The economy is on the mend, but — as some would say — we’re not necessarily out of the woods yet. That means it is the perfect time to secure reliable, supplemental income, just in case. And commercial real estate investing may be the perfect way to do it. The outlook is pretty good: Vacancy rates are slowly trending downward, with a slight office vacancy rate drop from 15.7 to 15.6%, a decrease in industrial vacancies (8.8 to 8.4%), and retail vacancies dropping from 9.7 to 9.5%.
Of course, whether you pay cash or secure a commercial real estate loan when investing in commercial real estate, it is important to make decisions that are as lucrative as possible. What is the most value sort of commercial real estate? Here is why a growing number of investors are choosing office space over apartment buildings and rental properties.
Apartments Can Be A Bit Of A Headache
When buying commercial real estate, it is important to understand that any and all kinds of properties will require some maintenance and upkeep, but let’s face it. Tenants in residential buildings tend to carry a lot more risk. Since most office environments enforce a certain amount of professionalism, you don’t have to worry about rowdy (and possibly damaging) behavior and noise complaints. And, although it’s slightly more common to have animals in the office than it used to be, just about all offices remain 100% pet-free.
Urbanization Is Always A Good Thing
When you are renting out apartment units, things can get tricky. For instance, if a lot of commercial development occurs, that may scare off current or future tenants. Some people simply do not want to live in an area when populations spike and commercial development takes off. Office buildings tend to be the opposite. Instead of being put off by a growing hub of activity, people will likely welcome it — and you will, if anything, get more tenants.
When it comes to commercial real estate financing and commercial real estate investing, office buildings and office spaces may be your best bet. The spaces have a higher return (a return of 7 to 8% vs. residential property’s return of 1.5 to 2.5%), things are a bit more low-key, and development does not hinder your investment or progress.