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February 07, 2022 - Blog Article
Retail Pad Sites are Worth Investing in 2022 - Growing Your Investment Effectively

The commercial real estate industry is no stranger to the COVID-19 hardship, but that does not stop it from rooting its legacy in its resilience. There are numerous opportunities that should be taken advantage of as the industry transforms in 2022 and beyond. One approach to finding success in the CRE market is to examine the growth of commercial pad sites and big-box retail spaces that are brimming with financial prospects.

 

It’s essential to keep an eye out for ripe business opportunities that can transform a somewhat bland commercial space into something much more elaborate and profitable. The pandemic has led a large percentage of businesses to move remote, and the CRE market is no different. The rise of virtual tours has only added to the improvement of management software that enables the sellers of the CRE property to offer a more contactless and seamless experience.

 

Why are retail pad sites becoming more desirable in 2022?

While the integration of technology has helped develop the CRE market, there is another dynamic opportunity on the horizon - retail pads.

 

Commercial pad sites are a building lot that is in close proximity to an existing commercial building and is usually not connected to the other buildings. The location of the retail pad is advantageous if you are considering investing, and can provide you with low overhead and higher returns than you may have thought.

 

The CRE industry is synonymous with being able to perform well under numerous market changes, and retail pads can provide a favourable return on investment.

 

Free-standing retail pads, like Starbucks, McDonald's and Tim Hortons, attract a substantial amount of traffic often shared with the businesses in the plaza. Retail pads are integral to increasing the value of a plaza, making them essential to driving overall sales and skyrocketing the value of the retail property altogether.

 

Retail pads have the advantage of adding unique customization to a larger plaza, creating a lucrative platform for advertising other businesses and drawing paying customers in.

 

Drive-through and multi-pad sites have skyrocketed during the pandemic

The demand for drive-thru sites has become essential in the last two years, as we are trying to accommodate serving individuals as efficiently as possible while limiting any contact. Especially with the growth of online ordering and pickup, retail pad sites are a rewarding investment to consider heading into 2022.

 

Rising construction costs, combined with an imbalance of a supply-demand chain, have moved the shift to investors considering multi-tenant pad properties as well. By focusing on multi-tenant pad properties, investors are able to double, and sometimes triple, their ROI. Multi-use pad sites can serve a larger purpose and bring a variety of customers as compared to a single-use retail pad site.

 

In terms of commercial retail, the market is slowly coming back to Canada. The government matched the developers, meaning the developers gave a 25% reduction in rent, and the other 25% was paid by the retail tenant; the other 50% was covered by the government of Canada, helping individuals remain stable during the course of the pandemic. If you can buy now at profitable rates, keeping in mind cap rates over a 10-year horizon, you will be on a positive upward trend within the year.

 

Watch my video about investing in commercial and retail properties and find out more.

 

Consider co-investing with a sponsor to create passive income and increase wealth over time if you are just starting out. A seasoned partner can bring in their expertise on how to operate, manage and improve the commercial real estate you are contemplating investing in.

 

At ReDev, we believe in the power of collective intelligence, bringing multiple perspectives and depth of expertise to the sector. We are proud of our entrepreneurial culture that fosters investment innovation, collaboration and teamwork. We take great pride in the skill and professionalism of our people where integrity is at the heart of our organization.