Why Commercial Real Estate Isn't Dead — It's Thriving | Mike Zlotnick
Key Takeaways
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Commercial real estate continues to offer opportunities for investors, despite concerns about changing consumer habits, e-commerce, and the rise of remote work. While some sectors face challenges, others, including multifamily housing, open-air shopping centres, and industrial properties, remain attractive investment opportunities.
In an episode of The Most Dwanderful Real Estate Podcast Ever, host Dwan Bent-Twyford sits down with Mike Zlotnick, a commercial real estate fund manager who connects passive investors with income-focused investment opportunities. Their conversation explores why certain commercial property types continue to perform well, how real estate syndication works, and why risk management and predictability are essential to long-term investing.
Who Is Mike Zlotnick?
Mike Zlotnick specialises in bringing commercial real estate investment opportunities to passive investors. Through his fund management business, he focuses on identifying properties that offer income potential while protecting investors against downside risks.
His investment strategies include multifamily properties, open-air shopping centres, and industrial real estate. Rather than requiring investors to manage properties themselves, his approach allows them to participate in commercial real estate through professionally managed investments.
Zlotnick describes his business philosophy as marrying money with opportunity. His team identifies potential deals, conducts due diligence, and connects investment opportunities with people who want exposure to real estate without taking on the responsibilities of day-to-day property management.
Why Commercial Real Estate Isn’t Dead
Some investors believe commercial real estate is declining because more people shop online, businesses operate remotely, and traditional office spaces face reduced demand. However, Zlotnick explains that commercial real estate encompasses several different property types, each with its own market conditions and investment considerations.
While certain sectors face significant challenges, others continue to benefit from consumer demand, limited new construction, and changing economic conditions.
The key is understanding which property types have sustainable demand rather than treating commercial real estate as a single, uniform market.
1. Multifamily Properties Continue to Meet Housing Demand
Multifamily real estate remains attractive because people will always need places to live. As populations grow and housing needs evolve, apartment buildings and other multifamily properties can provide opportunities for investors seeking rental income.
Zlotnick views multifamily housing as a relatively durable property category because its underlying purpose is tied to an essential human need.
Multifamily properties can also offer economies of scale compared with owning numerous individual rental houses. Instead of managing hundreds of separate properties, investors can gain exposure to a larger asset through a professionally managed investment structure.
2. Open-Air Shopping Centres Benefit From In-Person Experiences
Although e-commerce has transformed retail, Zlotnick argues that physical shopping spaces still serve an important purpose.
Open-air shopping centres often feature restaurants, coffee shops, boutiques, and service-oriented businesses. These establishments offer experiences that customers cannot fully replicate through online shopping.
Bent-Twyford shares her own experience investing in commercial buildings in a small town. Her properties accommodate businesses such as antique malls, coffee shops, clothing boutiques, and restaurants. She notes that these establishments continue to attract customers who enjoy shopping, dining, and spending time in physical locations.
The discussion highlights an important distinction between traditional enclosed shopping malls and open-air retail centres. Zlotnick explains that many older enclosed malls have struggled, while open-air centres focused on services and experiences can benefit from continued consumer demand.
Why Some Online Retailers Are Opening Physical Stores
The growth of e-commerce does not necessarily eliminate the need for brick-and-mortar locations.
Zlotnick uses Warby Parker as an example of an online-first retailer that expanded into physical stores. Customers shopping for eyeglasses may want to try on frames, see how they look in person, and receive a more hands-on shopping experience.
This illustrates how some businesses combine digital platforms with physical retail locations. Rather than replacing traditional stores entirely, online and offline channels can complement one another.
For commercial property investors, this creates opportunities to consider retail spaces that support experiential shopping, personal services, and businesses that benefit from face-to-face customer interactions.
3. Industrial Real Estate Supports Manufacturing and Logistics
Industrial properties represent another sector that Zlotnick finds attractive.
He points to the renewed emphasis on American manufacturing and domestic production as factors that may support demand for industrial facilities. Businesses involved in manufacturing and related operations need appropriate spaces to produce, store, and distribute goods.
Industrial real estate can therefore offer opportunities for investors who want exposure to commercial properties serving business and economic infrastructure.
As with other property types, the investment outlook depends on the specific market, property, tenant demand, and financial structure of the deal.
4. Office Buildings Require Greater Caution
While Zlotnick remains positive about several commercial real estate categories, he takes a more cautious approach to traditional office buildings.
Remote and hybrid working arrangements have changed how many businesses use office space. Some companies need less space than they previously occupied, while others may remain tied to long-term leases despite changing requirements.
These conditions can create challenges for office property owners, particularly when buildings have substantial vacancies or tenants seek to reduce their space.
Redeveloping an office building for another purpose is not always straightforward, either. Existing plumbing, electrical systems, and building layouts can make conversions complicated and expensive.
Zlotnick therefore advises investors to be particularly careful when evaluating office properties. He emphasises that different commercial real estate sectors have different risk profiles, making careful property selection essential.
Commercial Real Estate Offers Economies of Scale
Another important advantage of commercial real estate is the potential for economies of scale.
