Georgia Commercial Real Estate Market Trends Analysis

Commercial properties that house a tenant that deals with other businesses (B2B companies) are called industrial properties. B2B companies either manufacture or deliver goods to other manufacturers or retailers.

Recently an additional type of industrial tenants has been developed by fulfillment centers that disburse internet orders to retail clients.

Industrial properties are long-term hold investments that are wanted by investors/landlords. These investments profit from both income (lease) and the anticipated appreciation in the financial worth of the asset. Lease contracts can be either gross or net.

Annual and 10 Year Population Growth

Industrial real estate investors have a need for accurate population information that is particular to their kind of property investment. A declining population has a more indirect effect on industrial properties due to a shrinking tax base. Industrial investors need to know that the region’s infrastructure is adequate and properly managed.

A market that is dropping its populace will experience unacceptable commercial property value increase as well as residential. Industrial renters are operating companies that have to have workers. Big industrial renters will shun areas that are losing residents.

Property Tax Rates

As we witnessed with apartment building investments, tax rates are a reliable clue to the economic strength of a potential location. Frequently changing tax rates indicate a place that probably is not good for your investment’s profitability.

Our resources about industrial and commercial property taxation and commercial real estate tax reduction will inform you about taxation laws.

Accessibility

The renters in industrial properties manufacture or disburse large numbers of products that are big. Large tractor-trailer trucks are employed to move these products. Industrial property investors search for properties that are near significant roads that large tractor-trailer trucks can access quickly.

Sometimes industrial companies haul their goods by planes or railway. Interstate highways often go near those types of terminals which is a benefit for industrial properties located close to those interstates.

Utilities

Manufacturing companies are likely to utilize significant levels of electricity and water. If an industrial property does not possess necessary utilities, it will constrain the kinds of tenants that will rent it.

Retail facilities are leased by tenants that sell products or services to the public. These stores might be in a building alone (single-tenant) or in a property with additional renters (multi-tenant). Retail businesses that need to be by themselves include banks, pharmacies, restaurants, or automobile parts centers.

A property that contains a couple or more renters is classified as multi-tenant property, as are “neighborhood” centers, “strip” malls, grocery anchored shopping, or malls with significant national tenants considered “big box” shopping centers. Centers that contain condos or apartments, office space, and retail shops are considered “lifestyle” centers.

Retail lease agreements are net contracts with tenants paying the landlord’s tax, property insurance, and maintenance of common areas as additional rent. Net leases also say that the tenant takes care of the maintenance of the property.

Retail renters have specific site criteria that retail investors use when reviewing demographic data.

Population Growth

The overall data for the community under consideration is not enough for retail investors. They also consider the region’s submarkets. Retail sites have to be visible and accessible to their shoppers as they go about their lives.

A trade area that doesn’t currently contain enough “rooftops” will not satisfy retailers no matter if it is growing. Retail real estate investors have to review the existing population growth, average annual population growth, 10 year population growth, and daytime population.

Median Income

Wage levels tell retailers where their consumers are. Costly goods need shoppers with big incomes while lower end products need lower income residents.

Median Age

Age data is more important to retail investors than other investor categories. If your retail property is located near the age groups that potential tenants require, it is easier to draw them.

Property Tax Rates

Retail property buyers utilize property tax rates the same way as both multifamily and industrial investors. Rising taxes are passed on to their tenants which decreases their occupancy rates, and the value of their property could be diminished over time.

You spend even more money if the county tax office’s evaluation of your real estate market worth was wrong. If this happened, the best commercial real estate lawyers in Georgia will tell you how to protest the wrong assessment.

Office space is leased to companies that look for a place for their workers to operate. Office real estate can be a one level flex space or a multi story building. Significant businesses typically would rather employ their capital for company development rather than owning property.

The lease utilized for office tenants is a gross lease agreement, sometimes called a “full service” lease agreement. The rent includes the landlord’s expected expenses for utilities, taxes, property insurance, and facility maintenance. The terms can be altered according to the tenant and owner’s needs.

Office space investors keep these assets for a long period which generates returns from both repeating rental revenue and the increasing worth of the asset.

Population

Office real estate investors need demographic data that indicates the existence of suitable employees for their favored renters. They research the complete population number, their ages, and their education. It’s important for landlords to understand what their potential tenants need and to analyze the area appropriately.

Property Tax Rates

A well run city or county that attracts possible office employees to the area won’t have high or constantly increasing tax rates. Desirable renters for your property will analyze this factor and so should you.

Incomes/Cost of Living

Salary levels tell a potential lessee whether or not employees in the community are appropriately qualified for their jobs. It can also indicate the wage standards that employers will have to provide.

Education

Education achievements are analyzed by office lessees and investors more than other real estate investors. A call center may not require college graduates, but an attorney services renter could.

When an investor acquires a property, rehabs it, leases it, refinances the asset, and then duplicates the process, it’s called a BRRRR kind of investment. This is a type of Buy and Hold strategy in which an income creating asset is held for a long time. This plan has the benefit of providing short-term (lease) revenue and profit from the long-term growth in worth.

First the investor buys a property, then they rehab it and secure a tenant. When a positive cash flow is documented, the landlord takes capital out of the asset for refinancing their loan. The investor utilizes these funds to obtain more property which is rehabbed, leased, refinanced, etc.

You won’t be able to get issued a conventional commercial loan for a building in need of a serious repair. This kind of acquisitions present a high risk for conventional financing firms.

