The demand and prices of prime commercial real estate properties are constantly fluctuating. First-time investors need to have a clear understanding of the key factors influencing these properties’ market value. Moreover, they have to keep a close watch on the trends in the real estate market. Only then can they make the right financial decisions when securing and finalizing lucrative property deals. This enables them to increase their wealth exponentially over time. Many of them might even consider letting out the properties to the right tenants. In the process, they earn a steady revenue in the form of rental income.
Mack Prioleau – What factors affect the market price of commercial properties?
Mack Prioleau is an associate of a well-known commercial real estate company in Dallas, Texas. He is an Economics graduate from Vanderbilt University with minors in Corporate Strategy. He specializes in the sale, purchase, and lease of commercial properties in the industrial sectors. He has many years of valuable experience in this area.
He says many investors consider purchasing, selling, or leasing out of commercial real estate properties to be a worthwhile venture. They can earn a constant and steady cashflow by finalizing the right property deals. However, they need to keep in mind the following key factors influencing the market price of commercial properties:
- The location of the properties and its accessibility to major commercial centers,
- The demographics of the population inhabiting the properties’ location and surrounding areas,
- The market values of other comparable commercial properties in the same location,
- The prevailing economic conditions at the time of the commercial real estate purchase and sale,
- The interest rate commercial banks charge on mortgages for purchasing commercial real estate properties,
- The primary motives of the owners to sell the commercial real estate properties to them, and
- Government incentives for encouraging investors to buy prime commercial properties like tax deductions or subsidies.
Investors should always physically inspect the commercial real estate properties they shortlist and intend the buy. Otherwise, they might end up spending a considerable sum of money on repairs if the properties are in a precarious state. The expense they ultimately incur might be more than the sale consideration they pay to owners. Moreover, the basic amenities within the properties should be in proper working condition. These include the electrical wiring, water pipes, generators, HVAC system, and flooring stability. If the properties are in a slightly dilapidated condition, the investors should insist the owners lower the sale price. Only then can they get value for money.
Mack Prioleau concludes by saying the commercial real estate market attracts many first-time investors. However, they need to careful when it comes to selecting and finalizing which commercial properties to buy. In doing so, they do not want to pay a price that is over the actual market value of the properties. This is why it is prudent for them to hire and seek commercial real estate specialists’ assistance. The experts they work with should have experience, skills, and knowledge in finalizing commercial real estate deals. Above all, they should be aware of the current market trends and charge reasonable fees for their services.