Every geographic detail of your rental site, from the city right down to the street, can dramatically influence the level of capital it grosses, and your ability to liquidate the investment if necessary. Almost all critical problems in commercial real estate investment involve location, so it’s critical to have researchers conducting due diligence.
CONSIDERATIONS INCLUDE:
- Local zoning restrictions
- Property access (for specific business types, as well as local staff)
- Flood zones
- Environmental assessment reports
- Property premiums
- Demographic/socioeconomic trends
- Rising/falling area property prices and demand
- Rising/falling area unemployment rates
- Average area interest and mortgage rates
- Local taxes
- Capital market access and liquidity
- … and much more.
There are a number of commercial real estate categories, each with their benefits and drawbacks.
Your options include:
- Office Complexes: Office jobs account for 39% of total job growth globally and the need for office space is always on the rise. The locations are used for medical facilities, corporate headquarters, call centers, and a variety of other businesses. They can range from single floor buildings to high rises.
- Retail Buildings: Used for restaurants, department stores, chain stores, banks, and more. They can be stand alone buildings, strip malls, or large structures like indoor malls. Because e-commerce has risen in popularity, location (can’t stop saying it) is even more important for these buildings. Still, they have the highest property margin of all categories.
- Industrial Centers: Used in manufacturing, shipping, food productions, and utility services. The buildings vary in size but are typically in a warehouse style building. Because e-commerce, as an emerging element, has changed the way industries support themselves — research on (you guessed it) the location and its job market fluctuation is essential when investing in an industrial center.
- Mixed Use: Combines residential and commercial facilities into one building.
- Special Purpose: The reason these structures are referred to as “special” is because they are. Sometimes a building is so specific that it cannot serve any other purpose. For example: car washes, storage units, sports complexes, and The Dog Lover Inn — a bed and breakfast built in the shape of a giant beagle.