The 2023 outlook suggests that there may be challenges ahead for the commercial real estate industry, but this kind of news is nothing new. The future of retail and office space is uncertain, and supply chain issues and high inflation persist. However, there are also bright spots in the forecast, such as the continued success of multifamily properties and the growing demand for industrial commercial real estate.

Major Influencing Factors on Industrial Commercial Real Estate

Macroeconomics

Macroeconomic factors include geopolitical issues, high inflation, and rising interest rates, which may impact commercial real estate in 2023. Inflation in the U.S. reached a 40-year high of 7.75% in October 2022, and interest rates are expected to continue to increase, which could negatively impact commercial real estate owners. Geopolitical issues such as the war in Ukraine and resulting sanctions have had major global economic implications such as supply chain issues driving up the cost of food, shelter and energy. These factors may lead to a mild to moderate recession in 2023.

Supply and Demand

Supply in the industrial sector will affect demand. According to Cushman & Wakefield, a record 148.2 million square feet of space was developed and made available by logistics developers in the third quarter of 2021. That figure is around 72% more than the quarterly average of the last five years. This record number of new warehouse supplies entering the market and growing recession worries limit demand. 

Growth in E-Commerce

The e-commerce warehouse industry has an extremely hopeful future. The retail scene has changed significantly over the past several years as a result of the COVID pandemic and the continuous digitalization of modern life, making e-commerce a crucial component of the worldwide retail business.  In fact, global retail e-commerce is expected to rise to $7.14 trillion by 2025 from $3.23 trillion in 2019, according to eMarketer. This is expected to boost the market share from 13.9% to 22.3% during the predicted period, creating a lot of room for growth and making it a promising sector for an industrial commercial real estate investment. 

Investment Strategies to Consider

In light of the potential for a recession in 2023, it’s important for commercial real estate professionals to be strategic in how they approach their business. Some strategies we think would be wise to consider:

1. Diversify your portfolio: In a recession, asset classes will be affected differently. By diversifying your portfolio, you can minimize the impact of a downturn in one particular market therefore mitigating risk and/or losses. 
2. Focus on multifamily properties: Multifamily properties have been performing well and are likely to continue to do so even in a recession. Investing in or owning multifamily properties could provide a stable source of income during a recession.
3. Develop affordable housing: Demand for affordable and workforce housing far outweighs the supply. This is an opportunity for commercial investment companies to invest in the development of this type of housing, which is likely to be in high demand even in a recession. This could include modular construction, adaptive reuse of buildings, mixed-income properties, and unique capital solutions.
4. Be strategic with financing: During a recession, credit may be tighter and it may be more difficult to secure financing. Be strategic in how you use your financing and consider alternative sources of funding such as private equity or crowdfunding.
5. Be flexible: In a recession, the market may change rapidly. Be prepared to adjust your strategy as needed to adapt to the changing market conditions. For example, if the office market is struggling, consider repurposing the space for industrial commercial real estate or multifamily use.
6. Have a strong risk management strategy: A recession can bring unpredictable challenges to your business, it’s important to have a strong risk management strategy in place to mitigate potential losses. This can include things like hedging against currency fluctuations, insuring against property damage or loss, and creating contingency plans for potential market downturns. 

Conclusion

Investors need to stay updated on what’s happening in the industrial commercial real estate market before investing their money. Sands Investment Group has a team of dedicated professionals, ready to maximize your investment portfolio. Contact our advisors to learn more today.

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.

Last week at America’s Lodging Investment Summit in both private meetings and on the main stage experts were optimistic and even bullish, referring to hotels as “the golden child” of commercial real estate asset classes. The forecast for hotel investments in the near future looks promising as the economy stabilizes and people are eager to travel. The industry is expected to continue to present opportunities for investors interested in hospitality commercial real estate buildings. 

Key Reasons to Add Hotels to Investment Portfolio

• Opportunities for Quality Investment: The hospitality industry offers some of the best opportunities to invest in real estate, as it allows investors to diversify their portfolios. In fact, hotels are among the best commercial properties to invest in, especially because of the hopeful prediction for the industry in 2023.
• High Return: The high yield return that comes with this kind of real estate investment is the main factor that attracts most hotel investors. The revenue generated from investing in hotels is primarily realized from the operating cash flow. Therefore, it’s crucial to have a skilled management team in place to help balance hospitality-associated risks. Successfully handling these risks, however, allows for even higher returns on investments.
• Tax Efficiency: Another important advantage of investing in hotels is the tax benefits. Investing in commercial real estate is one of the most tax-efficient methods of investment. Investing in hospitality properties combines the core benefits of investing in real estate into a centralized property. Investing in hotels can reduce your tax liability, stemming from equity expansion, depreciation, and tax-deferred exchanges in commercial real estate.
• Community Impact and Brand Awareness:  To run a hotel effectively, a lot of hands have to be hired, as labor consists of almost half of the running costs of a hotel. A majority of the employees would mostly likely come from the local neighborhood, creating a significant job-creating impact on the community’s economy. Being actively involved in providing steady employment and developing a community establishes a positive outlook in the public’s eyes. Any business that invests in such will not only be impacting the community, but will also create a positive brand awareness.

Common Ways to Invest in Hotels

Buying hotel property is likely the most straightforward way of investing in hotels. Hotels come in different styles, sizes, and affordability which invites flexibility to find a hotel property that meets your investment criteria. Below are the most common ways to invest in hotels.

• New Hotel Construction Projects
• Hotel Renovation
• Hotel Franchise
• Hotel Refinancing
• Hotel REITs

Are you looking for commercial property investment opportunities or need help investing in commercial real estate? Sands Investment Group is the right place to be. We are a commercial real estate brokerage firm with years of experience buying and selling investment properties. Visit our website today to learn more about our expert investment advisors and how they can help.

One of the best ways to build wealth and meet long-term financial objectives is by investing in real estate.  Sands Investment Group has the expertise to help you build an investment portfolio to meet your financial goals. The commercial real estate industry is an excellent place to invest, offering consistent solid ROI.  This step is crucial in increasing their chances of better returns and greater long-term profitability.

What is Diversification

Diversification is the process of spreading out risk across your investment portfolio. An investor can acquire accounts in several asset classes to balance the risk of a complete loss. If one investment does poorly, diversification provides an opportunity for the investor to have other profitable assets to draw on.

4 Ways to Diversify Your Investment Portfolio

Like every type of investment, several methods exist for diversifying investment portfolios. An easy way to diversify CRE investments is by investing in various asset types and classes. For instance, an investor can invest in a residential rental property, a real estate investment trust, and a piece of commercial real estate. Investors can also invest in Class A, B, and C commercial properties as each class has pros and cons (we discuss this in further detail in an upcoming blog post).