Residential investors who own hundreds or even thousands of single-family rental homes may eventually discover that managing their portfolios has become a full-time business. Each property can involve separate tenants, maintenance requests, repairs, and operational responsibilities.
Commercial properties can provide an alternative approach to scaling a real estate portfolio.
Investing in a large multifamily complex, industrial facility, or retail centre can provide exposure to a substantial asset without requiring an investor to manage numerous individual houses.
Through passive investment structures, investors may also participate without directly handling tenants, maintenance, and daily operations.
However, larger properties are not automatically less risky. Their performance still depends on factors such as occupancy, tenant quality, operating expenses, financing, and local market conditions.
Why Location Matters in Commercial Real Estate
Zlotnick emphasises that real estate is local. A property type that performs well in one market may face oversupply or weak demand in another.
Before investing, it is important to examine the local economy, population trends, demographics, existing property supply, and the needs of potential tenants.
For example, an area with strong demand for retail services but limited available space may offer different opportunities from a market that already has numerous vacant shopping centres.
The same principle applies to multifamily and industrial properties. Investors need to understand whether the local market can support the property and its intended business plan.
Rather than assuming that an entire sector is either thriving or declining, investors should evaluate each opportunity within its specific market context.
What Is Commercial Real Estate Syndication?
For investors who want to participate in commercial real estate without purchasing and managing an entire property themselves, syndication is one option.
Zlotnick explains that a real estate syndication typically involves a property, or a group of properties, acquired through a partnership involving multiple investors.
The structure generally includes two main groups: general partners and limited partners.
General Partners Manage the Investment
General partners, often called sponsors, are responsible for managing the investment and executing the property’s business plan.
Their responsibilities may include acquiring the property, overseeing operations, implementing improvements, monitoring performance, and communicating with investors.
Depending on the investment, the sponsor may contribute some of the capital required to acquire the property.
Limited Partners Provide Investment Capital
Limited partners are investors who contribute capital to the deal but generally do not handle its day-to-day management.
In return, they may receive distributions from the property’s cash flow and a share of the profits when the property is sold, depending on the terms of the offering.
Zlotnick explains that investors may also benefit from tax-related depreciation, subject to their individual circumstances and applicable tax rules.
The sponsor typically provides financial statements, operating updates, and information about the investment’s progress.
This structure allows investors to participate in commercial real estate while leaving the operational responsibilities to the management team.
How Much Money Do You Need to Invest?
During the interview, Zlotnick states that the typical minimum investment for his syndications is around $100,000.
He also explains that most of his firm’s deals are intended for accredited investors. The actual minimum investment and eligibility requirements can vary by offering.
For investors who qualify, syndication may provide access to properties that would be difficult to acquire independently. However, the minimum investment can be a significant barrier, and passive participation does not eliminate the possibility of losing money.
Understanding Accredited Investor Requirements
An accredited investor is someone who meets specific financial or professional criteria under applicable securities regulations.
During the interview, Zlotnick discusses two commonly used financial thresholds for individuals: annual income exceeding $200,000 individually or $300,000 jointly with a spouse or spousal equivalent, generally assessed over the previous two years with an expectation of maintaining that income level, or a net worth exceeding $1 million, excluding the value of the primary residence.
These criteria are relevant to certain private investment offerings, but other eligibility pathways may apply. Investors should verify the current requirements and the specific rules governing an offering before committing funds.
Zlotnick explains that private real estate investments may be structured under different exemptions, including Regulation D offerings commonly referred to as Rule 506(b) and Rule 506(c). The applicable rules affect which investors can participate and what verification or other requirements apply.
He notes that his firm generally focuses on accredited investors, although some investment funds offered by other providers may accept non-accredited investors under permitted structures.
Investors who are unsure whether they qualify can consult a qualified attorney, accountant, or appropriate verification service.
How to Choose the Right Real Estate Investment Partner
For Zlotnick, choosing the right investment partner is just as important as selecting the property itself.
He encourages investors to evaluate the sponsor or fund manager before focusing exclusively on an individual deal. A promising property can still produce disappointing results if the people managing it lack the necessary experience, judgment, or operational capabilities.
Before investing, consider the following factors:
- Experience: Review the sponsor’s background and experience managing similar properties.
- Due diligence: Understand how the team evaluates properties, tenants, financing, and potential risks.
- Transparency: Look for clear financial reporting, operating updates, and communication practices.
- Investment strategy: Make sure the business plan aligns with your goals, time horizon, and risk tolerance.
- Diversification: Consider whether spreading investments across different properties, locations, or asset classes makes sense for your circumstances.
- Risk management: Examine the potential downside, not just the projected returns.
Zlotnick also highlights the value of building relationships over time. Investors should conduct their own research, ask questions, and become comfortable with the people managing their money before committing capital.
Risk Management Should Come Before Chasing Returns
One of the strongest themes in the conversation is the importance of understanding risk.
Zlotnick explains that his investment philosophy is not built around chasing the highest possible returns. Instead, his focus is on identifying opportunities with attractive income potential while carefully evaluating the possibility of loss.
