In the real estate industry, corporate and commercial real estate investing plays a much larger role than is generally perceived. Real estate owned by corporations includes many types of properties that are not normally considered part of the mainstream real estate market.
Nearly 40% of corporate-owned real estate is suitable for institutional investors, while more than 50% is specialized real estate not suitable for third-party investment.
A property that is owned or used by a business enterprise or organization for its own operational purposes is corporate real estate. Typically, this kind of portfolio consists of a corporate headquarters and several branch offices, as well as manufacturing and retail spaces.
Today, real estate investors no longer view their portfolios simply from a financial perspective. They understand the importance of integrating their approach as their portfolio grows and the complexity of managing properties increases.
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The Best Tips for Investing in Corporate Real Estate
The increasing complexity, consequence, and competitive nature of corporate real estate over time are all coupled with the risk of it becoming a liability. This can be prevented by a great strategy, which turns corporate real estate into a major asset and a driving force behind a corporate’s success.
With such a large investment, corporate real estate investment requires careful consideration and a systematic approach. Investing in corporate real estate can be exciting, but there are some important tips that must be taken into consideration before getting started.
1. Do Your Due Diligence
In order to begin corporate real estate investing, the first step is to conduct research. Just like in commercial real estate investment, it is necessary to be familiar with the risk, demand, supply, trends, and forecasts for a particular sector.
Additionally, yield performance must be evaluated to determine expected income return, acquisition, and ownership expenses.
2. Establish Investment Objectives
Performing research also serves as a basis for establishing investment targets, which should be your next step. There are two types of objectives in corporate real estate—corporate level and operational.
At the corporate level, it is necessary to decide whether the property’s value will be the company’s core asset for the long-term or a supplement/diversification towards revenue and performance and whether it is property investment or development.
At an operational level, specific details are decided upon, such as:
- The sectors that should be invested in
- The property types to invest in, such as commercial or industrial buildings, residential
- The exposure level in each sector
- The sector-specific benchmarks for yields and operating costs
- The holding period for different types of properties
- The options and models for financing
- The levels of competence and management team needed
After you have completed this process, you will know which area of corporate real estate investment is important to you, what your options are, and what your organization’s capital can afford to invest in.
3. Identify Your Current Position
If you don’t know where you stand right now, you may not be able to move forward in corporate real estate investing. Consult other investors and find out what problems and ideas they encounter, use this as leverage to determine how you can prevent them from your own standpoint.
Analyze global market and competition benchmarking studies to find out what your current position is. Find ways to address all or most of these problems in advance and work with real estate experts to ensure investments are made in the right places in order to get the best results.
4. Take Advantage of Opportunities
In addition to defining what you wish to invest in, the next step is to locate the best places to invest in real estate that will meet your needs.
Real estate firms are the best and most cost-effective choice for finding property investments for our organizations because they are generally connected with vendors.
Providing some information on your investment requirements to a real estate expert will help them better understand your intentions.
5. Don’t Just Focus on Transactions
Although tactical aspects of real estate activities will always be important, there comes a time when every firm realizes that leases/agreements across geographies are ad hoc and they need greater transparency, insight, and a strategy for the entire portfolio.
There is more to it than lease renewals, tenant issues, acquisitions, or dispositions. The goal is to increase business growth and cash flow, improve work efficiency, engage and retain employees, gain an edge over the competition, comply with ever-changing laws, and more.
Choose the Right Real Estate Approach
There has always been a connection between corporate real estate and commercial real estate. However, the importance of a company’s footprint, lease obligations, and accounting standards has never been greater.
This can be accomplished by having the right commercial real estate portfolio. Additionally, you need to manage that portfolio effectively when you face positive, negative, and unexpected situations.Get more investment resources and learn more about investing in commercial real estate on our website or connect with our team. Email us at email@example.com or contact us at 949-881-7128 at Saint Investment Group today!
President of Saint Investment Group
Nic is a two decade seasoned expert in investing and capital raising, specializing in Real Estate and debt markets. With Saint Investment Group, he leads large-scale distressed asset purchases and innovative syndications for investors.