Commercial real estate rates in cities around the world have risen since the dawn of the pandemic, but it’s a less pleasing situation for the U.K. and many U.S central business districts according to recent findings.
Demand for logistics and industrial-related properties helped push commercial real-estate rates 7.3% across major world cities, especially in Los Angeles and Melbourne, in the third quarter from a year ago.
But in key business districts in Chicago and in the City of London, San Francisco, and New York City, it continues to be a struggle almost two years into the pandemic, especially when comparing property prices with their broader metro areas. Charts now indicate that in seven of 17 areas evaluated by Real Capital Analytics, pricing levels in central business districts are lower than before the pandemic.
Even so, in five regions where prices hit higher, they still hampered gains in larger metropolitan areas, in part due to continuing remote work in suburbs and higher concentrations of office and retail properties in big-city centres.
But things aren’t exactly as rosy for Germany, where instead of a central point, its core office investment markets are themselves decentralized, stretched out across top-tier cities.
The changing fortunes of commercial real estate come despite a rebound of U.S stocks and mounting corporate profits, but also as financial circumstances continue to be easy for borrowing through global rates.
Las Vegas Area Attracting Increased Investor Interest
Last year’s proposed auction of the popular Bellagio Resort in Las Vegas to BREIT (Blackstone Real Estate Income Trust) is categorized by many as a potential forerunner of even more high-stake deals in gaming real estate space, and confirmation of the mounting institutionalization of this REIT segment.
Industry observers and realtors believe there’s more room for growth in the gaming real estate segment, especially considering that leading REITs own only about 35% of commercial gaming assets in the U.S. According to equity research analysts, the gaming real estate assets constitute “essentially proper real estate that’s available at very, very good prices in relation to other segments.”
Land-based Casinos Still Account for the Largest Share of the Industry
Although online gaming has reached otherworldly heights in the past year and will continue to do so in the near future, land-based casinos still account for the largest share of the industry, and realtors estimate that this will not change soon.
To be frank, despite the convenience that online gaming provides, most players still prefer the charm of a physical casino. According to TheGameDayCasino, users ages 45+, who are more comfortable with the traditional setup or prefer mixing playing casino games online with visiting physical casinos.
Also, after the industry halted in 2020 as a result of pandemic safety drawbacks, we’re about to witness a resurgence of physical casinos as soon as things unwind and people feel safe being in crowded spaces again.
Overall, U. S’s commercial casino-related estate is a veritable giant, and that should be something of interest to every realtor on the lookout for opportunities in 2022.
Investment as Always is a Bit of Gamble
Casinos are not just about gambling. They stretch on thousands of square feet and come with all sorts of bells and whistles. Even so, the gaming spaces are but a very small part of the entire bargain, as restaurants, bars, and other entertainment venues criss-cross what most commonly is a resort.
Multi-use hotels emerge facing the ocean and revealing breath-taking vistas, and this is absolutely hard to compete against.
Recent findings on the effect of casinos on commercial real estate markets and property value have generated mixed results. It’s estimated that the value of commercial spaces next to a casino is usually cheaper – or should be in theory. It’s also expected a 2% and 10% drop in the net value of the property.
But that’s not necessarily true, as there are too many moving pieces to consider as well. Expert realtors consider things to be much grimmer than they look. As they put it, casinos are an attractive nuisance, nuisances on home values but to pinpoint the exact impact of a casino project, you will need to study the exact real estate market you are in.
Which Physical Casino Locations are the Most Lucrative?
Land-based casinos are profitable in general, but not all properties are the same. There are a plethora of factors that can make a huge difference in terms of profits, so before adding a commercial property to your portfolio, consider the following:
- Casino location. As a general rule, casinos located in central areas attract the most traffic from tourists, while those in the suburbs are more popular among locals.
- Is it located in a hotel complex? These properties are the most profitable as they attract tourists.
- Are there any other businesses near the casino? In general, casinos that have bars, restaurants, nightclubs, and malls next to them tend to have otherworldly returns.
When looking to buy a property for investment and considering the impacts casinos could have on the real estate market, try to overlook the emotional decisions. Especially in the casino segment, there are in-depth forecasts and statistical data allowing you to make the smart move.
A significant part of the U.S is going to face problems in the next few years, but the Las Vegas real estate market seems to remain as vibrant as ever. Las Vegas realtors believe the opportunity for growth is so significant that there is no need for dramatic changes just yet. Over time, as the sector develops, it makes sense to see some consolidation in the gaming space.