Commercial Real Estate Investing Strategies You Should Try

Commercial real estate can be an excellent addition to a diversified investment portfolio.

Investors turn to it because of its attractive characteristics, including income-generating potential, inflation hedging, and capital preservation. Often real estate investments are less correlated to stocks and bonds than other common investments, making them the wiser choice in times of economic uncertainty.

If you want to build a profitable real estate investment portfolio, a good rule of thumb is to hire a professional to help. However, it is reasonable to start with general guidelines that form the foundation for a diversified investment plan.

Risk Vs. Reward Tolerance

Before anything else, it’s important to have a clear awareness of where you stand in terms of risk versus reward tolerance. Reach out to a professional who can help you really map out where you are and where it’s safe for you to “go”.

Commercial Real Estate Investing Strategies

1. You Should Try Investing In Industrial Real Estate

Industrial real estate includes warehouses, warehouses that are used for other things, spaces that are easy to modify for a variety of uses, logistics areas, as well as fulfillment centers. The Urban Land Institute (ULI) released a 2020 Emerging Trends in Real Estate report that read, in part: “Today’s buyers see further potential for long-term gains … The outlooks for both operating conditions and investment trends lean positive.”

Investing in industrial real estate is still very much of high interest these days. According to experts, for each $1 billion in e-commerce sales that’s incremental, around 1.25 million square feet is needed for distribution space. Recent events of the last two years have only sped that up big time.

2. You Should Try Investing In Multifamily Real Estate

Multifamily residential real estate is, essentially, various types of apartments that the market has available. They’re often prioritized over the other assets, though it faces regulatory reform in some markets. This is due to both caps and rent control. 

Investors need to be aware of debt capital markets’ possible shifts if there’s ever restructuring of the residential lenders backed by the government (Freddie Mac and Fannie Mae).

3. You Should Try Investing In Office Real Estate

Office space in corporate buildings is also becoming a popular investment option. Investors are dedicated to getting assets that spearhead trends in sustainability and amenities. Parts of larger mixed-use developments are also included in the mess.

4. You Should Try Paying Close Attention to Economic Trends

It’s important to be careful when you’re selecting a property type. As the term suggests, ‘property type’ refers to the property’s use and relationship to the economic cycle at present. Mainly, those are:

  • Industrial
  • Multifamily
  • Office
  • Retail

That initial list of four all breaks down further into multiple subtypes, each with their own particulars. The economy and cycles have varying effects on real estate properties. Investor sentiment and the effect of these factors can cause real estate prices to change further. Diversification across types of properties can reduce risk in your portfolio and enhance returns.

Conclusion

Commercial real estate is mainly industrial, multifamily, office and retail. Be sure to determine your risk vs. reward tolerance. Try paying close attention to economic trends or investing in one of the four main categories.

Looking for commercial property management in Jacksonville, FL? Contact Quest Real Estate today! We’re a full-service real estate company that’s been helping clients all over Northeast Florida since the 1980s.