Oregon Commercial Real Estate Market Trends Analysis

Industrial properties are commercial properties that are often rented by Business to Business (B2B) companies. These businesses might actually manufacture the products, or they could be distributors that disburse a manufacturer’s products to other companies.

The exception is the rapidly growing world of fulfillment centers that warehouse and distribute products sold by online sales websites directly to their buyers.

Industrial property investors will hold the asset long-term and serve as the landlord. Their profitably projections involve rental income and asset appreciation. Their leases could either receive pass-throughs such as insurance and taxes in one check (gross) or separately (net).

Annual and 10 Year Population Growth

Industrial property investors utilize population data for purposes that are different from residential investors. Static or declining populations mean a shrinking tax base. If the local government cannot gather enough taxes, it isn’t able to keep up its obligations to adequately administer the infrastructure that industrial tenants necessitate.

A shrinking population is a good sign that business property values are presumably to decrease as well. The renters for industrial properties require a reliable local employee base. The top industrial tenants will not move to a place that is dropping potential workers.

Property Tax Rates

Real estate tax rates are the same economic signal for industrial property investors as they are for apartment building investors. Inconsistent tax rates keep you from accurately predicting your predicted returns in that location.

We offer informative articles on commercial real estate taxation and commercial property tax reduction methods to help investors learn about taxation better.

Accessibility

The renters in industrial properties manufacture or distribute large amounts of products that are big. Tractor-trailer trucks are usually used to do this. Industrial real estate investors look for properties that are adjacent to important highways that large tractor-trailer trucks can get to conveniently.

There are industrial businesses that use trains or airplanes to transport their products. This makes being near an interstate, which usually takes traffic near airports and rail hubs, a significant plus for industrial properties.

Utilities

Manufacturers are likely to utilize significant levels of power and water. A property missing the ability to supply adequate utilities won’t draw those tenants.

Businesses that are situated in retail units sell straight to the population in the trade area. This includes single-tenant and multi-tenant buildings. Sought after businesses for single-tenant properties are drug stores, automobile equipment centers, banks, and restaurants.

A property that houses a couple or more renters is considered multi-tenant property, as are “neighborhood” shopping centers, “strip” malls, grocery anchored shopping, or malls with big nationally known tenants called “big box” shopping centers. Shopping centers that incorporate condos or apartments, offices, and retail shops are known as “lifestyle” shopping centers.

Retail owners utilize “net” lease agreements that require the renters to separately take care of the taxes, property insurance, and maintaining the common areas including the parking areas. Retail tenants also have to maintain the property.

Retail property investors hunt for the demographic data that their renters will require in their location requirements.

Population Growth

The overall data for the area being considered is not sufficient for retail investors. They also review the area’s submarkets. Customers have to be able to find and easily access your retail renters.

Population improvement is relevant, but retailers demand a minimum number of customers at this time. Retail property investors want to collect the existing population growth, average annual population growth, decade population growth, and daytime population.

Median Income

The population’s wage rates are a significant component of retail location criteria. Expensive goods necessitate shoppers with large incomes while lower priced products need lower wage households.

Median Age

Retail property buyers rely on age information that other investors disregard. Based on the kind of center (grocery anchored, entertainment anchored, big box retailers) the age of the populace could entice desirable retail tenants.

Property Tax Rates

Tax rate information is used by retail investors for the same reasons as residential and industrial investors. Bigger taxes mean higher rents which inflate vacancy rates, and markets with expanding tax rates often have decreasing property values.

You lose even a higher amount of money if the municipality’s tax office’s evaluation of your property value was erroneous. The best commercial real estate lawyers in Oregon can assist you with a property tax reduction procedure.

Corporations rent real estate for their workers in office buildings. Office space might be large enough for one worker or hundreds of employees. Major businesses usually prefer to employ their money for business development instead of possessing property.

Office tenants execute a “full service” lease which is additionally categorized as a gross lease agreement. These types of deals add the landlord’s costs, such as tax and property insurance into the rent. This arrangement may be adjusted to answer the needs of the landlord and the tenant.

These property owners are long term investors who anticipate revenues from lease payments and the increased value of the real estate.

Population

The population demographic data that office building investors look for should indicate a sufficient supply of employees for office tenants. They look for the total population number, their ages, and their education. In order to rent to stable tenants, investors have to copy the renters’ specifications in their site criteria.

Property Tax Rates

A financially solvent local government that furnishes a desirable living environment for office workers will maintain stable tax rates. Successful tenants will look for that type of community.

Incomes/Cost of Living

Wage standards tell a prospective renter if employees in the area are qualified, under-qualified, or overqualified for their jobs. The statistics also helps the renters estimate labor costs.

Education

Education achievements are analyzed by office renters and investors to a greater degree than other real estate investors. They ought to know whether they are recruiting lessees who need higher degrees of education or not.

Buy, rehab, rent, refinance, and repeat (BRRRR) is an investment plan that builds a portfolio of leased assets. This is a category of Buy and Hold method where an income creating asset is owned for a long time. This method has the advantage of providing short-term (rental) revenue and profit from the long-term increase in value.

Initially the investor acquires a property, then they rehab it and secure a tenant. As soon as they are able, the investor gets a “cash-out” refinance that lets them take funds out of the property in cash. This becomes the down payment on their next investment, and they repeat it all again.

