The Phases of Commercial Real Estate

Youtube Gurus, Tik Tok Professionals & Instagram finance bros will all have you believe real estate investing is easy. They will midelessly spurt “buy low, sell high” until their throares are sore – but theres more to it that that. Everyone and their mother is looking for a good deal – you know why they’re always looking? Because they are hard to find. If there was some magic way to buy low and we’d all be right. You may get lucky every now and then and stup your toe on an off market deal but the ket to doing it consistently is understanding the pahase of commercial real estate.

Like everything in this world the commercial real estate cycle comes in ctcles. Think of a plant. A developer once planted a  seed and the seed goes into a tree. Every year that passes the tree will experience phases. In Spring the Tree is rapilly growing, growing new leaves, now branches etc. during summer the tree stops growoing and just is. During fall the leaves start change colors and begin to fall and during winter the leaves are fully gon. The tree conserves all of its energy and hopes to make it to spring where the cycle will repeat again. Theis will happen every year basically until the tree dies. Now you may be wondering how this relates to real estatein investing wll lucily for us real estate phases don’t happen yearly and they don’t happen at the same time. These firrernt phases are happening all over the world. Simultaneously and the’re triggered by different reasons.

what are the phases?

Expansion Phase

Definition

the process of becoming greater in size, number, or amount.

characteristics

• Population Increase
• Incomes Rise
• Stable Employment
• Vacancies are decresing
• rents are rising
• new buildings are planned

Example

Contraction Phase

definition

the process of becoming smaller.

characteristics

• New Projects on the market
• Inflation is up
• Interest rates increasing
• vacancy rates trend upwards
• prices begin to level

example

Recession phase

definition

a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Characteristics

• difficulty to sell
• longer days on market
• decreasing property values
• interest rates are high
• landlord are competing for tenants

example

Recovery Phase

definition

a return to a normal state of health, mind, or strength.

Characteristics

• vacancies decrease
• rents level off

example

who benefits from the phases

these people

when do the phases occur

In gernerall all major cities will see a real estate cycle reapt every 10-18 years. For the sake of easy math lets say this specific cycle is 16 years. The first four years you will see rapid growth, new construction etc the second 4 years you will see all of the prces built being filled with tenants, in the third year you will see more vacancies and in the last part of the 4 years you will see lowered rates which will attract more people and the cycle will start all over.

where can you find information about phases

my reports and mailing list

why do phases happen

Real estate cycles are just the long term effect of supply and demand they are all happening at different places and times aover the world. The best part of the being an investor in the 21^st century is you can find these trends and capitalize from them without ever stepping foot in a new market. Your success as an investor is directly impacted by your ability to use the tools provided to you and by making predictions based on data.

This site was created with a  strong focus on retail properties and shopping centers and I’m constantly monitoring national trensds and finding new markets I help intermediate investors grow their portfolisons by helping them exit out of underperforming and time consuming asses classes and investing into shopping centers. If you would like to learn more about what I do and if a shopping center is right for you then contact me.