As an entrepreneur you’re no doubt tempted to acquire commercial premises for your business in order to stop paying rent to a third party.
Whether you’re looking to invest in offices, retail space or an industrial site, asking yourself the right questions is crucial before taking the plunge.
Is It Strategically Located?
If customers will be coming in person to your place of business, location is the biggest factor to consider. Proximity to public transport, major roads and commercial districts can further attract customers. Research future development plans for the area, crime rates (you might be surprised!) and accessibility to ensure that the site is advantageous over the long term.
This is, however, a far less important factor if you alone, with your employees, will be occupying the premises.
What Is the Current Occupancy Rate?
Find out the present and past occupancy rate to help you analyze demand. A low occupancy rate in the building comprising the commercial space in question may hint at potential problems with the property or local area. A high occupancy rate generally means the property constitutes a more secure investment and can provide a stable income stream (when it’s a store visited by customers).
What Are the Operating Costs?
Operating costs include property taxes, maintenance, insurance and management fees. Understanding these expenses is critical to evaluating the investment’s profitability. Request detailed estimates and account for possible increases in these costs over time. Sometimes, renting is the better option to avoid negatively affecting your revenues.
Are There Any Municipal Restrictions or Bylaws?
Every municipality enforces its own specific land use bylaws and regulations. Check the zoning, mandatory permits and any environmental restrictions. These factors may dictate how you’re able to use the space and impact its value.
What Are the Future Development Plans for the Area?
Future development can significantly influence your commercial property’s value. Investigate infrastructure expansion projects, new residential or commercial developments as well as community initiatives. A booming area can offer major opportunities for growth.
What Does the Local Competition Look Like?
Researching the local competition to understand the market is recommended. Too many similar properties can saturate the market and reduce your chances of getting a good price when you eventually decide to sell.
Buying commercial real estate involves detailed analysis and strategic planning. If you need guidance on finding the ideal premises for your business, contact a RE/MAX Commercial Real Estate Broker in your region.
