4 Commercial Real Estate Investments Adding Value to Communities Today
Commercial real estate investments that offer a community-wide boost can do wonders for gaining local buy-in and elevating asset values. Investors can spark economic growth by pinpointing opportunities that enhance local appeal, quality of life, and infrastructure. When searching for your next investments property, look at these commercial real estate types that add value for all.
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1. Mobile Home Parks
The cost of housing is on the rise, and it’s a non-negotiable budget line item. Up 5.1% as of July 2024, according to the U.S. Bureau of Labor Statistics, housing leads inflation. While families can pinch pennies on groceries and entertainment, housing prices are less flexible.
To make matters worse, the housing supply is down, especially in the affordable housing category. As workers see their pandemic-era wage adjustments lose their buying power, the need for safe, quality housing increases.
Investors looking to expand their portfolio should consider a lesser-known asset class with attractive margins: mobile home parks. Offering high cash flow margins, shorter depreciation timelines, and stability, mobile home parks benefit investors and communities.
When it comes to mobile home parks, Lifestyle Investing expert Justin Donald says, “Mobile homes are the least consolidated asset class out there…the least defaulted asset class out there. And way fewer mobile home parks get redeveloped.”
Community viability depends on access to affordable housing, which is a major deal-breaker or deal-maker for economic development. Businesses need access to workers across income levels, making mobile homes a valuable community asset.
Few mobile homes are redeveloped, and many can be purchased directly from an investor rather than a real estate firm. Mobile homes are among the most affordable housing options, offering advantages like outdoor space and parking that apartments cannot. Units can be tenant-owned, rented, or in a rent-to-own arrangement, making mobile homes attractive to a wide range of tenants.
Investors may also experience less competition in accessing a park due to the stigma associated with the asset class. However, improving housing access and quality of life can make a positive community impact and yield great profit margins.
2. Multi-Use Properties
Flexibility is the name of the game when it comes to multi-use properties. Harkening back to the early days of community infrastructure, shopkeepers would live, work, and play within the same block. The same concept has found its stronghold today: developments pair housing with community amenities.
Investors can tap into multi-use real estate opportunities with new builds and redevelopments. A former industrial site can become a technology and art incubator, providing a sense of place for community-building. Complimentary businesses like coffee shops, breweries, and restaurants make natural additions to the multi-use ecosystem.
Leverage a multi-use space as an attractor for creatives, entrepreneurs, and cutting-edge technology. Establish a coworking space where small industries can gain footing while your commercial space serves this captive audience. Make your interior flexible, thoughtfully designing power, lighting, and structure for a wide range of tenants.
Food halls are growing in popularity, providing a culinary incubator for rising chefs to bring their cuisine to the masses. With a lower cost of entry than a full restaurant, booth-like space gives more creators opportunities, increasing community equity. This affordable, multi-use space gives communities color, identity, and cultural significance by democratizing access to space.
3. Youth Sports Complexes
You don’t have to be a parent to know that youth sports can be demanding and expensive. Between league fees, equipment, and travel, the average family spends nearly $1,000 per child per sport. However, that doesn’t stop them from spending, which is why commercial real estate serving youth sports is a smart move.
In 2023, sports travelers had a $128B economic impact, bringing hundreds of thousands of jobs and major tax contributions. Families with youth are more than willing to travel for tournaments, making sports complexes a smart play.
If you can find raw land, establishing a sports park with flexibility for multi-season, multi-sport use is wise. Focus on the total footprint and baseline features, like quality fields, parking, and restrooms. Consider access to main travel corridors and area amenities, like restaurants and lodging, which are essential amenities for large tournaments.
Investors can collaborate with local tourism offices and economic development commissions for tax incentives, grants, and partnerships. Many schools yearn for quality practice facilities or competition space but lack the acreage. Network with government officials and community leaders to identify local opportunities to make your project a reality.
Investing in youth sports facilities can attract others to investments in the community, too. With nearly $10B spent on sports-related food and beverages in 2023, there’s plenty of opportunity to expand your impact. With an asset like this, new residents may consider relocating, and businesses that support sports will have reason to invest.
Tourism dollars often fuel a local economy’s ability to improve its infrastructure and expand its range of job types. Your other commercial investments, like your mobile home park, could see a boost, providing workers with affordable housing.
4. Senior Care and Related Facilities
The aging population is a demographic that deserves quality care but is at risk of not accessing it. In 2020, one out of every six Americans were age 65 or older, driven largely by the post-war baby boom. Compared to data a century earlier, today’s aging population is three times the size of their grandparents’ generation.
This demographic is expected to retain its share of the population, especially as more is understood about longevity and aging. Investing in commercial real estate serving this growing population offers profits and community benefits.
Individuals are more reliant today on senior care facilities, as fewer families care for their aging relatives at home. With more dual-income households, someone isn’t readily available to serve as a caregiver. However, there is a willingness to spend money on high-quality senior care in assisted living and aging-in-place communities.
Look into building or revitalizing a senior care community with various living options and amenities. Medical facilities on-site or on-campus make managing healthcare appointments convenient for residents and provide investors with layered tenant types. Your facility’s management can be delegated to an operator, while your commercial expertise can be more strategic.
Local, state, and national incentives and tax breaks can be applied to your investments, making your margins even more favorable. Look for areas with fewer similar amenities to fill an unmet need for a growing population deserving quality senior care.
Contribute to Community Advancement Through Smart Investments
You can grow your commercial real estate profile, profit, and contribute to the common good. Strive to understand your strengths as an investor and consider how to positively impact your communities. Apply this philosophy to your projects, and you’ll add value to the community for generations to come.