Benefits and risks exist for each type and class of commercial building. Diversification helps the investor balance their risk. Other ways investors can diversify their commercial real estate investments include the following:

1. Diversify through several transaction sponsors
2. Using different commercial real estate investment strategies
3. Hold Time (Including long-term and short-term investments in their portfolio)
4. Diversification through locations

5 Reasons to Diversify Your Investment Portfolio

The most common reason is to balance the risk involved in their investment. Yet, there are several reasons investors diversify their commercial real estate investment portfolio.

1. Immunity Against Stocks Fluctuations
   Investors who have money in stocks should be aware that a decline in the market values of their investments can cause a domino effect. However, commercial real estate investments are rarely affected by stock market fluctuations. When the value of their other equities declines, solid commercial real estate investments help to mitigate the effect on their portfolio.
2. Tax Benefits
   A commercial real estate investor may profit from a variety of tax advantages. Taxes on cash distributions may be sheltered or postponed by deductions for things like interest expense and depreciation. For instance, the current cash flow will mostly be lower than the total interest expense and depreciation costs, resulting in a return like a tax-free bond.
3. Hedge Against Inflation
   Fortunately for investment, commercial real estate rarely sees impacts from inflation. According to statistics, the inflation in 2008 was the only time that affected the real estate industry negatively. This is due to the consistently high demand for the commercial real estate industry. Demand will increase as long as people need these properties for their businesses. So, CRE investments offer a hedge against inflation.
4. Passive Income
   Investors can earn passive income from their commercial real estate investment without stress. They can even earn more if they work with reputable commercial real estate companies. Their property manager will handle all aspects of maintaining the property while steady income continues to flow to the investor.
5. Access to a Variety of Investment Types
   When investors diversify their portfolios, they have access to various types of properties. Each of these properties adds additional value to their portfolio while simultaneously protecting their other investments.

Do you need help diversifying your investment portfolio? Don’t hesitate to contact us at Sands Investment Group. We are a reliable commercial real estate brokerage company skilled in buying and selling investment properties. We sell properties for individuals, companies, and other institutions in the United States. Contact us today or visit our website to learn more about our services.

What is a Medical Office Building?

Often located near hospitals or on hospital campuses, medical office buildings (MOB’s) are a type of commercial real estate building that falls under the office asset class. They differ from traditional offices because of the building requirements needed to satisfy the needs of healthcare facilities with features intended specifically for use by physicians and other healthcare personnel such as waiting, exam and operating rooms. MOB’s are typically built with considerations for superior soundproofing for doctor-patient confidentiality, advanced air ventilation standards and have special requirements around parking and ADA accessibility.

3 Reasons You Should Invest In Medical Office Buildings?

Medical office buildings are seen as a lower risk commercial real estate investment for many reasons.

1. Healthcare is a fundamental human need that will not go away nor diminish. People will continue to need medical attention regardless of their financial situation. The COVID-19 pandemic has shown how resilient the industry is. This is demonstrated by the sector’s robust rental income, which has remained over 95% for the last two years. Most MOB renters were able to pay their rent on time as patients continued to seek treatment despite the economy. While elective treatments could be postponed, those who are unwell or require urgent medical care will still need to visit the hospital whether the stock market is rising or falling.
2. Forecasted increase in demand. Due to the large size of the baby boomer generation individuals over the age of 65 will increase by 73 percent between 2010 and 2030. One in five Americans will be a senior citizen. Easier access to medical care will be critical for the US’s aging population. People tend to visit the hospital more the closer they get to retirement. Senior citizens typically visit a doctor ten times more often than those of a younger age. These increased medical needs create a higher demand for more medical offices building locations specifically close to suburban areas and neighborhoods.
3. History of strong performance. If you take a look at the top 50 MOB markets in the US, transaction volume has grown from $18.2B to $24.5B in the last quarter alone, vacancy rates have fallen 40 basis points in the first half of 2022 to 8% and transaction volume has also increased by 79.2% from 2021, setting yet another record for the sector. Higher prices don’t always mean higher rents and having a trusted investment advisor who is familiar with these markets is important in order to avoid investment deals with weaker cash flows. If you know where to look, medical office properties in specific markets provide a solid tenant mix that will yield long-term value for investors.

Learn More With Sands Investment Group

If you want to invest in medical office buildings, you can trust that Sands Investment Group’s specialized Medical Office Building team will provide top notch advice. We are a commercial real estate brokerage firm specializing in purchasing and selling commercial investment properties for private investors and organizations throughout the United States. Contact us today to learn more about our services.

To understand whether cap rates are moving, one must first understand their influence on the world of commercial real estate investing. A cap rate, or capitalization rate, is considered a real estate valuation measure that plays a role in comparing different real estate investments. The cap rate calculation is the annual net operating income (NOI) ratio to the asset’s market value. This provides the rate of return for professionals to use in comparison.

Now more than ever, the importance falls on the movement of these cap rates. In a year like 2022, it can seem like nothing is certain in the world of investments. However, understanding this valuation can give you insight that benefits your financial decisions in the long term. Learn more with Sands Investment Group to get started.

What Factors Affect Cap Rate?

As in the rest of the world of investing, specific factors can influence cap rates. It comes down to three main options that can make this number change. The first of these is macro-level economics and demographics. Next, the micro-level market influences come in. Finally, the property type plays a role in changing the cap rate.

By seeing the influence of each of these factors, it is understandable that cap rates can vary by the area you are observing. However, the market as a whole maintains a similar direction depending on the macro-level economics of the country and the world.

How Can The Cap Rate Move?

The movement of cap rates depends on the factors that affect the quantities included in the ratio. The direction of cap rates is considered cyclical as they go up and down depending on how the market looks at a given time.

To see how the cap rates are currently moving, you have to look at the state of the market. Take interest rates, for example. When interest rates are low, you provide lower payments, allowing for lower monthly debt payments on a given property. The cap rate drives down by increasing the purchase price in the cap rate equation. Thus, when interest rates are low, generally so are cap rates. When interest rates are high, the cap rates usually rise as well.

Stephen Plourde of Sands Investment Group explains that buyers expect increased cap rates across multiple product types as a direct result of the finance-ability of NNN deals, precisely because of the recent and anticipated rise in interest rates.

As we look at the current market, Plourde explains that there are still 1031 exchange buyers at aggressive cap rates similar to the last 24 months; however, there is a disconnect between buyers and sellers, specifically when a buyer requires financing. “Smart sellers will sell their properties more quickly in today’s market when they recognize that the market has shifted. They must work collaboratively with their Investment Advisor to price their properties with a forward-looking approach,” says Plourde. Looking in the rear-view mirror will lead to sellers missing the buyers looking to transact in the 3rd and 4th quarters of the year.

