Should You Invest in Commercial Real Estate in 2015?

Investing in real estate is a good idea. Property values never decrease and you always have an asset that you can convert into cash. The good news is that real estate rates have been increasing since 2013 and 2014. The 2015 real estate market is pretty good too, if you plan to invest in real estate. In fact, industry watchers like Jeff Adams recommend you invest in commercial real estate, as well as residential real estate before property values increase.

Picking the Right Market for Commercial Real Estate
Commercial real estate is available all over the US but the best places to invest in at present are Orlando, Portland, Dallas, Houston, Minneapolis, San Diego, Austin, Raleigh-Durham, Fort Worth, and Denver. Since late 2014, the commercial sector has been seeing significant improvement. In fact, rentals are increasing and developers are looking out for new sites to accommodate the growing demand for commercial rental property.

The main reason for this booming interest in real estate is due to the success of online retail businesses. Consumers have been able to save a significant amount of money due to high salaries and a steadily lowering gas rate. As a result, consumer spending on non-essentials has increased.

Online retailers like Amazon, in particular, are seeing a huge boost in online business. The retailer has also started expanding its supply and storage division to ensure maximum customer service. The online giant has snapped up spaces in and around major distribution centers and large cities to streamline their supply and delivery network and this has paid significant dividends in the form of expedited shipping and increased business.

Housing experts state that almost every major online retailer will be following Amazon’s trend in the coming years. Commercial real estate, in the form of large warehouses located near urban areas, is in high demand and rental rates will increase. This trend is also visible in the form of increased warehouse rental rates since mid-2014. Rental rates increased from 2.4% to more than 3.3% in 2015 and are expected to increase even more.

Warehouse development is increasing due to demand and 59 million square feet has been earmarked for commercial storage. As of early-2015, more than 62% of that space is already under construction and will be ready by mid-2015. As more and more warehouse space becomes available, rental rates will decrease but this sector will still remain one of the most profitable acquisition and development sectors until 2016.

Jeff Adams #1 Real Estate Trainer
states that solid economic growth is the main reason that real estate is gaining in value. The office market, in particular, is showing substantial gains. Vacancy rates will decrease from 15.6% to about 15% in 2015 and rates could drop even further in late-2015.

The same demographic is visible in the industrial real estate market as well. Vacancies in this sector will decrease from 8% to 7.9% in late-2015. With so much demand for commercial real estate, it makes sense to invest in this sector as soon as possible.


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