Bakersfield CA Commercial Real Estate Market Trends Analysis

Industrial properties are commercial properties that are typically leased by Business to Business (B2B) companies. B2B companies either make or distribute products to other manufacturers or retailers.

The exception is the rapidly expanding category of fulfillment centers that warehouse and distribute goods sold by online sales websites straight to their buyers.

Industrial properties are long-term portfolio investments that are valued by investors/landlords. Their investment budgets rely on income from both rent and the eventual sale of the asset. Industrial leases can be based on either gross or net rent conditions.

Annual and 10 Year Population Growth

Industrial real estate investors have a need for correct population statistics that is specific to their kind of property investment. A shrinking populace has a less direct effect on industrial properties due to a declining tax base. Industrial investors want to know that the area’s infrastructure is sufficient and adequately managed.

A market that is dropping its population will undergo unacceptable commercial property appreciation as well as residential. The tenants for industrial properties need a reliable local employee base. These renters will not be comfortable betting on a place that does not have a growing amount of potential workers.

Property Tax Rates

Industrial investors use property tax trends as a sign of the strength of a market, just like multifamily home investors. Uncertain tax rates show an environment that presumably is not good for your investment’s success.

Our blog contains informative guides on commercial real estate taxation along with how to reduce commercial property tax in the U.S. to help investors learn about this topic more deeply.

Accessibility

Industrial property renters typically haul significant amounts of goods or bulky products. They use big trucks to move their products. Industrial properties need to be adjacent to highways so that significant vehicles can get to and from them without difficulty.

Sometimes industrial businesses move their products by airplanes or trains. This means that being close to an interstate, which typically goes close to airports and railway hubs, a big bonus for industrial properties.

Utilities

Businesses that manufacture goods themselves need large amounts of water and electricity. A property without the capacity to supply suitable utilities won’t draw those renters.

Retail facilities lease space to businesses whose customers are average residents in the market. These stores might be in a property by themselves (single-tenant) or in a structure with other occupants (multi-tenant). Single-tenant assets may contain a bank, a drug store, a dining establishment, or an auto service store.

A property that houses a few renters is considered multi-tenant property, as are “neighborhood” shopping centers, “strip” malls, grocery anchored centers, or malls with large national renters considered “big box” shopping centers. A large center with a collection of types including office, retail, and residential are called “lifestyle” shopping centers.

Retail landlords utilize “net” leases that require the tenants to separately take responsibility for the taxes, property insurance, and maintenance of the common areas like the parking lot. Tenants are responsible for the maintenance of the building as well.

Retail tenants have particular location criteria that retail investors use when considering demographic data.

Population Growth

Retail investors don’t only consider the overall market’s populace and growth. Their renters are considering the specific submarket, or trade area encompassing the suggested property. Retailers need to locate where their shoppers live, commute past, or are employed.

A trade area that doesn’t currently have enough “rooftops” won’t do for retailers even if it is growing. Retail renters, and therefore retail landlords will go over all populace data including size, increase, and daytime population.

Median Income

Income standards show retailers where their shoppers live. Median income data is a lead to the shoppers who can buy costly goods from high-end retailers or people on a tighter budget who need discounted prices.

Median Age

Age information is more critical to retail investors than other investor categories. If a retail asset is situated near the age groups that potential tenants want, it is easier to enlist them.

Property Tax Rates

The prior description of how property tax rate information is utilized by industrial and apartment complex owners pertains to retail investors also. Rising taxes are charged to their tenants which damages their occupancy rates, and the value of their asset could be diminished down the road.

Having your commercial building overvalued by the government is a hidden issue leading even to more waste of money. The best commercial real estate attorneys in Bakersfield CA can help you with a property tax reevaluation procedure.

Office space is leased to corporations that look for a place for their workers to work. Office areas can be big or tiny. For a lot of large companies, renting office space allows them to use their cash for the growth of their company.

Office rental contracts are typically gross or “full service” contracts. All of the owner’s costs are added when the rent amount is calculated. You could find customized versions of gross lease agreements that are tailored to work that particular circumstance.

Long-term investments such as office units create long-term rental revenue and the projected income from the future liquidation of the real estate.

Population

Office property investors analyze demographic data that shows the availability of suitable workers for their favored tenants. They look for the complete population number, their ages, and their education. It is important for landlords to understand what their prospective tenants want and to evaluate the region accordingly.

Property Tax Rates

A well managed city or county that attracts possible office workers to the market will not have excessive or constantly rising tax rates. A good workforce pool draws good office tenants.

Incomes/Cost of Living

Office lessees see current wage standards as one indication of the quality of the workforce. It also gives them an indication of the wage standards needed to contend for the best employees.

Education

The amount of education completed by the possible location’s population is particularly important to large office renters. They should realize whether they are recruiting renters who require higher levels of education or not.

BRRRR, which means “buy, rehab, rent, refinance, repeat”, is an investing plan to expand your assets by taking advantage of the appreciated value of the asset. It’s a category of Buy and Hold method where a revenue creating property is held for a long period. The investor collects lease income during their ownership and a one time sum when the asset’s price increases, then they unload it.

Initially the investor acquires a rental property, then they rehab it and find a tenant. As soon as they can, the investor obtains a “cash-out” refinance that allows them to pull equity out of the property in cash. The investor uses this cash to purchase more property which is rehabbed, rented, refinanced, and so on.

It’s unlikely to get a regular multifamily financing for a building needing a serious repair. Banks and other traditional institutions don’t work with these investments avoiding a high risk.

