We ofter get the question – what is it like to work in commercial real estate.
Commercial Real Estate is not an investment that can be simplified under one label. The major types all have their own considerations. When we talk to customers about commercial real estate, we first talk about the four major types: Office, Retail, Industrial, and Multi-Family. And within these are sub-types that have their own demand, supply and investment return patterns.
- Office is more than urban high rises and office condos. We have to look at medical office differently as it requires a configuration and support that is unique.
- Retail is broad. Within it there are restaurants, specialty stores, gas stations, hospitality venues, and even things like car washes or shopping centers. Each of these have their own investment profile and lifecycle. For example, once a property has been used as a gas station or auto repair facility, it really shouldn’t be considered for food service or a restaurant without completing an environmental study.
- Industrial can be common in certain areas due to zoning. Warehouses, manufacturing, self-storage each have their own considerations. A common space type within Industrial is Flex space, which is a building shell that can be converted into part warehouse and part office. Ideal for the entrepreneur or small business.
- Multi-family is a broad term for any property with more than four units. Apartment buildings, mixed-use, and multiplex residences can be considered multi-family.
When someone asks us how the commercial real estate market is, not only do we need to consider the local market, zoning, comprehensive plans, the employment numbers, vacancy rates, and discretionary income, we also have to consider the specific type. Each type can have its own distinct pace of change in the cycle of recovery, oversupply, expansion, and recession.
Your needs may be to use commercial real estate for your own business, or to generate long term equity. Perhaps you may a need to defer or avoid capital gains taxes through an opportunity zone investment, or you are interested in generating recurring cash flow. You may have your own need for level of involvement in the investment. All types can be considered. It’s about matching your needs, the location, and the considerations. Don’t forget to reach out to us for more about this topic and what commercial real estate investments may be right for your future.