How the Industrial Market is Changing
Real estate markets change over time as industries change according to neighborhood growth and decline. Industrial real estate markets are no different, especially the local ones to New Jersey. An industrial real estate appraiser has always been an important resource to protect investments, and has become essential to the modern real estate markets with values and prices which continue to increase.
The biggest change in real estate appraisals as an industry is the importance of not only knowing the value of real estate, but understanding how the value relates to nearby properties. It's also important to understand how values have increased based on the potential use of the property. New Jersey commercial land was traditionally used for manufacturing and the extent to which production factories need warehouse space. In modern markets, much of the warehouse space is still in use, but the factories aren't producing as much. Instead, distribution has become an industry focus.
It goes without saying real estate investments are going to b e profitable in the long run, but it may not be as profitable as other investment potentials have to offer. Considering distribution as an industry, mechanized or overseas factories have made it more profitable to purchase items to sell rather than manufacture them. Big box stores such as Walmart, wholesalers available to the public such as Costco, and online sellers like Amazon have proven most people purchase based on price rather than quality, assuming the item is reasonably well made.
Amazon, as an example, has eleven distribution centers in New Jersey. Because they don't have direct production costs and for a large part use mechanization and unskilled labor, they can afford higher property values which in turn raises pricing for other industries. Over the last decade, commercial properties have gone from $80 per square foot to $140 on average. These changes are something an experienced appraiser understands and incorporates into their evaluation of a property.
Industrial valuation is a great way to make an informed prediction about what's to come. If property values have been steadily rising in tandem with other neighborhoods around New Jersey, it's likely going to continue to increase steadily. Areas where values have gone up more than expected in recent years may be booming hot spots which are going to continue to increase in value, or they may be experiencing the fruit of recent improvements which are now finished, meaning the values are going to become stagnant.
Because of how industrial real estate can change in value over time, an experienced New Jersey appraiser is essential toward choosing a property which will provide a good return on the investment whether through rent income over the year, resell value over time, and the the value of the businesses located in the building or on the property. Not all real estate appraisers are equal. Any licensed appraiser is going to be qualified to understand the nature of an investment, but an appraiser with an MAI designation is someone who has proven their worth through a deeper understanding of the market. They'll be familiar with individual neighborhoods and be able to predict which investments are going to be most profitable in the long term. Although the buyer or investors have to make the final decision, it's a decision which can be very costly if a mistake is made. It's well worth the time and expense of hiring an expert appraiser for advice before spending money on a property which may not provide as much return as expected.
New Jersey Realty Advisory Group, LLC has been valuing industrial properties of all sizes and types for over 30 years. We follow the local markets for changes and are able to provide reliable valuations to our clients. Call us today to see if we can be of assistance on your next project.