Many people are rethinking their investment plans for 2022 because the market isn’t sure what will happen. At first glance, the market looks scary. There are many different versions of COVID-19, inflation is at an all-time high, and gas prices are going through the roof.
You might also be comparing the commercial real estate market to the residential market, which is slowed down by low inventory, bidding wars, and short turnaround times. It’s easy to think that the commercial real estate market has the same problems, but that’s not the case. Commercial property is ripe for the picking, and predictions show that now is a great time to buy a new property.
Let’s talk about the four best reasons to invest in commercial real estate right now:
Commercial Real Estate is an Investment Strategy Alternative to Equities and Bonds
Commercial real estate investing is an alternative to the traditional stock and bond portfolio. It protects against the risks of the public market by giving you a return on the cash flow that comes from tenant rents in real estate assets.
Investing in high-quality commercial real estate assets can protect you from inflation because rents tend to increase at the same rate. Well-located assets also tend to appreciate a bonus on the regular income yield.
E-commerce is Increasing Factory and Warehousing Demand
E-commerce is the future, and it will replace many of the stores we know and love. During the height of the pandemic, when more and more commercial real estate was put up for sale, doors closed. Now, they are expected to open again. But not in the way we are used to.
Online stores still need physical places to make products, pack orders, and ship them. Commercial real estate will continue to grow as more people use these new ways to shop. Even though brick-and-mortar stores might be replaced, these spaces will likely be turned into e-commerce locations. Even whole malls can be used for e-commerce fulfillment and distribution.
Return to Office Movement is Gaining Momentum
As the COVID-19 pandemic falls further down the news, many companies are once again expecting their employees to return to a physical office space instead of continuing to work from home. Even though many employers like the idea of letting their employees keep a new hybrid work schedule, the fact that they still have to spend some days in the office face-to-face means that they still have to make the office a friendly place for both employees and clients.
Commercial Real Estate is Stable for Rental Properties
We all know that many stores, businesses, and government agencies choose to lease their retail or commercial spaces instead of buying them. Because of this, the income potential of commercial real estate spaces is especially appealing to people who want to invest in real estate to make extra money.
Bank of America says that the average annual return on the price paid for a commercial property is between 6-12%. This number is much more than you would make from investing in residential property. These leases are also longer and more stable. For example, a triple net lease can help you make money while the tenant takes most of the risk for the property’s operating costs. These commercial leases are a way to invest in commercial real estate and make a steady, low-risk income.
So, Are You Ready to Invest?
If you are interested in the current commercial market, you might want to talk to Mike Toledo, an investment strategist, and commercial real estate agent. He will do everything he can to help you learn what you need to know to make this very important choice.
Working with an expert in the field will help you set up your investment for success and allow you to buy your own retail or office space or become a commercial landlord, investment strategist, or commercial real estate broker. When you look at the top four reasons why now is a good time to invest in commercial real estate, you can see that there are benefits to doing so.
To know more, call us at 909-821-7958 and get to know Southern California’s leading real estate agent.
