From commercial real estate investment through acquisitions and dispositions, landlord and tenant representation - Seaport Commercial focuses on your real estate needs backed by research, advanced valuation techniques, leverage of technology, and a track record of success.
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Advantages Of Commercial Real Estate Investing
Please note that Seaport relies on the services of CoStar Group, Crexi, and many other data providers to perform high-level analytics including but not limited to Cash Flow Analysis and Feasibility Studies to expose and market properties with hidden opportunities.
Opportunities revealed by good data: CoStar (CSGP), the world’s largest provider of commercial real estate information, has revolutionized the industry for those brokers who can afford to pay the monthly subscription and interpret the data for their clients. Tim Bray, Broker/Owner of Seaport Commercial, was one of the first employees at Costar and has mastered this craft. Having access to a national database of property information including lease terms, market rents, and trending reports give seaport clients an edge.
Higher Returns: Our guess is that you have heard the saying, ”with greater risk comes greater reward,” which is the case with commercial properties and higher returns. Compared to the returns on residential properties (in normal years), commercial property cash flow and returns are far more attractive. According to the National Council of Real Estate Investment Fiduciaries, Property Index, commercial real estate investments have an annual average return of 12.7% compared to the S&P 500, with an average annual return of 8.8% over the past 15 years.
Qualified Tenants: It can sometimes be difficult for investors looking to rent out their single-family property (or small multi-unit property) to find tenants who are qualified and treat the property with a sense of pride. On the other hand, commercial tenants tend to be businesses, corporations, and entrepreneurs. Because a larger company backs them, they are typically more likely to respect the property, its rules and have a greater level of accountability. While this is not always the case, qualified tenants will make any property owner’s life easier.
Triple Net Leases: While triple net leases vary from case to case, they are extremely valuable for commercial real estate investors. With a triple net lease, the property owner does not have to pay any property expenses. The lessee handles all property expenses directly, including real estate taxes, so all the property owner has to pay is the mortgage. Big companies like Starbucks, Target, Walmart, etc., will typically sign this type of lease to maintain a look and feel in line with their branding. So they manage those costs while the investor pays practically nothing in maintenance costs. Talk about a win-win. Investors can adopt various net leases; however, a triple net lease is specifically a benefit of commercial properties alone.
Longer Lease Terms: Commercial leases tend to be much longer when compared to residential properties, which typically range from six to 12 months. It is not uncommon for commercial properties to lease for anywhere from five to 10 years. For investors, this means lower turnover costs and vacancy rates. The long lease terms signal reliable, positive cash flow for those worried about marketing a property from year to year. Commercial investors can end up with less than desirable tenants for extended periods of time. Still, with the right application process and legal protections, investors can avoid any long-term issues.
- Easier To Increase Value: One of the biggest differences in residential and commercial real estate is how property values are determined. While comparable properties largely influence residential real estate, commercial real estate is directly impacted by its revenue. Simply put, the amount of cash flow a commercial property is earning, the higher the property value will be. With the right tenants, investors could see an increase in value at a much faster rate than residential housing.
Seaport Commercial knows that it is of utmost importance to evaluate all the pros and cons before making investment recommendations. Contact an agent today.