Mortgage rates are soaring. Commercial interest rates are skyrocketing. A divided Congress means less decisive action from Washington. And fears of recession still run high as the Federal Reserve seeks to curb inflation.

This nerve-rattling uncertainty results in a complex commercial real estate market that’s ripe for savvy investors. Their battle-tested expertise — analyzing key performance indicators, pricing trends and inflation’s impact — is a powerful differentiator for shaping a robust portfolio.

Consider the value of multi-residence rental properties. With mortgage rates at a 16-year high, home ownership is unattainable for many. That means the market for multi-residence rental properties will remain strong. Elsewhere, affordable-housing remains in huge demand. New York, New Jersey, Pennsylvania and Connecticut have 31 to 40 available and affordable rental units for every 100 extremely low-income renter households, according to the National Low Income Housing Coalition.

Rajeev isolated headshot
Rajeev Chennattu

Commercial properties remain a buying opportunity because prices are down 13% this year, according to the Green Street Commercial Property Price Index®. The market had been increasing into 2022 due to the bounce-back from Covid and returns to office work that injected vitality and momentum. However, drags on the economy, such as inflation, caught up and skewed pricing. Still, longer-term investors are likely to benefit even as hybrid work models take deeper root. Watch for Class B or lower office buildings to be repurposed for residential or other appropriate uses.

Elsewhere in the commercial sector, retail is expected continue to thrive as long as the strength in wage growth, the job market and productivity persist. Demand for industrial space remains strong, fueled by growth in online shopping and the need for distribution centers. J.P. Morgan’s 2022 midyear commercial real estate outlook report predicted that industrial properties may transform into multi-use facilities, with offices and showrooms, plus amenities such as gymnasiums.

Suburban offices are “a more reliable target” than other areas, Green Street says. New York City northern suburbs such as Westchester County always represent sterling opportunities due to proximity to the city, quality of life and demographics. These areas also will experience little or no rent decreases due to enduring value and opportunity.

No matter the location, a diverse real estate portfolio is key, especially in a market fraught with challenges. A struggling market is an opportune time to strengthen that diversity, especially for cash-laden investors ready to buy at discount prices. Time will prove an investment’s value when the market recovers, as it always does.

So, commercial real estate investors, leverage that savvy. Take action. Capitalize on opportunities that will pay off.

Rajeev Chennattu, founder and owner of Regency Commercial Real Estate in Scarsdale, N.Y., has been a leading real estate investment adviser and broker for 35 years. He’s a multi-dimensional entrepreneur and deal maker who has successfully surfed all economic climates. Visit regencyrealtyonline.com or contact Chennattu at rchennattu@gmail.com.

King Street, Port Chester

Rajeev Chennattu, founder of Regency Commercial Real Estate at 455 Central Park Ave. in Scarsdale, has amassed a lot of experience during his more than 30 years in the business. He came to the U.S. from India as a teenager, graduated from Iona, went to work for IBM and ultimately set off on his own in the world of commercial real estate, including brokering properties and arranging investments.

Recently, through his Regency Port Chester JV LLC, he took over a project to build a 12-story 185-unit apartment building at 208-216 King St. in Port Chester. The project originally had been presented to Port Chester as a development by High Street Residential, the residential subsidiary of Trammell Crow Company with its application filed by TC NE Metro Development Inc./Trammell Crow Company.

“We do have a number of development parcels that we own and one of the parcels that we own was King Street for a number of years,” Chennattu told the Business Journals. “Trammel Crow came in and expressed an interest in doing a venture with us in developing that parcel. This happened back in 2020. So, we entered into a contract and they were contract vendee with us subject to them getting a site plan approval, which they pursued with the village of Port Chester.”

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King Street Rendering

PORT CHESTER, N.Y. — Locally based developer Regency Commercial has received site plan approval from the Village of Port Chester, located about 30 miles north of Manhattan, for a 185-unit multifamily project. The site spans 221,000 square feet at 208-216 King St. The 12-story building will house studio, one-, two- and three-bedroom units, and amenities will include a rooftop pool, resident lounge, coworking spaces, fitness center and a dog park. About 10 percent of the apartments will be earmarked as affordable housing. Regency is now seeking a partner to either take over or co-develop the property.

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King Street Rendering Daytime

Local officials have approved proposals to construct a 185-unit rental building at 208-216 King Street in Port Chester, a village in Westchester County. Developed by Regency Port Chester JJV LLC, the property is the latest project set to break ground within the Port Chester Opportunity Zone, an area of the village where developers have access to special incentives meant to offset building and investment costs. The council handling the project includes Anthony B. Gioffre III of Cuddy & Feder LLP, and Bonnie VonOhlsen, AICP RLA, of Kimley-Horn Engineering and Landscape Architecture.

Proposals for the project were first reviewed in April 2021 and were approved at a meeting with the Port Chester Planning Commission this month.

Designed by architect Minno & Wasko Architects and Planners, the building will offer a mix of floor plans ranging from studios up to three-bedroom layouts. A total of 19 units will be offered below market-rate as affordable housing units. The most premium units will offer private outdoor space.

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