Tips on Buying Commercial Real Estate

Mark Howe Triangle Real Estate Group

Mark Howe Commercial Division President, CCIM

As a residential agent, I view commercial real estate as a strong economic indicator for Raleigh and the Triangle. To wow your friends at your next wine tasting, I interviewed commercial broker Mark Howe, TCAR, NCCCIM, CCIM, ALC, NCGC who has been one of the Triangle’s leading commercial agents for over three decades. Since 2013 he is the Triangle Real Estate Group‘s Commercial Division President. Currently serving on the NC-CCIM’s (Certified Commercial Investment Member) Board, he is the president-elect for 2014. Mark knows real estate and he knows the Triangle. When he’s not connecting buyers and sellers, Mark practices martial arts (he’s a 6th degree black belt) and plays racquetball and golf.

Hi, Mark, so great to have you. What might a residential home buyer from outside our area might want to know about Raleigh’s economy?

These are exciting times for Raleigh. It’s experiencing a lot of growth. Everywhere you look you see cranes working on the new construction and revitalization projects. You see torn down buildings that are being reconstructed; in many cases these buildings’ exteriors are being shelled down to be rehabbed and redeveloped.

Businesses are looking to relocate and/or grow in the Triangle—our home is one of the most desirable areas in the country to live. It’s a typically white-collar market where on average people live here for 3-5 years. The population is increasing at a rate of 57 people a day in Raleigh. It really looks like the Triangle area is on track to being as populated at the Charlotte metro area.

Raleigh is in a central location and is not only easily accessed by land, rail and air, there are public reservoirs for boating, as well as green spaces, parks and trails. Families are attracted to our good school system here and as a result of our recent growth, many new schools are being built. The main universities, NC State, Duke and UNC-Chapel Hill, Research Triangle Park (RTP) and the area’s hospitals in Raleigh, Durham and Chapel Hill are all engines that keep the motor running to spur growth here in the Triangle for many years to come.

How do the Triangle’s residential market cycles relate to the commercial ones?

Interest rates are slowly rising, which is an indicator of a more favorable economy, and look for more inflation coming our way. What does this mean? Home values will increase and well-qualified buyers will have more choice. By the same token, commercial property values will also increase. We also need to take a long term view that even with rising rates, these interest rates are still low by historical standards.

What is currently Hot and Not in the Triangle commercial market?

What’s Hot

Investors are looking for income-producing properties that offer above-market returns; this includes any property type that’s mostly occupied through credit and with strong tenants with long term leases. What’s high on the list? Medical/med spas/gyms/health facilities as well as retail/office/industrial/apartment communities/multi-family housing units. Investors are looking for those types of properties: the money is out there, but there’s not enough supply out there to satisfy the demand. Folks who own these properties are holding on to these properties since they can’t find a better place to put their money.

Look for changes in the grocery store landscape. Publix is coming to North Carolina from Florida. You’ll see a fewer number of competitors and the grocery folks here are going to be larger conglomerates with more mergers. Think Lowe’s Foods.

What’s Not

Land is still a challenge to liquidate. Buyers who want to buy land for investments make money on the front end by buying the land at a discount which satisfies the risk period while they own it. The only land deals that offer benefits to a user are in a hot location that is priced to market so it can move quicker.

We still need to keep in mind we’re in a fragile economy, there are a lot of worries and uncertainty on the American mind, including healthcare, retirement and jobs.

If I’m interested in Investing in land, or an improved investment property, where do I start?

I suggest you research the CCIM.com website as well as the REALTORS Land Institute’s website (http://www.rliland.com) to find a qualified commercial real estate professional. Some professionals have specialties, although most are general in the Triangle market. Narrow your search to one or two candidates, who have the CCIM credential, as well as the ALC (Accredited Land Consultants) accreditation.

You can also look at properties that are listed in the paper or are available online. You can drive around yourself, but you save time and get to the properties quicker if you hire a commercial real estate professional.

Thanks so much, Mark, for sharing your expertise with us here. Let’s keep this conversation going on Facebook and Twitter. If you have questions about buying commercial real estate, be sure to call my direct line at 919-981-5795. And as always, begin your home shopping experience at jasonbgraves.com.

This blog post is brought to you by Jason B. Graves and Scott Graves at Raleigh Real Estate Blog. We are part of the Triangle Real Estate Group.