Kentucky Commercial Real Estate Market Trends Analysis

Commercial properties that contain a tenant that works for other businesses (B2B companies) are designated as industrial properties. These companies may in reality manufacture the goods, or they may be intermediaries that disburse a manufacturer’s products to other companies.

But, at this time, there is an expanding type of industrial properties whose renters are internet purchase fulfillment centers that disburse goods directly to the customer.

Industrial properties are long-term portfolio investments that are desired by investors/landlords. These investments profit from both revenue (rent) and the anticipated appreciation in the financial worth of the property. Industrial lease agreements can be structured on either gross or net rent conditions.

Annual and 10 Year Population Growth

Industrial property investors require population data for reasons that are different from residential investors. A shrinking populace has a more indirect effect on industrial properties due to a shrinking tax base. Sufficient tax revenues are needed to maintain roads and infrastructure that industrial properties need.

A shrinking population is a good signal that business property values are likely to shrink as well. The tenants for industrial properties need a stable local employee base. These tenants will not be satisfied betting on a market that does not have a growing amount of possible employees.

Property Tax Rates

Industrial investors use property tax trends as a signal of the strength of a market, just like apartment building investors. Reliable tax rates are the sign of a predictable environment for your investments.

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

Accessibility

Companies that rent industrial properties move large items or significant amounts of items. Tractor-trailer trucks are routinely utilized to accomplish this. If the company is near significant highways, large vehicles can get to them more quickly and without difficulty.

Sometimes industrial businesses ship their products by airplanes or trains. This makes being near an interstate, which usually goes near air and rail hubs, a big advantage for industrial properties.

Utilities

Manufacturing companies usually use significant amounts of power and water. If an industrial building doesn’t possess suitable utilities, it will limit the types of renters that will lease it.

Retail investment properties rent space to businesses whose customers are ordinary people in the area. These stores could be in a building by themselves (single-tenant) or in a building with other tenants (multi-tenant). Retail stores that want to be by themselves encompass banks, drug stores, dining establishments, or automobile parts centers.

A building that contains a few businesses is classified as multi-tenant property, as are “neighborhood” centers, “strip” malls, grocery store anchored shopping, or malls with significant national renters called “big box” shopping centers. “Lifestyle” retail shopping centers could combine retail, office, and residential spaces.

Retail lease contracts are called “net” leases where the tenants pay the property taxes, property insurance, and common area maintenance of the facility in what’s known as “additional rent”. Renters are responsible for the upkeep of the facility as well.

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

Population Growth

The total information for the market being considered is not sufficient for retail investors. They also look at the area’s submarkets. Retailers have to be where their clients live, commute past, or are employed.

A trade area that does not already contain enough “rooftops” won’t do for retailers even if it is expanding. Investors in retail properties will analyze all facets of populace information like population size, annual and 10 year growth numbers, and how many people are employed in the area.

Median Income

Nationally recognized stores or “credit tenants” have very specific site criteria that involve income levels. Costly items necessitate customers with large wages while lower priced goods need lower income households.

Median Age

The age of the region’s population could be critical to retailers renting your property. If your retail property is located near the age groups that possible tenants want, it is simpler to draw them.

Property Tax Rates

Retail property buyers use property tax rates the identical way as both apartment building and industrial investors. Higher taxes mean higher rents which inflate vacancy rates, and places with increasing tax rates frequently have declining property values.

You waste even more money if the municipality’s tax assessor’s evaluation of your real estate value was wrong. Protesting real estate value assessment can be outsourced to the best commercial real estate lawyers in Kentucky.

Companies rent real estate for their workers in office buildings. Office space could be large or small. Large brands typically prefer to employ their assets for company improvement rather than possessing property.

Office lease contracts are most often gross or “full service” contracts. These kinds of deals add the landlord’s costs, including real estate tax and insurance into the payment. This agreement can be adjusted to meet the needs of the landlord and the tenant.

These landlords are long term investors who project returns from lease revenue and the increased value of the real estate.

Population

Office property investors analyze demographic data that indicates the availability of acceptable workers for their favored tenants. This consists of the population’s size, age, and education level. So that they can lease to dependable tenants, investors have to copy the lessees’ requirements in their site criteria.

Property Tax Rates

A well managed city or county that draws possible office workers to the market will not have high or consistently increasing tax rates. An acceptable workforce pool draws desirable office renters.

Incomes/Cost of Living

Salary standards tell a potential tenant whether employees in the market are qualified, under-qualified, or overqualified for their job openings. The data also helps them estimate labor expenses.

Education

Education achievements are studied by office lessees and investors more than other property investors. They should know whether they are marketing to tenants who need higher degrees of education or not.

Buy, rehab, rent, refinance, and repeat (BRRRR) is a growth strategy that creates a collection of rental properties. This is a category of Buy and Hold method in which an income creating asset is held for a significant time. The investor receives lease revenue during their ownership and a one time sum when the property’s value increases, after which they sell it.

The investor picks up a rental, repairs or improves it, and rents it out. As soon as they can, the investor obtains a “cash-out” refinance that enables them to pull equity out of the asset in cash. The investor uses this money to buy additional property which is rehabbed, leased, refinanced, and so on.

