Investing in Retail Properties and Office Buildings
If you are a commercial investor looking for something new this year, you may want to consider investing in retail properties or office buildings. However, before you get totally involved in a new realm of commercial real estate investing, no doubt you want to do your research and find out as much as possible about the opportunities that lie ahead of you. On the one hand, since retail sales are now decelerating, the demand for space is now lessening, so this could be a worrisome place to invest, since you could lose money. However, on the other hand, recently more than $71 billion traded hands in the first quarter for office properties, which is a record. A Few Types of Investments to Consider If you really want to make some money in commercial real estate, there are several different types of retail properties that you may want to give some consideration. The following are several to consider, including anchored shopping centers, strip malls, and of course, office buildings.
Type #1 - Anchored Shopping Centers - Basically a shopping center that is an anchored shopping center is a mall complex that can be either outdoor or indoor, and it has a major tenant, such as a well known department store or supermarket that has the large portion of the entire shopping area. This is known as the anchor. The four types of anchors that will bring in the best return to retail properties include movie theaters, supermarkets, department stores, and drugstores. Usually you'll find that these types of retail properties are easy to manage and you'll only have to worry about taxes, grounds maintenance, management, structural maintenance, and insurance.
Type #2 - Strip Mall - Another type of retail property you may consider investing in this year is a strip mall. Usually these strip malls have several different retail stores that average around 1000 square feet apiece. These strip malls are designed to have great visibility and are usually located in neighborhoods that are quite populated and streets that are well traveled and that have great access. Since these strip malls are not that big, they are quite easy to manage. They also require a smaller investment than other types of commercial real estate properties as well. Usually the leases don't last as long as well, so when you renew the lease you can increase what you charge, which will help you make even more money. Of course when investing in a strip mall, location is of great importance if you want to get a good return on your investment.
Type#3 - Office Buildings - Office buildings can be a bit more complicated, but they can bring terrific returns, especially during good economic times. When you own an office building you are usually in charge of paying for cleaning services, heat and air conditioning, electric, and internal repairs are usually up to you as well. When the economy fluctuates, it usually affects the income you can make from office buildings as well. During times when the economy is great, usually you'll find that rents are higher, vacancy rates are lower, and you will be able to make more from the commercial real estate investment. Also, if you want to invest in an office building, you'll usually have to lay down quite a bit of cash, so this is not the choice for you if you are still only a novice investor.
Outlook for Commercial Real Estate in 2008 More than likely as we go into a new year, you are wondering about the outlook for commercial real estate in 2008. With the way the economy is going, the commercial real estate market is expected to do well in the coming year. While residential real estate sales are somewhat down, there are no signs that the commercial market is going to do the same thing anytime soon. While retail properties may suffer a bit, office buildings show signs of flourishing in the coming year. So, now is definitely a great time to start thinking about branching out into some other types of commercial real estate investing.
Tell others about
this page:
Comments? Questions? Email Here