Longmont , CO
(720) 600-9513
Longmont , CO
(720) 600-9513

Is an Apartment Building the Best Investment Right Now?

Category: New Builds

Is an Apartment Building the Best Investment Right Now?

July 31, 2024

Increased Multifamily Development

Across the United States, and in Colorado specifically, multifamily development has dramatically increased. As real estate and land become more expensive, developers are turning to high-density housing to solve the issue.

The new multifamily development pattern also aims to ease affordability. With more options, consumers will have increased negotiating power, as there will be less demand for each unit. This leads us to the question many commercial real estate investors are asking: Should I invest in an apartment building right now?

Is an Apartment Building the Best Investment Right Now?

The short answer is that it depends on your portfolio and investment strategy. For some, an apartment building would make a great addition; for others, another investment type might suit best. 

The good news for the apartment sector is that rental growth has remained steady even with significantly more supply. Colorado isn’t seeing the rapid property value increases or rental demand that it saw a few years ago, but things haven’t gone sharply in the other direction either. Continued population growth in Colorado and a significant need for housing inventory have kept the market steady.

On the other hand, with buyers and renters having more housing options to choose from, owners of multifamily developments have certainly lost some of their leverage. To attract customers, investors must own properties with a specific value proposition (newly renovated, top-notch amenities, etc.) to ensure their building stands out.

Focus on Your Strategy

While some will tell you that now is the best time to invest in an apartment complex, and some will tell you it’s the worst, be sure to focus solely on your strategy. Each investor approaches their goals differently, so it’s up to you to decide which next step is right for you. 

If you have questions about commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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New Development vs. Resale: Which is Right for You?

July 2, 2024

New Development vs. Resale

There are two paths in commercial real estate: new development and resale. Depending on your investing strategy, one might better suit your portfolio.

New development and resale each have pros and cons. Your real estate broker likely has experience with both and can help you determine which is the right fit for you. 

New Development

New developments in commercial real estate provide unique opportunities that can make it the ideal option.

Pros

The pros of new development primarily center around being able to design and build the exact property that you envision. You often make compromises in resale, as no building will check every box perfectly. With new developments, however, you are free to create the space that will function perfectly for your business or tenants.

Cons

The most obvious cons of new development are the time and expense of building something from the ground up. Coordinating contractors, getting permits, obtaining construction loans, and dealing with zoning and code requirements can be a hassle.

Resale

Resale purchases are an effective way for many to start investing in commercial real estate.

Pros

Resale transactions are very efficient in comparison to new developments. In a matter of weeks, you can own an income-earning commercial property. Eliminating the construction phase makes resale an attractive option for those on a shorter timeline. 

Cons

In the resale market, you may face elevated levels of competition for a highly desirable property. In a competitive market, property values can become inflated, decreasing cash flow opportunities. Additionally, a resale property may require renovation or remodeling to make it the right space for your business. 

Which is the Right Path for You?

If you are unsure which path (new development or resale) is right for you, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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Opportunity Zones in Commercial Real Estate

February 1, 2023

Opportunity zones encourage private real estate investors to seek new investments in lower-income areas. Tax incentives reward investors who take advantage of the opportunity zone program. Tax deferrals, general reductions, and adjustments of capital gains taxes make opportunity zone investments appealing. 

What is an Opportunity Zone?

An opportunity zone is an often up-and-coming area with a distressed economy. The general goal in deeming an area an opportunity zone is to find an influx of funds to kick-start the economy and create new jobs. 

The government aims to entice investors with tax benefits and, in return, see new development, land improvement, and property renovations. The establishment of new recreational facilities, restaurants, etc., creates more jobs in the community. Furthermore, even the construction and renovation processes provide job opportunities for community members seeking work. 

Who Should Invest in Opportunity Zones?

Typically, long-term investors are the ideal fit for investing in opportunity zones. Investors only realize some tax benefits after a specified period (10+ years). Therefore, if investors hope to liquidate their assets before taking full advantage of the tax incentives, opportunity zone investing may not be the right strategy. 

If you are unsure whether or not opportunity zone investment is an option for you, consult your team of local real estate professionals. Please reach out to Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Top Trends in Modern Office Building Space

October 11, 2022

Commercial real estate and the use of office buildings has dramatically changed in recent years. Coworking spaces, work-from-home options, and modern technology have created opportunities that the general workforce never had before. 

Overall, standard offices have transitioned to more inviting and collaborative environments. Below are a few of the top trends in modern office building design. 

Efficiency 

As with most newer construction and remodeling, office buildings are making sure to emphasize efficiency when creating unique spaces. Using durable and high-quality materials reduces repair and maintenance spending and cuts down on utility costs over time.

Collaboration

Cubicle walls separate many traditional office spaces at every turn, while newer designs provide space for collaboration. Employees now sit at smaller workstations within a larger open area. Forgoing the heavily divided space allows team members to meet and collaborate easily. 

