1031 Exchange Investment Pipeline Topped with Restaurants

Posted on August 02, 2017

Earlier this year, market research firm IBISWorld reported that the U.S. chain-restaurant market, which has been growing at a steady rate since 2012, is today an approximate $112.3 billion industry. Additionally, a report from business consultancy McKinsey and Company foresees restaurants driving the future of shopping malls, where leasable space devoted to food and beverage services is expected to increase from 10 percent to 25 percent by 2020 in response to consumers’ demands for improved shopping experiences.

This market shift presents investors with unique opportunities to diversify their real estate portfolios and capitalize on the growing market of net-leased restaurant properties, especially when considering a tax-deferred 1031 like-kind exchange. The price point and equity requirements of a quick-serve restaurant (QSR) with a long-term lease in place is typically right on target for the average individual investor, as are these properties’ cap rates.

Engaging in a tax-friendly 1031 exchange however does not come without challenges.  In addition to navigating a complex technical landscape for effecting a 1031 exchange, property sellers and buyers must have an understanding of the commercial real estate market, both on the national and local levels, as well as the potential risks and rewards of different types of restaurants, including QSRs and sit-down establishments. Experienced real-estate professionals are an ideal source for gathering this detailed data and helping to guide investors through the process for maximizing the value for the investments over the long term.

The professionals with Orion Real Estate Group work with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.