Almost everyone has seen the reality TV shows surrounding residential real estate investors. They purchase homes for low prices, fix them up, and then they either resell them or rent them out for profits. These TV shows boast the high amounts of money that can be made with real estate investing. Although this is a possibility, an often overlooked area of investment success is in the commercial real estate investment area. Commercial real estate is the process of purchasing spaces that can be turned into commercial leases.
Businesses have many uses for leasing commercial real estate development or a distribution warehouse space. When a business is just starting out, they often do not want to take the risk of purchasing their own space. They may not be successful, and purchasing a piece of commercial property can be a risky investment. Also, every business has the dream of expansion. If the business were to grow quickly, they would end up with a commercial space that was too small for their commercial needs.
The benefit of renting distribution warehouse space for new businesses is also a benefit for commercial real estate investors. Just like with residential real estate, there will always be a demand for commercial real estate properties and distribution warehouse spaces. Ecommerce, for example, is expected to grow at a compounded annual average rate of 10% over the next five years, creating tremendous opportunities for owners and developers of warehouse and distribution space.
Commercial real estate tenants also tend to be more willing to keep up with their rent payments. A renter of a residential property may have other living arrangements, choosing not to pay their last few months of rent. A commercial tenant may not have the same opportunity, as the office space holds all of their necessary business equipment and documents. They can also be sued for back rents and are more concerned about getting negative leasing recommendations that make affect future rentals, making them a more ideal investment tenant.
With the increase of Ecommerce businesses, there will be a higher demand for rental of commercial businesses. Commercial leases will see a significant increase in demand. Also in most cases, suiting a commercial lease to a business?s needs is relatively simple. Minor changes within the building can help cater to their needs, making the specific commercial rental more appealing. Often, a minimum lease time is required, so the investor has the ability to regain their money put into it for special accommodation requests.
However, most distribution warehouse spaces can also be rented out, as is. For example, if you were to purchase an empty space and build a warehouse site on it to fulfill a potential warehouses needs, to later find out they decided to go with another property. You still have a setup for a distribution warehouse space, and can cater to other distribution centers. Leasing a warehouse will always be in demand, as companies that provide products to their customers, such as in Ecommerce, will need a warehouse to produce those items.
Not only will the demand for warehouse lease space remain just as in demand as it already is, it is also expected to increase significantly. Since 2000, the amount of occupied distribution and warehouse space has increased by 86.2%. Approximately 166,907 men and women in the U.S. work in the storage and warehouse leasing industry. It is an important market with a huge potential for profits and regular income. Renting commercial real estate will always be in more demand than residential properties, because there are fewer products. The housing market tends to get overpopulated, with many homes on the market at once.
Many have dreamed of becoming their own residential real estate investor. The possibility of owning additional investment properties is one that many desire for. Commercial real estate investment is another area of real estate that produces good returns and quick profits. Some might say that business spaces will always be in more demand than residential spaces will. Businesses take less risk by choosing to rent an office space or distribution warehouse center. People will always start their own businesses, so there will always be an abundance of commercial lease tenants.