There may be a number of different reasons why you are considering investing in commercial real estate. Perhaps you are looking to diversify your investment portfolio, and you’ve been told commercial real estate is one of the best ways to do this. Or you are looking to move your business to a new residence.
If you’ve never looked into it before, you may be surprised by the complexities that can arise when investing in commercial properties. To help you wrap your head around it, below is a crash course in all the basics you need to know about commercial real estate.
What exactly is commercial real estate?
Let’s start with the basics. Commercial real estate is any type of non-residential property that is used for commercial profit making purposes. So this means that stores, office buildings, industrial parks, gas stations and warehouses all fall under the umbrella of commercial real estate.
Usually, commercial real estate is sold on an individual building basis, meaning you would buy one office block, or one gas station, but bigger investments in larger developments are also possible.
The large variety of properties means that a commercial property is the perfect option for people looking to diversify their investment portfolio.
What do I need to consider when looking at a potential commercial property investment?
If you have found some commercial real estate you may be interested in investing in, there are several factors you need to consider to decide if it is a good idea.
First, you need to consider where the property is located. Is it close to the consumers who will end up using it? How close it is to rival properties that serve the same purpose? Is it located close to transport links? And so on.
Further considerations you need to make include the overall cost of the property, taking into account the base rent, lease rates and utilities. You also need to consider practicalities like the visibility of the property, the demographics of the neighbourhood and available parking.
Research Commercial Real Estate Investments
As with any investment you can make, it is important that you thoroughly research before making any long term commitments. This means that you have to make sure you have a full professional survey carried out.
If you are investing in a commercial property to move your business there, you need to make sure the property offers you some flexibility and can be adapted to match your business as it grows.
You also need to make sure you have researched the market as thoroughly as you possibly can. You need to make sure any potential investment doesn’t just work for you right now, but that it looks set to work for you in the long term. Being aware of the future predictions for the market in the area you’re interested in, as well as any upcoming plans for changes in infrastructure, is vital in being able to make an informed, intelligent decision.