It’s hard but not impossible. You must hold your nose and roll up your sleeves.
I just finished reading The Midlife Cyclist, which was depressing, but I recommend it to any athlete over the age of 40. The book includes nearly 350 pages of research explaining how—as you age—your body turns into fertilizer. But the silver lining is that if you work hard, you can be healthy and active well into your 80s. Tough, but not joyless.
Like remaining competitive, the reality of deals in today’s commercial real estate markets is tough but not joyless for those willing to be smart about it.
Successful investors find deals where their unique profiles give them the slight edge. Also, they are going into markets that they have never considered in the past.
Shrewd tenants are seeking landlords ready to meet them halfway with win-win terms. Also, to reconsider how they are using space and add efficiency to their footprint, they are leveraging tech.
Here’s why these markets are so tough. I will focus on industrial in the Carolinas because its growth is the most unexpected of all the asset classes.
- Increased demand. Manufacturing-employment growth in the Carolinas is nearly double that in the rest of the US. (1)
- Increased complexity. When I was at Trammell-Crow in 2005, the bread-and-butter deals were 25,000 SF. The average warehouse in 2008 was 37,347 SF. Today it is 330,000 SF – a 10X increase in 15 years. (2)
- Increased competition. Warehouses are cropping up everywhere. Developers are parachuting in from all corners the US, resulting in 30% more activity than the rest of the US. (2)
Increased prices. Back in the day, paying $60,000/ac for signature land at the corner of I-77 and I-85 was expected. Now prime industrial land sells for $200,000/ac/hour truck-drive from the same intersection. (3)
So What is A Tenant or Investor to Do?