Commercial Income Property: What’s Your Take?

Commercial income property keeps popping up on my radar of late. Numbers seem to becoming more and more favorable. Hmmm. Of course commercial property requires almost a mandatory 20% investment, sometimes 25%. But tenant turnover can be far less and if you land a NNN lease, well… But then there are vacancies. Empty in a duplex and you can fill that fairly quickly. 1-2 months. Empty in a commercial property and it can be months or even years depending on the type of property.

I’d love to hear our reader’s thoughts.   What have your experiences been?

3 Comments

Filed under Investment Property

3 responses to “Commercial Income Property: What’s Your Take?

  1. Another Investor

    Commercial and industrial real estate are grossly overpriced. Cap rates for all product types are at historical lows. Banks have been throwing money at construction, so most markets are as overbuilt as they were just before the savings and loan industry went under.

    In retail, chain retailers are pulling out of deals and closing stores. The mom and pop stores and franchises are getting hit by consumer recessionary spending cuts. I wouldn’t touch any type of shopping center at todays prices.

    Smaller office buildings and multi-tenant industrial properties that appeal to the investor trading up from residential units are also overpriced. Too much money is chasing too little quality product. When vacancy climbs, some of these folks will be in real trouble.

    The time to buy commercial industrial real estate is when the cycle is at the bottom. We may not get to the point where another RTC is created to liquidate the excess space, but there will be lots of opportunities if you are patient.

  2. Another Investor – Are you a KC guy or will you share where you are located?

    Here in KC the areas that would make me very nervous, commercial wise, would be retail and restaurant spaces. I know there is a specific need for more warehouse and flex space in SW JoCo. But office space, I think from what I can see, is wallowing.

    Thanks for your input.

  3. Two of the nation’s largest commercial real estate investment groups, (their names escape me) just recently announced, separately, they’d raised $11 Billion to invest in commercial real estate.

    When the Big Boys begin makin’ buyin’ noises, I believe them.

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