Shopping Plazas vs. Other Retail Properties
As Canadian real estate investors are becoming more familiar with the market and its different sectors, many are noticing the advantages of retail property, especially in shopping plazas.
While the Canadian industrial property has proven a positive track record for some, it is not without high risks. Provinces like Alberta boast some of the strongest, energy-backed economies in the world, however, when things fail to go according to plan for industrial property investors, they can go very badly. Leasing these properties can be far more challenging than many imagine. And let’s not forget about potential hazardous spills and constant regulatory changes.
Office buildings are fairly straightforward as a commercial real estate investment. However, the future of the office and the type of offices that will be in demand tomorrow is an incredibly cloudy arena, even for veteran experts. Without thorough due diligence and exceptional research, poor performance by startup tenants and the migration of major anchor firms can be catastrophic to the performance of a portfolio.
Residential real estate is often perceived as the simple option by newer investors. Yet, both multifamily and single family residential investments can be far more complex and management intensive. The high emotions that stem from dealing with residences and the geographic and logistical challenges of trying to manage a network of single or small residential units is not only labor intensive, but can also put a major dent in net returns.
In contrast to the above retail properties, local shopping plazas offer several advantages when it comes to management.
The direct link between leased units and tenant income provides for better performance and cash flow consistency for landlords. The current and projected strength of the Canadian retail market, particularly in Alberta suggests high demand, high rental rates and low vacancies for the foreseeable future.
When it comes to retail, there are rarely any middle of the night phone calls to assist renters with getting back into units after losing their keys or help with overflowing toilets.
Property management for these properties can be simplified even further by taking advantage of syndications and partnership opportunities, which comes with professional third party property management to handle day-to-day issues.
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