Five Things to Consider Before Investing in Commercial Real Estate

While many of the basic concepts are the same, there are significant differences between the commercial and residential real estate markets. The commercial side of real estate is a different beast that requires successful investors to make additional considerations when evaluating a potential investment. Here are some factors to consider:

Know Your Market Trends

Make sure you have in-depth knowledge of the market. This includes educating yourself on the latest economic trends. Ask yourself what the major job drivers include and if proximity to things like public transportation play a factor. You should also consider the supply and demand for specific property types like industrial, office or retail, and if there have been any major shifts in your market.

Know Your Demographics

Again, investors need to understand the market they’re investing in. This includes familiarizing yourself with the local demographic. You can even request a demographic report which will provide information on population trends and household incomes. This added research will give you insight into who could be visiting your potential property.

Be Patient

Keep in mind, everything takes longer with commercial investments. Re-development is common among investors, and you’ll want to take your time when reviewing documents pertaining to zoning, property condition, and environmental assessments. You may even want to set up a meeting with local government officials to discuss required approvals.

Assess The Risk

No two commercial properties are the same, so risk assessment should be taken very seriously. While the success of two residential properties right next to each other is often similar, commercial buildings tend to see greater fluctuations. It’s crucial to understand the range of risks that could arise with your potential purchase.

Consult a Professional

Finally, buying commercial real estate is a huge investment involving intricate details. Having a real estate attorney by your side throughout the process can come with both added benefits and protection.

Are you a real estate professional looking for representation in commercial transactions? Caiaccio Law Firm’s clientele includes commercial and residential developers, sponsors, investors and lenders. Our firm’s experience in commercial real estate transactions covers property types, including multifamily, single family, retail, hotel, and office properties. We have a specific concentration in representing multifamily operators, property management firms, and commercial developers.

Leave a Reply