Learn More With Sands Investment Group

Understanding cap rates is essential as you enter the world of commercial real estate investing. That is why you must work with a company with the research and data-driven expertise to back it. At Sands Investment Group, our team is ready to get you started from the beginning to help you make impactful deals. Don’t waste any time, and get started with us today! There is always more to learn as cap rates move and change.  Learn more about investing in commercial real estate with Sands Investment Group today. Call 844.SIG.NNN or find out more on our website.

 

It takes more than the desire to grow your financial portfolio to start investing in commercial real estate. The savvy investor conducts a lot of research into the most profitable types of commercial properties before making any decisions. It’s essential to know with certainty that you will be able to give your investment total commitment. 

Read more →

Are you looking for a way to achieve significantly higher real estate values? A sale-leaseback is a financing tool that allows property owners to sell their real estate assets to another buyer as they sign a long-term lease to be the tenant, securing the location in the process. Simply put, the seller of the asset becomes the lessee as the purchaser becomes the lessor.

In the current state of the market, the sale-leaseback is becoming more prevalent across industries. With the numerous benefits that come with it, this is no surprise. Sands Investment Group is here to provide you with the basics of a sale-leaseback, so you can decide whether it is the right fit for your commercial real estate investment decisions.      

Who should consider using a sale-leaseback? 

Often, the most common participants are builders or companies with high-cost fixed assets, in this case, commercial real estate. It allows these people to use the cash they invested in commercial real estate in other ways while still needing the asset to operate the business. 

Does this sound like a financing tool that could benefit you and your business as an investor? Sands Investment Group could be the resource you have been looking for to start.  

What is the process of a sale-leaseback? 

Understanding what a sale-leaseback looks like is one thing, but going through the process is another. At Sands Investment Group, we break down this process into three steps. 

1. Evaluate the Business 
2. Market Analysis 
3. Structuring a Lease

As the overarching tasks, each of these steps breaks down into extensive research tied to the characteristics of your specific case. Find the details here. 

What are the benefits of a sale-leaseback? 

The benefits of a sale-leaseback are broken down into that of the original seller and the purchaser. It creates a mutually beneficial agreement that creates opportunities for both parties to see positive impacts in their financial pursuits.  

For the original seller, one of the first benefits to consider with a sale-leaseback is that it is an alternative method of raising capital. In the instance of a loan, the company must repay the money, making it appear on their balance sheet as debt. With a sale-leaseback, the liability on the balance sheet decreases, while the current assets will increase. It does not present the same appearance of debt in the long-term overview of the business.   

Along with the benefits present on the balance sheet, sale-leasebacks give you the chance to grow your business with ease. This means you can use the capital to open other locations, expand the current company, or acquire another business or real estate property. As you grow, the volatility risks of owning the asset decrease with this method.  

On the other hand, the purchaser can expect benefits as well. From the start, they achieve ownership of a cash-flowing asset that also happens to be backed by a long-term lease. They also know that the long-term lease is tied to someone who wants to be a tenant and continue to utilize the property because of how a sale-leaseback originates. As a result, the purchaser can deduct the property’s depreciation expenses from their income taxes. 

Find the perfect sale leaseback listing for you by looking at the active inventory Sands Investment Group has to offer. 

Work With Sands Investment Group 

The sale-leaseback may be the financing tool you’ve been waiting for to expand your business. Now that you know the basics, it is time to take the next step. Sands Investment Group has experience in all types of commercial real estate to help you navigate leveraging your existing assets for more capital to fund future investments. 

At Sands Investment Group you can find highly personalized client services with an extensive network of investors to help you get started on discovering more about sale leasebacks. Call 844.4.SIG.NNN or find out more on our website.      

As the country gradually opens up, in-person events are at the forefront of people’s minds. The world of commercial real estate has long since benefitted from the presence of events such as conferences. In an industry heavily influenced by relationships, conferences give brokers, market experts, investors, and other interested parties the chance to engage with others on a topic-specific scale. No matter your area of interest, there is a conference to explore. 

We’ve had the chance to see what it is like to host events online. While that filled the necessary gaps at the time, it’s important to take advantage of the benefits that only come with an in-person conference. You can find Sands Investment Group at many conferences throughout the year, where you can schedule time with one of our advisors.  

  

Step Out From Behind the Screen 

While programs like Zoom have become the closest thing to conferences in the past few years, they are not a replacement for the impact of in-person events. Your physical presence can say a great deal about your work. If you walk into the room confident and knowledgeable, that stands out to people in a way they cannot see over a computer screen. 

Networking Possibilities 

People attend conferences when the topic matters to them, and they want to be surrounded by others who feel the same. For commercial real estate, this gives you ample networking opportunities with colleagues who have similar interests in your area of expertise. 

This brings back the well-known concept of an elevator pitch. When the most relevant information about you is demonstrated in less than 30 seconds, you can establish credibility and cause without having to make the conversation too time-consuming. Make your commercial real estate skills clear from the beginning to draw out the most productive conversation.    

Grow Your Brand

By getting your name out into the commercial real estate industry, there is room to grow your personal brand. You can effectively generate leads for your business or establish a list of people to stay in contact with. 

Building leads in person creates that connection that the internet lacks. People can connect your face and actions with your business in a way that sticks. This is the best time to have business cards, handouts, and any extra information you need ready to give out, along with a strong handshake. 

Discover New Trends and Knowledge

There is always more to learn in commercial real estate. Conferences place you in locations surrounded by those who you can teach things about your market knowledge, but also people who you can learn from. Honing your skills can enhance your work once you step out of the conference and back into the workplace. 

This new knowledge often comes from two places: people and panels. By contributing to the networking and discussion, you are sure to learn from those you talk to. On the other hand, these conferences include informational sessions from industry experts on trends and foundational information. In the past few years, these have had to occur online. However, attending a session in person gives you more of a reason to pay attention and speak up when there is something to discuss. There is no more sitting behind a computer screen with the camera turned off. 

Schedule Time With a Sands Investment Group Advisor 

Have you signed up for an upcoming commercial real estate conference? This may be the perfect time to get to know one of our Sands Investment Group advisors. Step out from behind the screen and get back in person. The networking, knowledge, and growth that accompany it will be worth it. This year alone, we have had the chance to attend Inside Self Storage World Expo, BOMA International’s Medical Office Buildings + Healthcare Real Estate Conference, Private Equity New York Forum, The Car Wash Show, ICSC Las Vegas, and NAIOP – I.CON East 2022. We look forward to attending the NACS Show, Restaurant Finance + Development Conference and many others later this year. Contact our experts today to set up a meeting by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com.

The stock market is often the first thing that comes to peoples’ minds when they hear “investment.” However, it has become more and more worthwhile to take those same dollars and move them into real estate investing. With the proper guidance and considerations, the choice to invest in the real estate industry can bring returns that the stock market does not have.

