Investments in Commercial Real Estate: Where are the best opportunities?

The classifications are large and diverse in the field of investments in commercial real estate and just some of the opportunities lie in several leading categories.

• Retail, Office, Industrial, Medical Triple Net Properties
• Apartments
• Public Storage
• Land

Value Add Investments in Commercial Real Estate that need Assistance (Repair and New Tenancy)

Risk /Reward tolerance level, staying power, infusion of large amounts of capital determine which group you would like to enter. Of course, higher rewards comes with larger risk and that means being able to supply capital and wait out down trends to restore tenancy to higher levels with higher rents translating to lower cap rates and better value. Investments in commercial real estate also are determined with the credit of tenants and what the lender is willing to grant you in the way of financing for each project you undertake. Banks today want to see much higher down payments or equity per deal and will grant lower interest rates with longer terms for the best of tenants not the average one. A strong national tenant will bring lower rates and more years than a local strong tenant with less credit rating.

Apartments are hot sector in investments in commercial real estate with housing at a low level of occupancy and qualifications much more difficult for the average family to justify buying a house. Thus apartments stay filled at higher rents but of course management is key and aggravation to be expected.

Office buildings are not doing as well for many businesses are consolidating and laying off workers, shrinking the space needed, increasing vacancies nationwide and lowering rent expectations for landlords. Industrial is also slowing down for business is not expanding and therefore business not needing more space for goods to be stored and shipped. But public storage is great, for homeowners are moving out of houses to apartments and need a place to store their personal items which increases the need for public storage and raises their rents.

Investments in commercial real estate will always fluctuate with the times and one sector replaces the other as the winner when the economic situation dictates. The above mentioned sectors will react to the housing market and unemployment numbers in a very direct fashion and will rebound when both these sectors regain a more positive outcome of performance.