If you were to research the various investment platforms available to you, you would find many important advantages about the commercial real estate market. The big advantage is that the rental returns can be considerably higher than those found in the residential sector.
The income returns you can expect from commercial properties falls within the range of 7 and 9 percent each year. Compare this to the 2 to 4 percent found in the residential sector. These statistics are taken from Norwest, an NSW Commercial Agency. The best way to begin improving the amounts you collect from your commercial rentals, you may consider allocating your resources in those rental sectors in high demand. This will requires keeping an eye on the market and an understanding of the underlying trends that can influence these values. Identifying market trends One of the most successful sectors of the market is tourism which has been on the rise and a smart investment option. There are always sudden booms in tourism in the Boston area due to various events and being a great sports town is a huge plus as well. Savills Q1 2015 report stated that because of this over $1 billion in hotel assets changed hands within a period of 12 months. This has set a record for the Boston markets. Of course, it didn’t take long for the investors to begin getting in on the action. Today’s backpacker inns and hotels are being bought up at record breaking prices. Another important trend that is contributing to the favorability of the market is large-format retail properties. Diversify your portfolio With the fluctuating Boston market, it is a good idea to keep your investments diversified to mitigate the harshness of any negative impacts. Commercial property can include industrial locations, offices, retail outlets, malls and even retail agribusiness. Specialty properties and even medical and retirement living solutions also fall into this category. Heathley Asset Management, a successful commercial investment company, did this very thing, they sold off a four office and industrial properties to achieve a $65 million bid that would buy them into the health and medical industry, Heathley Asset Management’s head of property, George Websdale, had this to say “Over the past few years we have increased our involvement in the medical and health sector and will continue to do so into the future as we take advantage of the valuable solutions and free up our resource tied in the industrial and office sector.” Anticipate market peaks and troughs While, the most important factors in commercial investment are not capital gains, you can still find some important deals that will provide this type of growth. To do this it will be essential to study the market and look for the highs and lows that indicate where your growth lies. Be tenant-savvy In addition to the demand being made for the hotel sector, we also see a rising number of investment opportunities in the childcare sector as well. These have a very high initial demand, and this can lead to strong returns.
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AuthorThroughout his career in Commercial Real Estate, Michael Snedeker has demonstrated a dual commitment to production and client service. Archives |