There are different types of real estate categories you can invest in. The most common are retail, office and industrial.
There are also triple net leases for educational facilities, hotels health care facilities, apartment buildings and even undeveloped land. In this section I will break down the most common types.
This category is broken down by several types of businesses, here are a few:
Big Box Stores
Typically referred to large discount retailers such as Walmart, Best Buy, Target, Costco and Kohls. Most of these types are public companies backed by multi-million dollar infrastructures.
Most will be familiar with these chains like CVS, Walgreens, Rite-Aid. These tenants usually demands premier hard corner locations and have serve a growing baby boomer population. Along with retail sale of prescription and non-prescription drugs they also sell front-store products such as beauty care, personal care, household items, candy, photofinishing, greeting cards, convenience foods and seasonal items, as well as liquor and tobacco where permissible by law.
Another very popular category for investors because the vast majority of restaurants operate under a triple net lease structure. The current retail sector is very attractive right now. Nationally, the retail market vacancy rate decreased from 6.9 to 6.7 percent in second quarter on the strength of more than 23.1 million sq. ft. net absorption, according to CoStar, a commercial real estate research firm. Rental rates were up 2 cents at the mid-year mark to $14.50 psf. Consumer confidence has also reached its highest level since 2007. Additional research support this as well. According to NDP Group a consumer market research firm, the total volume of restaurants in the United States increased by 0.5 percent in 2013, which is 3,045 units in the year. Quick-service restaurants rose by 1 percent to 328,162 units. Convenience stores experienced a 2 percent gain in consumer traffic, which led to a year-over-year increase of nearly 6 percent in dollars, reported NPD in June.
2013 has given some good reasons for this optimism. The S&P 500 index reached new highs. The steady recovery in home prices continues in the housing market, reaching their five-year high in July. The banking industry also showed improvement, posting record quarterly profits and capital levels in the second quarter. Larger banks are seeking to acquire more sites and expanding market share to stay competitive. Strong credit tenants like Bank of America, PNC Bank and BankUnited are popular tenants for investors.
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Dwaine Clarke is a published author and founder of Clarke & Tinker Net Leased Property Group, a commercial real estate sales and advisory firm located in Connecticut. Connect with Dwaine on Twitter and Linkedin