Raleigh NC Commercial Real Estate Market Trends Analysis

Commercial properties that house a business that deals with other businesses (B2B companies) are considered industrial properties. B2B companies either make or distribute products to other manufacturers or retailers.

However, today, there is an expanding type of industrial buildings whose occupants are online purchase fulfillment centers that deliver goods straight to the buyer.

Industrial property investors will hold the asset long-term and operate as the landlord. Their return projections involve lease income and asset value growth. Leases can be either gross or net.

Annual and 10 Year Population Growth

Population statistics are important for industrial investment methods for reasons that are dissimilar from investing in housing. Stagnant or declining populations mean a decreasing tax base. Industrial investors have to know that the area’s infrastructure is adequate and properly maintained.

A shrinking population is an accurate signal that commercial property values are likely to shrink as well. Industrial tenants are operating companies that have to have employees. Large industrial tenants will turn down regions that are losing residents.

Property Tax Rates

Industrial investors use property tax trends as an indicator of the vitality of a community, just like multifamily home investors. Stable tax rates are a signal of a foreseeable market for your investments.

We have informative resources about industrial and commercial property taxation and commercial real estate tax reduction to help investors get educated about taxation more deeply.

Accessibility

Companies that rent industrial properties ship large products or large amounts of items. They utilize large trucks to transport their products. Industrial real estate investors search for assets that are adjacent to important highways that big tractor-trailer trucks can access quickly.

There are industrial companies that utilize trains or airplanes to haul their products. Interstate highways usually go close to those types of terminals which is a plus for industrial sites placed near those highways.

Utilities

Manufacturing companies are likely to utilize significant amounts of electricity and water. If a property does not offer suitable amounts of these utilities, some companies will search elsewhere.

Retail buildings rent units to companies whose clients are average consumers in the market. Those assets may house a single renter (single-tenant) or several ones (multi-tenant). Retail businesses that want to be alone include banks, drug stores, restaurants, or automobile equipment centers.

Multi-tenant premises can be two or 3 space facilities, small “strip” shopping centers, large “big box” or grocery centers with nationally known anchor stores. A big shopping center with a combination of types including office, retail, and residential are considered “lifestyle” shopping centers.

Retail lease agreements are “net” with renters paying the landlord’s tax, property insurance, and maintenance of common areas as additional rent. Net lease agreements also say that the tenant is responsible for the maintenance of the property.

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

Population Growth

The overall data for the region being considered is not enough for retail investors. They also consider the area’s submarkets. Retailers want to be where their shoppers live, drive past, or work.

An expanding market population is a plus, but if the existing populace doesn’t include enough clients, it’s designated an unsuitable “green” area. Investors in retail properties will examine all categories of population data including population size, annual and 10 year growth numbers, and how many people are employed in the trade area.

Median Income

Nationally recognized stores or “credit tenants” have very specific location criteria that include wage amounts. Costly products require shoppers with high wages while lower priced products need lower income residents.

Median Age

Age information is more important to retail investors than alternative investor types. Based on the type of shopping center (grocery anchored, entertainment anchored, big box retailers) the age of the population can attract desirable retail tenants.

Property Tax Rates

The previous illustration of how property tax rate data is utilized by industrial and multifamily purchasers relates to retail investors too. Increasing taxes are charged to their renters which decreases their occupancy rates, and the value of their asset could be reduced down the road.

You lose even a higher amount of money if the local tax office’s estimate of your real estate market worth was unfair. Protesting real estate taxes can be delegated to the best commercial real estate lawyers in Raleigh NC.

Corporations lease real estate for their workers in office buildings. Office space can be large enough for a single person or tens of workers. For a lot of major businesses, renting office space enables them to utilize their money for the improvement of their business.

Office leases are normally gross or “full service” lease agreements. The rent contains the landlord’s expected expenses for utilities, taxes, property insurance, and facility maintenance. The terms can be altered depending on the tenant and landlord’s needs.

Office space investors keep these assets for a long period which generates income from both ongoing rental income and the increasing worth of the property.

Population

The population demographic data that office building investors search for should signify an adequate number of employees for office tenants. They look for the complete populace number, their ages, and their education. Experienced office investors purchase assets in areas where their renters need to locate.

Property Tax Rates

A well run city or county that draws potential office workers to the area will not have excessive or constantly increasing tax rates. Successful renters will hunt for that type of community.

Incomes/Cost of Living

Higher salaries could show an educated population that many office lessees require. The data also helps the renters budget for labor expenses.

Education

Office investors know that the education level of the workforce will be significant to their prospective tenants. They have to realize if they are targeting lessees who require higher levels of education or not.

BRRRR, which stands for “buy, rehab, rent, refinance, repeat”, is an investing plan to increase your assets by taking advantage of the increased worth of the property. These are long-term or Buy and Hold investments. This plan has the advantage of providing short-term (lease) income and net income from the long-term appreciation in worth.

After the asset is purchased and rehabbed, it is leased to a renter. Next, the asset is refinanced based on its enhanced worth, and the increase in its worth is provided to the investor. The funds are utilized for the down payment for an additional property, and the procedure is done again.

Traditional commercial mortgages aren’t issued for purchase and repair projects. Traditional financing firms don’t serve this kind of projects considering them too risky.

