Warehouse shortage could prompt investors to reconsider REITs

Investors in Illinois and around the country have backed away from real estate investment trusts in the second half of 2016 as another increase in interest rates seems more and more likely. Investors covet robust yields when rates are low, and REITs became extremely popular because they are required to pay 90 percent or more of their annual incomes to shareholders. However, other types of investments that were not seen as being particularly sound just a few months ago are looking more and more attractive to investors as interest rates inch upwards and stock prices climb.

While few analysts are surprised that money is flowing out of REITs, some are suggesting that investors pause to consider some of the other advantages offered by these investment vehicles. Most sectors of the commercial property market are healthy as the economy continues to climb out of recession, and warehouses in particular are being singled out as a prudent place for investors to put their money.

The rise of e-commerce has raised fears about the future of the retail sector, but the popularity of online shopping and the growth of the companies catering to this demand has created a need for additional warehouse space in many parts of the country. This commercial real estate shortage is particularly acute near large urban centers as e-commerce companies seek to find warehouse space closer to their customer bases in order to shorten delivery times.

Experienced real estate attorneys may stay abreast of market trends in order to provide more useful and relevant information to their clients. The scramble for warehouse space in cities and large towns could be of interest to those who own commercial land or undesirable properties such as remote, cavernous and vacant retail spaces. Attorneys could point out that warehouse tenants may not be concerned with minor cosmetic issues that could derail negotiations over an office or store lease, and these structures can also be erected fairly inexpensively and quickly.

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