Columbus OH Commercial Real Estate Market Trends Analysis

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

Lately an additional class of industrial tenants has been developed by fulfillment centers that deliver online purchases to retail customers.

Industrial property investors will keep the asset long-term and operate as the landlord. These investments benefit from both income (rent) and the anticipated appreciation in the value of the asset. Lease types are either gross or net.

Annual and 10 Year Population Growth

Industrial property investors have requirements for accurate population information that is particular to their kind of property investment. Sluggish or decreasing populations mean a decreasing tax base. Sufficient tax receipts are required to keep up roads and infrastructure that industrial properties need.

All property values, commercial as well as residential, are weakened in markets that are dropping citizens. The tenants for industrial properties need a stable local employee base. Large industrial renters will shun markets that are losing citizens.

Property Tax Rates

Industrial investors use real estate tax trends as a signal of the stability of an area, just like apartment building investors. Consistent tax rates are an indicator of a predictable environment for your investments.

You may need to read more on commercial and industrial real estate taxation and commercial real estate tax reduction from our guides.

Accessibility

The tenants in industrial properties manufacture or disburse high numbers of goods that are big. Big tractor-trailer trucks are utilized to haul these products. If the business is close to major roads, large vehicles can get to them more quickly and without difficulty.

Many industrial tenants have to reach train or airport cargo terminals. Interstate highways typically go near those kinds of terminals which is a plus for industrial sites located close to those highways.

Utilities

Manufacturers are likely to use large amounts of power and water. A property not having the ability to supply suitable utilities will not draw those tenants.

Companies that are housed in retail spaces sell straight to the citizens in the trade area. Those properties could contain one tenant (single-tenant) or several tenants (multi-tenant). Recruited renters for single-tenant properties are drug stores, automobile parts stores, banks, and restaurants.

A property that holds a couple or more stores is multi-tenant property, as are “neighborhood” shopping centers, “strip” centers, grocery anchored centers, or malls with big national tenants considered “big box” shopping centers. A big center with a mix of types including office, retail, and residential are considered “lifestyle” centers.

Retail lease agreements are “net” with tenants paying the landlord’s property tax, property insurance, and maintenance of common areas as additional rent. Retail renters also are required to take care of the property.

A retail investor will use the same demographic data that their desired tenants utilize to locate a satisfactory investment property.

Population Growth

Retail investors don’t exclusively look at the total region’s population and improvement. Their renters are looking at the particular area, or trade area surrounding the suggested location. Retailers need to locate where their customers live, drive past, or work.

A growing area populace is a plus, but if the current populace doesn’t include enough customers, it’s considered an undesirable “green” trade area. Investors in retail assets will analyze all facets of population information including population size, annual and 10 year growth numbers, and how many people are employed in the area.

Median Income

The populace’s wage rates are a critical component of retail site requirements. Median income data is a guide to the clients who can buy costly goods from luxury stores or customers on a smaller budget who need lower prices.

Median Age

The age of the region’s population can be significant to businesses leasing your property. If your retail asset is placed near the age groups that possible renters need, it is less difficult to draw tenants.

Property Tax Rates

Retail property owners use property tax rates the identical way as both multifamily and industrial investors. Larger taxes cause larger rents which increase vacancy rates, and markets with increasing tax rates often have shrinking property prices.

In a city with high property tax rates, it’s even more crucial to check if your asset isn’t overvalued by the county. If so, the best commercial real estate lawyers in Columbus OH will tell you how to protest the wrong assessment.

Office properties lease work locations to commercial tenants. Office areas could be big or small. Major brands typically would rather utilize their capital for business development instead of buying real estate.

Office tenants execute a “full service” lease agreement which is additionally categorized as a gross lease agreement. These kinds of leases add the landlord’s costs, such as tax and property insurance into the payment. The terms can be updated according to the tenant and owner’s needs.

Long-term investments like office units create ongoing rental revenue and the projected income from the eventual sale of the property.

Population

The population demographic data that office real estate investors look for should show a good number of employees for office renters. This often includes the number of citizens living there, their levels of education, as well as median age. It is vital for landlords to realize what their prospective renters need and to assess the market appropriately.

Property Tax Rates

A well run city or county that draws potential office employees to the region will not have high or consistently rising tax rates. A qualified labor pool recruits desirable office renters.

Incomes/Cost of Living

Higher wages could mean an educated population that a lot of office renters require. It could also show the wage standards that employers will have to pay.

Education

The amount of education completed by the possible location’s population is particularly significant to big office tenants. A call center may not require college graduates, but an attorney services tenant could.

BRRRR, which means “buy, rehab, rent, refinance, repeat”, is an investment strategy to increase your portfolio by leveraging the appreciated value of the asset. These are long-term or Buy and Hold investments. This strategy has the benefit of furnishing short-term (rental) revenue and profit from the long-term appreciation in value.

Initially the investor purchases a rental property, then they repair it and find a renter. Next, the asset is refinanced based on its enhanced value, and the increase in its worth is paid out to the investor. This becomes the down payment on their next investment, and they do it all again.

To purchase and rehab commercial real estate, investors prefer nontraditional loans. Banks and other traditional institutions can’t lend on this type of projects because of a high risk.

Scan our directory of commercial real estate vendors to find the top commercial rehab lending companies in Columbus Ohio and the top Columbus commercial private and hard money lending companies.

