When not to buy commercial real estate

There are times when it is not wise to invest in commercial real estate.

Alternatively, many potential investors don’t take the plunge out of fear of the unknown and years later regret it.

Let’s look at some examples of when you’d be advised not to purchase.

Better location with a lease

Store location can play a huge part in the success of a retail merchant.

Traffic count, surrounding demographic and area ambiance are some of the important factors to consider when prioritizing site options.

It can take years to find the right sized retail property, in the right location, at the right price to purchase, that best ensure the success of the business.

When I see a client compromising on location (and therefore the success of their business) so they can purchase rather than lease I will ask them to stop and think hard about their priorities.

Historically high vacancy

When assessing the value of a multi-tenant retail, office or industrial property as an investment property, how much reliance are you placing on the lease of existing vacancy? 

Have you researched previous rent rolls to determine what the historical vacancy has been? 

There may be a possibility to add value by investing in improvements and thereby increasing the desirability of the vacant space and attract more prospective purchasers.

Don’t assume you can increase income without sound research and smart strategy.

Forecast looks grim

There may be some functional obsolescence to the property that money can’t fix.

You can “put lipstick on a pig” but you’ll never change the fact that it’s still a pig.

I have the pleasure of moderating the panel: INVESTOR INTEREST IN SASKATCHEWAN at the Saskatchewan Real Estate Forum, Apr 30th  at TCU Place in Saskatoon.

Why not join us to hear related information on this topic from our industry experts.

Posted by Barry Stuart

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