The National Association of Realtors had some good news for Kansas residents who are interested in investing in commercial real estate and real estate investment trusts, or REITS. According to a report that was issued by the NAR in May, the commercial real estate market is recovering and should continue to improve.
The NAR report pointed out that vacancy rates in industrial markets, retail markets and offices are on the decline. Multifamily housing units have had especially low vacancy rates compared to other types of commercial real estate. In areas like California and the Northeast, vacancy rates in multifamily housing units are below 4 percent. Despite the positive outlook for the commercial real estate market, the NAR also pointed out in its report that there has been slow economic growth and lack of financing for small investors. These issues could prevent commercial real estate demand from accelerating rapidly.
Investors who don’t want to purchase their own properties could invest in a commercial real estate lending REIT. These companies offer portfolios of commercial real estate debt investments. Shares in REITs are expected to perform well, especially as $1.4 trillion in commercial real estate loans will be eligible for refinancing over the next five years.
Every investment opportunity has risks that should be evaluated carefully. A person who is interested in a direct investment in commercial property or an indirect one through a REIT might want to discuss the matter with an attorney who has experience in evaluating these types of investment vehicles. A commercial real estate attorney may be able to provide informed advice about the particular piece of property that is under consideration and might also be able to evaluate the diversity of the portfolio owned by the REIT.