Experts in the commercial real estate industry are upbeat about the market, according to a recent article in National Real Estate Investor. Specifically, there are several property types that hold the most promise. Here are the top picks from commercial real estate analysts at RERC, Reis Inc, Green Street Advisors and Real Capital Analytics. We’ve added our own thoughts as well:
Suburban Office Space. While it was slow to rebound from the Great Recession, suburban office space is making a comeback. Nationally, office vacancy dropped 20 basis points in both the 4th quarter of 2015, and the 1st quarter of 2016. Out of 82 surveyed markets, including Boston, Reis found that 75 of them posted rent increases.
The upbeat projections for suburban office space assume stable economic growth, and consistent job growth. Like all real estate, this market segment is highly localized. The diverse economy of the Boston Metro supports optimism for this sector. However, there may be less demand for locations that are not accessible by public transportation.
Warehouses. Big-box, flex warehouse space is enjoying strong demand, thanks to e-commerce tenants. The key concern for investors is the functional obsolescence of older warehouses that may require significant updating. Scalable, flexible and well-located warehouses command the best rents.
Self-storage. Price appreciation within the self-storage industry has risen 16% over the past year, according to Green Street Advisors. Higher cap rates, solid net operating income growth, and low capital expenditures make self-storage an attractive commercial property investment.
Senior housing. Senior housing is experiencing upward demand as more Americans near retirement age, and live longer in the bargain. Active-adult 55+ communities, assisted-living homes and convalescence facilities are expected to have very low vacancy rates for decades to come.
Other categories showing promise for real estate investors include community-centric strip malls that offer essential retail, financial and medical services for nearby neighborhoods. Also, student housing continues to be resilient against changing economic conditions. Again, please keep in mind that localized market conditions will have a direct bearing in the strength of any commercial real estate investment.
Interested in investing in commercial property, or ready to begin, relocate or expand your business? Team up with an experienced commercial real estate broker at Jay Nuss Realty Group, LLC! Whether you are thinking of buying or leasing Boston Metro commercial real estate, we can help you find the ideal property. Please contact us today for expert guidance!