Investing in commercial real estate: How to select the right location

By
Services for Real Estate Pros with Representative

In spite of the fact that the economy has experienced ups and downs over time, commercial real estate remains pretty much stable, with an increase slightly above the inflation rate. Domestic, as well as international investors, are looking into commercial property investing as a way to generate positive returns, which are more attractive as opposed to traditional investments in stocks and bonds. When selecting a new commercial space, it’s paramount to consider the location. Why? Because it impacts everything from the number of available customers to the dependable supply chain. Location translates into profitability for the investment.

There are several considerations regarding the location that must be taken into consideration when evaluating a potential real estate investment. Examples include but aren’t limited to accessibility, size, room for expansion, and so forth. If you want to enhance your decision-making process, entertain doubt and resort to rigorous debate and argument. Choosing the right commercial real estate location can be an arduous task. If you’re planning to embark on a new venture, it’s worth implementing the following suggestions for making smart location choices.

Draw up a budget and establish priorities

Budgeting is of the essence when making financial decisions because it creates accountability and measurability. When acquiring commercial property, you incur additional costs besides the actual sale price. For instance, if you borrow money from a bank, it will be necessary to have an appraisal completed. Buyers are the ones who pay for the commercial appraisal. If there’s no property survey, one must be created immediately. It will confirm the property’s boundary lines and legal description. It would be wise to seek advice from a real estate agent.

Some businesses need to be based in downtown areas, which play an important role in economic and social development. Generally speaking, downtowns contain more commercial space and a greater diversity of activity. For example, casinos are located near the city center, within a convenient walking distance. Those interested in playing new themed slots with excellent bonus features can easily find an entertainment center. Other examples of businesses that attract people back to the heart of the city are coffee shops, restaurants, and computer stores. Just so you know, you can find a good commercial real estate location farther away from the city center.

Understand the ins and outs of commercial leasing 

Don’t rush to sign the property lease until you have a basic understanding of how it works. A commercial lease typically lasts from three to five years, which creates a long-standing relationship between the landlord and the tenant. Even if it’s longer in duration, the commercial lease ensures a high degree of flexibility as far as negotiation conditions are concerned. On the flip side, it’s less regulated and doesn’t offer much protection. There aren’t caps on security deposits and there’s no guarantee your privacy will be protected. Thoroughly examine every contract that’s offered to you.

Most importantly, you can’t invoke excuses for not paying the lease. If you’re a thriving restaurant that finds its doors closed for some reason the rent still must be paid. If the contract clearly states that the payment of rent isn’t excused, regardless of the circumstances, you have to respect the conditions imposed.

Let’s take a look at a special situation. Imagine this: You rent space within a building where other businesses operate. Perhaps you’re planning to operate a casino venue and offer slot games running on the latest technology. There are no enterprises on the premises offering the same services, so it’s a good idea to lease this kind of location. Nonetheless, you may want to negotiate with the landlord to include a non-compete clause. They will agree not to lease space to another tenant with the same offers. Many shopping centers were forced to pay damages for violating the tenant’s non-compete clause.

Determine if there’s any competition  

It goes without saying that competition is everywhere, so you’re bound to see a crowded playing field. Demand has considerably increased and prices have reached historic levels. By getting a good understanding of what the competition is doing, you can establish an advantage. This gives you a chance to increase success. In the hospitality, leisure, and gaming industry, competition is fierce. There’s an upward trend in slot game searches, so people still visit traditional casinos. It wouldn’t be a good idea to have competitors near your physical location. 

Location drives competitive advantage, so it shouldn’t come as a surprise that many entrepreneurs strive to dominate a geographic concentration. If there’s too much competition in the area, you’ll have to do go the extra mile to stand out. When trying to find suitable real estate, approach the location decision wisely. You don’t want it to impact your future. Keep in mind that some mistakes are too costly or difficult to fix. Perhaps you can identify another suitable location. If you’re adequately mobilized from the start, the selection process will be effective and efficient.

Find a reputed real estate agent who can provide sound advice

It’s recommended to hire a commercial real estate broker to assist you with the purchase. Rather than determining the soundness of the location on your own, you should seek professional advice. You can alleviate momentary stress, clarify the situation, and find constructive solutions. An experienced broker can help you identify what to look for and, most importantly, avoid making rookie mistakes. Those in the commercial real estate business know each other because they develop professional relationships. So, you have access to a better deal.

You can completely rely on the real estate agent to help you with the documentation and ensure everything is legal. You’ll want to avoid issues such as zoning and land use, title defects, and so on. If the realtor lacks competence in the areas that you require assistance, they will be able to recommend a specialist. Regardless of what type of commercial real estate transaction you’re looking forward to completing, a professional makes all the difference. Speak to an expert about any questions you might have.

Comments (3)

Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Apr 21, 2021 03:34 AM
Bill Salvatore - YVP Blog
Arizona Elite Properties - Chandler, AZ
Realtor - Valley of the Sun / golfArizona@cox.net

Cynthia,

To be honest it scares me.  With everything going online/virtual.  The fet of brick and motars going away.  Enjoy your Wednesday, and thanks for the post.  Bill Salvatore 

Apr 21, 2021 04:50 AM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Good morning Cynthia! And of course, remember to be aware of the Marriott rule

Apr 21, 2021 06:18 AM

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