I don’t know if you have noticed lately, but Commercial Real Estate Investment is on its way back. Sure, there are still a few foreclosure stragglers out there keeping a lid on appraised values but once they are gone, look out above. Sellers of well located properties who have held strong on their asking prices may soon get paid for their patience in this psychologically driven market. I’m not saying we are going to be at 2006 levels anytime soon but you never know.
What’s driving this resurgence? One reason is flight to safety. Even though investors want the highest yield on their cash, more importantly they want to make sure their investment is safe and their money will still be there in case we get another tsunami. Are you sure that you want to buy treasury bonds from a country that has more than TWO TRILLION DOLLARS OF DEBT? Do you feel safe with your money in the stock market that has proven to be manipulated? Do you feel secure with putting cash in the bank not knowing if the bank will open its doors tomorrow? Are you ok with buying gold at $1,550 per ounce knowing that in a single day it is possible for it to lose 50% or more in its value and still be double of what it was in 2006? Or, the best one yet; how does it feel to risk your life savings in foreign countries like Brazil. India, or China which are thousands of miles away and are filled with political and social uncertainties?
Investing your money these days seems to be similar to electing a President; you pick the one that you don’t like the least but this doesn’t have to be.
If you buy commercial real estate locally, at least you can go and touch the walls, move your own business in there if necessary, and sleep more soundly knowing that your investment will still be there tomorrow and no company, no country, and no person other than you controls its future.
So, since I know have everyone reading this article scared to death to invest anywhere but Commercial Real Estate, let’s focus in on what opportunities exist and which ones of those seem to be the safer investment.
The Milton Road commercial corridor in Flagstaff and the 89A corridor in Sedona continue to be Rodeo Drive. National Tenant retailers are still salivating for anything on Milton and rightfully so; the retail sales of sites like Chili’s, Chipotles, and Starbucks are some of the highest in the state. The problem here is that there are no sites available unless you get creative and redevelop and existing site.
Student Housing is another “safe” and attractive investment in our college town. As the enrollment of Northern Arizona University increases semester after semester, the availability of student housing decreases.
Last but not least is downtown commercial investment. Not only has real estate downtown proven to be a solid bet throughout the years, but recently downtown retail development is the latest craze in our country. National Tenants are downsizing their stores/restaurants and targeting the inner cities especially in small to midsize towns that still have Ma & Pa ownership. Stores like Walmart Express, CityTarget, Best Buy Mobile, CVS, and many discount retailers are looking for infill city sites. Mixed use sites with residential lofts on top and retail and restaurant below are very desirable.
There are opportunities out there for both safe and high yielding commercial real estate investments, you just have to know where to look and who to talk to.
Feel free to call or email me to discuss.
Mark T. Belsanti, CCIM is owner/agent of da Vinci Realty, LLC. He can be reached at (928) 779.3800 Flagstaff, (928) 254-1770 Sedona, or HYPERLINK “mailto:firstname.lastname@example.org” email@example.com.
You can view da Vinci Realty’s website at HYPERLINK “http://www.davincirealty.com” www.davincirealty.com to view his listings and read past articles.