Retail real estate, in the form of shopping centers, strip centers, and free- standing buildings- has always been a good investment. As populations grow, and economies grow, and as America has inevitably grown, rents in good locations increase as vacancies decrease, and, thus, property values increase due to the growth in cash flows.
Another reason a retail property’s value increases is simply because the location can be re-purposed. For example, a shopping center may be turned into condominiums.
As a significant number of consumer transactions take place online, vacancy rates skyrocket- and suddenly, something that has been a great investment since the start of this country, commercial real estate- may not be a good investment at all.
If vacancy rates rise in retail areas, rents decrease, rent pricing-power decreases, property cash-flows decrease, and property values decrease. Under such a scenario, retail real estate can increase “only if” the property value itself increases. Such would not happen due to rent and shopper growth, but only due to a profitable re-purposing of the land.
Thus, retail that is totally surrounded by residential property is a better investment than property that is totally surrounded by commercial roads and buildings. Although retail that is totally surrounded by residential property is only use-able for very local and immediate products- i.e. food and drugs, and such businesses may fail, and certainly rents for such businesses are limited, the property value may increase due to the value of such retail property as land for more residential homes. This is less likely to happen in a more commercial zone (which, of course, has lost its commercial value due to online shopping- a double negative for retail in a less residential zone).
In sum, the best retail property investments going forward (other than extraordinarily large community and lifestyle shopping centers that have big money developers behind them … which may not even be such good investments- time will tell) might be only those that are in growing residential locations in this world where rents don’t go up and vacancy rates do go up because and people shop more and more from their cell phones and personal computers. Retail real estate investing may become far less about cash flow and far more about residential property speculation. One exception could be for a succeeding national retailer and a long term lease- but, still, once that lease is up, the property is back to square one in its position as a brick and mortar retail property in this new e-commerce world. As the property owner, you should ensure that you will make enough rental income during such lease-term to justify the property purchase.
Neil S. Siskind, Esq., President
The Siskind Law Firm
Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Learn more at: http://www.neil-siskind-the-fatherhood-assignment.org/
Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
The Neil S. Siskind Nature Preserve is over 8 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.
Neil Siskind, Founder, “National Fatherhood Day” – March 29th
Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
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Neil Siskind’s Volunteer Work:
– Memorial Sloan Kettering Cancer Center, Volunteer
– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskind help children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal
– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm
– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving
– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/
Neil Siskind’s Pro Bono Work:
– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com
– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/
– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/
– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.
Neil Siskind’s Government Work:
– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern
Neil Siskind’s Community Assistance:
Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.
Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/
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