How to Choose the Best Type of Commercial Investment Property for Your Portfolio

REDEV - Choosing the Right Type

There are a number of choices to make when looking for a real estate investment. One of the most significant choices can be selecting the type of property to invest in. How does one choose?

Whether you are looking for your first property investment in Canada or seeking the right acquisition to compliment your existing real estate portfolio, there are a number of decisions which must be made. These may include taxation considerations, finding a reputable and effective asset manager, and determining which type of partnership or structure is best suited for your investment goals.

When it comes to investing in property, you simply can’t lump all real estate together in the same category. That would be similar to investing in the stock market without any consideration for which sectors, industries, funds and individual stocks are performing.

When it comes to real estate investing, the results Canadian investors should expect will vary. This will depend on location, the performance drivers of a given property and the type of property. All real estate is local and each property sector operates on slightly different cycles.

There is a massive difference in the timing and way residential homes and even commercial multifamily apartments perform. This is a big part of the reason why Canadians need to diversify into commercial property in order to withstand future fluctuations in their home value.

When looking at the commercial property landscape there are industrial, office, multifamily, retail and even vacant land to consider. So which is the best investment?

Rather than one right answer, the best answer is which property type is right for you and your portfolio now. Some of the deciding factors and guiding questions that you should be asking to determine this include:

  • Which types of property do you understand the best?
  • Which have the best prospects for performance and income generation?
  • Which properties are likely to grow in the future?
  • Which type of real estate might provide the most non-monetary perks?
  • Which types of buildings will perform best in the market you want to invest in?
  • Which are best aligned with your personal timeline for potentially cashing out or restructuring?

Perhaps you are an engineer or an oil executive and know the industry’s needs inside and out. Maybe you own a sizable company with a large staff and can reap multiple benefits from an office building investment? For most individual Canadians, retail property stand out as the top choice. Most people clearly understand the concept of how they function and understand that shopping is not just popular, but is also a necessity. In locations such as Edmonton, it is also clear that there is great growth in the works, anchored by a high demand for space, which can deliver attractive cash flow and yields.

So the questions that still remains…What will you invest in?