Commercial Real Estate

Commercial Real Estate

Commercial real estate (frequently abbreviated to “CRE”) is usaully considered an alternative investment, and benefits from its status as a non-correlated asset type. It’s always long-term investment when investing in a commercial property typically three to seven years, so that also means it’s far less volatile than public markets. If you are interested in shorter term investment period a real estate investment trust is probably a better suited investment vehicle for you.

The way a CRE asset generally operates is tenants sign leases to occupy the space and in turn pay rent, which represents current income for the owners of that property. Another way a real estate asset can generate investment returns may be the one people are most familiar with: if the price at which it can be sold is higher than the price at which it was acquired, owners of that property will have achieved capital appreciation.

Certain strategies within CRE investing also make it an excellent inflation hedge, because leasing agreements can be structured with scheduled rent increases, guaranteeing growth over time in the income from those tenants. If an investor expects that money will be losing value due to inflation, those rent increases will help offset that impact and further their objective of capital preservation.

It’s worth mentioning a fourth investment objective that is relevant and unique to CRE, and that’s tax benefits. One tax benefit, called accelerated appreciation, occurs when a CRE operator performs what’s called a cost segregation study in order to provide investors the opportunity to lower their taxable income by depreciating the asset at a faster rate than the property’s natural useful life. Another common tax strategy is known as a 1031 exchange, wherein an investor who has recently sold a real estate investment can roll those proceeds into the purchase of a second real estate investment, subject to certain conditions, and defer the capital gains from their first investment.

Real estate has long been considered an alternative tangible asset outside of the typical stock and bond market it has many facets beyond the typically thought of homebuyers market. While real estate can be accessed through traditional means, such as direct ownership and real estate investment trusts (REITs), it is also possible to access this asset class through managers who invest opportunistically in private real estate and trade less mainstream real estate-related securities. Together, we select the real estate investments in line with your short- and long-term financial goals.​

Real Estate Investment Trusts R.E.I.T.s

The NAREIT REIT Directory provides a comprehensive list of REIT and publicly traded real estate companies that are members of NAREIT. The directory can be sorted and filtered by sector, listing status, and stock performance. Here is a link to their real estate investment trust members ​​​https://www.reit.com/investing/reit-directory

The ALTERNATIVE INVESTMENTS CENTER is in the process of organizing our own REIT specifically geared towards opportunity zone investments in 2025. If you would like to learn more please schedule a free initial consultation

The Real Estate Investment Fund is a type of fund that by pooling investors money to invest like a condominium in various segments of the real estate market such as logistic complex, offices, shopping centers, hotels, residence. This type of fund can also invest in securities

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A Real Estate Investment Trust, or "REIT", is a single investment into a diversified basket of real estate properties. REITs are legally required to distribute 90% of all taxable income to investors on a yearly basis. The Alternative Investments Center advisors feel 2024 is a compelling year to be involved in the R.E.I.T. marketplace due to a combination of factors not seen in decades. Why not schedule a consultation with an advisor to learn the many opportunities in the R.E.I.T. space that will occur in 2024? We have some opportunities in commercial and residential that have significant potential.

REITs are often diversified by property type, geography, or multiple categories to achieve strategic objectives

REITs have historically been positively correlated with inflation, which may make them a possible hedge for inflation

A perpetual life REIT has a primary objective to preserve and protect capital and provide attractive current income in the form of regular, stable cash distributions. It is intended to acquire and actively manage a diversified portfolio of multifamily apartment communities which can be located in larger cities or in secondary and tertiary markets. We aim to provide an investment alternative for investors seeking to allocate a portion of their long-term portfolios to commercial real estate with lower volatility than public real estate companies. With ever increasing volatility within the market, hard assets with inflation-protected yield and growth strategies.​

​What Is Industrial Real Estate?

Industrial real estate is a general term used to describe one of the primary categories in the commercial property market. Industrial real estate supports trade, e-commerce, and supply chains globally and ensures the efficient movement of goods and materials across various markets. This category is one of the most versatile and specializes in providing properties for non-public commercial use.

Industrial properties include:

• Warehouses

• Manufacturing

• Production

• Research and development

• Storage

• Hybrid warehouse/office flex spaces

• Distribution facilities

Think of these properties as where the behind-the-scenes work goes on, such as for scientific research, parcel deliveries, mechanical engineering, or transporting goods. These properties can be both small and large and can range from hundreds of square feet to hundreds of thousands of square feet.

Industrial Building Classifications

All industrial buildings will have a specific class grade attached to them. Each of these class grades will describe a different type of industrial property investment, as some of these assets may be more likely to see capital appreciation while others are better suited for capital preservation.

Though your return on investment (ROI) will be influenced by many different property factors, identifying these industrial real estate differences can help you make a better-informed decision as you move forward during your search.

Class A Industrial Properties

Class A industrial buildings are typically the newest and most prestigious structures in their market, which include buildings built with high-quality materials and top-of-the-line mechanical and utility systems. These industrial properties may also feature convenient amenities and have prime locations that prevent low vacancy rates. These properties are sometimes called “investment grade” because they often meet the quality and size standards that make them an attractive option for large institutional portfolios, such as insurance companies or retirement funds.

Class A industrial properties may be more likely to attract high-income earning tenants and credit tenants. Credit tenants tend to provide more cash flow reliability because of their exceptionally good credit and high assurance for making payments on time. This means investors may benefit from fewer outstanding asset issues and risks. An example of a Class A property might be a state-of-the-art logistics facility located near an interstate or airport.

These buildings are typically constructed in the last 15 years, but this can vary by city. Even after the 15-year threshold, extensive renovations that modernize a building can maintain a building’s Class A classification or even elevate a building’s rating.