If you’re new to commercial real estate, or investing in real estate period, you may not be aware that there are four market phases that you need to get to know quite well. Fortunately, they aren’t difficult to understand, but they play a tremendous role in what’s hot, what’s not, and what type of real estate is successful at what time. Many new business owners or investors may not take the market phases into consideration, but you’ll find you will understand the market and make sound business decisions when you do.
4 Market Phases You Must Know For Real Estate Investing in 2020
- Recovery
- Expansion
- Hyper-Supply
- Recession
Recovery, or Phase One, is when there is no new construction happening and declining vacancy. It can be difficult to secure a business loan when the market is in this phase, but this is a phase that most areas of the country are not in, or emerging from. Many new investors are afraid to invest during this phase, but with a good financial planner and some good demographic data and study, you could potentially do very well during this phase.
Expansion, or Phase Two, is where many markets hover – one of them being multi-family units, and there’s no real sign of that ending because the United States has become a nation of renters, particularly in some locales. This is again where you need to pay special attention to demographics and know a little something about how generational attitudes affect the real estate market. Baby boomers and Millennials are more likely to rent than Generation Xers, who are more likely to buy a home. Get to know your area’s demographic as well as you know a family member. If you’re in an area of many Baby Boomers (Florida in general may fit here), multi-family unit investment may be a great business venture.
Hyper-Supply, or Phase 3, is generally happening vacancies abound, but new construction continues. This is generally not a great time to buy or build commercial property. Take a careful look at your locale at understand that a failing economy can have a tremendous hand in keeping a market at this level. Understand that just because the economy is doing better on a national scale may not mean the local economy is. Did a major supplier of jobs just shut down in your area, such as a large factory? If so, you may see the local market quickly fade into Hyper-Supply, no matter where it was before.
Recession, or Phase 4, means there’s not a great cash flow and it’s going to hit the real estate market hard. Properties can lose value, vacancy rates are increasing, new construction comes to a halt, and Wall Street may not be doing very well. True national recessions happen rarely, but local recessions are common to areas at different times for different reasons. It’s still possible to invest during his market phase, but it usually takes someone with quite a bit of experience to navigate it efficiently, and you must know the particular market you’re dealing with.
This is a very brief synopsis of introductory to market phases, but investors should understand that they exist and are important. They are definitely worth studying and understanding if you want to do well with investing in commercial real estate.
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Newest Key West Commercial Properties on the Market
![2710 Roosevelt Blvd Boulevard N KEY WEST, Florida Prime Restaurant/Bar location for lease in Key West. Seller is motivated and will consider all serious offers. Very visible endcap location in Overseas Market. 6,000 sf. interior available and includes all Furniture, Fixtures and Equipment. Licensed for over 200 Seats. Includes an SRX/COP liquor license and a large full service bar inside with bar seating and tables. Comfortable Indoor AC dining and outdoor patio seating available. A ton of parking surrounds the restaurant. Perfect location for a major national Restaurant and Bar or other Retail uses are possible. Favorable, long term 20 yr. lease in place, started in Feb. 2017 with approx. 14 yr. balance. Landlord Approval required for any Lease assignment. Current Denny's franchise is optional and would require Denny's application and approval. Denny's opened in Key West back in 1996 at another location by current franchisee. Overseas Market just went through major improvements. Current tenants in Overseas Market include Winn Dixie, Ross, CVS, Five Guys, Domino's, Advanced Auto, US Post Office, Jersey Mike's and other retail and office tenants.](https://cdn.photos.sparkplatform.com/flk/20240524160808514044000000-o.jpg)
2710 Roosevelt Blvd Boulevard N KEY WEST, Florida
2 Baths 6,000 SqFt
![295 51St Street Gulf MARATHON, Florida Exceptional 6-unit multi-family commercial property conveniently accessible from both 51st Street and 50th Street. This property offers unparalleled convenience and charm in the heart of Marathon. Comprised of three buildings surrounding a serene courtyard oasis complete with a sparkling pool, tiki bar, and grill. Boasting a total of five efficiencies and a separate two-bedroom, two-bathroom unit, making it an investor's dream. Each unit has undergone extensive remodeling, featuring tile floors, impact windows, AC systems, state-of-the-art appliances, cabinets, and quartz countertops. Ample off-street parking for over eight vehicles. Zoned MU Commercial with six TBRs (Building Rights), this property offers versatile opportunities for investors, whether for short-term rentals, long-term leasing, or commercial endeavors.CA/NDA and proof of funds or bank pre-approval is required.](https://cdn.photos.sparkplatform.com/flk/20240408235334380252000000-o.jpg)
295 51St Street Gulf MARATHON, Florida
7 Beds 7 Baths 2,614 SqFt
![243 61St Street Gulf Street MARATHON, Florida A rare and unique income producing Hotel in Marathon. Tropical Cottages is a boutique & very profitable Mom and Pop Motel. Total of 11 valuable Transient Licenses, 13 Rooms plus office with kitchen & check in room. There are 9 buildings on the property, 8 adorable free standing cottages and the main building with 3 rooms. Each room has been tastefully and tropically renovated inside and out. Each room is unique and comes fully furnished. Most of the units have small kitchenettes including sink with microwave and refrigerator. All units have refrigerator & microwave. Each of the cottages have shiny new Victorian shingle roofs. Additionally, there is a large Tiki Hut & Bar along with Food Truck with seating area. The Food Truck is leased for $5,000 per mos. and the Tiki Bar operations are owner operated. Both add to income and a great amenity for the guests. On site is a full laundry room with Commercial grade washers/dryers and storage rooms throughout. All housekeeping is done on site. Small but friendly efficient staff has been there long term and willing to stay on with new owners. There are a total of 6 lots encompassing over 1/2 acre of land, total .56 Ac or 24,384 sf. There is ample off street parking for guests. Zoning is GC and land use is recognized as Hotel/Motel. Bonus of Deeded waterfront access at the end of 61st St. which has a boat ramp and staging area for all types of watercrafts and sports. Same family ownership since 2010. Tropical Cottages was started back in the mid 1950's as a Fish camp and is one of the few remaining Mom & Pop Motels throughout the Florida Keys. Priced at just over 7% cap rate. Motel generates substantial Net income year after year to current owners. Sellers may consider Seller Financing to a qualified buyer and must have 40%-50% or more down payment. Terms to be negotiated.](https://cdn.photos.sparkplatform.com/flk/20240306215504991065000000-o.jpg)
243 61St Street Gulf Street MARATHON, Florida
13 Beds 14 Baths 4,461 SqFt
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