At Sands Investment Group, we understand the benefits of investing in the commercial real estate industry. Our goal is to make others see it as well. These advantages can steer you towards new ways to grow your portfolio over time, from practical tax advantages to long-term security.

Real Estate vs. the Stock Market

Understanding how investing in commercial real estate differs from the stock market is more straightforward when comparing the two categories. Real estate is not as liquid as stocks, requiring more time, but the results often outweigh the disadvantage of time lost. 

When investing in the stock market, you buy a small piece of a company. This allows you to make money in two ways: value appreciation and dividends. On the other hand, real estate requires acquiring physical land or property. Here, the returns stem from collecting rent and property appreciation. The choice of what to invest in is personal and requires analyzing your financial situation, risk tolerance, and goals.

Practical Tax Advantages

The choice to invest in the commercial real estate industry comes with practical tax advantages. There are multiple instances of deducting expenses tied to owning an investment property. This includes mortgage interest, property taxes, management fees, insurance, ongoing maintenance costs, repair costs, and money spent finding potential renters.

From there, selling the property for more than you bought it results in taxing the income as capital gains, which usually entails lower tax rates.

Commercial real estate investors also have the chance to participate in 1031 exchanges that allow them to move from one property to another, providing tax benefits along the way. Learn more about this opportunity here.

Passive Income

There are few day-to-day requirements when investing in the real estate industry while still generating income. Consider this: in multi-family or residential properties, the revenue stems from rent. The tenant pays this, and the result is income for you. There is minimal action required to ensure that money comes in. On the other hand, the stock market requires more patience in seeing the result of the choices you are making at the moment.

Diversification of Your Portfolio

In recent years, we have seen why diversification of your portfolio can be advantageous. When economic turmoil occurs, having your investments in multiple locations can even out potential loss in other areas. If the stock market is struggling, your commercial real estate investments can still see success. It gives you another method of growth that does not require you to rely entirely on stock market investments.

Long-Term Security

If there is something that everyone is looking for in their financial decisions, it is long-term security. When investing in commercial real estate, you know that the time commitment is more significant than options such as the stock market. Over several years of owning the property, you can wait to see it appreciate. Along with that, you have the potential monthly rental revenue coming in.

With 10 to 25 year options, NNN leases are a great way for investors to find a reliable, long-term opportunity. Here, the business takes on the role of occupying the space for years. Due to this, landlords do not have to worry about finding new tenants to take on the space.

Feeling of Control

The physicality of commercial real estate investments gives buyers a feeling of control. You are the technical “CEO” of your investment in the role. This gives you the ability to cut costs, make improvements, choose tenants, change the rent, and decide on the best market opportunities. This lack of dependence on a larger entity, such as the stock market, can provide peace of mind knowing you can make changes when you want to.

Consider Commercial Real Estate Investing With Sands Investment Group

The stock market does not have to be your only option in investing. While it is considered a more hands-on investment, the commercial real estate industry gives you the returns you’re looking for. As we have continued to observe, it is valuable to find an option that provides peace of mind and a feeling of security in a tumultuous economy. Are you looking to place your finances somewhere other than the stock market? Sands Investment Group is the perfect place to start your commercial real estate investment journey. Contact our experts today by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com.

The world of commercial real estate has multiple facets of information. Investors, buyers, sellers, and anyone in between juggling plenty of important terminology, from the types of properties to how they are purchased. It is easy not to know where to start. 

This beginner’s guide to commercial real estate terms gives you a kickstart towards your goals. By breaking down the content into understandable sections and ideas, you can focus on what applies most to you—looking to take this new knowledge even further? Sands Investment Group is here to get you started. 

Understanding Commercial Real Estate Terms 

Categories of Commercial Real Estate 

Multifamily 

Multifamily is often considered the crossover between residential and commercial real estate. This means that someone can use the property residentially, but the property’s primary purpose is an investment opportunity. This is something such as a duplex or multi-unit apartment building. You can find out more by looking into the multifamily listings we have to offer.    

Office Space

Office spaces are typically broken up into urban or suburban. Urban office buildings are found in cities, often a part of skyscrapers and high-rise buildings. Suburban offices generally are smaller in size and often grouped in office parks. There are so many office listings to choose from, especially from the current collection of office listings we have at Sands Investment Group. 

Retail 

Retail spaces typically house retailers and restaurants. They can be single-use buildings that stand alone or multi-tenant. Often these are described as shopping centers as well. Shopping centers vary by size, concept, type, number of tenants, and trade area. If you are looking into investing in a retail space, there are many to choose from in our collection of retail listings.   

Industrial 

There are four main types of industrial-centered commercial real estate: heavy manufacturing, light assembly, flex warehouse, and bulk warehouse. They often vary heavily in size, depending on the specific use-cases. With many options to choose from, it is important to find the best fit for you. Sands Investment Group can help you make that call with our current collection of industrial listings. 

Hospitality  

Hospitality can also be referred to as hotels. These properties are described as full service, limited service, or extended stay locations.  

Commercial Real Estate Investing 

Land Banking  

Land banking refers to acquiring land, leaving their cash in a tangible, fixed asset rather than a savings account or the stock market. There are no extra payments of utilities, tenant issues, mortgage payments, or anything else that could impact a property.  

Fix and Flip 

With fix and flip, an investor purchases a property, renovates it, and then sells it for a profit. This is typically done at a discount because of its condition.   

Wholesaling 

Wholesaling is considered a strategy that includes a wholesaler entering in on a contract for a property before then selling it to a new buyer on behalf of the owner. This type of contract means that the wholesaler did not purchase the property, but they have the right to sell it for the owner.  

BRRRR  

BRRRR stands for “Buy, Rehab, Rent, Refinance, and Repeat.” This is a standard method of investment that contains more steps but brings forth a profitable result. 

Passive Investing  

Using passive investing, you can minimize buying and selling and maximize returns. This tracks a market-weighted index or portfolio. While it is most common in the equity market, it is more used in other investment spaces, such as commercial real estate. 

Location Considerations

Zoning  

Commercial zoning laws create regulations for different buildings. This often controls the type of activities a business can participate in, depending on the area. It also notifies what categories of business can occupy a zoned area. This can also factor into the features of the building as well in ways such as its setback.

Building Classification

There are three metropolitan base definitions for building classes. 

Class A 

Class A is deemed the most prestigious of buildings that have rents that are higher when compared to places in the proximity. They are considered state-of-the-art, accessible, and have a strong presence in the market.  

Class B

Class B is where most of the users can encounter average rent for the area. The finishes are not typically as well-done as Class A, but they are considered suitable for the site. These do not compete well when priced similarly to a Class A option.   

Class C

Class C classifications are properties with function space to rent below the area’s average cost.  

Request For Proposal 

As you determine what you need and want in a space, sharing that with a commercial real estate broker is an essential first step. You can submit these specifications in the “request for proposal” document as you find properties that meet your criteria. This document gives landlords information about what you are looking for to begin negotiations.  

