Only 30 percent of commercial real estate purchases around the country are made in cash according to the 2017 Commercial Real Estate Lending Trends Survey. As a general rule, it is important that buyers have financing in place before making an offer on a Missouri property. This is because a seller will feel more confident about completing a deal with someone who is more likely to follow through with the purchase.
Missouri residents who want to open a small business have several options when it comes to obtaining financing to buy a commercial property. However, it's important that an entrepreneur knows where to look for commercial real estate loans and how to improve their chances of getting approved.
Missouri residents may have heard about a potential trade war that could bring negative consequences. However, the United States is still a preferred market for many foreign investors. In fact, foreign countries directly invested $450 billion in the United States in 2016, according to the Bureau of Economic Analysis. Typically, foreign investors like to put their money into commercial properties. Since 2010, $365 billion has been invested in this sector, and the money tends to go toward properties located in large cities.
Investment in industrial real estate, especially warehouses, is at its highest level in more than a decade. The sector is doing well in a world where consumers expect delivery of goods faster, which requires large facilities in dense urban environments. Since industrial properties in Missouri are usually less expensive than their residential counterparts, they can potentially provide investors with a greater return on investment.
Online shopping has put convenience and huge selections at the fingertips of people in Missouri. Nationwide, competitive pressure from online retailers has forced many retail companies to go under, like the recent closures of Toys "R" Us stores. With increasing amounts of retail space on the market, rents have started to drop in some locations. Meanwhile, costs are rising for online retailers, which could create competitive opportunities for brick-and-mortar retailers.
In the first quarter of 2018, 35.2 percent of small businesses reported being able to secure financing from a bank. This compares to just 32.2 percent in the first quarter of 2017. Furthermore, 25.4 percent of small businesses said that they could get asset-based financing. These figures were obtained through the Private Capital Access Index (PCA Index), and it is a sign that smaller companies are in a stronger financial position than they were a year ago.
Commercial real estate can be a rewarding investment for many in Missouri, especially those who wish to profit from a passive investment in the market. While investing in commercial real estate is far different than dealing with traditional securities, it can be a profitable, successful and secure opportunity. There are a few points of guidance that investors can keep in mind when selecting a real estate investment opportunity that is well-suited to their portfolio.
Investors in Missouri and throughout the country may be interested in putting their money into single-family rental REITS. This is because they have access to more funding and are even engaged in new home building to create additional properties to rent. According to the National Rental Home Council, demand for rental homes should continue to grow in 2018. In 2018, American Homes 4 Rent plans to spend up to $600 million to build new rental homes.
The commercial real estate market in Missouri and nationwide has produced double-digit returns for the last two decades. Although Colliers International's 2018 Outlook has declared that 2017 was the peak for the commercial property market, investors could still expect moderate returns in the coming years. By keeping an eye on the long term, investors could shield themselves from missteps during market fluctuations.
Missouri retail merchants know a major key to profitability is staying on top of trends and anticipating the next big thing. With consumers getting more needs met through the use of technology and concentration of resources, the plight of retail can seem dark, but there is hope for merchants who maintain focus and stay ahead of the curve regarding the evolving needs of consumers.