Ohio Commercial Real Estate Market Trends Analysis

Industrial properties are commercial properties that are often leased by Business to Business (B2B) companies. Industrial tenants include manufacturers and distributors like supply houses.

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

The owners of industrial assets are also long-term investor-landlords. Their investment predictions count on revenue from both rent and the planned sale of the asset. Industrial lease agreements can be based on either gross or net rent conditions.

Annual and 10 Year Population Growth

Population data is important for industrial investment plans in ways that are dissimilar from residential investments. They don’t rent to the public, but they want to see an increasing number of taxpayers in the market. If the local municipality cannot gather adequate taxes, it is unable to keep up its responsibilities to sufficiently repair the infrastructure that industrial tenants require.

A region that is losing its population will endure unacceptable commercial property appreciation as well as residential. A large concern for industrial renters is the availability of desirable workers. The best industrial tenants will not locate in a market that is dropping possible workers.

Property Tax Rates

Industrial investors use property tax history as a signal of the strength of a market, just like multifamily investors. Uncertain tax rates show a place that presumably is not good for your investment’s profitability.

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

Accessibility

The tenants in industrial properties produce or disburse large amounts of goods that are big. Big tractor-trailer trucks are utilized to ship these products. Industrial real estate investors look for properties that are near important highways that large tractor-trailer trucks can get to conveniently.

Sometimes industrial businesses transport their goods by airplanes or trains. Interstate highways often go close to those types of terminals which is a benefit for industrial properties placed near those interstates.

Utilities

Production properties frequently require high levels of electricity and water. If a property doesn’t offer suitable levels of these utilities, some companies will search somewhere else.

Companies that are situated in retail spaces sell directly to the citizens in the area. This includes single-tenant and multi-tenant properties. Single-tenant real estate might house a bank, a drug store, a dining establishment, or an automobile service store.

A property that holds a few businesses is considered multi-tenant property, as are “neighborhood” shopping centers, “strip” centers, grocery store anchored centers, or malls with significant nationally known stores called “big box” centers. “Lifestyle” retail centers can include retail, office, and residential spaces.

Retail owners use “net” contracts that obligate the tenants to separately take responsibility for the taxes, property insurance, and upkeep of the common areas such as the parking lot. Net lease agreements additionally specify that the tenant takes care of the maintenance of the property.

Retail property investors look for the demographic data that their renters will specify in their location criteria.

Population Growth

The total data for the community under consideration isn’t sufficient for retail investors. They also look at the area’s submarkets. Retailers need to locate where their shoppers live, commute past, or are employed.

An improving trade area population is a plus, but if the existing populace does not hold enough clients, it is considered an undesirable “green” trade area. Retail tenants, and accordingly retail owners will analyze all population information to include size, growth, and daytime population.

Median Income

The population’s income standards are a critical part of retail site criteria. Larger wages show an acceptable place for higher end retailers, while middle wages are good for blue-collar retailers such as automobile equipment stores.

Median Age

Age information is more significant to retail investors than alternative investor types. If a retail asset is situated near the age groups that potential tenants want, it is simpler to draw them.

Property Tax Rates

The earlier description of how property tax rate data is used by industrial and apartment complex investors pertains to retail investors too. Rising taxes are passed on to their tenants which decreases their occupancy rates, and the worth of their asset could be diminished down the road.

Having your property overvalued by the tax office is a frequent problem leading even to more waste of money. The best commercial real estate lawyers in Ohio can help you with a property tax reassessment process.

Office space is rented to companies that look for a place for their employees to operate. Office properties can be large enough for 1 person or hundreds of people. Big corporations frequently lease office locations from others rather than use their corporation’s assets to purchase or build space.

Office renters sign a “full service” lease which is also considered a gross lease. These kinds of deals add the owner’s costs, such as tax and property insurance into the rent. The terms can be modified according to the tenant and landlord’s requirements.

Long-term investments such as office properties generate ongoing rental revenue and the projected income from the future liquidation of the real estate.

Population

The population demographic data that office property investors search for should indicate an adequate supply of employees for office tenants. They look for the total populace number, their ages, and their education. So that they can rent to reliable renters, investors need to copy the lessees’ specifications in their location conditions.

Property Tax Rates

A properly managed city or county that draws possible office workers to the market will not have high or constantly expanding tax rates. Good tenants for your office property will consider this factor and so should you.

Incomes/Cost of Living

Higher salaries can signal an educated populace that a lot of office lessees require. The data also helps them budget for labor expenses.

Education

The level of education achieved by the potential location’s population is particularly significant to major office lessees. A call center may not require college graduates, but a financial services business could.

When an investor obtains a property, fixes it up, leases it, refinances the asset, and then duplicates the procedure, it’s known as a BRRRR type of investment. This is a category of Buy and Hold method where an income generating asset is kept for a long period. This method has the benefit of furnishing short-term (lease) income and net income from the long-term appreciation in value.

The investor obtains a rental, repairs or renovates it, and rents it out. As soon as they are able, the investor gets a “cash-out” refinance that enables them to take equity out of the asset in cash. The cash is utilized for the cash investment in an additional property, and the process is done again.

Traditional multifamily financing products don’t work for buy and fix up deals. Banks and other traditional mortgage companies don’t finance this kind of investments trying to avoid a high risk.