Right of First Refusal 

This clause is advantageous for commercial buildings that receive a lot of attention. It requires a landlord to offer you additional space to lease before making it available to the general public. While you are offered this space first, you can refuse without implication.   

Rentable Square Footage   

Rentable square footage is the amount of usable square feet in a space, including a portion of the shared space. That common space is defined as the space that every tenant has access to and can use. 

Usable Square Footage 

Compared to rentable square footage, the usable square footage is the total area unique to the tenant. This does not include the shared common space that all tenants can use. 

Parking Ratio 

The parking ratio is the number of parking spaces in the property’s lot reserved for a company’s employees. This can be found by dividing your space’s total rentable square footage by the number of parking spaces.  

Option To Purchase

This part of a lease is the place of providing information to a company about how they can potentially purchase a space they are leasing. This is most commonly seen in whole-building leases with a single-tenant being responsible for the property. 

Sublease Clause

While not every landlord chooses to incorporate this clause, tenants need to reference it to see whether or not they can sublease the space to another business or individual. The tenant can consider renting out the space to someone else for some or all of the remainder of the lease when it is allowed.  

Estimating Value 

Cap Rate   

Capitalization rates are estimates used to compare the rates of return on commercial real estate properties. This number is found by dividing the property’s net operating income from its property asset value.    

Cost Approach

Cost approach is one of the methods used in real estate valuation. It estimates the price that a buyer should pay for a property as equal to the cost to build an equivalent building. 

Market Approach

The market approach determines the value of an asset by observing the value of other similar assets. This comparison can help decide what to price the asset at that fits fairly into the rest of the market.   

Income Capitalization Approach 

The income capitalization approach is a type of real estate appraisal that allows investors to use the property’s generated income to estimate its value.  

Gross Rent Multiplier (GRM) 

The gross rent multiplier (GRM) takes the property’s purchase price divided by the annual gross rents. This equation takes the numbers into account before considering property taxes, insurance, and utilities.  

Learn More With Sands Investment Group 

This beginner’s guide is just the start to learning the ropes of commercial real estate. Putting these terms into action can provide investment opportunities and a growing financial plan. Do you want to know more about the commercial real estate industry? Sands Investment Group is here to provide you with the resources and the knowledge you need. Talk to one of our advisors today to get started on your investment journey.

Are you interested in investing in commercial real estate? Investing can be crucial to an individual’s financial goals by offering financial security now and in the future. Investing can also allow you to increase your wealth over time as the value of the product increases. With the help of an advisor, you can begin building upon your real estate portfolio. Commercial real estate can offer a passive income with a premium return. 

Owning real estate assets may also allow for resale potential if the situation arises. If you are starting your commercial real estate investment journey, Sands Investment Group has the resources to help you confidently make investment decisions.

What is Commercial Real Estate?

Commercial real estate is different from its counterpart in residential real estate. Commercial real estate, or commercial property, is space used to conduct business, whereas residential real estate is used for living purposes. The commercial real estate industry is intended to generate a profit whether it be from capital gains or rental income. 

To invest in commercial real estate, an investment advisor can give you an overview of each category’s performance, supply, and demand. Then, you can choose what type of commercial real estate works best for you.

Types of Commercial Real Estate:

Commercial real estate can be placed in different categories based on the type of business residing in the space. You may also consider what the purpose of the property is when categorizing. These categories include multifamily, office, retail, industrial, hospitality, and special use. 

At Sands Investment Group, we specialize in the following commercial real estate product types:

• Automotive
• Convenience Store
• Dollar Store
• Drugstore
• Early Education
• Industrial
• Medical
• Office
• Owner-User
• Restaurant
• Retail / Big Box
• Self Storage
• Shopping Centers

Is it Sensible For Me to Invest in Commercial Real Estate?

Many people think of investments as stocks, bonds, mutual funds, or ETFs. However, investments can also be in commercial real estate.  There are numerous types of investments you can capitalize on in the realm of commercial real estate, and ultimately diversification is the key to managing your investment risk. However, successful acquisitions can vary due to multiple factors such as the economy and demographics. 

On the other hand, commercial real estate has proved to be a reliable investment during many market changes. To be successful with this choice of investment, you must set goals and decide what a commercial real estate investment could provide. 

What Type of Investor Are You?

Planning for your financial future entails deciding what the different choices will look like. During this time, you must analyze prior financial statements and determine what its current financial performance has the capacity to obtain. Then, when making investment decisions, you can take the time to evaluate time, risk, and value. This provides confidence in knowing that they will fit into your goals and future plans. Factors such as age, objectives, and tolerance to risk can be essential to what type of investor you are. 

After you determine the type of investor you are, it can help clarify how and why you should invest. Even if you have solid investments in place, you may find it wise to continue building your portfolio to meet financial goals. No two investment portfolios are identical. Investors can choose what options are best suited to their situation. 

Pros and Cons of Commercial Real Estate:

✓ Provide solid and predictable returns on investment over time.

X If not researched, potential risks of the market situation, such as oversupply.

✓ Provide a tangible asset.

X Can miss the property’s history of sales if not enough research is performed.

✓ Builds equity.

X Market cycles are constantly changing and do not last.

✓ Tax benefits from owning commercial real estate.

X Requires a commitment of time to upkeep.

✓ Commercial real estate assets have leverage.

X Maintenance costs may require professional help.

✓ Provide cash flow and more income.

X Requires a more significant initial investment.

Interested in Learning More About This Investment?

If you are interested in investing in commercial real estate, get in touch with a Sands Investment Group advisor to start your journey. Check out our current listings to see which commercial real estate investment would fit your needs. The opportunity you’ve been looking for might be one click away.  To learn more, get in touch with an expert today by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com. 

Thinking of expanding your portfolio by investing in the car wash industry? Owning a car wash can be a profitable addition to your work. Many car washes are owned by small business owners who started their investment journey. In fact, only 10% of car washes are not owned by small business owners. It may be time to invest in the car wash industry and all the opportunities it has to offer. Sands Investment Group has the resources to help aid you in your purchase decision on why you should invest in the car wash industry. 

Reasons To Invest:

With summer just around the corner, the car wash industry will be in high demand.  According to onedesk, 66% of car owners who live in the U.S. will get their vehicle washed anywhere from one to two times every month. Car owners have decreased their use of at-home washes and have rather utilized car washing facilities. 

While there are factors that dictate your income such as location and size, you will be investing in a market that is highly demanded by consumers. Location of your potential car wash is an important factor in determining the pros and cons of a car wash ownership. Different types of car washes will also require different finances such as down payments and space. Investing in the car wash industry is appropriate when it meets your goals, but not if you would be uncomfortable with its upkeep and par value. 

