Boomer shockwaves: commercial real estate gaining popularity among investors.

• Author: Springer, Alex

As the baby boom generation ages into retirement, boomers are making massive changes to the American healthcare system, workforce and culture. They are buying up commercial property throughout the country at a heightened rate.

Why? Several converging trends have turned commercial real estate into an attractive asset class for investors. First, the Great Recession decimated boomer's retirement accounts. Second, Utah's economy is trending upward, outpacing nearly every other state in the nation.

And third, the state's real estate market is heating up along with the economy, providing a safe and predictable cash flow for those seeking to recapture losses.

SCRAMBLED NEST EGGS

In the post-recession world, baby boomers are fearful about their ability to retire with enough savings, according to a report from the U.S. Congress Joint Economic Committee. That committee found that 39 percent of those aged 55 to 64 are pessimistic about their retirement security. And it's no wonder why: People in that age bracket lost 33 percent of their household net worth from 2007 to 2010.

For those looking to rebuild their retirement accounts, real estate investments are an attractive alternative.

"A lot of these baby boomers have had to reach out on the risk spectrum to achieve returns they experienced prior to 2008. They are no longer investing in bonds because the bond market cycle is now going in the opposite direction as well as the inevitable interest rate risk associated with them. Equities, Mutual Funds and ETFs were another area where they have been investing in Blue Chip stocks--chasing yields and expecting reasonable dividend," says Adam Gatto, senior vice president of investments for CBC Advisors.

As an alternative to those more traditional investment options, baby boomers are turning to commercial real estate as a viable asset class--particularly in Utah, which has a strong market and a thriving economy. In fact, the investment climate in Utah is even attracting baby boomers from out of state. "Baby boomers in California and around the country are seeing increased valuations for investments in primary markets. These are increasing to the point that the fundamentals don't make much investment sense," says Gatto. "There's been a quiet, yet significant, shift toward these secondary and tertiary markets, to identify those income producing properties that have less competitive bidding and attractive investment returns on capital."

A WELL-OILED ECONOMY

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