Some business owners may know what it’s like to buy a house, but if they’re used to renting their offices, storefronts, or other locations, then they may be afraid to dip their toes into the pool of commercial real estate financing. Commercial mortgage loans may sound frightening to some business owners, financial backers, and other investors, but the freedom of owning your own property can often make up for some of the additional responsibilities that business owners acquire with that real estate.
Are you a business owner wondering how to know you are getting a good investment when you choose commercial real estate? Here are three indications that your business will get bang for its buck:
- Amenities: What does your commercial space need? Not only should you consider the square footage of the property, but you should also think about the other features. Do you need a high-bay warehouse, a drive-thru for a restaurant, or a building that can hold a gourmet kitchen? You may also want to think about the type of property you need (office, warehouse, retail, etc.) and consider what is available. The office vacancy rate for the fourth quarter of 2015 is projected at 15.6% in the United States, compared with 15.7% at the end of last year. Industrial facilities are expected to have a vacancy rate of 8.4% (down from 8.8%), and vacancy rates for retail properties are expected to go from 9.7% to 9.5% by the end of the year, according to the National Association of Realtors.
- Location: The old adage “Location, location, location” holds true when investing in commercial real estate. In order to figure out the value of
relative location to competitors, do a search for similar properties that have recently been sold nearby. Other things you might consider are the other amenities nearby. For instance, will a mall detract from your customers or bring more in?
- Options to build or expand: Finally, think into the future: do you intend to keep your business relatively the same size throughout the next few years, or do you have an eye toward expansion? If you’re looking at existing properties, you may want to think about whether you have the room to expand in a building or plaza. In addition to procuring a traditional real estate mortgage, you may also qualify for new construction loans. This can help you customize your property to your specifications, and you can always select a larger lot for future expansions if necessary.
Investing in commercial property can be a difficult decision, but resources are available. If you have questions about choosing a commercial loan or selecting a property, make sure to give us a call, so we can help you plan your business’s future.