What are commercial real estate investors focusing on today?

Question

I have previously owned multi-tenant office properties and self-storage facility prior to 2008.  These were all purchased with major value-added possibilities and updating, which I undertook.  Since 2008 I have only owned a smaller restaurant property that is tenant leased at great returns on investment.   I have mostly been doing residential fix-n-flip renovations in a number of areas.  In addition, I have used seller financing as a way to create a "deal after the deal" when possible, with well qualified buyers.  I have been doing fix-n-flips and property rehabs for over 50 years and really enjoy doing them and overall, the returns have been quite good.

I have one STR property in a tourist area that I did recently as a fix-n-flip and am holding for capital gains status - 2 years - and have a vacation property manager handling the STR.  It has gone OK for the first season but overall does not look like it will bring in really impressive returns.  I did it to see what those returns would look like.  I will likely use a 1031 Tax Deferred exchange to move to a property with better returns that could be a commercial property.

I like commercial real estate investments for the better-quality tenants compared to residential and would purchase again if the opportunity looked right.  I like multi-tenant properties so that I am never upside-down if a tenant leaves.  I also target undervalued and unloved properties to build equity and cash flow.  My target price if I found one is $2.5 million or less.

Are there commercial real estate investors out there operating in those type properties, or others and if so what market opportunities are you seeing today?   I am not tied to a particular area or part of the country and have owned properties in MD, VA, NC, FL,TN, GA & CA.  Thanks for reading.

Michael K Gallagher · Answer

@Wade Wisner thanks for sharing your story. I'm mostly involved as others have stated here with retail. Mostly focused on retail medical and grocery anchored centers.  Outside of owning the center or similar strip mall, we are seeing pretty big opportunities in development of the asset class and or re-development.  If you can find a property that is in need of a lot scrape or retrofit, but is in proximity to a grocery center with good access and visibility, their is likely several ways to "skin that cat" from a build to suit to a ground lease, etc.

Arman Ahmed · Answer

@Wade Wisner

Hey Wade, with your experience, it sounds like you have a great eye for undervalued opportunities. Many investors today are still focused on multi-tenant residential and small commercial properties that offer strong cash flow, upside potential, and low management headaches. In markets across the Midwest, there are off-market properties—both multi-family and smaller commercial—that are often overlooked, providing solid returns, appreciation, and easier deal execution compared to high-demand coastal markets. Pairing these deals with a strong local team—property managers, contractors, and brokers—can really streamline acquisitions and renovations while keeping your hands-off approach.

Wade Wisner · Answer

Hey Evan,

Thanks for reading and your comments.  I have looked at retail centers but mostly they looked overpriced for the market at that time.  I like your last statement of knowing property and watching it decline and tracking the owner when they are finally done with it.   That is my kind of approach.

Do you finance commercial property purchases or are you a cash buyer?  Are there preferred lenders out there today?

Again, thanks for your comments.

G. Brian Davis · Answer

I’ve personally seen a multi-family commercial flip through my co-investing club, and it highlighted how larger commercial deals can be structured collaboratively while mitigating some of the hands-on management that comes with residential rehabs. Deals like that often come with strong underwriting, professional property management, and a team approach, which can make targeting undervalued, multi-tenant properties more manageable.

Markets that have been showing opportunity include Sun Belt cities with growing populations and job markets, as well as secondary metro areas where older properties can be repositioned for higher returns

Markets that have been showing opportunity  include Sun Belt cities with growing populations and job markets, as well as secondary metro areas where older properties can be repositioned for higher returns

Account Closed · Answer

Great insights your experience across multiple property types really shows the importance of diversification and timing in real estate. Commercial investments, especially multi-tenant and value-add properties, still offer solid opportunities if you can find assets priced below replacement cost. Markets with strong population growth and business incentives tend to show the best returns.

If you’re also considering how local demand impacts valuations, this overview on estateagentsilford.co.uk offers some helpful context on current property trends and management strategies in the UK market.

Henry Clark · Answer

OP. We do self storage and country subdivisions just the lots.

Right now cargo containers are at their lowest cost.  I would do a storage location with just 1trip or new 20 foot containers.  We bought 50 to add to an existing location.  Normally buy 14 at a time.  But had the cash.  Will use the 100% depr this year for taxes.  Plus no property taxes which have gone up around here.  Insure as Personal property and not Real Property.

Also if you’re near a major city, I would do the land subdivisions.  Pick a good farm ground for sale or auction that has a lot of waste ground.   Say 20 to 80 acres.  Too big for individual home owners.  Too small and too much waste ground for a farmer to bid up.  Or an old farm house with 20 or 30 acres.

Look for road access on multiple sides, close to highway, fiber near by, good schools, ditches you can make ponds, trees, rolling ground for views and walk out basements, etc.

Since you’re multi state.  I would use Loopnet and look for Nasty properties that have been on the market a while.  Bring value add to it.  Example- old elementary schools convert to multi, old buildings with parking- convert to Fireworks building, the rest of the year used car lot, We have two large Firework companies they have both bought and built buildings that are only open for 3 weeks a year.

Wade Wisner · Answer

I hope that you do not mind further questions.  It sounds as if you are a buy and hold investor for retail centers?  What is and "ideal" investment for you?

Evan Polaski · Answer

@Wade Wisner, I invest in multi-tenant retail assets.  Purchase prices higher than yours, and market focus is mid-west areas due to proximity for ease of traveling to projects, as well as tenant and broker connections.

Like anything, every factor is a trade off.  Unloved properties mean risk in deferred maintenance and lease up risk.  Rural markets, where you can get 20,000 sq ft for $2-3mm mean lower tenant demand and lower rents, typically more mom and pop type tenants.  You note issues with single tenant, which I am fully aligned with.  I have not invested in the specific states you noted, but did recently turn down a deal in Norfolk, VA area.  It was about 13k sq ft for $2.9mm, I believe.  I ultimately passed on it because it was too small for being too far away.  There were other issues: parking was on the lighter side, access was right in right out on a boulevard style street.  Cash flow in place was "okay" but a little lighter than I wished, but there was opportunity to push rents through some near term expirations without renewal options.  This was a listed retail property, so they are out there.  There are also a pretty steady stream of Walmart shadow anchored centers in WV and VA, it seems.  But beyond that, your best deals are almost always knowing a property, watching it decline, tracking the owner and reaching out to be the call they make when they are finally done with it.

What are commercial real estate investors focusing on today?

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