Commercial real estate isn’t all doom and gloom
The answer is nuanced. Commercial real estate is a highly diverse market. It has plenty of challenges, and lots of opportunities, too.
Take office real estate, which accounts for most of the now-sold properties referred to in the WSJ article. Some companies are mandating a return to office, and New York City’s mayor has met with CEOs to plead for their return; yet, remote work still dominates.
On the other hand, real estate for shopping centers is facing the opposite challenge. A recent report from Cushman & Wakefield commented that “for the first time in years, the retail market is at a point of being supply-constrained — at least for space in quality shopping centers."
Heightened demand plus insufficient supply could drive increased rents, and strong returns for those invested.
In September, the U.S. central bank started moving aggressively in this new direction and cut interest rates by 50 basis points (bps). Rates were cut by a further 0.025% in November.
Commercial real estate typically appreciates in value when interest rates drop because buyers can afford to pay more for assets at lower borrowing costs — and First National Realty Partners (FNRP) is ideally situated to help investors take advantage of the current rate environment.
FNRP offers accredited investors access to these types of promising retail-anchored commercial real estate investments, without the leg work of finding deals yourself.
You can engage with experts, explore available deals and easily make an allocation, all in one personalized secure portal.
For high demand, proven resilience, and continued adaptability of their services, these promising real estate investments have had a very different outcome compared to office spice in the pandemic’s aftermath.
Investing in recession-resistant sectors
Another way to benefit from changing tides in commercial real estate is to focus on the businesses that have weathered many storms, from pandemics to recessions. The office space sector, in particular, has experienced significant disruption. As Rudin aptly put it, “the world has changed.”
Meanwhile, grocers and supermarkets have demonstrated remarkable stability in the face of both crises.
Even with a massive increase in e-commerce transactions compared to bricks-and-mortar, grocery stores have proven resilient. Turns out, picking a perfectly ripe avocado is a lot harder when you’re buying it through a screen.
Since these businesses are necessity-based, they tend to perform well during times of economic volatility and act as a hedge against inflation. And you can benefit from these same protections by investing in these commercial opportunities through FNRP.
The FNRP team has developed relationships with shopping centers across the U.S., as well as the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods.
They also offer white-glove service for investors, providing key market insights and finding the best properties both on and off-market, while investors can passively collect distribution income.
Don’t overlook residential opportunities
The WSJ noted that plenty of New York’s underused office space is being converted into rental apartments. New York City’s rental vacancy rate is at a 50-year low, at just 1.4%. The average rental price has increased 4% in the last year alone, to 69% higher than the national median.
Individual investors can still take advantage of this major growth without becoming a landlord, however.
For instance, DLP Capital specializes in private REITs designed for accredited investors, focusing on regions across the U.S. where multifamily residential properties are in high-demand. Through multiple investment funds, the firm is primarily focused on acquiring or developing safe, affordable rental housing for working families in high-growth areas.
For example, like New York, the Sun Belt is booming, accounting for 80% of U.S. population growth over the last decade, according to Moody’s Analytics.
With a track record of identifying high-potential properties and over $5.2 billion in assets under management, DLP Capital helps investors capitalize on real estate’s long-term value.
DLP Capital’s funds target potential annual returns between 9% and 13% — almost at par with the S&P 500 index’s 10.26% returns annually. But you get two distinct advantages by investing in DLP Capital’s funds — portfolio diversification and a potentially lower tax bill.
And you don’t need to be an accredited investor to add income-producing real estate to your portfolio, thanks to the rise of real estate crowdfunding platforms.
These platforms allow you to invest in shares of properties, like residential and vacation rentals, without ever even setting foot in the city or taking on property maintenance, taxes or other housing costs. WSJ reported that plenty of landlords have been spending heavily on new interiors to compete with one another.
Arrived is one of these accessible platforms, backed by world-class investors including Jeff Bezos, where everyday investors can invest in shares of rental homes and vacation properties, allowing you to get your foot into the real estate market without taking on any of the expensive responsibilities of a landlord.
Arrived allows you to browse their curated selection of homes, each vetted for their appreciation and income potential. Once you find a property you like, you can choose the number of shares you want to buy and start investing with as little as $100.
