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March 19, 2012High-quality commercial real estate will be a mainstay of investors this year, a recent study by the Real Estate Research Corporation found.
"Commercial real estate does not have the major swings that we have been seeing in the stock market, it is a tangible asset in this world of surprises," said Kenneth Riggs, president and chairman of the organization, which has Duluth offices.
The report also states real estate offers a 10-year investment horizon; that is, it's foreseeable that commercial real estate will maintain its strength well into the future.
The advantages of real estate make it more "transparent," according to the report.
With this investment, you know what you are getting.
You can touch it, walk through it and see who's paying the rent. As with few other investments, real estate is tangible. This is "what the world wants," the report states.
In further good news, the study reports that 25 markets exceeded $1 billion in commercial sales in the first half of 2011. As to predictions for 2012, we should expect to see $50 million of office absorption nationwide this year, compared with $30 million last year. Industrial vacancy is predicted to drop to 9 percent by the end of 2012, and retail should be on the upswing by then.
Apartments top the study's predictions, based upon the decreasing home ownership rate, the difficulty to build new apartments and the easier access to apartment financing.
As bank financing has started to loosen up, investors are taking advantage of low interest rates to snatch up commercial investment. Even commercial real estate loans are hovering around 4 percent, making it a historically significant time to invest in a tangible, "real" asset.
Brian Patton, CCIM is a commercial real estate broker, author and instructor. He can be reached via his website www.CommercialPropertyGuy.com or via his cellphone 770-634-4848.