Understanding Commercial Investment and Leasing

Understanding Commercial Investment and Leasing

Net lease advisor

There are a lot of good reasons to consider commercial property investments. Commerical rent can be a great way to build assets. If you have any interest in investing in commercial property and collecting commercial rent, read on to learn all about it.

Constructions and Opportunities in Commerical Rent

The situation in the United States for investing in commercial property has in some ways never been better. Data from the United States Census Bureau shows that between December 2014 and December 2017, construction related to hotels increased by nearly 60%, while spending on construction for offices and related structures increased by 43%. In 2016 a lot of new commercial buildings were put up in America: over $74 billion worth.

Strong Demand Despite Plenty of Construction

All this property construction has not been wasted. Despite all the office-related construction spending increases in the last year, demand for office space was strong in 2017, particularly in the third quarter. There was high tenant interest and leasing was at a two-year high for activity rates. Over 62 million square feet were leased out in that quarter alone. In the five years before 2017, there was consistent strong demand for services in the commercial real estate industry. The annual growth for this industry was nearly 4% during that time. Since the beginning of 2018, the economy has only continued to surge and even better numbers are likely.

Investment Competition

One reason to consider getting in on commercial rent as an investment is that it’s still possible to do so fairly easily. Investments have been growing in this sector, and it’s always best to get in at the beginning whenever possible. In 2015 alone, there was an 85% surge in investment in American commercial real estate, and that may only increase going forward. The Real Estate Investing Report shows that over 50% of millennials are considering commercial lease types for investment. That’s the highest number among all age groups that were questioned. This age group is only getting started when it comes to investment power.

The Possibility of Commerical Rent

It might seem as if investing in a property would be out of reach, but it might be more of a possibility than you think. The Energy Information Administration has data showing that the majority, 72%, of commercial buildings are smaller than 10,000 square feet. Right now, to invest in triple net properties requires accreditation and a net worth of $1 million, not counting $200,000 of annual income and the value of your primary residence.

Know What Tripe Net Investment Is

This is a particular kind of commercial investment agreement. In it, the one leasing pays the three nets; hence the name triple net property or NNN lease. The three nets are real estate taxes, maintenance fees, and building insurance. These are in addition to commercial rent paid to the owner. Triple net leasing is the simplest and easiest for investors to collect commercial rent, though the commercial rent will, of course, be lower than with properties where the owner is responsible for taxes, maintenance and upkeep, and insurance.

Triple net properties can be a great way of diversifying investments. The sector is growing and demand is high. Interest in investing is only likely to grow as millennials become involved, so now is the time to get in on the ground floor.


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