While there are many factors to consider in your purchasing decisions, here at some potential outcomes when a car wash is run correctly:

Increase Your Income

Owning a car wash gives you an increased revenue as there is a high volume of customers. According to Hedges & Company, 2022 is estimated to have 289.5 million registered cars in the United States. 20,000 cars washed in one year can bring you an average revenue of $139,000 alone. On average, car washes charge $15 dollars per car. This would not include additional add-ons that may be available. Investors can make a large profit off of the recurring income that the predictable consumer demand brings to the car wash industry.

Growth 

Owning a car wash will provide a safe and profitable investment. When car wash owners see the increased revenue, many decide to open other locations. They may add on a gas station for sale if space is allocated. According to Brandon Gaille, approximately 65% of car wash stations also dispense gasoline. This would also add new opportunities for growth and increased revenue within your investment. With this eagerness, you can create your own car wash brand on numerous sites. 

Added Real Estate Asset 

Owning a car wash also adds to your real estate portfolio. When owning this car wash real estate you are receiving a passive income but also a premium return. Owning this real estate asset also offers a resale potential. After making your decision to invest in a car wash, you can decide to sell the real estate/business down the road to fund your retirement or bring in more profit. 

How To Invest:

If you are interested in investing in the car wash industry you have two options. You may purchase an existing car wash or start from scratch. However, if you start from scratch, a SIG Car Wash advisor can help you complete the following steps:  

• Prepare a business plan: decide if investing is right for you. 
• Pick a car wash business type: full-service conveyer enterprises, express drive-through sites, and self-service establishments with bays. 
• Pick a location. 
• Check location for zoning and local regulations. 
• Cover financing needs: Paying in cash or using funding to cover the investment purchase, upgrades, and expenses up to at least one year. 

Consult A SIG Car Wash Advisor

Thinking of investing in the car wash industry? The investment opportunities hold limitless growth. Join SIG at The Car Wash Show in Nashville, TN on May: 5/9- 5/11. Become an attendee or make an appointment with a SIG member at the conference! We will be located in booth #556.

If you’re looking to invest in the car wash industry, get in touch with a SIG advisor. Our experts can help you find the right car wash property for your portfolio. SIG is home to experienced brokers that are designated experts in all areas of CRE, including car wash real estate.

Among its listings, Sands Investment Group offers several car washes that are guaranteed by a large company or a dominant regional operator. These car washes are set close to major roads and offer favorable demographics such as nearby retail stores, companies, and universities. They also offer long-term triple-net (NNN) leases of 15-20 years and attractive cap rates that range between 6.25%-7.5%. Contact the team by calling 844.4.SIG.NNN or check out our current car wash listings to get started with your car wash investment.

Healthcare real estate has been a growing asset over the last several years and it will continue to be a good place to invest based on expert opinion. Healthcare real estate assets include hospitals, medical centers, nursing facilities, and retirement homes. 

Why Invest in Healthcare Real Estate?

Healthcare is one of the most interesting spaces for private equity real estate investors. The success of this real estate is directly tied to the healthcare system.  If you’re looking for a solid real estate investment, it pays to look at healthcare REITs or real estate investment trusts.

Benefits

Healthcare REITs benefit from the massive and growing healthcare industry, one of the largest stock market sectors. While healthcare spending in the U.S. peaked at $3.8 trillion in 2019, it declined by 2% in 2020 due to the COVID-19 pandemic. However, it started growing again in 2021 and is on track to top $6 trillion by 2028.

Forecasts suggest the demand for healthcare-related real estate will continue growing. REITs are likely to benefit from steadily rising rental rates on existing properties. In addition, they should be able to develop new properties to meet the growing needs of the healthcare industry.

One of the drivers of the sector’s projected growth is the aging of the baby boom generation. The population of individuals over the age of 80 years old is expected to be one of the fastest-growing age groups through 2029. The increase in the ranks of the elderlyis predicted to  drive demand for senior housing and skilled nursing facilities. Such growth is likely to benefit healthcare REITs focused on those properties as they report higher occupancy levels, allowing them to raise their rates.

Risks

While healthcare REITs are less risky than other healthcare investments because of their generally stable rental income, they’re not without risk.

• Leverage risk: REITs borrow heavily to acquire and develop real estate. The debt reduces their financial flexibility during economic recessions.
• Interest rate risk: REITs are highly sensitive to changes in interest rates. Higher rates increase their cost of debt, given the sector’s use of leverage. In addition, higher interest rates give income-focused investors more investment options that offer an attractive income yield, such as government and corporate bonds, which can weigh on REIT stock prices.
• Oversupply risk: Healthcare REITs need to match their development plans with demand. Given the highly specialized nature of most healthcare facilities, REITs need to be careful not to build too much supply or it is likely that it will sit vacant.
• Tenant risk: Healthcare REITs rely on their tenants to pay rent and manage senior living facilities effectively. However, healthcare margins are relatively thin, which can cause operators to run into financial trouble if they’re not vigilant. That can affect rental receipts and force a healthcare REIT to find a new tenant for their facility if an operator can’t meet its financial obligations.
• Pandemic/flu season risk: Virus outbreaks can significantly affect healthcare REITs, especially those focused on senior housing. This can cause occupancy to decline as more patients check out than are admitted.

How to Invest in Healthcare Real Estate

Healthcare REITs

Healthcare REITs own, operate, manage, acquire, and develop healthcare-related real estate. These facilities include senior living communities, hospitals, medical offices, outpatient facilities, life science innovation and research properties, and skilled nursing facilities. Medical commercial real estate is often called MedTail, short for medical retail.

Most healthcare REITs make money by leasing space in their facilities to tenants such as healthcare systems, primarily under triple net leases. This lease structure requires the tenant to cover maintenance, real estate taxes, and building insurance. The structure provides REITS with a very predictable stream of rental income, making them ideal stocks to invest in during a recession.

Some healthcare REITs also operate the facilities they own, such as senior living communities. They typically hire a third-party manager who earns a fee for managing the property’s day-to-day operations. The healthcare REIT generates net operating income from the fees paid on behalf of patients for their housing and any services provided. The income can vary due to fluctuations in occupancy levels and rates.

Consult a SIG Advisor

If you’re interested in healthcare real estate investment, get in touch with a SIG advisor. Our experts can help you find the right healthcare property for your portfolio. SIG is home to experienced brokers that are designated experts in all areas of CRE, including healthcare real estate.

 

Want to learn more? Call 844.4.SIG.NNN or contact us here to consult with a SIG advisor about growing your commercial real estate portfolio. 

Mixed-use zoning is a type of urban zoning that blends multiple types of properties that would fall into more than one standard zoning category. Mixed-use zoning is applied to places where residential, commercial, and industrial spaces are integrated. Often these developments are “walkable” or have pedestrian connections. Read more →

Whether you are brand new to CRE or a veteran investor, the time is going to come when you want to start growing your commercial real estate portfolio. Even if you have solid investments in place, it’s wise to look for ways to build your portfolio into one that will help you meet your financial goals.

