When investors think about commercial real estate, some of the first things that come to mind are risk and return assessments, market trends, and the potential for financial gains. After all, real estate is a significant player in the world of investments. However, it's crucial to recognize that real estate plays a role that goes far beyond the numbers. Commercial real estate holds a unique place in our lives, intertwining with our memories and emotions in ways we may not always realize.
Commercial real estate is the backdrop against which most of our lives unfold. These buildings are where we learn, store our cherished possessions, seek medical care, earn our livelihoods, enjoy meals, play, shop for essentials, and are entertained. They are the stages upon which our most memorable events play out.
Think about it: In what stadium did you witness the greatest football game of your life? Or where did you celebrate your child's first birthday? Commercial real estate is all around us, shaping our experiences and fostering emotional attachments.
Within the realm of commercial real estate, there are a host of sectors that comprise the industry. These include office buildings, retail spaces, industrial warehouses, multifamily housing, hospitality venues, healthcare facilities, and many more. Each of these sectors plays a unique role in our lives and contributes to our emotional connection with these properties.
Throughout our lives, commercial real estate often serves as the canvas on which we paint our memories. From the excitement of moving into a college dorm to the joy of buying our first home, these properties are not just bricks and mortar; they are the setting for significant life milestones.
Let's explore the role of commercial real estate in some key life transitions:
College/Student Housing: For many, the experience of living in college dormitories or apartments is a rite of passage. It's a time of newfound independence, lifelong friendships, and personal growth. College housing holds emotional value, as it contributes to shaping young minds and creating lasting memories.
Self-Storage Facilities: Self-storage facilities are often where we stow away possessions that hold sentimental value. These spaces bear witness to the different chapters of our lives that require storage, including, for many, the “Four D’s” dislocation, downsizing, divorce, and death. The emotional connection to self-storage facilities lies in the role they play as keepers of our history.
Healthcare Properties: Accessible medical office buildings (MOBs) and senior housing play a vital role in our journey toward aging with independence and receiving quality care. These properties hold deep emotional significance as they facilitate the well-being and dignity of our loved ones and ourselves as we age.
Demographics play a pivotal role in determining the demand for various types of commercial real estate properties. As the population evolves, so do our needs and preferences. This ongoing transformation is likely to continue fueling growth in the sectors.
College/Student Housing: The steady growth in the number of college students, driven by demographic shifts and international enrollment, points to a consistent demand for college housing. We believe a limited supply of adequate housing will likely remain a challenge for many students.
Self-Storage: Our attachment to personal belongings and the nomadic nature of modern life helps ensure the enduring demand for self-storage facilities. Whether it's due to a move, downsizing, or simply decluttering, these spaces remain essential.
Healthcare Properties: With an aging population, we believe that the need for accessible healthcare facilities, including senior housing and MOBs, continues to rise. As we prioritize quality care and independence in our golden years, these properties become increasingly valuable.
As mentioned, it's easy to get caught up in the numbers and financial forecasts. However, commercial real estate is more than just a balance sheet. It's where life happens, where memories are made, and where we find the spaces that support us through the various stages of our lives.
Whether you're a college student embarking on a new adventure, a homeowner creating a storage sanctuary, or a senior seeking quality care, commercial real estate is there, silently shaping your experiences and weaving itself into the fabric of your life.
The views expressed herein are subject to change based upon economic, real estate and other market conditions. These views should not be relied upon for investment advice. Any forward-looking statements are based on information currently available to us and are subject to a number of known and unknown risks, uncertainties and factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.
Some of the risks related to investing in commercial real estate include, but are not limited to: market risks such as local property supply and demand conditions; tenants’ inability to pay rent; tenant turnover; inflation and other increases in operating costs; adverse changes in laws and regulations; relative illiquidity of real estate investments; changing market demographics; acts of God such as earthquakes, floods or other uninsured losses; interest rate fluctuations; and availability of financing.