In 2012, there were approximately 4,000 Sears stores in the United States. A little while after hitting that peak, Sears started to experience a downturn. Now, with less than 700 stores, nationwide, the company is facing bankruptcy. What might the mean for the commercial real estate sector? The following examines the possibilities, and it provides some viable solutions for commercial real estate owners who are looking to start on a new investment venture.

Sears’ Bankruptcy Restructuring Plan Involves More Store Closures by End of Year

In their Chapter 11 bankruptcy restructuring plan, Sears is set to close another 142 stores before the end of the year. Many of these closures will happen in top two tier malls (those that generate at least $350 in revenue per square foot). There has been no word on just how many employees will lose their jobs, but the company has already downsized its workforce from over 90,000 employees to just 68,000.

While it is not uncommon for an investor to focus on only one type of real estate, the wealth that they seek is often easiest to achieve with a diverse investment portfolio. Not only does this allow for multiple streams of income, it also provides investors with better protection from fluctuations in any given market. Unfortunately, when investors do not understand the fundamental differences between the two most common real estate models - single-family residential real estate units and commercial real estate (CRE) - they risk significant financial loss.

Use the following sections to gain a better understanding of the key differences between these real estate sectors and how they can be used to determine the potential return on investment (ROI) on any given property, and discover what a seasoned real estate attorney can do to help improve the outcome of your next residential or commercial real estate transaction.

Net Operating Income (NOI) - What is it and When Does it Matter? 

Most commercial real estate investors recognize that the digital era is changing everything about business - from how retailers must advertise to the way they use space. Mitigating for this issue and maintaining a thriving portfolio can be difficult, however, as it t requires tenacity, creativity, and a willingness to think outside the “big box.” Learn more about how you can protect your CRE portfolio in the digital era, and discover how a skilled real estate attorney can assist.

The Digital Era's Impact on Commercial Real Estate

People used to spend countless hours at the mall and big-box stores. Now they go to their favorite store's website (or perhaps even a reseller) and purchase items from the comfort of their own home. Retailers like Amazon are even making it possible for consumers to order everyday items online and have them delivered, sometimes in the same day. In short, brick-and-mortar stores are seeing less foot traffic, and businesses that have failed to build a digital platform have already either gone under or are currently at serious risk of doing so in the future.

If you are looking for a way to diversify your real estate portfolio and have not yet ventured into commercial real estate, now could be the time to do so. However, there are some important differences between commercial and residential real estate transactions that one must understand before diving into the market. Gain a firm grasp on these variances with help from the following sections, and discover how the assistance of a seasoned real estate lawyer can help improve the outcome of your first (and hopefully all successive) commercial real estate transaction(s).

What is the Market Doing in Your Chosen CRE Sector? 

Commercial real estate involves many sub-sectors (housing developments, office spaces, restaurants, etc.), so investors need to understand the various nuances and fundamentals of their chosen sector. Not only does this decrease the risk of project failure, but it can also increase one's chances of yielding a high return. Savvy CRE investors can also use their market knowledge to fine-tune their investment path and diversify their real estate portfolios.

Millennials are more than just history's youngest consumers; they have shaped the very world in which we live. Their love for technology has made items that were formerly seen as conveniences - things like free wifi and USB ports - an expectation, rather than a perk in restaurants, hotels, and coffee shops. A strong desire to make less of an impact on the planet than the generations before them, millennials have also encouraged many companies to adopt more eco-friendly practices. Now, with many of them reaching a stage where they want to start a family, real estate developers who wish to achieve future growth and success are having to consider (and find solutions for) the challenges that stand in the way of home ownership for this unique demographic. A recent survey may help shed some light on the subject.

Millennials Express Concerns Over Rising Home Prices and Interest Rates 

During the Great Recession, home prices dropped dramatically. The economy has, thankfully, since recovered - so well, in fact, that house prices in many areas are nearly the same as they were before the recession. Unfortunately, the lack of income stimulus in many parts of the country, paired with the drastic rise in house prices over the past few years (currently up 6.8 percent from the previous year) has made purchasing a home seem impossible for those who are just looking to purchase a small starter home. Millennials, who are just starting out in the world and may not have the best paying jobs quite yet, seem to struggle with it even more. Experts say this could because it is not just home prices rising, but loan interest rates as well.