There are many types of commercial property available. Research on the stock market can reportedly help identify the most profitable commercial property sectors.
There are several large companies who invest in commercial property whose shares are listed on the stock market. Following share prices can identify the better-performing property companies and this can provide valuable information about the profitability of distinct types of commercial property.
An example is the FTSE 100 company Segro that specialises in building and owning large distribution centres in Europe and the UK that are rented to online retailers. At the start of 2018 the company signed leases worth an extra £27.3 million in rent, compared to the same period in 2017 when new leases were worth an extra £16.3 million.
Segro stocks have risen 13% to 556p per share. This reflects confidence that the asset values of their properties will keep rising.
Though companies that own online retail warehouses are doing well, those that own retail premises in shopping malls or high streets are having difficulties. Many landlords are being asked to freeze or reduce rents by struggling retailers. Retail landlord company Hammerson has seen its share price fall by 35%.
By looking at how Segro, Hammerson, and other property-owning companies are performing, investors can gain knowledge about what type of commercial property is more profitable. This is just one piece of information that an investor can use to inform purchasing decisions prior to applying for a commercial mortgage.