It’s unlikely to qualify for a regular commercial mortgage for a building in need of a considerable repair. Traditional lending companies avoid to approve these projects viewing them as too risky.

Visit our commercial real estate service provider directory to select the best commercial rehab lenders in Oregon and the best Oregon commercial hard money lenders.

Also, don’t underestimate the professional knowledge of the best commercial real estate agents in Oregon. They will educate you on the important local real estate dynamics described in the next section.

Median Gross Rents

This data tells the investor if they can reach their primary and future profit targets. Rent numbers are a key component in an investor’s decisions.

Property Value Growth

Property values need to be increasing in the area for a buy and hold investment to be successful.

Population

The key population information for buy and hold investments is the growth rate. Without a growing populace, properties will stay vacant and lose value.

Income

Housing investors ought to know their targeted tenant, including their level of income. If you are happy owning mid-priced properties, you do not have to find high wages.

Property Tax Rates

High or increasing taxes will damage an investment. Stable tax rates are a signal of a vibrant, growing economy.

Keep in mind that counties’ assessments of property market price are sometimes inaccurate, which makes you pay too high tax amounts without knowing. To conduct a tax protest process, talk to the top commercial property tax protest companies in Oregon as well as top-rated Oregon commercial property appraisers.

For a real estate professional, property development means the development of any commercial property or an entire residential neighborhood. A developer locates and buys acceptable land and prepares either lots for purchase or buildings that are rented to renters.

This requires acceptable zoning, site work design by civil engineers, construction plans for improvements, and permission of the local authorities. Once all of those steps are properly done, the developer oversees the construction work and marketing of the end project.

It could take a year or more from the start to finish of a development project. In that time, economic and regulatory changes can influence the investor’s revenue. This uncertainty makes real estate development the most speculative sort of real estate investing.

A wide range of events could force developers to put a construction process on pause. Even if the site is secured against thieves, you won’t prevent weather disasters from causing damage to the unfinished property. The best commercial property insurance companies in Oregon help professional investors compensate for financial damage caused by such events.

Insurance should be included in the investor’s project costs when submitting it to a lender. Ask the best commercial construction lenders in Oregon which local insurance companies they recommend.

Population

To make sure that their residential and commercial development projects are situated in acceptable areas, developers assess the identical population size, populace growth, household wages, and education achievements of the population that their desired users want to see.

Income

Income statistics will tell developers whether the shoppers and diners in the location are the shoppers that their tenants are after. A neighborhood that doesn’t draw a high-end retail store could be exactly what a moderately priced company is searching for.

Information on incomes can help industrial and office renters understand what they will have to pay their workforce in that market. Income levels help developers understand whether a market is good for industrial or office spaces.

Education

Companies that lease office and industrial spaces look for different educational factors in the area. Office building occupants frequently require potential workers with a college degree. Mid level businesses are fine with high school graduates.

Age

Most developers want to find a young to middle-aged population that supplies a steady tax base. A population that is actively participating in the workforce is the best for office and industrial property developments. Citizens who are actively employed usually shop and eat out regularly at retail stores.

Residential property developers look for the same age category because they are probably upwardly mobile, which stimulates home sales.

Real estate loan note investors buy actual loans cheaper than the amount due and turn into the new lender. Lenders sometimes liquidate loans to raise capital, but they typically sell them due to them not being paid as agreed.

Some promissory note buyers will restructure the loan to enable the borrower to continue their debt payments — for a long-term income. The investor is protected by the mortgage note that the borrower executed and can recover the asset if needed.

Population

Population size and rate of growth are crucial to these investors for the same rationale as the rest of investors. This data is an immediate test of the future economic strength of the market.

Property Values

Rising real estate values are the most important factor when mortgage note investors analyze an area. The note buyer is lending on the strength of the collateral and not the borrower’s reliability.

Property Tax Rates

In an area with growing tax rates, the greater expense of having a property may push borrowers into default. This picture harms long-term investors, but it helps short-term note investors who aim to monetize their investment more quickly.

Real estate investment trusts (abbreviated as REITs) are investment businesses that buy and oversee revenue generating real properties. Lease income and periodic asset liquidations generate the REIT’s revenue.

These trusts have to distribute 90% of net income to shareholders as dividends. The capability to invest and take out your capital as your demands dictate make REITs a good strategy for an average individual to invest in real estate.

Investors in REITs are passive investors who have no input in the choice or oversight of the assets.

Investors, who want to move away from active investing but want to stay in real estate, consider REITs. When you dispose of real estate, you can use the money to purchase REITs.

If that’s your plan, using a like-kind exchange is the best strategy. Learn more about it from our resources: Exchanging Real Property into REIT Shares with IRC Sections 1031 and 721 along with What Is a DST 1031 Exchange?.

For this type of transaction, you will be required to be served by a 1031 exchange accommodator. Find such companies in our list of the best 1031 exchange companies in Oregon.

An additional way that funding is raised for real property investments is a real estate investment fund. These companies don’t possess real estate — they hold interest in businesses that do, such as REITs.

Unlike REITS, funds aren’t required to disburse dividends. The investor’s return is created by the valuation of the fund’s stock.

Mutual funds, ETFs (exchange-traded funds), and high-end private equity funds are considered real estate investment funds. Shareholders are permitted to unload their shares if they want cash, like REITs.

Because they are passive investors, fund shareholders aren’t part of any decisions such as property purchases.