Investing in commercial property can be a highly rewarding decision for businesses, but like most business choices there is also risk involved. Commercial real estate can offer a complete variety of options for a business from retail space, offices, cap parks and warehousing space and the yields tend to be higher and the tenants will likely have building repairs and insurance included.
But as mentioned the can be errors made when buying commercial property and more likely than not, investors and/or business owners won’t be familiar with some of the processes involved when making a purchase.
With commercial property being valued differently to residential property, there are many more processes involved before completing the acquisition as the value of the property is directly related to income and the yield of the business. Which makes the buying process an essential part of a business’s move or expansion.
Here’s a look at four mistakes to avoid when acquiring a new commercial property:
If your property is going to be used to sell a product or service to the general public, footfall in an essential part of the buying process. Making sure the business gets and much exposure as possible. Depending on the service being offered, you can select a high footfall position on the high street or in a shopping centre to encourage impulse shopping. But if you’re a niche company you can also risk a lower buying price with less footfall, but advertising location and have potential customers specifically visit the store.
Naturally the higher the footfall the higher the buying price, so working out how many customers you need on average could save you a lot of money. Think about the high street vs retail parks for example.
Review How Long its Been on the Market
If a property has been on the market for a while it’s usually a strong warning sign. It could be a poor location, nosey, poor footfall or over priced, so it’s worth consulting with Commercial Property Agents to help review the property and identify its suitability for you. It’s another expense to consider, but in the long run, very worthwhile.
Factor in Additional Costs
There are plenty of additional costs to consider, and aren’t just gas, water and electricity. Hiring professionals to review the condition of the property, and any potential remodeling that needs to be completed is another essential to consider before purchase.
In terms of staff, think about the number of employees, and whether or a kitchen needs to be available or if local shops need to be available. These may seem unessential, but the fact is employees run the day to day operations and keeping everyone happy with the location and the amenities locally available.
Invest in the Future
It’s a common occurrence that businesses only look at the here and now when it comes to commercial property for sale. But it’s important to consider whether you can grow in the building and how fast you plan to expand. It can end up costing a fortune if you expand too quickly and end up having to move again before truly reaping the benefit of the original purchase.