He stresses that no investment is completely risk-free. Even a property that appears financially sound can face unexpected expenses, declining demand, vacancies, or broader economic challenges.
Investors must therefore evaluate the potential rewards alongside the risks involved.
A property with attractive projected returns may not be a suitable investment if those returns depend on overly optimistic assumptions or leave little room for unexpected problems.
Zlotnick’s approach favours downside protection and careful analysis over speculative decisions driven by excitement or the promise of unusually high returns.
This does not mean losses can always be avoided. It means that understanding potential risks should be central to the investment decision.
Why Due Diligence and Experienced Mentors Matter
Both Zlotnick and Bent-Twyford emphasise the importance of learning from experienced professionals.
Bent-Twyford recalls beginning her real estate investing journey before the internet made information widely accessible. She learned through hands-on experience, practical training, and mistakes.
Her advice to newer investors is to seek out experienced mentors rather than constantly trying to reinvent established processes.
Zlotnick shares a similar perspective. He encourages investors to study the people they work with, understand their investment strategies, and learn from both successful and unsuccessful outcomes.
For passive investors, working with an experienced sponsor can provide access to professional research and property management expertise. However, investors should still understand the investment, review its documentation, and make their own informed decisions.
No sponsor can guarantee a successful outcome, and professional management does not remove the need for investor due diligence.
Investing Is a Continuous Learning Process
Zlotnick describes investing as an ongoing journey of learning.
He draws a parallel with chess, a game in which players improve by studying experienced competitors, reviewing their decisions, and learning from their mistakes.
The same principle applies to real estate. Every investment provides an opportunity to develop a better understanding of markets, property operations, financial structures, and risk.
Investors should continually evaluate their decisions, consider what went well or poorly, and use those lessons to improve their future approach.
Zlotnick also highlights an important question for investors: Are you learning to invest, or are you investing to learn?
In practice, both happen simultaneously. Investors develop their knowledge while making decisions involving real capital, and the consequences of those decisions can provide valuable lessons.
A commitment to learning helps investors make more informed choices as their experience and financial circumstances evolve.
Predictability: The Key Takeaway for Real Estate Investors
When asked to share one word of wisdom, Zlotnick chooses predictability.
For him, predictability means pursuing investments with outcomes that can be evaluated and understood, while recognising that no result is guaranteed.
The objective is to seek greater stability, assess potential risks carefully, and avoid taking unnecessary risks simply for the possibility of a larger return.
This philosophy applies across commercial real estate. Investors should examine the property’s fundamentals, understand the business plan, evaluate the management team, and consider how the investment may perform under different conditions.
Although uncertainty can never be eliminated entirely, thoughtful planning and risk management can help investors make decisions that better align with their long-term goals.
Final Thoughts: Finding the Right Commercial Real Estate Opportunities
Commercial real estate continues to offer opportunities for investors who understand the market, select the right property types, and prioritise risk management. As Mike Zlotnick explains, successful investing is not about chasing the highest possible returns but about identifying opportunities with sound fundamentals, experienced management, and greater predictability. Whether you’re interested in multifamily properties, open-air retail centres, industrial real estate, or passive investing through syndication, careful due diligence and continuous learning can help you make more informed decisions.
If you’re ready to take the next step in your real estate investing journey, Dwanderful, a real estate investing resource created by investor and podcast host Dwan Bent-Twyford, offers educational resources to help you understand the industry and explore different investment strategies.
You can start with the free Real Estate Lingo book to learn essential real estate terms or explore Five Pillars of Real Estate Investing to build a strong investing foundation. For those interested in distressed properties, LEVEL 1: Complete Foreclosure Investors’ Choice Program teaches foreclosure investing strategies, while Foreclosure Fortunes helps investors identify foreclosure opportunities and avoid common pitfalls. The Fed Up Program focuses on helping homeowners experiencing financial distress while creating opportunities for investors.
Dwanderful also offers How to Sell a House When It’s Worth Less Than the Mortgage, covering options such as short sales and subject-to strategies, and Short-Sale Pre-Foreclosure Investing, which explores opportunities involving short sales and pre-foreclosures.
Still deciding on your next investment move? Try Dwanderful’s real estate investing quiz game. It takes less than a minute and helps you explore how you could potentially generate six figures in the next six months, whether you’re buying your first property or looking to expand your portfolio.
Ultimately, building a successful real estate investing journey starts with education, informed decision-making, and understanding the risks involved. Explore the resources available at Dwanderful.com to discover your next step.
About Mike Zlotnick: Mike Zlotnick is a commercial real estate fund manager who connects passive investors with commercial property investment opportunities. Learn more at Big Mike Fund.
This article is based on a conversation between Mike Zlotnick and Dwan Bent-Twyford on The Most Dwanderful Real Estate Podcast Ever. It is for informational purposes only and does not constitute financial, investment, or legal advice. Real estate investments involve risk, including the potential loss of capital. Investors should review individual offerings and consult qualified professionals before investing.
