11 Jun What Commercial Real Estate Makes the Most Money?

Commercial Real Estate is a broad industry that covers a lot of asset classes and property types. Many people are interested in knowing what commercial properties are the most profitable. Understanding the reasons why certain sectors perform higher than others can help support your success in an ever-fluctuating market. Here are some of the property types that perform well and the factors influencing their return.

Types of Profitable Commercial Real Estate Investments

Industrial Properties

Industrial Properties have strong and stable demand, especially with industries like manufacturing and e-commerce needing properties like warehouses to store and distribute their goods. Industrial users usually sign long leases–sometimes 5 or 10 years–and are typically servicing nearby businesses or large plants so there is a lower chance of them leaving. This provides investors with steady income and less day-to-day management is required. Also, many industrial leases are triple-net (NNN) which translates into near zero ongoing expenses for the landlord. Managing industrial properties may be easier than other types as tenants often take care of things themselves, but there is much more wear and tear on industrial buildings compared to other propert types.

Multifamily Properties

Mutlifamily properties can provide steady cash flow… because there will always be people who need a place to live! Plus with multiple units, you can count on a regular rental income covering vacancies and expenses while generating profits. Managing one property with many units can save time and money on maintenance and upkeep. Multifamily properties also provide an opportunity to increase occupancy rates from a diverse tenant pool: singles, families, professionals, low-income, etc. There are many niches within Multifamily that can provide significant upside to savvy investors. 

Shopping Centers

Shopping Centers are retail properties that can yield high returns, but depend on a few key factors to produce such results. Successful centers will generate high traffic and attract popular stores thereby increasing revenues for everyone. However, It is critical for a shopping center to be in an excellent location to produce results. Visibility and access are two key factors. If people can’t see your shopping center or if your property is too difficult or inconvenient to get to, shoppers won’t visit. For a variety of reasons there is often more turnover with retail tenants, but when an investor secures a complimentary tenant mix in their well-located center, they reap the rewards.

Challenges to Profitable Commercial Real Estate Investments

Reward doesn’t come free of risks or downsides. Every commercial property investment will involve challenges and opportunities that will impact your overal return and experience owning the property. For example, changing trends in retail and online shopping can impact store success or the need for warehouse space, requiring investors to stay agile. And while overall these property types provide stable tenants, some stores or businesses may close or relocate, leading to vacant spaces and requiring prompt action to find new tenants. These types of properties can also be expensive to maintain, and some properties may need higher initial investments for repairs or simply a higer upfront cost of acquisition.

Working with a Broker

Partnering with an expert who is a dedicated specialist in one of these property types is one of the best ways to identify and overcome some of the challenges that come with investing in the types of commercial real estate that make the most money. For example, brokers at ELIFIN® specialize in specific property types, such as multi-family, retail, or industrial properties in Columbus, Ohio and beyond.

They are also backed by an in-house research team tracking every single commercial real estate sale in Columbus, enabling them to provide additional insight to determine which investment strategies are right for your interests and overall commercial investment portfolio. The research team also compiles and publishes this research as The Pulse, a weekly newsletter powered by ELIFIN®. 

For more insights and personalized advice about investing in commercial real estate in Columbus, Ohio and beyond, visit ELIFIN® or call us at 800-895-9329.