Updated: Oct 21, 2020
As an investor you know that gut instinct isn’t enough to find opportunity. It takes data and research. But as the coronavirus pandemic continues to disrupt all commercial real estate sectors, even safe investments have become risky. So how do you know what to research?
Reunion Investments collects and analyzes multiple data points, aside from our tried and true tertiary market investing strategy. These four asset classes are ones investors should consider over the next year.
Class A Multifamily Properties
Class A multifamily has proven to be more resilient to Covid’s impact than both Classes B and C. Class A renters have paid their rent on time more consistently over the last
Despite the looming uncertainty, Class A has shown consistency throughout this crisis and we believe it will continue to do so. Additionally, institutional investors continue to pour capital into the sector across secondary and tertiary cities, which should help narrow investor’s research into what specific markets offer the most attractive opportunities.
With high unemployment and general anxieties over the job market, would-be home buyers could continue renting for a while. But they’ll likely still want everything a single-family home offers. SFR rent collection has actually been stronger than Multifamily, with only about 5 percent remaining uncollected.
Also, demand for single-family portfolios (five or more homes) has skyrocketed in the last months, up more than 500 percent! People love single-family rentals since there’s no need to qualify for a loan, no down payment, no 30-year mortgage and privacy.
We all know Covid impacted the retail and restaurant sectors in a bad way, meaning consumers had to change how they approach shopping. It’s risky to browse store aisles or spend time waiting in curbside pickup lines, so they buy online and have it delivered to their door.
As a result, online shopping has exploded, even more than in recent years. Retailers have invested heavily in opening new warehouses and distribution centers to speed the delivery of products to the consumer.
Of course, online sales will slow a bit as states lift health restrictions and allow more brick-and-mortar stores to re-open. But a worthwhile investment nonetheless.
Grocery-Anchored Retail Stores and Cold-Storage
Supermarkets remained open at the start of the pandemic, but that did not discourage consumers from doing their grocery shopping from home. Online grocery sales have posted triple-digit order growth since mid-March! Grocery and other food merchants (including pet supplies) were up 110 percent for the week of June 6.
Grocers will look to create facilities made for delivery outside of their in-store models. Therefore, cold-storage will continue to be a fantastic opportunity for investors. Some experts foresee that a whole new sector could emerge and eventually become more popular than actually going to a grocery store in a traditional manner.
With challenges come opportunities, and there are plenty for investors to capitalize on. Commercial real estate professionals need to leverage diverse datasets and data powered tools to create actionable insights that are relevant in the current climate.
The easier route is, of course, leveraging Reunion Investments' already finished analysis on great investment opportunities. From tertiary to military and VASH markets, we offer investors opportunities that remain secure and deliver higher returns. To find out more, or talk over your wealth building goals, call us at 214.438.4809 or visit our website!