July 31, 2023 – Atlanta, GA | In the dynamic landscape of commercial real estate, the convenience store market stands out as a sector that is both susceptible to threats and brimming with opportunities. Working exclusively in the convenience store asset class, SIG Investment Advisor Matthew Riznyk has a good pulse and keeps a close eye on industry trends and data. With changing consumer preferences and advancements in technology, convenience store operators and investors alike must navigate a rapidly evolving market to stay competitive and capitalize on emerging trends. Read more
The market is shifting – what now? Despite the continuing rise in interest rates and the uncertain effects it will have on the economy, we believe certain sectors and markets are uniquely suited to thrive. You just need to know where to look. Read more
July 29, 2022 – By Sands Investment Group (SIG) – Despite rising interest rates, inflation, and geopolitical instability, SIG Early Education investment experts remain optimistic about the market for the remainder of 2022. Read more
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.
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:
- Convenience Store
- Dollar Store
- Early Education
- 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.
ORLANDO, FL – Sands Investment Group (SIG), net lease and shopping center investments leader, has recently closed the sale of a Home Depot shadow anchored shopping center in one of America’s fastest-growing metropolitan statistical areas, Orlando, Florida.
ATLANTA, GA – Sands Investment Group’s (SIG) Atlanta based automotive net-lease broker, Harry Archer, brokered the sale of a $13 million 8-unit Tires Plus portfolio across Atlanta and Athens, GA. Harry Archer and his team at Sands Investment Group represented the seller, a Southeast based private investor, as well as the buyer, a California-based REIT.
Charleston, SC (August 17, 2021)
Sands Investment Group (SIG) is ecstatic to report today that once again they have made the Inc. Magazine’s list of America’s Fastest-Growing Private Companies. Read more
Sands Investment Group Earns Recognition For Excellence in Leadership and Dynamic Growth!
Sands Investment Group (SIG) announced today its placement on the prestigious annual Inc. 5000 list of America’s fastest-growing private companies. The independent American business magazine provides insight into the dynamic success of small businesses in the US economy. Read more
August 6, 2020: By Andrew Ackerman – The triple net investment market has seen a two-fold shift amidst the COVID-19 pandemic. In late March, we saw a pause as investors took time to digest rapid changes in the global economy before making forward-thinking investment decisions. However, on the other hand, demand for NNN assets has been steady despite economic turmoil. Read more