No two investment portfolios are identical and investors typically choose different CRE asset types to put their money into. Real estate portfolios can include investments in real estate investment trusts (REITs), real estate mutual funds, or investment properties like office, retail, multifamily, or industrial space.

Tips for Growing Your Commercial Real Estate Portfolio

When growing your commercial real estate portfolio, there are several areas you should focus on. From finding the asset types that will serve you best all the way through deal negotiation, the following tips will be helpful as your CRE portfolio develops.

Setting Goals and Making Plans

The first step in building your CRE portfolio is to think about your financial goals. What do you want your investments to achieve? Are you looking for an additional source of monthly income to pay the bills? Do you want to work towards complete financial freedom and build a business based on CRE investments? Do you want to put away more money for your family and retirement? These are all valid goals that a good CRE investment portfolio can help you achieve.

Once you have set your financial goals, you can make a plan to build a portfolio that will serve your needs. Creating a real estate business plan with specific goals laid out will give you a roadmap to follow on your investment journey. The map may change, but having a starting point is essential. Consulting with an investment advisor specializing in commercial real estate is beneficial for making your CRE business plan.

Exploring Different CRE Asset Types

If you’re interested in growing your commercial real estate portfolio, keep an open mind about investing in different types of commercial properties. There are a lot of commercial properties out there, and not all of them will be right for your portfolio, but some will. The best type of property for your portfolio will depend on the market you’re in, how much money you have to invest, your timeline, and many other factors. That’s why we recommend consulting a commercial real estate advisor about different types of properties.

You will want to consider the type of income you want from your property as well as the CRE product type that will provide the best return on investment for you.

Types of Property Investment Income

One factor to take into account when you’re looking to build a strong CRE portfolio is the type of income you want from your property investment. There are two types of investment income: cash flow and capital gains (sometimes called capital growth). To build a strong portfolio, you might want to consider both types of investment income.

Capital Gains Investments

Capital gains investments are made with the goal of capitalizing on the long-term appreciation of a property. In simpler terms, you buy a property with the intention of keeping it for a period of time before selling it for a profit. The popular motto of “buy low and sell high” is the central idea of capital gains investing. ROI is usually higher in capital gains investment than it is in cash flow investment. However, it is riskier because there is more speculation involved and market fluctuations can make a big impact on success.

Capital gains investors are often called “flippers” and fall into two categories:

1. Investors who buy a property and flip it as-is: These investors buy on market speculation. They buy properties and don’t make any changes in anticipation that the market down the road will yield a profit when they sell the property.
2. Investors who buy, fix, and flip a property: These investors buy properties and invest time, money, and labor into improving the properties with the goal of using the upgrades to increase the value and selling price of the property.

Cash Flow Investments

Cash flow investments are based on the potential return on investment (ROI) the investment will yield on a regular basis. Rental properties in asset classes like office space, multifamily buildings, and self-storage facilities are examples of cash flow investments. Cash flow is your profit after collecting income, paying expenses, and reserving funds for future expenses or repairs.

Cash flow investments are usually long-term compared to capital gains investments. With a cash flow investment, you’re not purchasing the property with the intention of selling within a short span of time. When deciding whether or not a cash flow property is a good addition to your portfolio, keep these factors in mind:

• The rentability of the property and projected occupancy
• The expenses related to maintaining and/or improving the property
• The potential for property value appreciation

CRE Product Types

Commercial properties can also be put into different categories based on the type of business that uses the property, or what the purpose of the property is. These categories include multifamily, office, retail, industrial, hospitality, and special use. Sands Investment Group specializes in the following CRE product types:

• Automotive
• Convenience Store
• Dollar Store
• Drugstore
• Early Education
• Industrial
• Medical
• Office
• Owner-User
• Restaurant
• Retail
• Self Storage
• Strip Centers

Acquiring Assets

With your goals set and a plan in place, you can start building their portfolios by acquiring assets. The acquisition process includes:

• Studying Market Trends
• Evaluating Properties
• Analyzing Potential Income
• Calculating Expenses of Purchase
• Negotiating a Deal

Studying the market and looking at the properties that fit into your investment strategy are the beginning stages of the acquisition process. This groundwork is important for making the right choice, but there’s a lot more work involved. You may have found your dream property to add to your portfolio, but you need to analyze your potential income and calculate the expenses involved in purchasing the property before you can start negotiating a deal.

Getting a commercial property appraisal is an important part of the property evaluation process. No matter what your goals are with the purchase or sale of a property, an appraisal will be necessary. A commercial real estate appraisal helps to determine the value of a property. To learn about this step in the process, read our guide on What You Need to Know About a Commercial Real Estate Appraisal.

And of course, negotiating and closing the deal completes the acquisition process. Partnering with the right broker during your CRE purchase will help you negotiate the best deal possible for all parties involved. After a property is acquired and added to your portfolio, you can start considering your next move.

Balancing and Diversifying the Portfolio

As you are growing your commercial real estate portfolio, it’s important to take steps to balance and diversify the portfolio. As has been stated many times, you cannot avoid risk in the world of commercial real estate investment if you want to reap the rewards of profit. However, there is a line between taking risks and being reckless with your money. Diversifying your investments has the potential to strike a healthy balance between risk and reward.

Even when staying on top of commercial real estate trends, the market can be unpredictable and sometimes volatile. Having a balanced and diversified CRE portfolio can reduce the risk of loss or soften the blow if a certain asset class takes a hit in the market.

What Is Diversification?

When referring to investing as a whole (not just CRE investments), a diversified portfolio would include components like domestic and international stocks, bonds, short-term investments, mutual funds, and real estate investments.

Diversifying Commercial Real Estate Investment

Diversification means investing in different property types with unique risk-reward profiles. Investors can diversify their CRE portfolios in several ways, including:

• Investing in different asset types
• Investing in different asset classes
• Diversifying investments by geographical location or market
• Using multiple investment strategies and hold-times
• Mixing passive and active investments

Exploring different CRE product types is a great way to start the diversification process. You may also want to consider growing your commercial real estate portfolio with alternative investments. To learn more, read our guide to Diversifying Your Portfolio with Alternative Investments.

Choosing the right strategy for growing your commercial real estate portfolio will depend on economic and demographic cycles. An experienced commercial real estate advisor will be able to help you navigate the different types of properties and which would suit your CRE portfolio best.

Get in Touch with a SIG Advisor

If you’re interested in growing your commercial real estate portfolio, get in touch with a SIG advisor. Our experts are uniquely positioned to help you get the most out of your investments. We have brokers that are designated experts in each CRE product type.

Want to learn more? Call 844.4.SIG.NNN or contact us here to consult with a SIG advisor about growing your commercial real estate portfolio.

