The Rise of Alternative Commercial Real Estate

December 28, 2023
 min read

In recent years, the landscape of investment opportunities has witnessed a significant shift, with alternative commercial real estate emerging as a lucrative avenue for investors. Traditional real estate sectors, such as office spaces and retail, have faced challenges, paving the way for alternative assets like Self Storage Facilities and Mobile Home Parks to take center stage.

The Allure of Self-Storage Facilities

Self Storage Facilities have proven to be resilient and profitable, particularly in times of economic uncertainty. According to the National Self Storage Association, the self-storage industry's revenue in the United States amounted to over $40 billion in 2022.

This sector's appeal lies in its low overhead costs, steady demand, and ability to weather economic downturns. People require storage during various life events, such as moving, downsizing, or even during economic recessions, ensuring a consistent demand.

Investors find solace in the stability of self-storage investments. The Self Storage Association reports that during the 2008 recession, self-storage REITs (Real Estate Investment Trusts) posted a negative return of just 3.86%, compared to a negative return of 37.8% by the S&P 500. This resilience is a testament to the robustness of this asset class.

Mobile Home Parks: A Stable Investment Avenue

Similarly, Mobile Home Parks have emerged as a stable and promising investment. With over 20 million Americans living in mobile homes, according to data from the Manufactured Housing Institute, the demand for affordable housing solutions is evident. Mobile Home Parks offer investors the opportunity to tap into a market that caters to a demographic seeking cost-effective living solutions.

The attractiveness of Mobile Home Parks is further underscored by their lower per-unit cost compared to traditional real estate, allowing for a broader investor base. Moreover, the limited supply of new parks due to stringent zoning laws, creates a favorable supply-demand dynamic for existing properties.

Patriot Holdings: Capitalizing on Alternative Real Estate

Patriot Holdings has astutely recognized the potential of these alternative commercial real estate sectors. By focusing on the acquisition and development of Self Storage Facilities and Mobile Home Parks, Patriot has strategically positioned itself to leverage the steady returns and resilience these assets offer.

With a track record of $350 million of Assets Under Management, Patriot Holdings has demonstrated a keen understanding of the market dynamics. The firm's approach involves improving, developing, leasing, and expanding the assets, ensuring they meet the evolving needs of clients while providing investors with sustainable returns.

Conclusion: A Prudent Shift Towards Alternative Assets

In conclusion, the rise of alternative commercial real estate, particularly Self Storage Facilities and Mobile Home Parks, presents a compelling case for investment diversification. For investors seeking stable returns, lower volatility, and assets that can weather economic shifts, these sectors offer promising opportunities.

Patriot Holdings' strategic focus on these asset classes is a testament to their potential and an invitation for investors to explore these untapped markets. By aligning investments with changing demographics and economic realities, investors can position themselves for sustained success in the evolving landscape of commercial real estate.

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