Look at our directory of commercial real estate service providers to get in touch with the best commercial rehab lenders in Bakersfield California and the top Bakersfield commercial private and hard money lending companies.

From one of the top commercial and industrial real estate agents in Bakersfield CA, you can get advice about the advantages and disadvantages of the location for your investment. They can consult you on the important local property trends described further.

Median Gross Rents

Investors have to understand how much rent they can charge and if it’s likely that rental rates will grow in the future. Rent numbers are a vital factor in an investor’s choices.

Property Value Growth

Buy and hold investments obviously need properties that are expected to appreciate in value.

Population

The pace of the population’s increase is a critical figure to BRRRR investors. Anemic residential markets that they need to sidestep will have static or shrinking rates.

Income

To purchase the appropriate investment property, investors must be aware of their target audience’s level of income. If you are comfortable owning mid-priced properties, you do not have to find high wages.

Property Tax Rates

Higher taxes will stifle both short and long term profitability. Reliable, appropriate taxes are a good sign that the market is a strong place for investment.

Be advised that counties’ assessments of property values may be inaccurate, which makes owners pay unfair tax amounts without knowing. The top Bakersfield commercial real estate valuation companies and the top commercial property tax appeal firms in Bakersfield CA are used by thrifty property owners to review the value.

To a real estate investor, real estate development means the development of any commercial property or a complete residential neighborhood. Developers purchase property that allows the development of parcels sold to homebuilders or commercial structures that are rented.

An investor must make sure the property is correctly zoned, engages civil engineers to design the site work, hires architects and engineers to create building plans, and manages the municipal approval process. Once permits are communicated, the property is developed, and the final product is marketed to the desired users.

It could take a year or more from the start to completion of a development project. Much can occur, before the project is completed, that can harm the developer’s profitability. For this reason, development is considered the most speculative kind of real estate investing.

Construction may get stopped by various factors causing a long delay before resuming development. During this pause, the property may be damaged by vandals, weather conditions, or other factors. But you can use the best commercial real estate insurance firms in Bakersfield CA to make sure that you reimbursed with a reasonable compensation in such case.

Lenders need your project to get protected by a reliable insurance. Ask the best commercial construction lenders in Bakersfield California whom of the local insurance firms they deem valid.

Population

Developers use populace size and growth pace along with economic and education information to make certain that there will be enough retail shoppers and housing homebuyers in the market.

Income

Retail property developers utilize wage levels to place their development where it could attract the buyers that their intended renters need. Moderate wages could still show a good market for middle income shopping centers.

Office and industrial renters will want to discover the wage rates that their potential employees will want. Wage standards help developers understand if a location is acceptable for industrial or office properties.

Education

Companies that rent space in industrial and office developments have specific education information in consideration for their locations’ residents. High end employers need to discover a majority of college graduates. Industrial workers don’t require any more than high school education.

Age

Developers hunt for a median age that indicates people who are active workers and taxpayers. These are the labor pool that office and industrial tenants have to have. Retail facility developers want families and labor pool participants who eat out and go shopping more frequently.

Growing families turn into homebuyers serving the basis of a favorable residential market.

Investing in loan notes means paying less than the payoff total for a loan that is in effect so that the note purchaser turns into the lender. Lenders may liquidate loans to boost capital, but they typically sell them because they are not performing as agreed.

One mortgage note investment strategy is to set up a revised payment program that is easier for the borrower to maintain, and keep the investment in place long-term. They know that if the borrower discontinues making payments, they can recover the property and liquidate it, which is a portion of the plan.

Population

Loan note buyers, like other investors, want to know the number of residents in the possible area and if that amount is increasing or shrinking. Investors understand right away if an area is a possibility by researching population data.

Property Values

Property value growth rates are vital to the promissory note investment plan. The viability of the asset is the viability of the investment.

Property Tax Rates

When property taxes rise regularly, borrowers who have trouble making their debt payments will find it troublesome to stay current. This is bad for long-term investors, but advantageous for the ones who need to turn their investment around quickly via a sale of the collateral property.

An interesting way of investing in the purchase and oversight of real estate is to acquire shares in a REIT (Real Estate Investment Trust). Their income is derived from rents and the occasional sale of properties.

REITs are required to disburse 90% of their profits in dividends which appeals to a lot of investors. The ability to invest and withdraw your capital as your demands require make REITs a valuable method for a typical person to invest in real estate.

REIT investors are passive investors who have no input in the choice or oversight of the properties.

Investors, who plan to quit active investing but need to stay in real estate, consider REITs. They buy REIT shares once they liquidate real property.

There exists a great legal vehicle enabling you to defer taxes on real estate sale in this case. Our resources — Can You Do a 1031 Exchange to REIT Shares? and Pros and Cons of a 1031 Exchange into DST — will allow you to discover the benefits and rules of this investment vehicle.

For this procedure, you will need to employ a 1031 Exchange facilitator. Find them in our list of the best 1031 exchange Qualified Intermediaries in Bakersfield CA.

Real estate investment funds are an interesting vehicle that pools capital to invest in real estate. These companies do not possess real property — they possess interest in entities that do, for example REITs.

Unlike REITS, funds aren’t obligated to pay dividends. The shareholder’s return is generated by the valuation of the fund’s stock.

The most popular investment funds include mutual funds, ETFs (exchange-traded funds), and private equity funds for wealthy investors. Shareholders are allowed to sell their shares if they want funds, similar to REITs.

Fund share buyers do not have a thing to do with deciding on properties or locations, because they are passive investors.