New York NY Commercial Real Estate Market Trends Analysis

Industrial buildings are a kind of commercial real estate that is used by companies that serve other businesses (B2B tenants). B2B companies either manufacture or deliver goods to other manufacturers or retailers.

But, at this time, there is an expanding group of industrial properties whose tenants are online order fulfillment centers that disburse goods directly to the purchaser.

Industrial properties are long-term hold investments that are desired by investors/landlords. Their profitably calculations involve lease income and asset value growth. Leases are either gross or net.

Annual and 10 Year Population Growth

Population statistics are vital for industrial investment strategies for reasons that are different from investing in housing. Static or declining populations mean a declining tax base. Industrial investors have to see that the area’s infrastructure is sufficient and adequately maintained.

A region that is dropping its population will experience unacceptable commercial property value increase as well as residential. Industrial tenants are operating companies that have to have employees. Large industrial tenants will avoid areas that are dropping residents.

Property Tax Rates

As we saw with multifamily investments, tax rates are a reliable indication of the economic strength of a potential market. Frequently changing tax rates indicate an environment that presumably isn’t beneficial for your investment’s profitability.

Investors may want to read more on industrial and commercial property taxation and how to reduce commercial property tax in the U.S. from our guides.

Accessibility

Businesses that lease industrial properties ship big items or significant numbers of items. They use large trucks to ship their products. If the business is near major highways, large vehicles can get to them more quickly and conveniently.

Some industrial renters need to get to railroad or airport freight terminals. Interstate highways often go near those types of terminals which is a plus for industrial sites located adjacent to those interstates.

Utilities

Production properties often need large amounts of power and water. If a property does not offer adequate levels of these utilities, some tenants will hunt somewhere else.

Businesses that are located in retail units sell directly to the citizens in the region. They may be in a property alone (single-tenant) or in a property with other tenants (multi-tenant). Single-tenant assets might contain a bank, a pharmacy, a restaurant, or an automobile repair center.

Multi-tenant premises can be two or three space buildings, small “strip” shopping centers, big “big box” or grocery store centers with nationally known anchor tenants. A big shopping center with a combination of uses such as office, retail, and residential are designated “lifestyle” shopping centers.

Retail lease agreements are “net” with renters being responsible for the owner’s tax, property insurance, and maintenance of common areas as additional rent. Net leases additionally specify that the tenant takes care of the maintenance of the property.

Retail tenants have particular site criteria that retail investors follow when analyzing demographic data.

Population Growth

The total information for the region being considered is not enough for retail investors. Investors also look at the community’s submarkets. Retail locations need to be visible and accessible to their clientele as they go through their daily activities.

An expanding market population is a bonus, but if the current population does not include sufficient clients, it is considered an undesirable “green” trade area. Investors in retail assets will review all categories of populace data like population size, annual and 10 year growth numbers, and how many people work in the trade area.

Median Income

Income standards tell retailers where their clients are. Median income information is a lead to the shoppers who can afford pricey goods from high-end stores or those on a smaller budget who require discounted prices.

Median Age

Age data is more important to retail investors than other investor types. Depending on the kind of center (grocery anchored, entertainment anchored, big box retailers) the age of the population can entice desirable retail lessees.

Property Tax Rates

The earlier illustration of how property tax rate information is utilized by industrial and apartment building investors relates to retail investors too. Increasing taxes are passed on to their renters which decreases their occupancy rates, and the worth of their asset could be lessened down the road.

Having your commercial building overassessed by the county is an unobvious problem that leads even to further expenses. Protesting property taxes can be outsourced to the best commercial real estate lawyers in New York NY.

Businesses rent places for their workers in office buildings. Office real estate could be a single story flex space or a multi story building. Large brands typically prefer to use their money for business growth instead of possessing property.

Office tenants execute a “full service” lease agreement which is additionally classified as a gross lease. All of the owner’s costs are included when the rent total is determined. You may encounter customized variations of gross lease contracts that are altered to fit that specific circumstance.

Office investors are long term investors who project revenues from rental income and the appreciation of the property.

Population

The specific demographic data that office property owners use shows the number of desired office workers in the population. This includes the populace’s size, age, and education level. Experienced office investors purchase assets in areas where their renters want to relocate.

Property Tax Rates

Growing municipalities that are home to a desirable group of possible office employees will have expected, predictable tax rates. Successful renters will search for that type of environment.

Incomes/Cost of Living

Office renters see existing wage standards as one indication of the qualifications of the labor pool. The statistics also helps them estimate labor costs.

Education

Education levels are analyzed by office lessees and investors more than other real estate investors. Some tenants do not have to find college degrees but other businesses do.

Buy, rehab, rent, refinance, and repeat (BRRRR) is an investment strategy that creates a collection of leased properties. These are long-term or Buy and Hold investments. The advantage is that the property generates income while you hold it and could be liquidated later on for a profit when its worth has increased.

Initially the investor purchases a property, then they fix it up and find a tenant. Next, the asset is refinanced subject to its improved worth, and the increase in its worth is given to the investor. The investor uses these funds to obtain more property which is repaired, rented, refinanced, and so on.

To buy and fix up commercial real estate, investors use unconventional financing. These acquisitions carry a high risk for traditional financing firms.

