Top 5 U.S. Cities for First-Time Commercial Real Estate Investors

Investing in commercial real estate can be a lucrative venture, offering opportunities for significant returns and portfolio diversification. For first-time investors entering this market, selecting the right location is crucial for success. Some key factors to think about when choosing which market to enter into are population growth, job growth, and high rental demand. Here are the top five U.S. cities that offer promising prospects for first-time commercial real estate investors:

1.) Nashville, Tennessee

Commonly known as, “Music City”, Nashville has emerged as a hotspot for commercial real estate. The city’s strong job market is fueled by tourism, finance, and healthcare, and has forced the need for more office space as well as retail space. Nashville’s business-friendly environment yields a promising opportunity for first-time commercial real estate investors. This is a prime area for not only alternative lending opportunities, but SBA products geared towards those small and/or new businesses could be an excellent route as well. 

 

2.) Atlanta, Georgia

Known as the economic hub of the Southeast, Atlanta boasts a thriving business environment and a rapidly growing population. The city's diverse economy, which includes sectors like technology, finance, and logistics, provides ample opportunities for commercial real estate investments. Additionally, Atlanta's favorable tax environment and relatively low cost of living make it an attractive destination for businesses, driving demand for commercial properties.

 

3.) Austin, Texas

In recent years Austin has experienced rapid population growth, and is home to a burgeoning tech scene and a dynamic entrepreneurial culture. The city's strong job market, fueled by companies like Dell, IBM, and numerous startups, has led to increased demand for office, retail, and mixed-use developments. With a vibrant arts and entertainment scene and a high quality of life, Austin offers attractive investment opportunities for first-time commercial real estate investors. From large commercial loan opportunities to small-business ventures, the commercial lending space here is especially unique.

 

4.) Denver, Colorado

Situated at the foothills of the Rocky Mountains, Denver combines natural beauty with a booming economy, making it an appealing destination for commercial real estate investment. Its strategic location as a transportation and logistics hub, coupled with a diverse economy spanning industries such as aerospace, healthcare, renewable energy, and cannabis, contributes to its allure. Denver's young and educated population, alongside a burgeoning tech sector, further augur well for the future growth of the commercial real estate market. Notably, Denver's cannabis industry stands as a trailblazer in the landscape of legalized marijuana since the state's landmark legalization of recreational cannabis in 2012. Emerging as a leading destination for cannabis enthusiasts and entrepreneurs, the industry continues to thrive, significantly contributing to the city’s economy.

**It is important remember that the cannabis laws vary by state

 

5.) Seattle, Washington

Home to tech giants like Amazon and Microsoft, Seattle has become synonymous with innovation and economic growth. The city's thriving technology sector, combined with a highly skilled workforce and a culture of entrepreneurship, has led to sustained demand for commercial real estate properties. From office buildings in the bustling downtown area to mixed-use developments in vibrant neighborhoods, Seattle offers diverse investment options for first-time commercial real estate investors seeking exposure to a dynamic and rapidly evolving market.

 

These five U.S. cities present attractive opportunities for first-time commercial real estate investors looking to enter the market. From Atlanta's diverse economy to Seattle's tech-driven growth, each city offers its own unique advantages and potential for success. However, as with any investment, thorough research and due diligence are essential to making informed decisions and maximizing returns in the competitive commercial real estate landscape.


Cash-Out Refinance Helps Client Pursue Projects on Raw Land

In December 2022, our client closed on the cash out refinance of an existing loan. The loan proceeds for this deal will be used to pay off not only current debt, but will also provide working capital for our client to pursue other projects. The collateral property is located in Nashville, Tennessee. While LTV for raw land is lower, we love working raw land deals because the possibilities for our clients are endless! 

Requested amount: $6,000,000  //  Property size at 120.57 acres of raw land  //  LTV at 35%


Why Invest in Commercial Properties in 2022

Commercial Real Estate has shown significant growth in 2021 over what will forever be known as a year of uncertainty in 2020. What was once considered a shuttering market just over a year ago, multi-family residential is full steam ahead while industrial and office space properties are also ticking upwards. With so many changes over the last 18 months, you may be asking yourself, “Why invest in a commercial property?” Our question for you is, “WHY NOT?”

 

According to the "May 2021 RCA CPPI: U.S." summary report, U.S. commercial real estate prices rose at a 1.3% annual rate from April 2020 to 2021. Driving that increase were apartments (up 7.6% year over year) and industrial properties (up 9.4%), the retail sector (up 1.3%), and office buildings (up 3%). – Millionacres.com

 

Commercial and Office Spaces:

From the rise of unique office spaces, the opening of satellite offices in suburbia as well as the reopening of corporate headquarters, offices are seeing a resurgence and where they’re popping up is a surprise to many.

 

With many companies now embracing a strong sense of employee culture that includes comfortable yet trendy surroundings, loft offices are some of the more popular choices across several industries – turning what were once retail-only spaces into multi-use spaces. Now these property types are an appealing investment choice for many who are looking for a diverse portfolio with more limited means.

 

Suburban office space and smaller square feet options for satellite offices are also excellent investment opportunities for those looking to invest in a property outside of a metro locale. This also allows the property owner to work with an experienced tenant who has other offices established in other locations. These general use spaces are also easily flipped allowing a new tenant to take over quickly and easily.

 

While not increasing as quickly or as steadily as residential, office space will continue to tick upward as employers finalize their reopening plans and prepare for most employees to transition back into offices full time over the next year.

 

Retail Brick-and-Mortar:

Retail will continue to evolve and find its pace over the next 12 months. One of the most hard-hit markets due to the pandemic, retail owners saw a surge in online sales, however, an increase in sales also occurred via curbside orders. This particular piece to the sales pie increased alongside a retail company’s increase in direct social media posts – allowing buyers to “shop a store’s social media,” purchase their products locally while also being able to receive their products same-day.

 

With this, we will see locally owned retail opting to keep their brick-and-mortar store fronts, but possibly look to increase their product storage and reconfigure their backstock needs as curbside orders continue and online orders increase.

 

“Same Day Pick-Up!” “Curbside!” These are phrases that have been promoted to buyers since the start of the pandemic – even across larger brands and corporations – allowing buyers to enjoy a slightly altered shopping experience while also receiving goods same-day as opposed to shipping and possible delays.

 

Strip malls and larger retail developments have also adjusted their selling strategy by implementing these additional forms for buyers to receive their purchases – not just locally owned mom and pop stores. While not an ideal situation in an uncertain world, these adjustments helped to keep the doors open for retail – small and large – assuring investors that these particular sectors of commercial real estate were still very active and growing.

 

Multi-Family Residential:

The start of the pandemic saw college students, new graduates, young families and more moving back home with their parents or to other shared living situations with friends and family. The uncertainty of the economy produced a boom of residential real estate listings, however with states now opening back up, markets are seeing a resurgence of individuals and families needing temporary and/or more budget-savvy living options such as apartment and condo rentals. Multi-family commercial real estate has witnessed the greatest increase of growth and will continue to do so as more states, universities and places of employment begin to open back up to pre-pandemic standards.

 

What to Do Now

Always weigh the pros and cons to any investment situation as well as play out each scenario – especially if you are a first time commercial real estate investor – however, striking while the iron is hot will be key to maximizing your investment and cash flow early on. With unique opportunities on the rise across all branches of commercial real estate, investors will be able to build a path that suits their goals. Lending experts – such as our team at Commercial Capital BIDCO – can assist you with the funding you need that the banks simply cannot do. We are proud of our in-house credit team as well as our in-house credit committee that both allow us to process loans quickly and easily. What are you waiting for? We’re ready to talk investment goals when you are!