Validation for the Biggest Cliché in Commercial Real Estate
There are numerous factors related to location to consider when evaluating a potential commercial real estate lease or purchase. Issues with location are critical because they tend to be major issues.
The Commercial Real Estate Mantra
Undoubtedly, the biggest cliché in commercial real estate is location, location, location. It’s been repeated so often that it’s likely lost most of its meaning. Nevertheless, the saying exists for a reason.
There are numerous factors related to location to consider when evaluating a potential commercial real estate lease or purchase. Issues with location are critical because they tend to be major issues: property access, zoning rules and regulations, environmental safety, etc.
The Benefits of Location
Obviously, in commercial real estate, the property must be close to customers, employees, suppliers, and vendors. Access to major thoroughfares, highways, and in some cases, airports is vital. Due diligence is imperative when evaluating a potential area. Investors who can accurately predict which areas are coming into or out of fashion stand to make significant returns. Location includes many variables such as:
- Proximity to services and other businesses
- Access to public transportation
- Parking availability
- Neighborhood amenities
Factors (both current and future) to consider in evaluating specific locations include:
- What projects are approved in the area?
- What changes are being discussed?
- Are there vacant lots that may be developed in the future or older buildings that may be demolished?
- How might the business landscape change in the area over the next several years?
The location also dictates the amount of rent that can be charged and is directly related to the value of a property. Businesses usually expect to pay less for sites that are less desirable over other more convenient locations. At the end of the day, a great location equates to higher demand and in many cases, even higher rent.
Before signing on the dotted line, a business must complete the due diligence to ensure that everything will be permitted for its operation. For example, some businesses have contractual restrictions prohibiting two of the same types of businesses in the same center.
Commercial Real Estate Zoning
Zoning rules and regulations must also be considered. Property zoning is essential because it will determine the allowable uses for the building. Fewer zoning restrictions mean that building owners can better adapt to shifting neighborhood dynamics. Re-zoning is sometimes possible, but investors should be reasonably confident they can successfully get a building re-zoned to suit their purposes before proceeding with the purchase.
Along the same line, investors should check limitations on what kinds of updates can be made to the exterior and interior of the building. Occasionally, there can be location-dependent restrictions, such as when a building resides in a historic neighborhood.
The importance of a commercial real estate location is a big deal; everything from access to surrounding businesses and home developments are important considerations. The location has the main hold on determining the value of the investment, as well as rental rates.
SPP Commercial properties are located in Macon and Warner Robins, Georgia, along heavily traveled corridors that are concentrated within stable and well-established areas with outstanding demographics. We provide exceptional options for office space, retail, restaurants, box store locations and even land parcels for commercial development. Check out our properties list and let us assist you in taking your business to the next level.