There, you will also see the best commercial real estate agents in Columbus OH
whose professional advice may be valuable for you. They will educate you on the important local real estate trends described further.

Median Gross Rents

You want to see allowable current rent levels and a history of acceptable rent bumps. This can impact choices regarding markets to choose and which assets to acquire.

Property Value Growth

If real estate values aren’t going up, a buy and hold investor loses 1/2 of his or her investment strategy.

Population

BRRRR investors will analyze the populace increase. A growing population means a good supply of renters and is more likely to maintain increasing real estate values.

Income

Residential investors ought to understand their targeted renter, including their income levels. You do not want a Class A high-end apartment complex in a market of mid or low level wages.

Property Tax Rates

Higher taxes will stifle both short-term and long-term returns. Reliable, realistic taxes are an accurate sign that the market is a vibrant environment for your project.

Note that counties’ appraisals of property market worth are sometimes inaccurate, which makes investors pay excessive tax amounts without knowing. To execute a tax protest process, talk to the best commercial property tax consulting companies in Columbus OH and best Columbus commercial real estate appraisers.

People in the real estate business think of development as producing entire housing community projects or any kind of commercial property. Developers need land that permits the creation of homesites bought by homebuilders or commercial structures that are leased.

This involves acceptable zoning, land use plans by civil engineers, construction plans for buildings, and approval by the local municipality. When all of that is properly finished, the developer manages the construction work and marketing of the finished product.

It could take one or two years from the start to finish of a development project. During that period, economic and regulatory changes could influence the project’s profitability. Because of this reason, development is considered the riskiest type of real estate investing.

Construction may get paused by various events causing a long delay before renewing development. During this pause, the property may be damaged by vandals, natural disasters, or other things. Nevertheless, you can use the best commercial real estate insurance firms in Columbus OH to ensure that you receive a sufficient compensation in such case.

Insurance is a tool you will need to provide to lenders if qualifying for financing. The best commercial construction lenders in Columbus Ohio could give you a list of insurers they deem reliable.

Population

Developers utilize population size and growth rate along with economic and education stats to make sure that they have enough retail shoppers and residential buyers in the market.

Income

Wage rates will tell investors whether the shoppers and restaurant patrons in the location are the shoppers that their tenants need. Premium retailers search for higher income areas, whereas moderate priced retailers need middle class customers.

Information on wages can help industrial and office tenants understand what they’ll be required to pay their employees in that market. Developers know this, and consider wage data to predict a location’s appeal for their preferred tenants.

Education

Businesses that occupy space in industrial and office buildings have particular education statistics in consideration for their sites’ population. Office space renters often need possible workers with a college degree. Industrial businesses search for a higher accumulation of high school graduates.

Age

An aging citizenry that more actively utilizes public services is not what developers are after. These are the labor pool that office and industrial businesses need to access. Retail property developers require families and workforce participants who eat out and go shopping more regularly.

Growing households become homebuyers serving the basis of a strong residential market.

Investing in mortgage notes means paying a lower amount than the payoff sum for a loan that is in effect so that the note buyer turns into the lender. The original lender may be agreeable to selling because they want money, or because the borrower is not current with their payments.

One mortgage note investment strategy is to create a new loan payment schedule that is more convenient for the borrower to meet, and retain the investment in place long-term. They know that if the borrower stops making payments, they can recover the asset and unload it, which is part of the plan.

Population

Mortgage note buyers, similarly to other investors, have to know the number of residents in the intended market and if that amount is increasing or declining. Investors know immediately if a market is feasible by researching population stats.

Property Values

A mortgage note investor wants to discover that real property values in the area are expanding. The expanding value of the property lessens the exposure of the investment.

Property Tax Rates

If real estate taxes increase, the higher housing expense will be difficult for distressed borrowers to maintain. That’s not good for interest income, but is in fact desired by note buyers who plan to make a profit more quickly by recovering the asset.

Real estate investment trusts (normally called REITs) are investment organizations that invest in and oversee income generating real estate. Their income is derived from rental payments and the periodic liquidation of properties.

Because they are a trust, REITs have to distribute ninety percent of that revenue to its shareholders. Small investors prefer REITs because they can liquidate their shares when they want.

Such investors are passive investors who have nothing to do with the choice or supervision of the assets.

Property owners who are going to become passive investors look into buying REITs. They purchase REIT shares when they sell real property.

A like-kind exchange is meant to save money for investors who intend to do this. Our resources — What Is a 721 Tax Deferred Exchange? and Pros and Cons of a 1031 Exchange into DST — will enable you to understand the benefits and rules of this exchange.

For this type of transaction, you will be required to get help from a 1031 exchange accommodator. Find them in PropertyCashin’s directory of the best 1031 exchange companies in Columbus OH.

An additional way that money is gathered for real property investments is a real estate investment fund. They don’t own real property — they own interest in organizations that do, like REITs.

This investment choice doesn’t pay dividend revenue to their members. The investment return to the shareholder is the anticipated increase in share worth.

The most common investment funds include mutual funds, ETFs (exchange-traded funds), and private equity funds for high net worth people. Shares in investment funds are bought and unloaded on the public market which is good for inexperienced investors.

Since they are passive investors, fund shareholders are not involved in any decisions such as property purchases.