If you’ve read our post on Why You Should Consider a Childcare Asset for Your Next Net Lease Investment and want to learn more about early education property investments, you’ve come to the right place. We’re exploring more details about this asset class and providing crucial considerations for when you’re ready to make your next commercial real estate investment. Read more →

Commercial real estate investors and owners have faced a series of challenges due to the COVID-19 pandemic and those challenges will evolve. Nobody can predict the future, but we can get an idea of how things in 2022 will progress by looking at current CRE market trends.

While we can’t claim to be on the other side of the pandemic, the country is recovering. That means demographic and business trends will accelerate. When it comes to CRE investments, there will be an increased demand for certain assets as the year progresses. 

Savvy investors will consider CRE market trends when making decisions about where to put their money so they can take advantage of the more popular assets and how to look for opportunities among all asset classes.

CRE Market Trends to Watch

Here are 10 CRE market trends investors should watch for as we move into the Q2 of 2022 and look even further into the future.

1. Continued Market Recovery Post-COVID-19

The first CRE market trend to keep an eye on as 2022 progresses is the continued recovery of economic and CRE markets. That’s not to say everything will be on a constant upward slope. As current events affect prices, you can expect natural ups and downs. As we move further into 2022, we are getting closer to a “new normal” where the market will gain more stability and CRE investment opportunities will keep improving. There may be setbacks and flare-ups along the way, but trends indicate that they will be short-lived.

 

2. Evolving Retail Models

The way people shop has changed over time, which impacts retail property investment. During the early days of the pandemic, consumers were pushed to spend a lot more online. But now that people are routinely out-and-about again, consumers are returning to retail spaces for in-person shopping. That doesn’t mean online shopping will drop off. Sales have risen in both online and in-store channels, so consumers seem to want more of both types of shopping.

In-store sales are rebounding for retailers because shoppers want to see their buying options in person. Leading to reduced vacancy rates in brick-and-mortar retail spaces, good investment opportunities in the retail property sector will increase and capital for financing will be readily available.

 

3. Self-Storage as a Popular Asset

Self-storage is a very popular asset to invest in now. A large number of American households rent storage units and demand remains high during all phases of an economic cycle. That means occupancy rates are stable and revenue streams are steady. Investing in self-storage is advantageous because it is somewhat passive and requires less capital. Check out our post on why self-storage investment is a smart move for your portfolio for a more in-depth look at this CRE trend.

 

4. Continued Growth in the Multifamily Sector 

In 2021, multifamily investment performed very well. Investors can expect that to continue through 2022. According to Crexi, multifamily was the fastest-selling asset type in 2021. The average closing times reached 123 days in Q3 and the market should see increased demand in the next year.

Factors behind this CRE market trend are low supply in single-family homes due to construction limits, price competition along with household formation. The economy is growing, leading to the formation of new households looking for housing. Along with household formation, growth is being driven by people looking for quality multifamily housing with more space to accommodate growing families and working from home.

 

5. Increased Interest in Senior Housing

Senior living, skilled nursing, and residential health care facilities were heavily impacted by COVID-19. Infections limited move-ins and occupancy of those facilities dropped. However, occupancy rates started increasing at the end of 2021 and will continue to rise as a CRE market trend in 2022. Full recovery may not happen this year, but investors should start considering this asset class again.

 

6. Changes in Office Space

Due to the pandemic, there is an existential change in the way people view workspaces. Working from home shifted attitudes about working in an office, making some investors wary of office properties. But that doesn’t need to be the case. While working from home seems to be here to stay, it will be part of a flexible hybrid model that also includes in-office work. 

The office will once again be the hub of business activity as people split their time between remote and in-person workplaces. As this setup becomes more common, occupancy in office spaces will be steadier. Demand for flex space, coworking space, and turnkey office space will also create investment opportunities. Forbes predicts that employers will look for larger, cost-effective locations while also demanding spaces with nice amenities and flexibility.

 

7. More Mixed-Use Space and Adaptive Reuse 

Investments in hospitality, office, and retail spaces will be smart moves as recovery from the pandemic continues, but changes to properties in those sectors may provide opportunities that will add value to portfolios in the future. Mixed-use zoning and adaptive reuse will be CRE trends to keep an eye on going forward. For example, an office becoming a mixed-use space may yield impressive returns in the future as the market continues to change.

 

8. Investors with Cash In Hand

Many real estate investment firms and private equity investors have cash ready. Many investors are making faster decisions and looking to invest capital before the cost of borrowing increases too much. They will be looking to put money into the hot asset classes like self-storage and multifamily, but they will also look for other places to invest their stockpiled cash, in sectors such as hospitality and retail.

 

9. Supply-Chain Issues Impacting Industrial Development

Manufacturers, logistics companies, and retailers are all seeking solutions for supply chain issues. These issues have been plaguing businesses for a long time, but it has just recently caught up to the commercial real estate market. 

Transportation and insurance costs are rising and space near seaports is limited and in high demand. For those reasons, things are moving inland for people building new facilities and working on development projects for expansions. There will be an increase in industrial properties in population centers, and in close proximity to highways and airports. 

 

10. The Proptech Revolution Continues

Technology and software will continue to grow in importance in the commercial real estate world. Property technology (proptech) is vital to many aspects of CRE investments for both brokers and landlords. Software platforms and databases are used for managing deals and portfolios and aid in property management.

Proptech is the key to making things more customer-centered as tenants expect online platforms to streamline operations and improve their user experience.

However, it’s important to keep in mind that technology alone won’t yield success in the commercial real estate industry. An online platform or database will never replace the industry knowledge of an experienced broker. Using property technology to connect people and systems simply makes things more efficient, which drives revenue.

Work with an Experienced Broker

If you’re an investor looking to take advantage of the current CRE market trends and grow your portfolio, get in touch with a SIG advisor. Our experts are uniquely positioned to help you get the most out of your investment. We have brokers that are designated experts in each CRE product type so you can explore the current trends within each specific asset type.

Want to learn more? Call 844.4.SIG.NNN or contact us here to talk about working with our team.

Did you know that around 10% of households currently use a storage unit? The demand for storage space means that you might want to consider adding a self-storage investment to your portfolio. Compared to retail, hotel, and residential properties, self-storage properties have minimal management and lower capital expenditures.

Read more →

Investing can be an interesting and lucrative career – or even a side hustle or hobby – for many people. There are different ways to get into investing, but some of the most common include stocks, bonds, mutual funds, and real estate. After a volatile 2020 in traditional stock and bond markets, there is increased interest in alternative investments. Because it’s always a good idea to diversify a portfolio, many investors are looking at different opportunities for growth. First, let’s take a look at alternative investments. Then, let’s look at the different types of real estate investors are often interested in acquiring.  Read more →