Kansas Commercial Real Estate Market Trends Analysis

Industrial properties are a kind of commercial real estate that is utilized by businesses that do business with other businesses (B2B tenants). Industrial tenants can be producers and distributors such as supply houses.

The exception is the quickly expanding category of fulfillment centers that store and distribute products sold by online sales websites directly to their consumers.

Industrial properties are long-term hold investments that are wanted by investors/landlords. Their profitably calculations involve lease income and asset value growth. Their lease agreements could either collect pass-throughs such as insurance and real estate taxes in one check (gross) or individually (net).

Annual and 10 Year Population Growth

Industrial real estate investors have a need for reliable population statistics that is specific to their kind of property investment. A declining populace has a less direct impact on industrial properties due to a decreasing tax base. If the local municipality cannot gather sufficient taxes, it can’t maintain its responsibilities to sufficiently repair the infrastructure that industrial tenants need.

All property values, commercial in addition to residential, are hurt in places that are dropping citizens. A significant concern for industrial tenants is the access to qualified workers. Big industrial renters will turn down areas that are dropping citizens.

Property Tax Rates

As we witnessed with apartment building investments, tax rates are a good indication of the financial strength of a potential location. Reliable tax rates are the sign of a predictable market for your investments.

Investors may want to learn more about commercial property taxation and commercial property tax reduction methods from our informative articles.

Accessibility

Companies that rent industrial properties haul large items or significant numbers of items. They utilize big trucks to ship their goods. Industrial properties have to be near major roads so that big vehicles can reach them without trouble.

There are industrial businesses that use trains or airplanes to move their products. Industrial properties that are located near an interstate make this easier, which makes the property more valuable.

Utilities

Manufacturing companies typically use large amounts of power and water. If an industrial property does not have suitable utilities, it will limit the kinds of tenants that will rent it.

Companies that are housed in retail spaces sell directly to the people in the area. They could be in a property alone (single-tenant) or in a structure with other occupants (multi-tenant). Retail stores that want to be alone encompass banks, drug stores, dining establishments, or automobile equipment stores.

Multi-tenant buildings can be 2 or 3 space properties, little “strip” centers, significant “big box” or grocery centers with national anchor tenants. “Lifestyle” retail centers can combine retail, office, and residential units.

Retail leases are known as “net” leases meaning the renters pay the taxes, insurance, and common area maintenance of the property in what’s known as “additional rent”. Net lease agreements also specify that the tenant is responsible for the upkeep of the property.

Retail real estate investors look for the demographic data that their tenants will stipulate in their location criteria.

Population Growth

The overall data for the market under consideration isn’t sufficient for retail investors. They also look at the community’s submarkets. Retail locations need to be visible and accessible to their shoppers as they go through their daily activities.

Population improvement is relevant, but retailers have to have a minimal number of clients now. Investors in retail properties will examine all aspects of population data like population size, annual and 10 year growth numbers, and how many people are employed in the trade area.

Median Income

Nationally known brands or “credit tenants” have very specific location requirements that include wage amounts. Larger wages show a good place for higher end retailers, while middle incomes are good for blue-collar retailers including automobile parts stores.

Median Age

Retail property owners rely on age statistics that different investors ignore. Depending on the category of shopping center (grocery anchored, entertainment anchored, big box retailers) the age of the populace can entice desirable retail tenants.

Property Tax Rates

The earlier illustration of the way property tax rate information is used by industrial and multifamily home owners pertains to retail investors too. Bigger taxes increase the total of additional rent charged to tenants which can hurt leasing attempts, and have an adverse effect on property values as well.

In a city that has elevated property tax rates, it’s even more important to ensure your asset isn’t overestimated by the tax office. Protesting property taxes can be outsourced to the best commercial real estate attorneys in Kansas.

Office space is leased to businesses that need a location for their employees to work. Office units can be large enough for a single employee or hundreds of employees. Large brands typically would rather utilize their money for business development rather than owning property.

Office leases are normally gross or “full service” deals. These kinds of lease agreements add the landlord’s expenses, such as real estate tax and property insurance into the rent. This agreement can be customized to meet the requirements of the owner and the renter.

Long-term investments like office buildings generate long-term rental revenue and the projected revenue from the eventual sale of the real estate.

Population

The particular demographic data that office landlords utilize shows the number of desired office workers in the population. They research the complete populace number, their ages, and their education. It’s important for investors to realize what their prospective clients need and to analyze the market appropriately.

Property Tax Rates

Expanding towns that are home to a desirable group of potential office employees will have understandable, consistent tax rates. A good labor pool recruits sought after office tenants.

Incomes/Cost of Living

Office renters acknowledge existing wage levels as one sign of the quality of the labor pool. It can additionally reveal the wage standards that employers will need to provide.

Education

Education levels are analyzed by office renters and investors to a greater degree than other real estate investors. A call center might not require college graduates, but a financial services company might.

When an investor obtains real estate, fixes it up, leases it, refinances the property, and then duplicates the procedure, it’s designated a BRRRR category of investment. This is a Buy and Hold investment because the investor holds the property for a long time. The advantage is that the asset generates income while you hold it and could be liquidated later at a profit once its value has increased.

The investor picks up a rental, repairs or renovates it, and rents it out. When a positive cash flow is documented, the investor takes money out of the property by refinancing their loan. The cash is utilized for the down payment for an additional property, and the process is duplicated.

To purchase and repair a commercial building, investors opt for unconventional loans. Banks and other traditional institutions don’t serve this kind of deals taking into account a higher risk.