However, lenders who could help you can be found in the commercial real estate vendor directory featuring the top Raleigh commercial private and hard money lending companies and the top commercial rehab lending companies in Raleigh North Carolina.

In this directory, you can additionally find the top commercial and industrial real estate agents in Raleigh NC
whose professional expertise will be valuable for your investment. They are glad to educate you on the important local market trends described below.

Median Gross Rents

This information tells the investor whether they could reach their primary and future revenue goals. This one factor carries a lot of weight when the final market decision is made.

Property Value Growth

Real estate values are supposed to be going up in the market for a buy and hold investment to be successful.

Population

BRRRR investors will analyze the populace growth rate. A growing populace means a dependable source of tenants and is more likely to sustain rising real estate values.

Income

Housing investors ought to understand their targeted renter, including their wage levels. A property that doesn’t meet the requirements of the market will show a high unoccupied rate.

Property Tax Rates

High or increasing taxes will be damaging for an investment. On the other hand, stable tax rates can indicate a growing area.

Be advised that local tax offices’ estimates of property values may be inaccurate, which makes investors pay unfair tax amounts without knowing. When that is the case, you may seek the expertise of the best commercial property tax consultants in Raleigh NC and the top-rated Raleigh commercial property appraisers.

Professionals in the real estate business think of development as producing complete residential community ventures or any sort of commercial property. The developer must find land that matches their criteria so that they can prepare housing lots for sale or commercial leasing properties.

This requires suitable zoning, land use design by civil engineers, construction plans for buildings, and the okay from the local authorities. Once the okay is communicated, the land is developed, and the finished property is marketed to the intended audience.

The time you need to complete a real estate development can be a year or more. In that period, economic and legislative changes can influence the project’s success. That is why the most financially risky method of real estate investment is development.

Risks may cause a developer to stop the construction for an undefined term. When the construction workers aren’t on the site, the site can get damaged. You should seek assistance of the best commercial landlord insurance companies in Raleigh NC.

Lenders need your project to get protected by a reliable insurance. You can learn about the insurance companies that are considered good by speaking with the best commercial construction real estate lending companies in Raleigh North Carolina directly.

Population

Developers utilize populace size and growth speed in conjunction with economic and education data to make certain that there are enough retail customers and housing buyers in the region.

Income

Wage rates will demonstrate developers whether the customers and diners in the market are the customers that their renters need. Moderate incomes can still show a good market for blue collar retail centers.

Statistics on wages can help industrial and office tenants understand what they will have to pay their employees in that area. Those developers research wage data as one indication of a site’s possibilities for profitability.

Education

Industrial and office property tenants look for distinct levels of education in the area’s citizens. Office space occupants frequently seek potential workers with a college degree. Mid level employers are happy with high school grads.

Age

Developers look for a median age that shows residents who are active workers and taxpayers. Industrial and office developers require a working age population. Retail real estate developers require households and workforce participants who eat out and go shopping more frequently.

Residential real estate developers seek the identical age group because they are presumably moving up the social ladder, which helps home sales.

To invest in property loan notes, the investor pays a lower amount than the remaining balance for loans currently in place, and takes over from the first lender. The first lender could be agreeable to selling because they require cash, or because the borrower is behind in their payments.

The investor could re-amortize the loan with reduced payments providing them a long-term investment with interest income payments. The investor is covered by the mortgage note that the borrower signed and could take back the collateral if required.

Population

One of the most fundamental factors in real estate investing of various kinds is the magnitude of the market’s population and if it is expanding. This is a quick “sniff test” of the financial strength of the area.

Property Values

Increasing real estate values are the most crucial sign when promissory note investors assess an area. The note purchaser is lending on the viability of the property and not the borrower’s ability to pay.

Property Tax Rates

In an area with growing tax rates, the larger expense of having a property may force borrowers into default. Such a picture hurts long-term investors, but it assists short-term note investors who like to turn around their investment faster.

An easy method to invest in the acquisition and oversight of real property is to buy shares in a REIT (Real Estate Investment Trust). Their profit comes from rents and the occasional liquidation of properties.

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

Individuals who invest in shares in a REIT have no input in which properties are bought or the way they are operated — they are passive investors.

REITs are sometimes acquired by real estate owners who want to shift focus from active to passive investing. Once you sell investment property, you can use the proceeds to buy REIT shares.

There is a wonderful legal tool enabling you to defer taxes on property sale in this case. Learn more about it by reading our guides: Can You Do a 1031 Exchange into a REIT with a Section 721 Exchange? and A-to-Z Guide to Delaware Statutory Trust (DST) 1031 Exchange.

IRS requires that you request assistance from a 1031 Exchange facilitator to consider the tax deferral valid. Find such companies in our directory of the best 1031 exchange Qualified Intermediaries in Raleigh NC.

An additional investment option that gathers money from people to invest in real estate is a real estate investment fund. It’s a company that invests in other real estate-associated companies, such as REITs.

This investment option doesn’t distribute dividend revenue to their members. Similarly to other stock funds, the return is created by appreciation in the value of their stock.

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

Investors in funds don’t have anything to do with choosing properties or markets, because they are passive investors.