identify and capitalize on opportunities in the market. By developing a clear investment strategy, investors can minimize risk, maximize returns, and ensure the long-term success of their industrial investment and real estate portfolio.

• Explore New Technologies: Technology is changing the industrial commercial real estate landscape rapidly. Investing in new technologies such as robotics, automation, and the Internet of Things (IoT) can help you stay competitive, reduce operating costs, and improve efficiency.
• Form Strategic Partnerships: Partnering with other investors, developers, and property management companies can provide access to new markets, capital, and expertise. This can help you grow your portfolio more quickly and efficiently.
• Expand Globally: Consider expanding your operations globally by investing in industrial commercial properties in other countries. This can provide access to new markets and diversify your portfolio.
• Focus on Sustainability: Implementing sustainable practices such as energy-efficient systems, green building certifications, and waste reduction strategies can help you attract tenants who prioritize sustainability. This can improve the long-term value of your properties and help you stay ahead of regulatory requirements.
• Diversify Your Tenant Mix: By having a mix of tenants from different industries, you can minimize the impact of an economic downturn on your property. During the COVID-19 pandemic, demand for e-commerce surged, driving up demand for logistics and warehouse facilities. In fact, according to a report by JLL, e-commerce accounted for 42% of all industrial leasing activity in the United States in 2020.

Industrial Real Estate: How Can Sands Investment Group Help

• Sale-Leaseback Transaction: A large private equity-backed company was looking to free up capital to invest in their core business. They owned several industrial properties across the country and wanted to sell the properties and lease them back for their ongoing operations. Sands Investment Group helped the client structure and negotiate the sale-leaseback transaction, resulting in a successful sale and long-term leaseback arrangement that met the client’s financial goals.
• Portfolio Disposition: A publicly traded REIT was looking to sell a portfolio of industrial properties in secondary and tertiary markets. Sands Investment Group leveraged its extensive network and market expertise to market and sell the properties to a mix of private and institutional buyers. The portfolio sale was completed successfully, achieving the client’s pricing expectations and maximizing the value of the assets.
• Build-to-Suit Development: A logistics company was expanding their operations and needed a new industrial facility. Sands Investment Group helped the client identify a site, negotiate the purchase of the land, and oversee the design and construction of a custom-built facility. The project was completed on time and within budget, allowing the client to grow their business and improve their operational efficiency.
• Equity Recapitalization: A privately held industrial owner wanted to recapitalize their portfolio and bring on a partner to help fund future growth. Sands Investment Group helped the client structure a joint venture partnership with an institutional capital partner, providing the client with the capital needed to expand their portfolio and improve their asset management capabilities.

These are just a few examples of how Sands Investment Group has helped clients in the industrial real estate space. Our experienced team works closely with clients to understand their unique goals and challenges and develop tailored strategies that meet their needs.

According to the Self Storage Association, approximately 10% of U.S. households currently use self-storage properties. Self-storage facilities have become increasingly popular in recent years due to the growth of the sharing economy, urbanization, and downsizing. According to research, the self-storage market in 2019 was valued at $87.65 billion USD. This valuation is anticipated to increase to $115.62 billion by 2025. This results in a compound annual growth rate of 134.79 percent from 2020 to 2025.

While revenue in the self-storage industry can be impacted by a variety of factors, the industry has shown consistent growth over the past five years, making it an attractive investment option for many investors. According to data from the National Association of Real Estate Investment Trusts (NAREIT), the self-storage sector has experienced steady revenue growth over the past five years. In 2016, the self-storage sector had a total return of 18.45%, followed by a return of 9.04% in 2017, 4.20% in 2018, 18.32% in 2019, and 5.15% in 2020. We anticipate the ROI on self-storage will continue to rise in the coming years as the market bounces back from the effects of the COVID-19 Pandemic.

Before investing in self-storage, it’s essential to have a thorough understanding of the market. Research industry trends, such as the increasing demand for storage space due to factors like urbanization, downsizing, and the rise of e-commerce. Analyze local market conditions, including population growth, income levels, and housing trends, to identify areas with the potential for high self-storage demand. 

What Factors Make Self-Storage a Strong Investment?