Visually Appealing 

New office designs include modern furniture and interior elements, plenty of color, open concepts, and abundant natural light. Updated finishes and colors make for an energizing workspace, and the use of glass walls to separate offices and meeting spaces creates a bright environment.  

Built-In Technology

Down to the minor details, companies are designing their offices with plenty of built-in technology. Conveniently placed outlets, projectors and smartboards, and wireless phone charges are keys to creating a thoughtfully designed work area.

Recreation

Beverage stations, ping pong lounges, and nap rooms—Who would’ve thought these features would end up in office buildings? Unique recreation spaces have become increasingly necessary to recruit and keep top talent. 

Innovative Meeting Spaces

Conference rooms and large private offices are a thing of the past. Open concepts allow for team meetings with employees remaining at their workstations. Additionally, updated offices are more likely to feature smaller meeting hubs for a few employees to hold meetings or take private phone calls.

Looking for a New Office Space?

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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What to Consider Before Your First Development Project

September 14, 2022

What is Commercial Real Estate Development?

Commercial real estate development involves purchasing a piece of land or an existing structure and creating a new facility. This could mean purchasing land and building an apartment complex or buying an old commercial warehouse and renovating it into a wedding venue. 

As you might imagine, the development process has many moving pieces. Some investors shy away from development projects and stick primarily to buying already-built structures. However, when done correctly, development can yield significant profits for willing investors.

What to Consider Before Development

Before beginning a commercial real estate development project, there are a few essential items to consider.

Risk

While the risk of development tends to be higher than simply purchasing an existing structure, it can pay off in the long run. Before developing, be sure you fully understand and feel comfortable with any associated risks.

Financing

There are many types of commercial financing, including lines of credit, construction loans, and portfolio loans. Connecting with an experienced commercial lender will help you determine the right kind of financing for your project.

Building Site

Choosing a piece of land or structure can be one of the most challenging parts of the process. Your real estate agent will help guide you through contract negotiation, zoning regulations, and any necessary inspections. 

Construction

As the developer, it’s your job to bid out and supervise construction. Managing subcontractors can be time-consuming, so it’s important to allot enough margin to navigate challenges that arise through the construction process. 

Sale or Leasing

Finally, when all is said and done, you must be sure you have the right sales or leasing team to market your new development and find the right buyer or tenant. 

Build Your Real Estate Team

Before beginning your first commercial real estate development project, you should spend time assembling the right team. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 with any questions or if you have any commercial real estate needs in Longmont, CO, and our neighboring communities.

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Commercial vs. Residential Real Estate Investing

August 16, 2022

Commercial vs. Residential Real Estate

Some real estate professionals have strong opinions on whether it’s best to invest in commercial or residential real estate. The truth is that your financial position and your goals will determine which investment is best for you. In the end, each strategy has its own pros and cons.

Your residential real estate investment could be a single-family home, condo, townhome, and anything up to a quadruplex. Commercial real estate is anything that has 5+ dwelling units, office buildings, retail space, hotels, etc. To decide which path is right for you, let’s look at some of the benefits of the two types of real estate investment.

Pros of Commercial Investment

While it may be tougher to get started due to higher costs, there are some great benefits of commercial real estate.

  • Well-Qualified Tenants: In residential properties, you typically work with families or groups of people as tenants who may not treat the property as you would. In commercial real estate (aside from apartment buildings), your tenants are well-qualified businesses that likely won’t create as much wear and tear on the property. 
  • Lease Terms: In commercial real estate, five to ten-year leases are common, which means there is significantly less turnover than in residential leases. Additionally, triple net leases are often used, meaning the tenant handles all property expenses directly, significantly reducing the property owner’s maintenance costs.
  • Appreciation: In residential real estate, the value of a home is heavily dependent on comparable homes in the area. For commercial properties, the building’s value is almost purely based on its cashflow potential and thus can appreciate very well over time without being affected by the surrounding structures.
  • Return on Investment: The larger scale of commercial investment properties typically correlates to a greater return on investment. While it may require more cash to begin investing, the cash flows almost always beat residential properties. 

Pros of Residential Investment

There are also many pros to residential real estate that may make it a better fit for some. 

  • Large Tenant Pool: As opposed to working primarily with businesses, residential real estate has a large pool of tenants and buyers. A larger tenant pool ensures that vacancy rates stay low and cash flow is consistent. 
  • Starting Cost: Residential real estate is often much more affordable than commercial properties. The lower starting cost makes it easier for investors to start in the industry. 
  • Recessions: Businesses are always quickly impacted by an economic downturn which inevitably affects their landlord. Companies may go out of business or look to cut down on costs, and suddenly commercial properties are hard to market. Residential real estate, however, typically stands strong, no matter the state of the economy, as people always need a place to live. 
  • Fewer Rules: Commercial real estate comes with many zoning laws, regulations, and paperwork. Because residential real estate doesn’t involve renting to businesses and is typically smaller scale, there are significantly fewer rules to follow.

