As newly-minted American investors debate whether to invest in biotech startups or in commercial properties, established real estate investment firms continue to offer their clients solid investment returns on strongly-considered commercial real estate portfolios. Although “do it yourself” investment websites continue to proliferate online, investing in real estate may be a decision-making — and risk-taking — process that is best left to the professionals. Amateur investors tend to succeed or fail somewhat randomly, and experts know that established real estate investment firms understand the full complexity of the commercial real estate market.
Finding commercial real estate for lease is not a problem for amateur real estate investors, but what they don’t know about commercial property could damage their bottom line. Reports show that while the worldwide commercial real estate market is worth a staggering $780 billion, amateur investors may remain unaware of larger market trends. While there is no single method to ensure solid real estate investments, and while commercial real estate investors continue to enjoy a market that boasts incredibly high tenant occupancy rates, new investors are advised to continue under the watchful gaze of seasoned professionals.
For example, the market for server farms remains very promising in the American Midwest, but amateur investors may not be fully aware of the fact that these warehouse-sized facilities — housing extensive arrays of computer equipment — have begun to quietly spring up in larger urban areas as well. In addition, the market for urban recreational facilities such as rock climbing gymnasiums is beginning an extended period of expansion in larger markets. Can the amateur commercial real estate investor hope to parse such a dynamic market at all? Real estate investment strategies are only effective when the investor is aware of them, and investors who choose to “go it alone” could be missing lucrative investment opportunities.
Another trend affecting commercial real estate for lease in urban areas is an increasing shift toward rental and purchase of Class B buildings by small business owners hoping to gain a foothold in a competitive market. While Class A buildings generally offer larger retail spaces to investors — 50,000 square feet and larger is standard in most cities — Class B buildings can offer a more affordable investment for entrepreneurs. Often in very good repair, Class B facilities can allow a new business to focus on reaching customers instead of having to raise prices to keep pace with aggressive rental and operational costs. An established real estate investment company can offer new investors a more solid ROI, and experienced investors consistently report that they are looking for steady growth from their investment portfolios.
In larger urban areas, another trend is working to shape the decision-making process of commercial real estate investment firms: major stores, hoping to reach a wider customer base, are opening “discount” retail outlets in record numbers. The entire market for commercial real estate for lease and purchase is being deeply impacted by the average consumer’s ongoing search for discount prices. “Off-price” clothing and shoe sales continue to climb, and the market as a whole has nearly doubled in the last decade, surpassing the $45 billion mark late last year. Again, amateur investors may attempt to keep abreast of market trends, but may not realize the full potential of commercial real estate listings in urban areas.
While finding commercial real estate for lease or purchase is as easy as examining online listings and perusing local availability, but for a more sophisticated approach toward real estate investing, consulting with a real estate investment group is advised. Should I invest in restaurant franchises, vacation condominiums, urban non-profit groups, or should I be focused more on investment opportunities in international markets? Learning how to buy commercial real estate takes years — perhaps decades — and allowing guesswork to enter into major financial decision-making processes is something that even the most enthusiastic amateur investor should eschew in favor of more established real estate purchase and leasing practices.