Opportunity in the Face of Volatility

Posted on May 03, 2018

A new tax plan, a stock market correction and an interest rate hike with more on the way make for an uncertain economic start to 2018. Yet, seasoned investors know that economic volatility creates opportunities, especially in a stable asset such as commercial real estate.

That is not to say that investing in real estate is failsafe. During the most recent recession, property values did decrease. However, most investors did not realize those losses unless they sold. Even as values dropped, investors in commercial real estate with sound fundamentals, such as good location and tenant mix, survived and continued to receive passive income through the collection of tenant rent.

Investing in commercial real estate is not something that individuals should consider doing on their own, even if they have real estate experience. For example, commercial real estate is a far different animal than residential properties and requires investors to understand and adapt their strategies to these differences. Moreover, it is important to recognize that some markets or asset classes are often better positioned to weather an economic downturn than others. For example, grocery-anchored shopping centers historically retain their value during a recession, as people always have a need for groceries, and tend to shop more and visit restaurants less when money is a concern. Medical office building and shopping centers with medical offices also typically retain tenants in difficult times as the need for medical care does not disappear.

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.