Contact Information
Andala F. Shell, ABR and RSPS
Fesperman Real Estate
315 Plant Ave
Suite M
Waycross, GA 31501
Office: 912/283.1181
(M): 912.281.1995
EMAIL AGENT
From US News and World Report by Jeff Reeves:
Every type of organization rents commercial real estate. While some corporations, nonprofits and government entities buy property outright, tenants often prefer to lease facilities instead.
That's because while it may be more expensive in the long run, most organizations prefer the flexibility that comes with renting rather than being locked into one location for decades to come. Many corporations prefer to use their cash to do business rather than buying an expensive facility using a lot of upfront cash.
Deep-pocketed firms are typically the only investors that can afford to invest directly in commercial real estate, as most lucrative commercial properties are large and in dense urban areas.
As one example, consider the iconic Empire State Building – one of the most prestigious and in-demand office buildings in the world. It's valued at more than $2 billion and is owned by a publicly traded real estate firm, Empire State Realty Trust Inc. (ticker: ESRT).
It's simply not practical for individual investors, even many wealthy ones, to own commercial real estate directly. This is particularly true when it comes to large, attractive properties.
There are several ways investors can get a piece of commercial real estate as part of an investment group, or at least gain indirect exposure to these assets. They include:
Crowdfunding. There are a host of real estate-focused crowdfunding sites out there, including CrowdStreet, DiversyFund, PeerStreet and Fundrise. Hundreds or even thousands of small-time investors pool modest sums to gain exposure to commercial real estate this way.
Publicly traded real estate firms. There are a host of stocks like the Empire State Realty Trust that own property. There is even a special class of stock called real estate investment trusts, or REITs, to accommodate publicly traded commercial real estate firms.
Private equity funds. If you have substantial cash, you can invest in a larger and more exclusive private equity fund for direct commercial real estate exposure. Keep in mind that the minimum investment in private equity funds is often tens of millions of dollars, with the most affordable funds demanding at least $250,000 from each investor.
Commercial real estate can be a good way to diversify your investment portfolio. All investments carry risk, but certain forms of commercial real estate carry relatively low risk compared with other assets.
For instance, it's not uncommon for commercial real estate tenants to sign seven-year or even 10-year leases. This offers a lot of reliability to landlords. Furthermore, certain commercial real estate investments can withstand recessions, as these tenants include government offices, hospitals or other organizations that won't go away even if the broader economy gets rocky. And of course, the reliable cash flow from monthly rents adds a bit of certainty you won't find in more discretionary expense categories.
You should always do your research on any investment, but there are a host of commercial real estate investments out there that tend to perform more consistently than other assets over time.
Jeff Reeves is a veteran capital markets journalist and an active individual investor. Since 2017, he has written about dividend stocks and exchange-traded funds for US News & World Report. His work has also appeared on CNBC, the Fox Business Network, the Wall Street Journal digital network, USA Today and CNN Money.