Conventional commercial property financing products aren’t meant for purchase and repair projects. This type of acquisitions pose a high risk for traditional mortgage companies.

Visit our directory of commercial real estate service providers to choose the best commercial rehab lenders in Kentucky and the top Kentucky commercial private and hard money lending companies.

Also, don’t underestimate the professional knowledge of the best commercial real estate agents in Kentucky. Keep reading to learn about the data you should discuss with them.

Median Gross Rents

Investors need to see desirable current rental rate levels and a history of reasonable rent increases. This one factor is important when the eventual market choice is made.

Property Value Growth

Buy and hold investments obviously need assets that are projected to grow in worth.

Population

The pace of the population’s increase is a significant number to BRRRR investors. An expanding populace is a good source of renters and is more likely to sustain rising real estate values.

Income

Multifamily property investors need to find out the wage level of their prospective tenants. An asset that does not meet the needs of the area will show a high unoccupied rate.

Property Tax Rates

Higher tax rates will dampen both short-term and long-term profitability. Stable tax rates are a sign of a vibrant, improving economy.

What’s also important, in the local tax office’s register, your asset can be overvalued, which means you pay excessive property taxes. When that is the case, you may need guidance by the top commercial property tax protest companies in Kentucky and the top-rated Kentucky commercial property appraisers.

To a real estate professional, property development refers to the development of any commercial property or an entire residential community. A developer spots and purchases suitable property and develops either parcels for purchase or buildings that are leased to occupants.

Property development involves working with zoning permits, managing sitework plans created by civil engineers, working with engineers and architects on construction plans, and shepherding the project through the local municipality for approval. After all the plans are authorized, the site work and construction are completed and purchasers or tenants are located.

The time required to finish a real estate development could be several years. The economic picture or area regulations can change in a damaging way before the development is completed. This instability makes real estate development the most speculative category of real estate investment.

Construction can be paused by different factors that cause a considerable delay before continuing building. During this pause, the property may be damaged by vandals, weather conditions, or other things. The best commercial landlord insurance companies in Kentucky help professional investors avoid financial damage caused by such events.

Lenders need your project to be protected by a reliable insurance. Ask the best commercial construction real estate lending companies in Kentucky whom of the local insurance firms they accept.

Population

Property developers use the same demographic indicators that their possible buyers and renters estimate to locate neighborhoods with suitable standards of populace size and growth, economic viability, and educational achievement.

Income

Wage levels will show investors if the customers and diners in the location are the people that their tenants require. High-end retail stores look for upper wage regions, but moderate priced retail stores require middle class customers.

Companies that rent office and industrial properties utilize wage statistics as a sign of their employee expenses in that area. Income standards help developers see if a location is desirable for industrial or office properties.

Education

Industrial and office space renters need distinct achievements of education in the local population. The majority of office tenants want college grads for their workforce. Industrial workers do not need any more than high school education.

Age

Developers look for a median age that reflects people who are active workers and taxpayers. Industrial and office developers want an employable age population. People who are actively employed normally shop and dine out consistently at retail establishments.

Expanding families turn into homebuyers serving the foundation of a growing residential market.

Promissory note investors purchase existent loans for less than the sum owed and turn into the current lender. Lenders are often able to sell loans in order to increase their funds, however they often get rid of the note because the loan is “non-performing”.

The investor could re-amortize the loan with lower payments giving them a long-term investment with interest income payments. They know that if the borrower discontinues making payments, they can take back the property and liquidate it, which is part of the strategy.

Population

One of the most basic factors in real estate investing of various types is the size of the market’s population and if it is growing. This information is a fast evaluation of the future economic reliability of the market.

Property Values

Growing property values are the most important indicator when promissory note investors assess a market. The growing value of the property eases the exposure of the investment.

Property Tax Rates

When property taxes increase consistently, borrowers who have difficulty making their loan payments will find it challenging to stay current. This is bad for interest income, but is actually preferred by note buyers who expect to turn a profit quicker by recovering the collateral.

A REIT (Real Estate Investment Trust) is an organization that possesses and operates revenue producing property. They generate income from lease payments and create long-term property appreciation.

Being a trust, REITs must distribute ninety percent of that income to its shareholders. Modest investors prefer REITs because they could unload their shares anytime.

REIT investors are passive investors who have nothing to do with the choice or management of the assets.

Those wanting to become passive investors are interested in buying REITs. They dispose of their own real estate to reinvest the money into REIT shares.

In this case, conducting a 721 exchange is the best strategy. Take a look at the following articles to understand how to benefit from it: Can You Do a 1031 Exchange to REIT Shares? and Pros and Cons of a 1031 Exchange into DST.

The Government demands that you use assistance from a 1031 Exchange Qualified Intermediary to consider the exchange lawful. Find such companies in our list of the best 1031 exchange companies in Kentucky.

One more way that capital is collected for real property investments is a real estate investment fund. These businesses possess shares in entities that invest in real estate, such as REITs.

This investment choice does not disburse dividend revenue to their investors. Like with other stock funds, the profitability is created by increases in the value of their stock.

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

Fund share buyers don’t have a thing to do with deciding on properties or markets, because they are passive investors.