What is Best for You?

If you are curious about what investing strategy might be best for you, it’s important to connect with a real estate professional to discuss your options. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 if you have questions about the commercial real estate market in Longmont, CO, and our neighboring communities.

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Supply Chain Issues in Commercial Real Estate

August 14, 2022

Surging Supply Chain Issues

As we all know from news headlines, COVID-19 spurred supply chain issues in many sectors of the economy. Commercial real estate is one of the many industries that continues to feel the ripple effects. 

When the pandemic began and put the global economy on hold, many businesses were caught without products. Thanks to online retailers, consumers could still shop from the comfort of their homes, but companies couldn’t keep up with the demand. Additionally, residential and commercial construction quickly began feeling the effects of supply chain shortages in various ways.

Shifting Demand

E-commerce allowed businesses to continue to reach customers even when in-person operations stopped. The rapid rise in e-commerce created a shifting demand in the commercial real estate market. 

Companies that hadn’t prepared for large volumes of online shopping and shipping began to acquire substantial warehouse space. The warehouse market tightened as demand remained strong, and prices began to rise. 

Commercial Construction

As with most other sectors, commercial construction continues to face challenges due to supply chain issues. Kitchen appliances, raw materials, windows and doors, and steel components are all seeing extensive lead times that are delaying completion. 

Additionally, shipping and product costs have increased dramatically, which, in turn, has made the construction process and the final product much more expensive.

The Solution

There is no doubt that supply chain issues will continue to impact the commercial real estate industry for some time. The best solution is to partner with a real estate professional that understands the impacts and can advise you accordingly.

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 if you have questions about the commercial real estate market in Longmont, CO, and our neighboring communities.

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Multi-family Developments Easing the Affordability Issue

June 8, 2022

Rising Real Estate Prices

Real estate all over the country has seen a dramatic increase in prices over the last two years. Historically-low interest rates, coupled with minimal supply and the ability to work remotely, sent residential real estate sales through the roof. The reshuffling of the real estate market saw consumers reimagining what they wanted in their perfect home.

Many external factors have created a real estate market unlike anything we have ever seen before. While every market is unique, there seems to be one central theme—high prices. 

The Affordability Issue

As real estate appreciated at double-digit rates, many people were left on the sidelines, unable to save fast enough to keep up with increasing values. Home builders can’t build fast enough, and land has gotten so expensive that developers can’t even take the first step.

So how do we cope with this affordability issue affecting the Northern Colorado real estate market and most other areas across the country? Multi-family developments may be the key.

Multi-family Developments to the Rescue

Multi-family developments are buildings or complexes that contain multiple housing units, such as townhomes or condominiums. Developers can cut costs by buying smaller pieces of land that become home to higher-density housing. Multi-family real estate is also less expensive to build than single-family residences as units share walls, roofs, utilities, etc. 

Prices remain high, and in the Colorado market, they continue to rise, meaning buyers need affordable options. With homebuyers on the hunt for a less expensive option, the demand for multi-family units presents an incredible opportunity for those interested in commercial real estate.

Many commercial real estate investors and developers have set their sights on multi-family developments as they consider their next projects. If you have any questions about the multi-family real estate market in Longmont, CO and our neighboring communities, please contact Steve at WeBrokerCORealEstate or 720-600-9513.

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Sustainability in Commercial Real Estate

May 17, 2022

Commercial real estate is one of many industries worldwide that is feeling a push towards sustainability. From construction practices to how the building operates post-construction, small changes make big differences.

Cutting Down on Waste

Construction at any scale is a messy endeavor. Commercial real estate accounts for some of the most significant structures built, which can come with an equally large share of waste. 

We often think of recycling common materials such as paper, cardboard, glass, and metal. Commercial construction leaves many other types of waste that builders should divert away from landfills. Concrete, bricks, wood, asphalt, and salvaged building materials (HVAC components, doors, plumbing fixtures) can be reused, recycled, or sold for different purposes.

Using the Sun

Solar power has been gaining popularity dramatically over the last decade. In addition to traditional solar panels, some companies install solar canopies over parking lots to harness the sun’s energy or use solar shingles to create an aesthetically pleasing and efficient facade.

Owners of commercial spaces are finding many ways to use natural energy sources without hindering the functionality of their buildings.

Net Zero Commercial Real Estate

Some commercial real estate owners and builders are determined to be considered Net Zero Energy or Net Positive Energy. Net Zero buildings generate enough renewable energy on-site to operate, and Net Positive buildings generate energy above what is needed to run the facility.  

Additionally, some sustainably-focused builders use top-of-the-line materials to insulate their structures and install Building Automation Systems that monitor and control major systems to increase efficiency.

It is essential to work with a real estate professional that understands the most current industry trends. Contact Steve at WeBrokerCORealEstate or 720-600-9513 to discuss any of your commercial real estate questions or needs in Longmont, CO and our neighboring communities.

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