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Remember these 5 Things During Evaluation of Market Projections

Before you put your money into a market, you should responsibly evaluate the market. Forecasts on the market enable you to evaluate progression prospects. You can go about this course in a methodical way. You can go through this article to understand the commercial real estate properties, for example, multifamily properties, storage facilities, industrial properties, and hospitality real estate. You will also learn about substitute investments to expand your financial resources.

Classically, an “asset class” means to group investments. Investments in one asset class group normally have alike laws. A financial asset class means confirmed-income financing, cash counterparts, stocks, alternate assets, and futures. Similarly, commercial real estate contains different set of assets which depend on the property type purchased by investors. Multifamily properties, mixed-use properties, and land are included in this asset class.

While comparing variations of market within an asset class, you will see that that the overall risk for every class is similar. Following are some of the things that you should know in order to evaluate market forecasts for various asset classes. These will also help you to achieve your investment goals.

Elements that influence industrial real estate right now

The properties included in Industrial class are the ones where merchandises are kept, transported, repaired or manufactured. Investment in such type of properties is most likely to be beneficial, so you can consider this if you want to move to a new asset class.

Consider investing in this asset class as the demand for warehouse space has increased; this is because the e-commerce industry thrived people are avoiding public retail places. For online orders and deliveries, companies need more storage space which increases the demand for industrial real estate.

Due to the problems faced in logistics network, mostly businesses rent more warehouse spaces to store their surplus inventory. Some other businesses also need industrial units to accommodate their future expansion plans. Largely, you should consider the logistics network, the inflation rate, and any businesses driving the demand for industrial units like packaging, manufacturing, and e-commerce.

It’s a good idea to invest in industrial or commercial real estate asset class in case you are assessing market forecasts for expansion or increasing cash flow. Real estate does have considerable resilience against inflation. Furthermore, it is not as volatile as financial markets; hence you need to evaluate forecasts for each asset class taking in consideration the above points.

Does self-storage demand change with relocation?

For families that are growing, some of the most advanced solutions come from self-storage facilities. They are a good addition to your financing strategy as they’re in comparatively high demand. There are more than 50,000 self-storage facilities in the United States, which give a huge area of rentable space.

If you are an investor, you need to define a way forward related to the asset class of self-storage by examining the migration patterns. You rely on tenants to relocate more often. During Covid, the occurrence called the “Great Migration” made renters move away from urban areas. Moving from one unit to the other is among the top reasons to use self-storage units. Some rental facilities also decreased living space which increased storage needs. We can conclude that relocation affects the demand for more space in self-storage units. By 2026, this market is forecasted to reach $64 billion.

Is hotel industry still being affected by travel restrictions?

After Covid, investors have learned that market forecasts can’t be correctly determined based on the past. Past market forecasts were disturbed in 2020 due to pandemic. But if you are considering various asset classes inside industrial real estate, be thorough with your thought process regarding the hotel industry.

If you consider asset distribution, investment in hotel industry may not bring as much profit as short-term rental units. So, move carefully in this sector because not all areas are completely reopened. Even after that, no one can forecast if significant travelers will avail this. Travel for business has not returned to pre-pandemic situation because mostly workers are working remotely.

Will 2022 be the year for the highest multifamily supply?

As you know that the delays in construction are disturbing single-family homes as well as multifamily units in the U.S. The demand for apartments has increased even though the rent is increasing. Owners of multifamily property for example, apartments, condominium buildings, townhouses, and other properties are not getting a considerable growth because occupancy rates are almost same as pre-pandemic.

Vacancies in urban areas are likely to come back to original place by the end of the year, so financers are still investing in multifamily industry. Even though construction delays will probably continue because of shortage of workers and price hike of materials, but many properties will still get completed by the end of the year. So this industry will give you profit as an investor in the long term.

Should you invest in alternate businesses to expand your portfolio?

If you are considering expanding your portfolio, you can check alternate investments apart from traditional asset types. This type of asset class might bring you some extra incentives while assessing market forecasts.

Alternate investments contain properties like land, medical offices, RV parks and student housing. These types of properties don’t come under the customary asset types of commercial real estate. All other asset types have their prospective benefits, however alternative investments could offer comparable prospects but with lesser competition.

Hence these can be considered as a good way to get progressive cash flow. It also enables you to assess forecasts in other markets that are yet to be fully explored.

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Justin Brennan

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