When an investor is considering purchasing a commercial property, there are many important considerations. The amenities, utility capacity, and the way the building fits into its local area are all critical parts of the decision. Purchasers should also make sure that they are getting a competitive price for their new building, making sure that they spend their money wisely. A building which is not attractive to potential tenants will not succeed as an investment property. Joseph Rizzuto, a commercial real estate expert and developer from New York, lists the factors that commercial property investors should consider when choosing a new building.
1. Accessibility
A property should be easily accessible, whether by car or public transport. If commercial trucks are accessing the property, make sure that there is a functional loading dock for their use. For a smaller business, it is essential that other companies of the same type are in the area. All of this will increase customer traffic and make it more likely that patrons will visit the location.
2. Parking
Parking can be a complicated problem when planning a commercial business. It is vital that the company has enough parking places for all of its employees and customers. Without adequate parking, employees and clients will be turned off and will look for work or services elsewhere. When planning a commercial purchase, always make sure that you have growth statistics in mind for the industry you are catering to.
3. Zoning
It is vitally important to check all zoning regulations in the local area before purchasing a building. If the area is not zoned correctly, you will not be able to attract the kind of lease tenants you need. The difference between industrial and commercial zoning is particularly important.
4. Green Technology
Green technology appeals to many tenants, and it also leads to lower utility costs and lower construction costs. Purchasing a green building is an easy way to appeal to the most environmentally conscious tenant. These systems may require more maintenance, as in the case of solar panels, but they will save tenants a great deal of money down the road. Developers will be able to charge higher lease prices for the same property.
5. Proper Size for the Tenant
If your real estate investment firm is looking to lease a new property, make sure that it has enough space for the targeted industry type. It is a good idea to do an informal survey of other kinds of businesses in the area and find out their square footage and how many employees they have. Some businesses require more machinery and infrastructure than others, so it is important to consider that as well.
6. Utilities and Systems
When purchasing an existing building, it is vital to find out whether its systems like heating and air conditioning are robust enough for the type of tenant you wish to attract. For example, a technology company will need a powerful air conditioning system to accommodate the heat coming from a large server room. A commercial warehouse will need to be efficient in its use of heat. An office tenant will want the ability to keep its spaces at constant room temperature without difficulties.
If the systems in place are not sturdy enough, that would be a good time to appeal to the seller and have them cover the costs of any upgrades. Otherwise, the purchaser will have to do it after the fact.
7. Natural Light
In office spaces, natural light provides a much better quality of life for the workers inside. Office spaces with natural light are far more attractive to prospective lease tenants. If your building does not have natural light in its office areas, consider changing the windows. Improvements such as these will make your potential lease price higher and lead to happier tenants.
8. Potential Incentives
When examining a new building for sale or lease, always take advantage of all incentive programs offered by federal, state, and local governments. For example, the new federal Opportunity Zones offer attractive tax advantages for businesses that invest in low-income areas or adjacent to these areas. Contact your state economic development organization for more help in determining the best place to invest in commercial real estate.
Choosing a Commercial Property
When you consider these eight points, you will find it easier to decide which commercial building you should buy. Joseph Rizzuto recommends that you determine whether the building is well-maintained and that all of its systems, including electrical, are in good working order. With careful planning, you will be able to reap the benefits of higher lease prices and fewer incidents of turnover.
