When location alone won’t cut it

Want to drive rental income, attract high-quality tenants, minimize risk and maximize the return of your real estate investment? In order to capitalize on market dynamics, you need to understand what’s driving demand. Here are the top five considerations for each asset class.

Apartments

1. Employment Opportunities. Areas with robust job growth and diverse industries tend to attract more residents.

2. Lifestyle and Amenities. Proximity to shopping centers, restaurants, parks, etc. can increase demand. Access to public transportation helps too!

3. Affordability. Varying rental prices along with different sized units can directly impact demand.

4. Changing Homeownership Trends. Rising housing prices and increasing mortgage rates can impact demand, as can generational preferences.

5. Property Condition and Quality. Well-maintained and updated properties with clean and functional units tend to generate higher demand.

Class B/Creative Offices

1. Affordability and Value. Value-driven businesses, especially those that are small and medium-sized, want desirable office space that’s also affordable.

2. Adaptive Reuse and Creative Industries. Industries such as advertising, marketing, tech, etc. often seek out unconventional architectural features and historical charm.

3. Location and Accessibility. A desirable location near major transportation routes, public transit and amenities often drives considerable demand.

4. Flexibility and Customization. Start-ups and growing businesses may require unique layouts or specialized infrastructure that’s easier to find in Class B or creative office space.

5. Supply Constraints. Local preservation of historic properties and other supply obstacles can make this office type scarcer, driving higher occupancy and rental rates. 

Warehouses

1. E-Commerce Growth. More online shoppers = growing need for fulfillment centers and distribution facilities.

2. Supply Chain Optimization. Warehouses located near ports, airports and highways mean faster and more cost-effective distribution.

3. Just-in-Time Inventory. Warehouses that can support rapid inventory turnover and quick order fulfillment are in high demand.

4. Last-Mile Delivery. Being closer to customers allows for faster and more efficient delivery of perishable goods and time-sensitive products.

5. Changing Retail Landscape. Retailers require a warehouse that can handle both e-commerce and brick-and-mortar fulfillment.

Retail Strip Centres

1. Location and Visibility. A retail strip center should be located in a highly visible and accessible area with good traffic flow.

2. Tenant Mix and Complementary Businesses. A well-known anchor tenant, paired with popular retailers and a diverse range of complementary businesses, creates a synergy that attracts shoppers.

3. Consumer Demographics. Population density, income levels, age distribution and lifestyle preferences all influence demand as retailers and service providers look for locations where the target market aligns with their customer base.

4. Convenience and Local Market. Essential services such as grocery stores, pharmacies, restaurants, and personal services, can make a retail strip center a go-to destination. Being easy to access helps too.

5. Economic and Population Growth. Growing employment opportunities, rising household incomes and an expanding population drive consumer spending, leading to increased demand for retail goods and services.

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