Where to Invest - Summer 2019

When I began my commercial real estate career more than 30 years ago, I focused on industrial properties. It was an exciting time and the industrial sector seemed enigmatic. I soon realized the consistency in product and uses and, most importantly, the factors that caused the industrial real estate market to expand and contract. Over the course of my career I expanded my market coverage to include all commercial properties within a geographic area, which included downtown and south. When asked, “Where should I invest in commercial real estate?” I often relay this anecdote: Thirty years ago, industrial rental rates were around $3.50 per square foot. Today, a comparable industrial building would rent for about $7.50 per square foot. Now compare these rates to downtown properties during a similar time frame which maintain a wide variety of uses, opportunities, densities and excludes industrial uses. Some three decades ago, Main Street retail space commanded rents of about $6 per square foot. Today, those same storefronts rent in the range of $30-$45 per square foot. Want to know why? Call Harshman & Co. and find out in greater detail why industrial space has had slower appreciation in rental rates while many Main Street properties have at the same time experienced skyrocketing appreciation.