The lenders who could finance your deal can be found in the commercial real estate vendor directory containing the best Kansas commercial hard money lenders and the best commercial rehab lenders in Kansas.

In this resource, you will additionally find the best commercial real estate agents in Kansas whose professional knowledge may be useful for your business. Read on for a set of data an agent will advise you on.

Median Gross Rents

Investors should understand the amount of rent they can charge and if it is likely that rents will increase later. This single factor means a lot when the eventual market determination is made.

Property Value Growth

If real estate values aren’t expanding, a buy and hold investor gives up half of his or her investment strategy.

Population

BRRRR investors will estimate the population growth rate. Anemic housing markets that they want to bypass will demonstrate static or declining rates.

Income

To purchase the appropriate investment property, investors should be acquainted with their target tenants’ amount of income. You don’t want a Class A luxury apartment complex in a market of mid or low level incomes.

Property Tax Rates

Rising taxes can eat into your profitability. Dependable, realistic taxes are an accurate signal that the community is a strong environment for business.

Keep in mind that local tax offices’ estimates of property market worth are frequently inaccurate, which makes owners pay too high tax amounts unknowingly. The best Kansas commercial real estate appraisal companies as well as the top commercial property tax appeal firms in Kansas are used by thrifty investors to review the value.

The industry understanding of development usually means complete residential neighborhoods or commercial projects of virtually any scope. A developer searches for and purchases usable land and prepares either lots for purchase or buildings that are rented to occupants.

A developer must make sure the land is correctly zoned, hires civil engineers to design the site work, employs architects and engineers to design building plans, and goes through the municipal approval procedures. When all of those steps are properly done, the developer oversees the building and promotion of the end product.

Real estate projects can take years to finish. In that time, economic and regulatory changes can influence the project’s success. That is why the most financially risky type of property investing is development.

Risks may force you to conserve the building for an undefined term. Even when the site is secured against thieves, one can’t prevent natural disasters from causing damage to the unfinished building. The best commercial landlord insurance companies in Kansas help local builders avoid financial damage resulting from this.

Insurance is a tool you may need to present to lenders when qualifying for a loan. Ask the best commercial construction real estate lending companies in Kansas whom of the local insurance firms they accept.

Population

Real estate developers utilize the identical demographic information that their possible buyers and tenants look at to find markets with acceptable standards of populace size and growth, economic viability, and educational levels.

Income

Retail real estate developers assess wage levels to place their development where it can draw the buyers that their intended renters need. Premium retail stores look for upper wage areas, but moderate priced retail businesses need middle class shoppers.

Companies that lease office and industrial space utilize wage statistics as a sign of their labor expenses in that location. Income levels help developers see if a location is suitable for industrial or office spaces.

Education

Employers that rent space in industrial and office developments have distinct education data in consideration for their sites’ citizens. High end businesses want to discover more college graduates. Industrial employees don’t want any more than high school graduates.

Age

An older populace that more intensively utilizes public services isn’t what developers are searching for. These are the workforce that office and industrial renters have to have. Retail building developers need households and labor pool participants who dine out and shop more frequently.

Growing families turn into homebuyers being the basis of a strong residential market.

Investing in mortgage notes includes paying a lower amount than the payoff balance for a loan that’s in effect so that the note buyer becomes the lender. Lenders are usually able to unload loans in order to boost their cash, but they frequently liquidate because the loan is “non-performing”.

The investor can re-amortize the loan with lower payments giving them a long-term investment with interest income payments. The note buyer is covered by the mortgage note that the borrower executed and could take back the property if necessary.

Population

One of the most basic factors in real estate investing of various types is the size of the market’s population and whether it’s expanding. Investors know right away if an area is feasible by analyzing population data.

Property Values

Growing real estate values are the most crucial sign when mortgage note investors assess an area. The note purchaser is loaning on the viability of the property and not the borrower’s reliability.

Property Tax Rates

In a market with growing tax rates, the greater expense of having real estate may force borrowers into default. This is not good for long-term investors, but advantageous for the ones who need to turn their investment around quickly through a liquidation of the asset.

Another method of investing in the purchase and management of real property is to purchase shares in a REIT (Real Estate Investment Trust). Rent income and periodic asset liquidations generate the REIT’s revenue.

These trusts have to disburse 90% of profits to shareholders as dividends. The capability to cash out by selling their REIT shares attracts modest investors.

REIT investors are passive investors who have no input in the selection or management of the properties.

Real estate owners pondering becoming passive investors are interested in buying REIT shares. They liquidate their own real property to reinvest the capital into REITs.

A tax deferred exchange is meant to save money for investors who intend to do this. Learn more about this by reading our articles: Can You Do a 1031 Exchange into a REIT? along with Pros and Cons of a 1031 Exchange into DST.

For such a transaction, you will have to be served by a 1031 Exchange Qualified Intermediary. Find them in PropertyCashin’s directory of the best 1031 exchange companies in Kansas.

An additional method in which funding is pooled for real estate investments is a real estate investment fund. These entities possess interest in entities that invest in real estate, notably REITs.

Unlike REITS, funds are not expected to distribute dividends. The individual’s return is created by the value of the fund’s stock.

The most popular investment funds include mutual funds, ETFs (exchange-traded funds), and private equity funds for wealthy people. Shares in investment funds are bought and unloaded on the open market which is good for beginner investors.

As they are passive investors, fund shareholders are not part of any decisions including asset purchases.