Things That Make Up A Good Commercial Real Estate Location

If you want to purchase a “commercial property for sale”, it is important to choose a good location for your property. The location of a commercial property is an important driver of the potential investment success of the property. As part of your due diligence process, it is very important to evaluate the location of a property on the submarket, market, and property.

A market is a city or MSA that a commercial property is located in. A good market is characterized by high population growth, median income and jobs. In addition, they have a diverse economic base and have more access to multiple modes of transportation.

On the other hand, a submarket is a smaller division and the strongest ones are typically evidenced by a favorable business climate, relative stability, strong dining, and entertainment and shopping amenities.

The property level concerns the property itself. The most attractive commercial properties have a high-traffic location that has good signage, high visibility and ease of egress and ingress.

What makes a good market?

A market is the Metropolitan Statistical area or/and a city in which a commercial property is located. Most investors name the city as the location of the property. When leasing commercial real estate properties in a given market, investors may place less or more emphasis on a particular point of data depending on their desired type of property. For example, someone who wants to buy a multifamily property from a commercial real estate platform may care more about the important aspect of the market than an office building property investor who may care more about others. However, all investors look for the following things.

Growth

An investor will look at the growth of the market. Is the population in the market shrinking or growing? A growing market means that there may also be a growing need for different types of properties.

Economic diversification

A good market tends to have a diverse economic base. This means that it is not tied to any industry. Cities that are heavily leveraged to tourism and travel are vulnerable to an economic downturn. However, cities that have different industries are more resilient.

Jobs

People follow jobs and in addition to the growing population, real estate investors like to see an increasing number of job opportunities to accommodate new residents.

Transportation

A good market should have a wide range of public transport options. These include airports, highways, trains, bike paths, subways and walking trails.

Economic drivers

A strong real estate market has one or more major economic drivers. These drivers could be things like a major university, a major employer, a government activity, a major technology hub, a major research hospital, and so on. These sorts of drivers anchor a market and attract other entrepreneurs, people and companies.

Favorable supply and demand characteristics

This is another thing you should look at when choosing a location for a suitable commercial property for sale. A good market should have favorable demand and supply characteristics for the desired type of property.