Improved fortunes of retailers and a growing preference for renting over home purchase mean that now might be a good time to invest in those kinds of commercial property, according to PricewaterhouseCooper’s December 2012 Real Estate Investor Survey.
The survey, which evaluates industrial, multifamily, office and retail real estate in 33 markets, notes that by 2015 the retail, office and multifamily real-estate sectors in particular should be in full recovery. Therefore, now’s the time to consider these investments.
You should look for well-managed companies that have good track records for buying and selling real estate at a profit, says Green Street Advisors Senior Analyst John Stewart. Consequently, he likes Simon Property Group (NYSE: SPG; Price: $158.00), which owns high-end malls, and AvalonBay Communities NYSE: AVB; Price: $125.84), which owns apartment buildings. “The high-end malls have performed and will continue to perform exceptionally well,” he says. Those have higher sales per square foot than do lower-end shopping venues.
Beware of investing in warehouses: Changes in inventory management and technology are making them obsolete, Stewart says.