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Commercial Real Estate Tips: What to Consider Before Buying

 

Commercial Real Estate Tips

 

There are many reasons to get into the commercial real estate market: setting up a business, expanding an existing one or new investment opportunities. Commercial real estate may include office space, retail space, restaurants, agricultural space, rental housing or property in the hospitality industry. Like any real estate transaction, it’s important to have the right REALTOR® to guide the buyer through the process. There can be complicated issues surrounding financing, zoning and legal paperwork; which a REALTOR®can help decipher. Here are some commercial real estate tips to consider before entering the market.  

 

Do Some Homework

 

Before beginning the search for properties, be clear about what the needs of the business are. Consider everything from accessibility and foot traffic to square footage and ceiling height. Write down a list of must-haves, don’t wants and best-case-scenario wishes. When planning on construction, renovations or changing the use of the existing property, understanding the local zoning bylawsand environmental regulations is key. Know in advance what permits and allowances are required.

 

Get Finances in Order

 

Despite the high cost of buying real estate, it’s almost always better to buy than be at the mercy of a fickle landlord. However, make sure the financial health of the company is ready to take on all potential expenses. Spend the time and money it takes to have an accountant, knowledgeable in commercial real estate, prepare a well-executed business plan and financial statement. Plan for any renovations or building costs. Know the tax implications. Be practical about the company’s financial forecast. Plan for a rise in interest rates. Budget for general upkeep and repairs.

 

Location, Location, Location

 

The old saying stands true. The most popular locations have the best resale value and commercial potential. They can also be the most expensive with the highest taxes. Look to locations near popular areas or to neighbourhoods undergoing a transformation. A good indicator of up-and-coming areas are where the artists are moving to.  Small galleries, independent theatres and indie coffee shops often bring people into an area that may have been previously overlooked. Have an idea of what kind of clientele the business needs to attract and where the best neighbourhood is for the type of enterprise.

 

Finding the Right REALTOR®

 

It’s important that any potential REALTOR®has experience in commercial real estate transactions as well as extended knowledge of the neighbourhood. Be sure to ask questions about what kind of expertise they have. A good place to start is the Canadian Real Estate Association which hosts the Canadian Commercial Network of commercial real estate specialists. 

 

Don’t overlook real estate agents who primarily buy and sell homes. Many brokerages offer both commercial and residential services. If you already have a good relationship with a residential REALTOR®, ask if they deal in commercial transactions. In Peel Region, the boutique brokerage, JN Asensio, is an excellent, family-run business, with excellent reviews.

 

These commercial real estate tips are a good place to start. However, always speak to a business professional who will give good solid advice. While starting or expanding a business can be exciting, being prepared and informed will take the risk out of the equation.