But lenders who might be interested can be found in this directory of commercial real estate vendors that lists the top Ohio commercial private and hard money lending companies as well as the best commercial rehab lenders in Ohio.

Also, don’t undervalue the local knowledge of the top commercial and industrial real estate agents in Ohio. Keep reading to learn about the stats to ask them about.

Median Gross Rents

You need to locate allowable existing rental rate levels and a history of acceptable rental rate bumps. Rental rate numbers are a vital component in an investor’s choices.

Property Value Growth

If property values are not expanding, a buy and hold investor loses 1/2 of their investment plan.

Population

The important populace information for buy and hold projects is the growth rate. Weak housing markets that they want to bypass will have flatlined or shrinking rates.

Income

Apartment building investors must find out the wage level of their prospective tenants. If you are satisfied holding mid-priced properties, you don’t have to find high incomes.

Property Tax Rates

Disproportional or increasing taxes will harm an investment. On the other hand, stable tax rates can indicate an expanding area.

This gets even more crucial when your real estate is overvalued by the local tax assessors. The top-rated Ohio commercial property appraisers and the best commercial property tax consulting companies in Ohio are used by wise property owners to fix this.

Professionals in the real estate industry consider development as creating whole housing neighborhood projects or any sort of commercial property. A developer seeks and buys usable land and prepares either parcels for sale or buildings that are leased to occupants.

A developer has to be certain the property is properly zoned, employs civil engineers to design the site work, employs architects and engineers to draw building plans, and manages the local approval procedures. When approvals are received, the property is developed, and the final product is advertised to the targeted users.

Real estate development can take years to finish. The economy or local regulations can shift in a damaging way before the development is finished. For this reason, development is known as the riskiest type of real estate investing.

A wide range of events may force investors to put a development process on hold. Even when the site is protected against vandals, you won’t prevent weather disasters from damaging the unfinished property. The best commercial landlord insurance companies in Ohio help professional developers compensate for losses resulting from this.

Insurance must be incorporated in the project costs before submitting it to a lender. You can learn about the insurance firms that are considered trustworthy by asking the best commercial new construction financing firms in Ohio directly.

Population

Developers utilize population size and growth rate along with economic and education data to make sure that they have enough retail shoppers and housing homebuyers in the region.

Income

Retail facility developers utilize income levels to place their project where it could attract the customers that their intended renters require. A place that does not attract a high-end retailer could be just what a moderately priced company is looking for.

Office and industrial renters will need to see the wage rates that their potential employees will require. Income levels help developers know whether a market is good for industrial or office spaces.

Education

Industrial and office property tenants want dissimilar levels of education in the locality’s populace. The majority of office renters require college graduates for their employees. Industrial employees don’t require any more than high school education.

Age

An older population that more often uses public services isn’t what developers are hunting for. Industrial and office developers need a working age populace. Citizens who are actively employed usually go shopping and dine out consistently at retail stores.

Residential community developers require the identical age category because they are more likely to be moving up the social ladder, which helps home sales.

Investing in promissory notes means paying less than the payoff amount for a loan that is in effect so that the note buyer becomes the lender. The first lender may be willing to sell because they require capital, or because the borrower is not current with their mortgage payments.

A part of promissory note investors will re-amortize the loan to enable the borrower to make their loan payments — for a long-term profit. The note buyer is covered by the mortgage note that the borrower signed and can take back the collateral if need be.

Population

One of the most fundamental factors in real estate investing of all types is the magnitude of the market’s populace and if it is increasing. Investors understand right away if an area is feasible by researching population data.

Property Values

A mortgage note investor needs to see that property values in the market are growing. The note purchaser is lending on the value of the asset instead of the borrower’s financial strength.

Property Tax Rates

When property taxes escalate consistently, borrowers who have trouble making their loan payments will find it difficult to stay current. This is unacceptable for long-term investors, but good for those who need to turn their investment around quickly by way of a sale of the collateral property.

A REIT (Real Estate Investment Trust) is a business that owns and manages revenue generating real estate. They produce revenue from rent and create long-term asset value.

These trusts have to distribute 90% of net income to shareholders as dividends. Modest investors prefer REITs because they are able to unload their shares at any time.

REIT shareholders are considered passive investors which means that they have no activity in the acquisition or management of any assets.

REIT shares are often bought by people planning to change strategy from active to passive investing. They unload their own real property to reinvest the money into REITs.

There is an effective legal tool allowing you to postpone paying taxes on real estate sale in this case. Learn details about tax-deferred exchanges from our resources: Can You Do a 1031 Exchange into a REIT? along with Pros and Cons of a 1031 Exchange into DST.

The law demands that you request assistance from a 1031 Exchange facilitator to consider the tax deferral rightful. Our directory suggests the best 1031 exchange Qualified Intermediaries in Ohio to narrow down your search.

Real estate investment funds are an interesting vehicle that collects money to invest in real property. These entities maintain shares in companies that invest in real estate, such as REITs.

This investment choice doesn’t distribute dividend income to their investors. The investor’s return is created by the valuation of the fund’s stock.

The most common investment fund types are mutual funds, ETFs (exchange-traded funds), and private equity funds for wealthy people. Shareholders are allowed to sell their shares if they need money, similar to REITs.

Share buyers are passive investors who are not involved with the decisions of the fund’s managers.