1. Lower rates = buying opportunity
Lower interest rates tend to make loans and mortgages cheaper. According to the Federal Reserve Bank, U.S. mortgage balances increased by $77 billion during the second quarter of 2024 and stood at $12.52 trillion at the end of June.
Commercial real estate typically appreciates in value when interest rates drop because buyers can afford to pay more for assets at lower borrowing costs.
An increase in the number of investors can drive up property prices due to the increased competition for desirable properties. This capital appreciation benefits current property owners, as well as new investors who enter the market in a timely manner.
For those looking to take advantage of rate cuts and diversify their holdings, owning a piece of a grocery-anchored shopping center is an enticing proposition.
First National Realty Partners (FNRP) is a leading private equity firm that allows accredited investors to gain access to necessity-based properties leased by national brands and household names such as Walmart, Kroger, Whole Foods, CVS and Target. Investors can potentially receive regular cash flow from rental income, starting the first quarter after closing, and then a pro-rata share of the profits when a property is sold.
This type of commercial real estate investing is appealing if you want a steady income and even to hedge against inflation, regardless of interest rate moves. The heart of the company’s investing philosophy is straightforward: Food and shelter are consistent consumer expenditures, regardless of the economic environment.
These are a few examples of past properties or acquisitions from FNRP. For a full list of currently available properties, visit the FNRP deal room.
2. Timing is everything in real estate
It's been said many times in real estate that next to location, "timing is everything." In commercial real estate there are distinct windows of opportunity that do not usually stay open for too long. One such moment is when interest rates drop. Rate cuts reduce borrowing costs, boost investor confidence, stimulate overall demand and enhance property values.
Investors must be attuned to the fast-moving commercial market and quickly seize opportunities. The next challenge lies in knowing exactly where to find these high-potential prospects—an area where FNRP can provide valuable support.
FNRP has a robust pipeline of high-quality commercial real estate opportunities. They specialize in acquiring necessity-based retail properties, which have a history of performing well even in fluctuating economic conditions. By providing access to these carefully vetted investment opportunities, FNRP helps investors diversify their portfolios and potentially mitigate risks associated with market volatility.
“Perhaps the most compelling case for owning necessity-based commercial real estate through all phases of the economic cycle is the recession resistance and inflation-hedging characteristics inherent to these property types,” Jaren Feldman, FNRP’s executive chairman, said during a recent presentation.
The firm’s investment strategy is focused on investing in market-dominant grocery-anchored retail shopping centers. They specialize in selecting shopping locations that hold top positions within their submarkets, standing out as premier consumer destinations.
“Assets that facilitate the delivery of essential goods and services can insulate a portfolio whenever a recession occurs,” Feldman said.
“Common tenants include essential businesses that tend to weather economic storms and rebound faster.”
3. Following the “smart money”
With rate cuts usually reducing yields on traditional fixed-income assets like bonds, these investments become less attractive to investors seeking better returns. As a result, 'smart money' shifts its focus to commercial real estate, where yields remain more favorable.
This influx of capital into the commercial real estate market often leads to increased demand, which in turn drives up property values, making commercial real estate an increasingly appealing asset class for those looking to maximize returns in a low-rate environment.
FNRP can assist accredited investors in identifying prime real estate assets with strong potential for favorable returns, positioning them to benefit from long-term market value appreciation.
From acquisition to disposition, FNRP oversees your entire investment lifecycle. Their proprietary Dragnet Acquisitions Model vets a large number of potential commercial real estate assets and narrows down the best candidates at the best value.
As commercial real estate continues to attract savvy investors, now is potentially the ideal time to capitalize on this shift and follow the flow of 'smart money' investments.
If you’re interested in learning more about new deals in the necessity-based real estate space, you can learn more at fnrpusa.com.
