How to Reduce Risk in Your Commercial Properties

Risk Returns to Commercial Real Estate

commercial real estate investing risks

This recent report on CBRE’s 2019 survey of commercial real estate investors revealed that risk assessment has re-emerged as a prime investment consideration:

“As investors consider their allocations plans for this year, commercial real estate’s stability of income stream is their top reason for investing in the property type, according to the Americas Investor Intentions Survey 2019 put together by real estate services firm CBRE…

“Stability of income stream came out on top among the reasons its survey participants listed for continuing to invest in real estate (with 32 percent of respondents picking it,) followed by expectation of better capital value growth compared to other assets and higher yield compared to other assets (both at 20 percent). Asset diversification also made the list, with 16 percent of respondents picking it. Asset diversification seemed to be of particular importance to institutional investors—52 percent of those respondents indicated it was their main motive for investing…

“Using real estate as a hedge against inflation ranked last on the list, with 1 percent of respondents picking it.”’

“‘There has been a spike in investors who indicated they feel less of a tolerance for risk at the current point in the cycle—this year, the figure rose to 43 percent from 22 percent in 2018’…

“‘Overall, they survey found that 98 percent of respondents intend to invest in commercial real estate this year. But the percentage of respondents who plan to increase their allocations to the sector fell to 31 percent from 45 percent in 2018 and the percentage of respondents who plan to decrease allocations went up to 25 percent from 12 percent.’…

“Yet, when it comes to preferred investment strategies, investors’ appetite for value-add and “good secondary markets” showed an increase compared to last year (to 37 percent from 34 percent for value-add; and to 33 percent from 28 percent for secondary markets)’.”

In this risk-averse investment context, it makes more sense than ever to find out if you’re missing out on any available tax credits, accelerated depreciation bonuses, or local property tax savings. For a risk-free instant estimate of these potential commercial property savings, click here.

CRE Investors More Wary of Risk in 2019, But Prefer Secondary Markets Because of Higher Yields, CBRE Survey Finds

 
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