A 1031 exchange is one of the most valuable tools available to commercial real estate investors. By allowing investors to defer capital gains taxes when selling an investment property and reinvesting into another qualifying property, a 1031 exchange helps keep more capital working in real estate rather than being paid immediately to the IRS.
As Thanksgiving arrives, I am reminded of the remarkable spirit that defines Alabama – a spirit rooted in faith, family, hard work, and genuine care for one another. Across our towns and cities, Alabamians in our neighborhoods and workplaces show every day what it means to serve with generosity and care with sincerity.
Owner-occupied commercial real estate loans differ from investment property loans primarily in how the space is used and how lenders assess risk. When a business occupies more than 50% of the building, it typically qualifies as “owner-occupied,” which allows access to more favorable loan terms, including lower interest rates, higher loan-to-value ratios, and potentially SBA financing options. Because the property’s performance is tied to the operating business rather than external tenants, lenders often view owner-occupied properties as less risky. In contrast, investment commercial loans (the owner occupies less than 50%) depend on tenant income and lease stability, which generally results in stricter underwriting and higher equity requirements.
A modified gross lease is a commercial lease in which the tenant (Lessee) pays base rent plus a share of certain operating expenses, such as utilities or maintenance. It blends features of a gross lease—a lease in which the landlord (Lessor) covers expenses with a tenant's all-inclusive, flat rate rental payment—and a net lease, a type of lease in which the tenant (Lessee) pays them all. A modified gross structure offers flexibility and allows costs to be shared between landlord (Lessor) and tenant (Lessee).
Understanding a Triple Net Lease (NNN): What Every Property Owner and Tenant Should Know
Nicole Jones Wadsworth, PhD, MBA, MS
By: Nicole Jones Wadsworth, PhD, MBA, MS
Dr. Nicole Jones Wadsworth is a trailblazing economic developer and conservative business leader who has dedicated over two decades to strengthening Alabama’s communities. With four academic degrees and two certifications focused on contracts, economic development, and policy, she brings unmatched expertise to commercial real estate and economic
In commercial real estate, a 1031 Exchange—named after Section 1031 of the Internal Revenue Code—allows investors to defer paying capital gains taxes when they sell a property, as long as they reinvest the proceeds into a similar, or “like-kind,” property. This tool is especially valuable for investors seeking to grow their portfolio or reallocate assets without triggering an immediate tax liability. The like-kind requirement is broad, meaning an office building, warehouse, retail space, or even undeveloped land can typically be exchanged for another type of commercial property, as long as both are held for investment or productive use in a trade or business.
An interview with Dr. Nicole Wadsworth
Commercial real estate site selection for the medical field requires a strategic balance of data, accessibility, and community need. Healthcare providers must consider proximity to hospitals, patient demographics, traffic patterns, insurance coverage rates, and growth projections when choosing a location. Regulatory factors, zoning, parking availability, and future expansion potential also play a significant role in long-term viability. A successful site meets current operational demands and also positions the practice for sustainable growth and ease of access for patients.
Commercial real estate (CRE) is a powerful investment vehicle that offers both income-generating potential and long-term asset appreciation. Unlike residential properties, commercial assets—such as office buildings, retail centers, medical facilities, or warehouses—often come with longer lease terms and higher rental yields, which provides investors with steady cash flow. Additionally, these properties can serve as a hedge against inflation, as rental rates typically rise with the cost of living. Strategic location, tenant quality, and property management all play key roles in maximizing returns. While the entry costs and risks can be higher, commercial real estate remains a cornerstone of diversified investment portfolios for those seeking stability, equity growth, and tax advantages.
