Posted on April 29, 2021
With current interest rates at historic lows due, in part, to the impact of the COVID-19 pandemic, the reality is that rates can only go higher from here.
In broad economic terms, rising rates make borrowing more expensive and have the potential to reduce investors’ returns on their investments. Within the realm of commercial real estate, there is a correlation between interest rates and cap rates. However, any fears that higher rates could cause property values to decline are unfounded. Rather, rising rates signal a strengthening economy and increased demand for commercial space, which, in turn, can command higher rents to bolster operating income and counterbalance any potential decrease in property value that may occur due to interest rate hikes.
The one area of CRE for which this rule does not apply is real estate investment trusts (REITs), which not only rely on a lot of debt to operate but also require 90 percent of taxable income to be paid back to investors in the form of regular dividends.
With offices in Miami, Orlando, New York City and Geneva, the team at Orion works 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.
Posted on April 21, 2021
Asset diversification is a critical component of a sound investing strategy. To counterbalance the volatility of stocks, bonds, and mutual funds traded on the public equity markets, astute investors often turn to commercial real estate and its proven track record for retaining value, preserving capital, and generating passive income.
Commercial property generally involves long-term leases, including triple-net leases for which tenants bear the responsibilities of maintaining the property and covering operating expenses, including utilities, property taxes and insurance. This allows investors to generate rental income without getting their hands dirty or reaching into their pockets to pay for building upkeep and repairs. Moreover, these long lease terms tend to protect commercial real estate investors from pricing instability that can occur during recessions and other times of economic stress.
Historically speaking, commercial property with a good mix of tenants in a growing market can withstand unexpected economic challenges and continue to generate passive income while delivering longer-time appreciation.
With offices in Miami, Orlando, New York City and Geneva, the team at Orion works 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.
Posted on April 15, 2021
The pandemic and resulting shift to remote work has helped to spur a migration of winter-worn northern residents and businesses to sunny, tax-friendly Florida. According to the Florida Realtor’s Association, February’s existing single-family home sales were up more than 15 percent from 2020, while sales of condo-townhouses increased more than 28 percent over the same period last year.
This population growth also bodes well for the state’s commercial real estate market, which is seeing an uptick in activity to pre-pandemic levels. In fact, the number of companies that have relocated and expanded in South Florida alone over the past year is unprecedented. Moreover, with many of the state’s newest residents coming from more expensive cities, more disposable income can be spent on retail, restaurants and service providers.
With offices in Miami, Orlando, New York City and Geneva, the team at Orion works 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.
Posted on April 07, 2021
It has been one year since the start of the COVID-19 pandemic and prediction of a surge in commercial property defaults that never materialized. Instead, rent delinquencies have declined while landlords renegotiated lease terms to their advantage and reaped the rewards of 6.8 percent commercial property price growth in February, according to Real Capital Analytics. Now, as vaccines continuing to roll out across the country, commercial real estate investors that remained patient through a volatile time, are well-positioned to yield even greater growth from a rebounding economy.
With offices in Miami, Orlando, New York City and Geneva, the team at Orion works 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.
