The great thing about real estate is that there are so many ways to successfully invest. Thus far, Selenid and I have invested in real estate actively. But there are passive options. And within active and passive real estate investing are a ton of types of properties you can base your investments on. In this post we are going to evaluate investing in retail real estate, specifically within master-planned communities.
Investing in retail development within master-planned communities is an excellent opportunity typically offering stable, predictable returns. These communities offer several key advantages that make them ideal for commercial investments.
To help elucidate this particular niche of retail real estate investing, I’ve asked Mounang Desai MD, MBA and founder of Malabar Hill Capital to give us some insight!
5 advantages of retail real estate investing via master-planned communities
1. Consistent demand
Master-planned communities are designed with a built-in population. This ensures a steady flow of customers to retail businesses like fitness centers, medical offices, and fast-casual restaurants.
This demand is not speculative but based on the needs of existing residents. This leads to reliable revenue streams for businesses and, by extension, stable returns for investors.
2. Controlled environment & predictable returns
The structured design guidelines of master-planned communities ensure cohesive architecture, enhancing appeal for residents and businesses alike.
This structure leads to faster and more predictable construction timelines, allowing developers to stay on schedule and providing investors with more certainty about when returns can be expected.
3. Predictable development costs
One of the biggest advantages is the efficient use of existing infrastructure.
Roads, utilities, and drainage systems are already in place, reducing both upfront costs and the risk of development delays.
Fewer unexpected expenses and a smoother development process translate into higher profitability and predictability for investors.
4. Exclusive Land Opportunities
Land in these communities is often limited, making it highly desirable.
Through strong relationships, developers like Malabar Hill Capital secure prime locations off-market. These exclusive, legacy sites—often located at signalized intersections—ensure long-term value and stability, making them difficult to replicate elsewhere.
5. Reliable Tenants and Leases
Retail centers in master-planned communities typically attract reliable, long-term tenants, such as national franchises, which often sign leases for 10+ years.
This arrangement allows for steady, predictable income for the landlord. Moreover, with Triple Net (NNN) leases, tenants cover expenses like taxes, insurance, and maintenance, reducing the landlord’s costs and boosting profitability.
Real world example of retail real estate investing
Malabar Hill Capital’s recent off-market acquisition of a 4.5-acre site from Toll Brothers for the development of 37,000 sqft of retail in the Sienna master-planned community exemplifies the strengths highlighted above.
The acquisition includes exclusive shopping center rights for the area, a prime location at a signalized intersection in a retail-limited region. With Toll Brothers actively delivering an additional 3,000 homes to the immediate area, the development will serve as a key amenity for thousands of nearby families, ensuring robust demand.
Malabar Hill’s prior experience developing a similar retail center in the north part of Sienna underscores their familiarity with the community’s design standards.
And their solid understanding of the tenant landscape has allowed us to secure real leasing data to underwrite this project with confidence.
Additionally, with a gas station under development nearby, the high traffic of this intersection promises reliable traffic for tenants, while the exclusive nature of this deal ensures that our retail center becomes the go-to destination for premium amenities in the area.
Retail developments in master-planned communities like Sienna offer a stable, efficient, and exclusive investment opportunity. With consistent demand, a controlled environment, predictable costs, and reliable tenants, these projects provide long-term value for investors seeking predictable returns.
Developing a unique niche in real estate investing
Like I discussed above, there are many niches within real estate investing. And many can be successful in their own right. Retail real estate investing in master-planned communities can certainly be one of these niches.
So how does someone develop this particular strategy for investing?
Let’s again use Malabar Hills as an example since retail real estate investing is exclusively what they do.
Their strategy centers on acquiring prime, off-market land parcels in thriving master-planned communities, giving us a competitive advantage. They develop institutional-grade buildings that attract major national retailers and tenants with strong, proven track records, ensuring the long-term sustainability and value of our projects.
One key aspect of their approach is a conservative underwriting process. And you can take a look at how I underwrite and analyze properties in depth here.
Anyway, Malabar Hill Capital does this as they base their financial assessments on current leasing rates rather than relying on speculative future projections. Additionally, they incorporate built-in financial contingencies to protect and strengthen the investment. This further mitigates risk and enhances the potential for reliable returns.
How can you develop your niche in real estate investing
This is always my advice for those looking to get started with or optimize their real estate investing journey:
- Educate yourself about the different options
- Create specific goals for what you are looking to achieve with real estate investing
- Decide which niche best aligns with your goals and investing demeanor
- Take action
- Stick with it
And the last two parts are really important. I know way too many potential real estate investors that get stuck in analysis paralysis exploring all of the options. They get stuck in education. And they never take action. If this is you, you need to read this post on how to beat analysis paralysis.
And then about the last step…once you have your niche, dive into it. And stick with it. The most successful real estate investors I know do this. They might invest a bit in real estate opportunities outside of their niche. But their core investments stick to their circle of competence and niche.
And hopefully this gave you a nice introduction to the niche of retail real estate investing as you start or continue your path to financial freedom using real estate.
This post focused more on the real estate asset itself. If you want to know more about investing in a real estate syndication, you can learn about that here. And for more information about the investment measurements involved in investments like this, check out this post.
Here are some additional resources for physician real estate investors:
- The Real Estate Flywheel Effect for Successful Physician Investors
- Real Estate Investing: Why the Tortoise Beats the Hare
- Figuring Out If You Are a Better Active or Passive Real Estate Investor
- A Real Estate Investing Guide for Physicians
What do you think? Have you considered retail real estate investing in your investing plan? How else do you invest in real estate? If you don’t yet, what has held you back? Let me know in the comments below!
