Investors have their checkbooks ready, poised to go on a buying frenzy if interest rates continue to drop. Commercial real estate, in particular, has been decimated in recent years.
The combination of discounted property with low rates is a tempting proposition for many investors. Despite this, knowing what to spend your money on and assessing risk is essential before calling your broker. Here are some commercial asset real estate classes worth considering.
Aging Office Buildings
The mere mention of buying office buildings amid all the bad press regarding vacant city centers and remote working may make you want to steer clear. However, if you’re well funded (tens of millions and up) and can afford to think long term, these are well worth looking into.
First, office buildings currently have the deepest discounts in commercial real estate. Second, the urban doom loop—as business districts have often been referred to—won’t last forever. In fact, office leasing is up in New York and San Francisco, some of the hardest-hit city centers. In May, Manhattan office leasing increased by 70%, making the 70% discounted deals savvy investors made during the height of the “doom loop” look prescient.
Repurposing apartments and data centers
The third thing worth considering is the use of these buildings in the future.…