Southern California has long been a highly sought-after location for real estate investors. The area has been booming since the 1970s and has become a world-renowned living and vacation spot. One specific town that is highly attractive to commercial real estate (CRE) investors is Irvine, California.
Established in 1971, the area has primarily been developed by the Irvine Company. However, there are still opportunities for outside investors to obtain a CRE property in the city and reap the financial rewards.
Here are just a few advantages of owning commercial real estate in Irvine.
1. Irvine’s Established Master Plan
Established over 50 years ago, the Irvine Master Plan is a guide to strategically develop and maintain long-term growth within the city. The plan is dedicated to sustaining a balance between development and preservation.
The Irvine Master Plan calls for two strategies that were designed to safeguard the strength of the CRE market via job growth and revenue from retail centers. Specifically, the plan outlines the following:
Steady job base: Irvine’s Master Plan includes strategically located, professional office buildings. The city is now home to more than 17,000 businesses (one-third of all Fortune 500 companies) and has more jobs per resident than any city in America.
High employment: Irvine-based companies employ more than 250,000 people who participate in revenue-generating activities, which fund the city’s local services, including public safety, park maintenance and more.
Fiscal security: Irvine ranks No.1 for fiscal health in the U.S.
Convenient location to local and regional retail centers: Irvine’s retail centers bring in more than $60 million in annual revenue, keeping its economy healthy.
Irvine’s strong population and business growth make the city an excellent location for CRE investors. Not only has it seen development over the years, but the city has also identified a long-term goal to continue its growth.
2. Safety and Wealth
Year after year, Irvine is ranked one of the safest cities in the United States. With a relatively low crime rate and a population of 227,453, the FBI has identified Irvine as one of the safest large cities for thirteen continuous years. Additionally, Irvine is considered a wealthy city in Orange County with a median household income of $93,823.
Owning real estate in a safe and wealthy community can create security for the future of an investment. Irvine has strict regulations on building codes and appearances of structures — this provides certainty that an investor’s building will continue to be improved (specifically beneficial when the tenant has a NNN lease).
Investing in a safe neighborhood such as Irvine also reduces the risk of vandalism. This consideration related to building maintenance ultimately saves money for any investor.
3. A Growing Housing Market
There is a strong correlation between the U.S. economy, the CRE market and the housing market in a specific city. Over the last year, Irvine has seen growth in the housing market — sale prices have increased 6 percent compared to the previous year, and the price per square foot has increased by 2.6 percent. These statistics indicate a growing local economy.
4. Foreign Investor Presence
Many factors are attracting foreign investors (FIs) to the Irvine market. For example, Irvine has a limited supply of new property relative to other investment markets, and the population and household income are booming.
The presence of foreign investors in any market can benefit local investors: FIs promote strong long-term lending, provide a competitive advantage to businesses, reduce the effects of politics, and generally lower the risk in an identified market. They also promote best practices, creating a stronger future for the market identified — such as Irvine, CA.
5. Location, Location, Location – The Exit Strategy
The fact that Irvine is located in Orange County is not a fact to be overlooked — Orange County is one of the most thriving CRE markets in the United States.
Purchasing a property in Irvine provides an exit plan investors, which is a smart aspect to consider in any purchase. Due to the high demand for properties in the market, the availability to potential buyers is limitless — there are essentially always buyers looking to acquire new assets in this market. If something were to alter your investment plan and require you to sell, your chance of selling at a competitive price is highly likely.
6. Hedge Against Inflation
Back to the basics — appreciation and inflation. The annual average inflation rate across the United States is around 3 percent, depending on the area in which you reside (or invest).
Purchasing CRE in Irvine allows investors to hedge against inflation — that is, investors can anticipate that the value of their CRE assets will appreciate in line with inflation. The bonus: CRE assets from a tax perspective depreciate. Therefore, owning in Irvine allows investors to build equity at an expedited rate.
Owning CRE in Irvine can provide a stable and secure asset to an investor’s portfolio. The challenge: finding the right property for you specifically — one that will match your investment goals.
To learn more about opportunities to invest in the Irvine CRE market, whether it is an office, retail, industrial or multifamily property, contact WindWater today.
Check out our commercial Irvine Spectrum properties.