However, lenders that could serve you can be found in our commercial real estate vendor directory featuring the best Georgia commercial hard money lenders along with the best commercial rehab lenders in Georgia.

Also, don’t underestimate the real estate knowledge of the best commercial real estate agents in Georgia. Read below to understand what data to discuss with them.

Median Gross Rents

Investors need to find acceptable existing rent levels and a history of reasonable rental rate increases. This could affect decisions regarding markets to choose and which properties to look for.

Property Value Growth

If real estate values are not going up, a buy and hold investor is deprived of half of their investment strategy.

Population

The important populace information for buy and hold investors is the growth rate. An expanding populace means a reliable pool of renters and is more likely to support rising property values.

Income

Apartment building investors must find out the wage level of their prospective tenants. A property that does not meet the needs of the market will show a high vacancy rate.

Property Tax Rates

Rising taxes obviously eat into your profitability. Reliable, reasonable taxes are an accurate indication that the market is a reliable environment for investment.

Keep in mind that the Government’s appraisals of property values are frequently inaccurate, which makes owners pay excessive tax amounts unknowingly. The top Georgia commercial real estate valuation companies as well as the best commercial property tax consulting companies in Georgia are used by thrifty property owners to review the value.

The real estate industry understanding of development usually means entire residential neighborhoods or commercial ventures of virtually any scope. The developer must locate property that meets their specifications so that they can prepare housing parcels for sale or commercial rental properties.

This requires suitable zoning, site work plans by civil engineers, construction plans for buildings, and approval by the local authorities. Once all the plans are approved, the site work and construction are done and purchasers or tenants are located.

It could take a year or more from the start to finish of a development venture. A lot can occur, before the venture is finished, that can harm the developer’s returns. Because of this reason, development is the most speculative kind of real estate investment.

Development can be stopped by various factors causing a long delay before resuming building. During this period, the property may be damaged by vandals, natural disasters, or other things. You should seek help by the best commercial real estate insurance firms in Georgia.

Lenders want your project to be covered by a good insurance. You can learn about the insurers that are considered trustworthy by talking to the best commercial new construction financing firms in Georgia directly.

Population

Developers utilize populace size and growth rate along with economic and education information to make certain that they will have enough retail customers and residential homebuyers in the region.

Income

Retail property developers use income data to locate their project where it will draw the customers that their intended renters need. High-end retailers hunt for higher wage regions, but moderate priced retail stores require middle class shoppers.

Information on incomes can help industrial and office renters see what they will be required to pay their employees in that market. Income levels help developers see whether a market is acceptable for industrial or office spaces.

Education

Employers that rent office and industrial properties look for contrasting educational factors in the area. Office space renters frequently look for potential employees with a college degree. Mid level businesses are happy with high school graduates.

Age

Many developers need to find a young to middle-aged population that provides a steady tax base. A citizenry that is actively involved in the labor pool is the best for office and industrial real estate projects. Active workers and their households patronize businesses and dining establishments that lease retail real estate.

Residential neighborhoods developers want the identical age category because they are probably moving up the social ladder, which increases home sales.

Real estate loan note investors buy actual loans cheaper than the sum owed and turn into the new lender. Lenders often liquidate loans to increase cash, but they usually sell them because they are not being paid as agreed.

Some mortgage note buyers will renegotiate the loan to help the borrower make their debt payments — for a long-term income. The investor is covered by the mortgage note that the borrower executed and could take back the property if need be.

Population

Promissory note buyers, like other investors, have to know the volume of people in the possible market and if that number is expanding or declining. This information is a quick evaluation of the future economic vitality of the market.

Property Values

A mortgage note investor wants to see that real estate values in the area are expanding. The rising worth of the collateral decreases the risk of the investment.

Property Tax Rates

When real property taxes go up, the higher housing expense will be difficult for struggling borrowers to maintain. Such a scenario hurts long-term investors, but it helps short-term note investors who aim to monetize their investment more quickly.

A REIT (Real Estate Investment Trust) is a business that possesses and manages income producing real estate. Their revenue comes from lease payments and the occasional sale of assets.

REITs are required to distribute 90% of their net revenue in dividends which appeals to many investors. The ability to cash out by unloading their REIT shares appeals to lower net worth investors.

REIT shareholders are passive investors which means that they have nothing to do with the purchase or operation of any properties.

Investors, who want to move away from active investing but want to stay in real estate, will want to learn more about REITs. They unload their own real property to reinvest the money into REIT shares.

A tax deferred exchange is meant to save money for investors who want to do this. Study our articles to understand how to benefit from it: Can You Do a 1031 Exchange to REIT Shares? and A-to-Z Guide to Delaware Statutory Trust (DST) 1031 Exchange.

The Government requires that you request assistance from a 1031 exchange accommodator to consider the tax deferral lawful. Find them in our directory of the best 1031 exchange Qualified Intermediaries in Georgia.

Real estate investment funds are an additional vehicle that collects money to invest in real estate. It’s an organization that invests in other real property-connected businesses, including REITs.

This investment choice does not pay dividend revenue to their shareholders. The individual’s return is generated by the valuation of the fund’s stock.

Mutual funds, ETFs (exchange-traded funds), and high-end private equity funds are designated as real estate investment funds. Shareholders are permitted to sell their shares if they need money, similar to REITs.

Fund share buyers do not have anything to do with choosing assets or markets, as they are passive investors.