• Self-storage is always in demand: When the economy is booming, households take longer sabbaticals and move homes, requiring self-storage. During a downturn, people may be returning to school or downsizing, which means they may turn to self-storage as they adjust their housing situations. Construction lag times have contributed to a lack of recent development, so we are now seeing undersupplied markets, especially in the Southeast.
• ROI is more straightforward: While self-storage properties aren’t quite a completely passive investment, there are fewer hands-on challenges than with other types of commercial real estate. Owners and property managers don’t have to deal with unexpected calls from tenants to resolve issues like leaky pipes or clogged toilets. That simplifies things when calculating your return on investment.
• Low expenses: Unlike some types of investment properties, self-storage capital expenditures are low. Lower expenses are always an advantage, and this is yet another reason that cash flow can remain steady even as other factors change.
• Financing for self-storage investment properties is accessible: Self-storage properties have shown themselves to be something of a “COVID-resistant” asset, so lenders are eager to get them on their books. So, if you’re interested in exploring this area of industrial property investment, you probably won’t have any issues finding financing at a competitive rate.
• Self-storage properties provide a reliable stream of income: Self-storage facilities vary widely in size, but the average number of units in a facility is around 500. With this many separate spaces for rent, your income stream is not dependent on collecting rent from just a few tenants. So if a tenant or two leaves, your cash flow will not be dramatically altered. Plus, with self-storage units in such high demand, it is not difficult to find new tenants to replace the ones that leave.
• Self-Storage Rent Increases Have Less Pushback: Inevitably, rent increases will be necessary to keep your self-storage investment profitable in changing markets and tenants bristling against these rent increases can seem unavoidable. But the advantage of self-storage is that leases tend to be shorter. Most tenants will be on a month-to-month schedule, which makes it easier to raise rents more frequently without tenants pushing back against the increase. Being able to adjust rent more often and more easily also allows you to keep your income stream pretty consistent if you experience frequent tenant turnover.

What Factors Determine Self-Storage Investment Success?

• Location: Look for commercial properties for sale in areas with high visibility, easy accessibility, and a growing population. Proximity to residential neighborhoods, apartment complexes, and businesses can help drive demand for storage units. Usually, 90% of your customer base will be within a 1-5 mile radius of the storage unit. Is the area growing or shrinking? Is the city expanding in the area or away from the area? It will be a safer investment if the homes and apartments in that area are small as your self-storage facility will . That means the people living in them will have a bigger need for additional space to store their belongings, which is where your self-storage facility can help.
• Size: Facilities vary in size and can range from 10,000 square feet to 100,000 square feet or more. The average rentable square footage is around 46,000 SF. A facility will take up anywhere from 2.5 to acres of land. The size of the self-storage facility will dictate many things including the cost of maintenance, property taxes, and management.
• Demand: Square feet per capita and price per square foot are important to understand the level of competition in your area. A higher number per person, within a facility you’re considering investing in, or in your market as a whole, might mean in terms of supply and demand, there’s not enough demand. If the prices per square foot in all of the facilities that you’re considering investing in are high, that’s another sign of healthy demand.
• Consumer Behaviors: Offering a mix of storage solutions can help attract a wider range of customers and ensure consistent occupancy rates. In addition to traditional storage units, having climate-controlled units, vehicle storage, and specialized storage options for wine, artwork, or documents helps diversify your offering mix. Also, considering changes in consumer behaviors, such as increased reliance on e-commerce and online marketplaces, can impact the demand for self-storage space. 
• Management: Is the property managed by the owner or a management company? Are you going to self-manage or hire someone? Effective marketing and management are crucial for the success of your self-storage investment. Utilize digital marketing strategies, including search engine optimization (SEO), pay-per-click advertising, and social media marketing, to increase your facility’s online visibility and attract potential tenants. Implement a robust management system that includes customer service, regular maintenance, and efficient billing processes to streamline operations and improve tenant satisfaction. 
• Occupancy Rates: If the occupancy rates in the storage facilities in your area are in the 90-100% range, you can safely assume you’re looking at high demand. Whichever route you choose, if the vacancy rates are low, you can be confident you’ll find customers. If you’re investing in a facility, you’ll want a high occupancy rate.

Consult An Expert

When you’re ready to have a conversation with a broker about self-storage investment, the team at Sands Investment Group can help. We have facilitated transactions of many self-storage facilities across the country, ensuring that investors not only find the right opportunity but get the best deal when adding to their portfolio.  

Investing in self-storage can be a lucrative opportunity for real estate investors seeking stable cash flow and portfolio diversification. By understanding the market, selecting the right location, diversifying offerings, implementing technology and security features, and focusing on customer service, you can maximize the return on your investment and set your self-storage facility apart from the competition. Consult an expert at Sands Investment Group today.

