April 15, 2019

Real Estate Newsletter Spring 2019

SPOTLIGHT: Child Care Investment Properties

Child Care Investment PropertiesI have represented the sellers of three child care investment properties in the past year, and in the past few months, I had been looking for a preschool for my son – so I’ve had quite a bit of experience with child care recently.  Child care centers can be a safe, secure investment.  Here reasons why you may want to consider adding a child care center to your portfolio;  and things to look out for when evaluating a one as an investment.

 

  1. Child care is an Internet-proof business.  It will be a long time before we have robots who can take care of our kids!
  2. They often have better investment returns relative to other single tenant NNN properties – child care centers, even ones with corporate lease guarantees, typically have higher cap rates than other single tenant investments.
  3. They provide a valuable service – for socially conscious investors, child care centers provide a necessary service, looking after children for parents who have to work.

 

Things to look out for when investing in a child care property:

  1. Guarantor – look for a child care center that is backed with a corporate guarantee, or at least a guarantee from a very strong franchise operator.  Just because a child care center is a national chain does not mean that the lease has a full corporate guarantee!
  2. Operations – try to find out about how the particular location is performing.  What is the current enrollment? Maximum capacity?  Have they had recent code violations?  Much of this information can be found out on the CA Dept of Social Services web site.  If you are not able to find out location specifics, look at the financial strength of the backing company.
  3. Location – look for well-located properties that are near other complementary businesses, such as in a shopping center or near an elementary school. Properties located in residential neighborhoods will be difficult to repurpose if the tenant were to leave.
  4. Lease duration and terms – as with all investment properties, the tenant’s operating history in that location, as well as lease term remaining are important factors to consider.

I currently have for sale a Sunrise Preschools property in Goodyear, Arizona.  It is an absolute net leased investment to Child Care Networks, which is the 6th largest operator of child care centers in the US, with over 250 locations.  There are over 12 years of lease term remaining.It is priced at $3,500,000 which is a 6.1% cap rate.  Contact me if you are interested in learning more about this solid investment!

 

Inland Empire Retail Activity for 2019 YTD

How is the market doing?  The charts and answers below are all for the retail real estate market encompassing the western Inland Empire, which includes the cities:  Corona, Norco, Eastvale, Chino, Chino Hills, Ontario, Montclair, Claremont, Upland, Pomona, Fontana, Rialto, and Colton.

 

Q1. Are more retail properties being sold now versus in prior years?

sales-volume-2019

 

A: Aside from an anomalous 2017 Q3, the sales activity in the first quarter of 2019 is on par with the average sales volume each quarter of the past three years.

 

Q2. How are retail vacancies trending?

retail-vacancy-rate-2019

 

A: Retail vacancies have been gradually trending downward since the beginning of 2016 until now.

 

Q3. How are rents trending?  Are they going up or down?

average-marketing-rent-2019

 

A: It can be seen that over the past two years, rents have been rising at a steady, almost linear rate.

 

What does this all mean?  Despite all the predictions of what may or may not happen in the retail industry in the next two years, we are on a positive trend, as the data shows.  I am optimistic about the market and what the next several years will bring!

 

What other charts would you like to see?  I can help you to prepare custom reports and charts for your specific needs. Contact me to see how I can help you.

 

Want to see more of me?

see more video imgIf not, then sorry!  But if you’ve made it this far in my newsletter, I guess there’s a good chance that you want to see more of me.  One of my goals for 2019 is to create more video content – to talk about commercial real estate, what’s happening in the Inland Empire, and to sell my listings. Please visit my YouTube channel at http://bit.ly/mikelincrevideos to see what I’ve posted, and please subscribe to my channel be notified each time I post a new video!

 

About me:

I specialize in representing buyers and sellers of retail investment properties, focusing primarily on the Western Inland Empire, encompassing the cities of Corona, Norco, Eastvale, Ontario, Chino, Chino Hills, Montclair, Pomona, and Fontana.  Prior to commercial real estate brokerage, I worked as a residential real estate investor, flipping houses in Orange County. 

 

I grew up in New Jersey, and have worked for corporations such as Nestle PowerBar, Prudential, and Computer Sciences Corporation. I have a degree in Biomedical Engineering from Johns Hopkins University and an MBA from Duke University.

retail-properties-spring-2019

retail-properties-spring-2019


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