Understanding The Commercial Real Estate Landscape
Commercial real estate is unique in the sense that you can craft a portfolio with quite a bit of diversity, if you so choose. There are five key types of commercial real estate that an investment property expert may advise you to consider. These include:
- Special Purpose
Let’s dive into the specific benefits and potential disadvantages of each sector.
Office space tends to be what people are most familiar with when it comes to commercial investment opportunities. This classification applies to everything from single-tenant offices to the soaring skyscrapers. Office space is divided further into three categories: Class A, B, and C.
- Class A - typically newly built or renovated in an ideal location with extensive amenities.
- Class B - tend to be older buildings requiring capital investments, including minor repairs and upgrades.
- Class C - most often used for redevelopment, typically due to poor location or out-of-date infrastructure/
Depending on the city you’re considering investing in, an investment property expert will be able to offer insight that will direct you either toward or away from office space in order to gain the highest yields.
Retail space is another category of commercial investment opportunity. Retail space offers quite a range of options, including stand alone properties like banks or restaurants, small-scale multi-unit properties like strip malls, and even large-scale multi-unit properties like community retail centers. Square footage in retail properties can vary from a couple thousand square feet to a couple hundred thousand square feet, giving investors flexibility on their price points and yields.
The research shows that if you’re going to unilaterally select a sector to invest in, industrial property is the place to be. Thanks to the rapid growth of online shopping, the need for and use of industrial real estate has boomed in recent years. While it is on the pricier end, any investment property expert worth their salt would recommend getting involved in the industrial sector of commercial real estate.
In the Denver area, in particular, the cannabis industry has pushed the industrial market forward. If this is the avenue you’re considering going when it comes to investing in commercial real estate, you’ll most certainly want to discuss your options with an investment property expert.
Multifamily is a very niche category of commercial real estate that includes apartments, condos, and smaller units that can house multiple families. Many experienced residential investors will use multifamily properties to bridge the gap into the commercial space. If this is something you’re considering, you will want to talk to an investment property expert who specializes in commercial space. Depending on the residential real estate trends of renters and buyers, you may even want to talk to a CRE expert who specializes in multifamily housing.
Special purpose commercial real estate caters to the niche business types that require specific elements to operate. These types of properties may include car washes, self-storage facilities, or any other kind of operation where the infrastructure of the building meets highly-specific operational needs. Mixed-use commercial property also falls into this category and encompasses properties that can support various types of use, including residential, retail, and even public sector.
The Benefits Of Investing In Commercial Real Estate
As we’ve laid out above, there are a lot of options when it comes to investing in commercial real estate. Working with a property investment expert can help you reap the maximum benefits of a well-planned strategy. Let’s review some of the reasons to consider investing in the commercial market.
- Potential Income - The key reason anyone invests in anything is the potential for higher income and more cash flow. Commercial real estate is no different. While the price points are much higher than that of other investment opportunities, the yields often parallel, generating a sizeable passive income for the investor.
- More Opportunity - The commercial space is great because the high barrier to entry means there’s less competition for the serious investor, especially one who is supported by an investment property expert who specializes in commercial properties.
- More Stability - Another key benefit of investing in the commercial market is the extended leasing period. This means less time and energy has to be spent marketing and leasing the property on an annual basis and more stability in income during the leasing period.
Getting Started: Investing With A Property Investment Expert
Investing in commercial real estate is a unique beast. It’s not something you want to enter in to without an investment property expert by your side. From the loan process to the success metrics, everything about investing in the commercial space is different.
If you’re considering investing in the commercial market, contact our investment property expert at Fountainhead Commercial in Denver today.