Many examples are illustrated yearly such as retail hot than warehouse take its place, why?
When the brick and mortar stores start to tail off for the internet buyer decides they want to purchase online, the warehouse distribution sector gets popular in order to service the internet orders.
Warehouses need to be all over the country to get a product to the consumer fast, thus the sector rises in value. Rents go up, vacancy goes down and cap rates lower.
Retail stores start to go down with fewer sales and larger vacancies.
The office buildings trend with the users wanting open spaces instead of smaller offices thus the warehouse becomes suitable for office instead of traditional storage creating a cheaper way to an office and less need for high or mid-rise expensive office space.
In addition, lawyers don’t need the large libraries anymore due to storage on the internet thus smaller use of office space. Many workers want to work from home instead of an office also causing less need for office space.
Homes purchases start to slow down and apartments get hot, along with the need for storage facilities near the apartments. The garage or smaller storage spaces with controlled air is valuable today. The apartment dweller has no room for all their items and cannot afford or qualify for a house, thus they store their personal items in the storage facilities.
The medical office is necessary when doctors decide to locate near hospitals and join together to share their expenses like high insurance premiums, labs and specialty practices feeding off each other in the same buildings.
Eye doctors having eyeglass operations in their own space or specialists for retina care as an example.
Independent living combined with assisted living and memory care all in the same complex. When an older citizen goes from the freedom of living on their own to needing some help and then the need of full care they simply move from one section to the next in the same facilities without a major disruption for the family and patient.
Why I always suggest diversification is for the very reason stated above. Sectors change every few years but buying in several sectors protect your investment dollars and even the cash flow in the long run. Depreciation and appreciation along with tax deductions are all part of these advantageous commercial properties and need to be studied to see which ones are the best for your age and your risk-reward tolerance level.
Spending hours catering to tenants like apartments or storage, to gain higher returns, maybe for younger type investors while triple net, single retail tenants are for older investors not wanting any responsibility or phone calls.
Getting loans for all these sectors is not difficult as long as you have sufficient equity or credit of the tenants or your good credit will do the job.
Hiring a real estate lawyer, a professional commercial broker, and a CPA is also very important in your positive end results. Trying to do things on your own is dangerous and not encouraged by the commercial real estate pros.
The Trump administration looks to be pointing toward a positive real estate direction with respect to tax rules and appreciation of future commercial real estate transactions. No major changes except smaller taxes on capital gains and less tax to pay when leaving assets to your heirs are the theme presently.
The stock market with its wild swings is not a place for most investors that are not interested in gambling, while commercial real estate investments seem to be on a trend of steady eddy cash flow with wonderful tax benefits second to none.