Despite a slower US economy, where real estate sales have become sluggish, William Collins, a real estate developer, believes those interested in investing in commercial real estate should carefully review both current and future indicators. For example, investing in a new 10-acre greenfield (apartment complex typically located in the suburbs) or even the construction of a government-subsidized multifamily, low-income complex are excellent choices.
On the other hand, states William Collins, investing in a
new strip mall or office building in urban locations should probably wait until
the economy improves, and many global issues have been resolved.
What's affecting Commercial
Real Estate Development
Investing in commercial real estate has a wide range of
options for the investor or joint venture group. William Collins has also been
very successful in taking advantage of the passive income value of the real
estate by investing in large-scale CRE upgrades (capital renovations) that
typically require less money.
Geopolitical
issues
The war in Ukraine and sanctions on Russia will be a big
factor for CRE in 2023. Chain supply issues will cause an increase in building
material costs. And, when you add the tremendous increase in diesel gas prices,
the uncertainty in real estate investing will continue to be volatile.
Record-high
inflation
The pressures put on our economy by increased inflation,
which is defined as a general increase in the cost to buy consumer products or
services and a decrease in the purchasing value of money. High inflation keeps
mortgage rates high, which lowers the affordability of all real estate. This
causes a reduced demand and greater costs in new construction and real estate
development.
Rising
interest rates
Even citizens looking to make large purchases using
credit know that right now is not the time to take on new debt, in most cases.
. Yes, real estate is a hedge against inflation, says William Collins, but only
if you already have an impressive CRE portfolio. The cost of construction
materials and even manual labor costs will all put a dent in stakeholder
profits.
William Collins suggests that when economic indicators
point to a stalled CRE market, there are still viable investments that are very
worthwhile. The intrinsic value of the multifamily real estate will continue to
offer a good CRE investment market. In 2023, there has been an explosion in the
construction of new apartments, condominiums, townhomes, and
mixed-residential/commercial buildings.
Also, a niche real estate market like sustainable real
estate development which incorporates design, materials, and infrastructure
that is environmentally friendly is also a good investment.
Multifamily real estate properties are excellent
investments because they’re physical properties with intrinsic value. Not only
do the profits generated from rent and other fees go up as inflation rises, but
the value of the property itself will rise. Commercial property owners are even
willing to invest in major renovations to commercial real estate that can make
daily operations more efficient and reduce operations costs.
read more: Todd Jarrett