The Boston Metro area enjoys a healthy business climate that is complimented by a well-educated workforce. Boston’s vitality attracts investors from around the world, with foreign buyers spending 4.2 billion dollars on Boston office properties during 2014.
Fortunately, the diversity of commercial real estate in the Boston area means that there are plenty of opportunities for investors. A popular choice is mixed-use properties that offer some combination of retail, office and residential space, allowing for diversification of income types within the same building. There are also many other commercial property options in retail, apartments, industrial and office space.
Investing in commercial real estate can be lucrative. According to an article by Nolo.com, the average annual return on commercial real estate ranges from 6% to 12%. Also, the nature of triple-net leases puts most of the costs of maintenance and taxes on the lessee. As a whole, the regulations surrounding commercial leases are more advantageous to the property owner than those involved in residential properties.
Commercial real estate market values also have more transparency in their calculations. Owner income statements can be used to evidence cash flow and calculate the cap rate, which is the annual expected return on investment.
However, as with any investment, there are risks. Commercial real estate investment requires more up-front capital than a residential purchase. The expenditures for repairs that fall under owner responsibility can also be quite expensive. Another consideration is the liability that comes with public access.
Investing in commercial real estate requires you determining your own risk tolerance, long-term investment objectives and financial resources. You must also have the guidance of an experienced commercial real estate broker who is astute with the market dynamics involved with your property type and location.
Whether you are thinking of buying Boston Metro commercial real estate as an investment, or to house your business operations, we can help you find the ideal property. Please contact us today for expert guidance!