Presentation: Investing in commercial property

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SLIDE 1 Investing in commercial property

SLIDE 2 You likely can’t afford an office tower, but that doesn’t mean commercial real estate investing is out of reach.

SLIDE 3 There are lots of smaller properties that mid-level investors can afford.

SLIDE 4 Or, if you really want to buy an office tower, another option is to partner with a fellow investor, or build a small consortium.

SLIDE 5 By and large, commercial properties can produce steady returns from rents.

And if they’re well located, they’ll appreciate or at least retain their value.

SLIDE 6 Not convinced?

Consider these pros and cons.

SLIDE 7 Pros

SLIDE 8 1. Steady growth in employment, manufacturing and consumer spending since 2010 has reduced office, industrial and retail property vacancies. This heightened demand has caused lease rates to edge up.

SLIDE 9 2. Risk-averse operations models have helped improve balance sheet performance of developers, construction firms and real estate agents.

SLIDE 10 3. More U.S. retailers are opening locations in Canada. This means retail property prices can be expected to head higher, and that’s great news for sellers.

SLIDE 11 4. Rents typically rise in periods of inflation. While consumer prices are under control right now, most economists speculate there will be a shift sometime in the next two years.

SLIDE 12 5. Tighter mortgage rules, which have made buying a home more difficult, together with continued immigration and growth among lifestyle-choice renters, should spark demand for purpose-built rental apartments in Canada’s major cities, according to accounting firm PwC.

SLIDE 13 Cons

SLIDE 14 Consistent tenancy isn’t guaranteed.

There are still pockets of vacant commercial buildings in the U.S. and Canada

SLIDE 15 4 tips for commercial property investing

SLIDE 16 1. Invest in a location near mass transit, says Lori-Ann Beausoleil, partner and national real estate leader at PwC.

SLIDE 17 2. Research vacancy rates in the city you want to invest in, and ensure local employment markets are growing so you can count on having tenants.

SLIDE 18 3. Get investment, legal and tax advice before you buy so you know you can afford the property.

SLIDE 19 4. If investing in retail property, look for spaces tenanted by well-managed retailers that have performed consistently and may be expanding.