California is known to people all over the country as the Golden State with the "Eureka" slogan. This name stems from the days of the state's development spurred by the discovery of gold in 1848 and the sight of golden poppy fields seen during the spring.
This state can be described as a beacon of hope, from its natural beauty to the breathtaking tourist sites, to the Hollywood culture and the cutting-edge technology.
The state of Cali also has booming prospects in real estate due to its favorable business environment and favorable climate. Thus, businesses are willing to explore the beautiful state to take advantage of the numerous opportunities. In that regard, it will therefore be wise as an investor to exploit the growing market for commercial real estate in California.
This article aims to examine the commercial real estate opportunities in California, especially those in the triple net lease form. For more information on the concept of triple net leasing, also known as NNN lease, please read our article on the said topic.
Meanwhile, before we break the ice on commercial real estate in California, let us briefly discuss the concept of commercial real estate.
What Is Commercial Real Estate?
Commercial Real Estate, also known as an investment property or commercial property, is a type of real estate procured to generate profit from either rental income or capital gains. These CRE properties, in this case, may be in the form of lands or building complexes. Examples of commercial real estate include warehouses, retail buildings such as shopping malls, and office buildings.
On a broader view, commercial properties can be grouped into six umbrella categories, namely retail, healthcare, office, leisure, and multifamily housing and land.
Why Invest In California Commercial Real Estate?
It is no news that California provides one of the largest real estate and housing markets in the US due to its ever-growing business climate. Hence, California real estate investments can influence high returns capable of bolstering the income portfolios of potential investors.
Many believe that the constant availability of commercial property for sale in California and the ever-present market accounts for the lucrative nature of the real estate businesses in the state. Nevertheless, other factors cause California to stand out among its peers in the world of commercial real estate.
These factors have been the driving force of the booming real estate industry, despite various backdrops such as the COVID 19 pandemic and the massive exodus of families to Colorado, Arizona, and Utah. They include, but are not limited to the following:
Economic Growth, Stability And GDP
The robust condition of California’s economy has already been widely discussed in this article, and it is worthy to note that California’s $3.018 trillion GDP is one of the largest in the world, ranking 5th worldwide just after Germany’s GDP of $4 trillion.
The state’s GDP is pumped by the metropolitan areas of San Francisco-Oakland and Los Angeles-Long Beach, thereby making the state a dominant force in the United States economy. Economic growth is generally stable, with an annual growth rate of about 3%. California thereby provides the golden headway every investor seeks alongside a long-term fiscal growth forecast.
Opportunity
The golden state is flowing with opportunity as the state accounts for 10% of the country's opportunity zones. There are over 870 opportunity zones in California only, with Los Angeles contributing about 280 of these. Opportunity zones are the perfect entryway for investors into every market, including the real estate market.
Therefore, it is little wonder that California ranks 23rd in the Opportunity Index with a score of 55, 2.6 points higher than the US national average of 52.4. The Opportunity Index is a measure of sixteen critical factors that allow for the growth of opportunities and economic stability.
With startups springing up all around the state, especially in industrial areas such as Silicon Valley, more opportunities are bound to appear. It is fair to say that California is still recognized as the land of new beginnings where massive wealth rewards hard work and perseverance.
Please view our listings to find California commercial real estate.
High Foreign Direct Investment
California is home to some of the most productive industrial areas in the US, such as Silicon Valley and the City of Industry. These locations are the abode of numerous thriving technological businesses that draw in many foreign investments to the state.
Due to this, the US Bureau of Economics has continued to rank California as No. 1 in total FDI nationwide, with figures reaching as high as $119 billion despite the influence of the COVID-19 pandemic.
Talking about California’s commercial real estate, FDI in this sector has continued to grow as most foreign countries find the state of being a haven for economic activities and investments. Hence, the commercial real estate industry generates excellent returns for foreign investors determined to have a great yield.
Population Growth And Tourism
California remains the most visited state in the United States due to numerous tourist attractions in the state. From the Yosemite National Park to Disneyland Park to Napa Valley, California provides a tourist delight any day and anytime. The presence of a favorable Mediterranean climate and beautiful beaches also add to the state's increasing luster.
These factors and many others, therefore, contribute to steady population growth. However, in recent times, the population of California has had a zero increase rate. Nevertheless, the state continues to present many commercial real estate sales, such as hotels and malls, to satisfy the high tourist traffic.
Benefits Of Investing In Commercial Real Estate In California
Investing in California's commercial real estate industry has an array of benefits that help answer the big question of "Why should I put in my money?". From high-profit returns to low-risk possibilities, here are a few benefits that make commercial real estate investing in California worthwhile.
1. High-Profit Returns
2. Less Competition
3. Meticulous Clients
4. Value Increase over Time
5. Availability of Tax Incentives
6. Low-Risk Possibilities
7. Steady Client Traffic
8. Multiple Business Possibilities
What Should Be Your Next Step?
Suppose you are passionate about real estate investing and you are looking for cheap commercial property for sale in California. In that case, you can take the next step by contacting Buy NNN Properties. We offer a range of commercial real estate options that are suitable for all forms of clients. So contact us today to make that great move to CA, don't delay!