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.

 

With continued growth projections for the retail industry, shopping centers can be a great investment as long as you understand what you are investing in and the risks associated. ICSC defines a shopping center as a group of retail and other commercial establishments that is planned, developed, owned and managed as a single property, typically with on-site parking provided.

Shopping centers come in various combinations of size, concept, tenant purpose, and anchor mix. Mainstream media, Wall Street and the general public don’t have a set classification system to follow because the industry doesn’t have an agreed upon system to categorize shopping centers. Inherently complex and difficult to understand, ICSC has developed a classification table with typical characteristics they are hoping the industry will adopt. We’re not quite sold on this system.

Types of Shopping Centers

Malls

The most identifiable of the various types of shopping centers, typically enclosed buildings with a central corridor and with one shared roof are malls. Key components that help categorize a shopping center a mall:

• 400,000 – 800,000 sq. ft. of commercial space (although there is no actual limit to the size they can be)
• At least 2 anchor tenants (typically national department stores)
• House food courts or full-service restaurants
• Apparel makes up a sizable portion of the general products sold 

The growth of e-commerce has made it difficult for many malls to remain competitive. However, many malls are increasingly relying on fresh approaches to draw customers, such as providing more experience shopping options and including other forms of entertainment, like restaurants and movie theaters.

Neighborhood Centers | Community Centers

Neighborhood Centers typically get thrown into the category of what people refer to as strip malls. A strip mall is a collection of retail stores and other businesses that are designed, built, owned, and operated as a single building with on-site parking. Key components that help categorize a shopping center a Neighborhood or Community Center:

• 30,000 – 400,000 square feet in size
• Have one to two anchor stores
• Provide daily necessities and personal services such as grocery, apparel, drugstores, tailors, dry cleaners, or cell phone stores

Because they often include local “mom-and-pop” businesses with less of an established reputation, community centers —along with neighborhood centers and convenience centers —pose a higher risk for lenders and investors. Having strong anchor tenants can mitigate this risk.

Power Center | Big Box Stores

The defining characteristic of power centers are that they are made primarily of anchor stores. Typically 75% to 90% of available retail space in Power Centers is dedicated to anchor stores. Name brand grocery stores, discount stores, super drugstores, and home improvement stores are examples of typical big box store anchors. Key components that help categorize a shopping center a Power Center or Big Box Store:

• Retail space ranging from 100,000 – 300,000 square feet 
• At least three anchor stores
• Pad sites typically include fast food or other eateries in their parking lot

Other Shopping Centers

Shopping centers that can’t be classified in the previously mentioned shopping center types, are factory outlets, mixed-use retail, fashion centers, and freestanding retail stores.

Contributing Factors to Shopping Center Success

Location

One important factor to consider when evaluating a commercial investment property, particularly in the shopping center sector, is location. The location of any kind of shopping center can greatly impact its potential for success. It’s important to look for properties located in high-traffic areas, with easy access to public transportation and close proximity to major highways, and in a market with a strong and growing population.

Tenant Mix

Another important factor to consider is the tenant mix and the diversity of the tenant mix. A shopping center property with a mix of different types of retailers, such as a grocery store, pharmacy, and clothing store, has a better chance of success than a property with only one type of tenant. The state of the economy and buyer expendable income will directly impact some tenant types more than others.

Market Conditions and Outlook

It’s also important to thoroughly research the current market conditions and the future potential of the area. A property in an area with a strong economy and a positive outlook for future growth is more likely to be a successful investment. For example, since the COVID-19 pandemic, open-air Neighborhood Centers and Power Centers have performed consistently better than indoor shopping Malls. The contactless shopping methods were easier to implement in an outdoor layout and thus made these centers more adaptable and therefore more profitable.  

Lastly, when investing in retail properties, it’s essential to work with a team of commercial real estate professionals who have the experience and expertise to guide you through the process. Sands Investment Group has an expert retail-focused team that can provide valuable advice and guide you to make good investment decisions. Contact Sands Investment Group to learn more.

Interested in buying or selling a Drugstore? When the goal is growing an investment portfolio with specific properties, you can’t trust a typical real estate agency to walk you through the process. SIG is a commercial real estate brokerage firm with a wealth of experience helping clients find, secure, and purchase properties to round out their investment portfolio. Check out our newest drugstore listings to hit the market.