How To Invest In Commercial Real Estate in 2018: Getting Started in Millennial Philadelphia
Investing in commercial and retail property isn’t as straightforward as it used to be. In the past few decades shopping centers, hotels, and other large retail spaces have gone out of style, with many closing their doors permanently. Young Americans no longer flock to local malls on the weekend to find what they need, or book big-name hotels for a weekend getaway. Many large-chain businesses now struggle to rent rooms even on holiday weekends, as visitors prefer boutique hotels or unique apartments in trendier, less traditionally commercial neighborhoods. This modern shift in consumer desires presents a unique problem for those seeking to purchase commercial property investments.
However, there is no shortage of commercial investment property for sale. Luckily, new consumer trends in retail and commercial spaces mean that these buildings are being used more flexibly than ever before. These days, a store isn’t just a store and a hotel isn’t just a place to pass-through on business or on a getaway vacation. Trends in investments in commercial real estate properties are decidedly moving towards mixed-use buildings. It’s not just clients and consumers, but commercial investment services who are focusing more on these mixed-use buildings and their flexibility for both retail, apartment, and commercial use.
New Occupancy Style Is Philadelphia
A city exemplary of this new occupancy style is Philadelphia. Former rental properties in the city center are being bought out and converted to commercial real estate by adventurous capital groups, curious about what a commercial space might provide for the property values of future investments. Investing in commercial vs. rental property can be a difficult switch to make, but it often proves profitable. For example, in the past ten years, property values in Philadelphia’s 19123 and 19146 zip codes have more than doubled. In the same decade, boutique hotels for sale these up-and-coming, Philadelphia downtown neighborhoods have sold for sky-high, record prices. New apartment buildings with commonly-utilized commercial spaces on the first floor (convenience stores, groceries) provide a guaranteed income stimulus to the development project.
The transition of commercial real estate to mixed-use residential and commercial buildings can partly be attributed to the economic habits of Millennials. This population, born between the early-eighties and mid-nineties, are willing to downsize or to live in non-traditional or converted spaces in order to live in a more urban and central environment.
According to the most recent census data, Philadelphia has 1.4 million Millennial residents. Commercial sales and property management companies recognize Philadelphia’s large population of young people and their desire for centralized amenities. Millennials are also the greatest participants in the shareconomy, which includes hospitality hosting websites like Airbnb. This means that the inhabitants of mixed-use buildings may also be interested in turning their own profit on combined commercial and residential real estate. The shareconomy has only encouraged Millenials to settle into and revitalize Philadelphia’s downtown neighborhoods, making the city a productive and high-yielding market for commercial real estate.