Scan our commercial real estate service provider directory to contact the best commercial rehab lenders in New York New York and the best New York commercial hard money lenders.

Also, don’t underestimate the expert knowledge of the best commercial real estate brokers in New York NY. Below is a set of data an agent will consult you on.

Median Gross Rents

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

Property Value Growth

Real estate values need to be appreciating in the community for a buy and hold investment to work.

Population

BRRRR investors will look closely at the populace growth rate. Without a growing populace, real estate will sit vacant and depreciate.

Income

Multifamily property investors must find out the income level of their potential renters. You don’t require a Class A high-end apartment complex in a region of mid or low level wages.

Property Tax Rates

Unreasonable or rising taxes will be harmful for an investment. Reliable, reasonable taxes are a good signal that the community is a vibrant environment for investment.

What’s also important, in the local government’s register, your real estate can be overestimated, which makes you pay excessive property taxes. The top-rated New York commercial property appraisers as well as the best commercial property tax consultants in New York NY are used by smart property owners to reduce your taxes.

Professionals in the real estate industry think of development as producing entire residential neighborhood projects or any kind of commercial real estate. The developer has to find land that matches their criteria so that they can produce residential parcels for sale or commercial leasing properties.

A developer has to be certain the property is properly zoned, employs civil engineers to plan the site work, finds architects and engineers to draw building plans, and controls the municipal approval process. Once the okay is received, the property is developed, and the finished product is advertised to the intended audience.

It can take a year or more from the start to finish of a development venture. In that time, economic and legislative changes can influence the project’s profitability. This is why the most financially dangerous type of real estate investment is development.

Development may get paused by various events causing a considerable delay before continuing building. Even when the site is secured against vandals, nobody can prevent natural disasters from damaging the unfinished building. You will need assistance by the best commercial real estate insurance firms in New York NY.

Insurance should be included in the investor’s project costs before presenting it to a lender. The best commercial construction real estate lending companies in New York New York may provide a list of firms they consider worthy.

Population

To make certain that their housing and commercial development projects are situated in promising places, developers use the same population size, populace growth, household wages, and education level of the populace that their end users want to find.

Income

Salary statistics will show investors whether the shoppers and diners in the area are the customers that their tenants want. Moderate incomes could still show a good location for blue collar shopping centers.

Companies that rent office and industrial space use income statistics as an indicator of their employee expenses in that area. Income standards help developers see whether a market is good for industrial or office spaces.

Education

Industrial and office property tenants require different levels of education in the area’s population. Office building renters frequently prefer possible workers with a college degree. Mid level employers are okay with high school graduates.

Age

Developers hunt for a median age that reflects people who are active employees and taxpayers. Industrial and office developers require a working age citizenry. Retail property developers require families and labor pool participants who eat out and shop more regularly.

A working age populace also has the most dynamic homebuyers that residential investors need.

Real estate loan note investors buy existing loans cheaper than the amount owed and become the current lender. Lenders may liquidate loans to raise capital, but they typically liquidate them due to them not being paid as agreed.

One promissory note investment plan is to create a revised payment schedule that is more convenient for the borrower to meet, and retain the investment in their portfolio long-term. If the borrower can no longer pay, the investor maintains all the foreclosure rights of the previous lender and may foreclose to recoup their invested money.

Population

Mortgage note buyers, like other investors, want to see the volume of residents in the possible area and if that amount is expanding or declining. This information is an immediate assessment of the anticipated economic reliability of the area.

Property Values

A mortgage note investor has to see that property values in the market are growing. The note buyer is loaning on the strength of the collateral instead of the borrower’s reliability.

Property Tax Rates

In a market with rising tax rates, the higher expense of possessing a house may force borrowers into foreclosure. This scenario hurts long-term investors, but it benefits short-term note investors who want to profit from their investment fast.

Real estate investment trusts (abbreviated as REITs) are investment businesses that purchase and supervise revenue generating real estate. Rent revenues and periodic property liquidations generate the REIT’s income.

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

People who purchase REIT shares have no input in which units are purchased or the way they are operated — they are passive investors.

Investors, who plan to quit active investing but want to stay in real estate, consider REITs. They invest in REIT shares after selling real estate.

A like-kind exchange is meant to benefit investors who plan to do so. Learn more about tax-deferred exchanges by reading our guides: Can You Do a 1031 Exchange to REIT Shares? and What Is a DST 1031 Exchange?.

A 1031 Exchange Qualified Intermediary will be required by the IRS to serve as a middleman in the procedure. Our directory suggests the best 1031 exchange Qualified Intermediaries in New York NY to help you in your search.

Real estate investment funds are another venture that gathers financial resources to invest in real property. These organizations do not possess real property — they possess interest in entities that do, like REITs.

This investment choice doesn’t disburse dividend revenue to their investors. The investment revenue to the shareholder is the expected appreciation in share worth.

The most common investment funds include mutual funds, ETFs (exchange-traded funds), and private equity funds for high net worth people. Similarly to REITS, real estate investment funds provide investors liquidity by enabling them to dispose of their shares on the market at their convenience.

Since they are passive investors, fund shareholders are not part of any determinations including property purchases.