Why Location is an Important Factor in Acquiring Commercial Property

When thinking of purchasing a new home, the guiding factor is often the location; however, location of residential properties is usually somewhat flexible—the success of the real estate deal doesn’t depend solely on where the home is built. Contrastingly, when it comes to commercial properties, a different set of standards and deciding factors is at play. The success of commercial properties relies heavily upon where the property stands physically.

Deciding on what commercial property to invest in requires significant consideration of the property location for several reasons. Knowing what location can do for a property, or do TO a property, is a critical aspect of preparing for investment opportunities. In this article we’ll discuss the importance of commercial locations, including the risks and benefits location can present, and how to find a location that best suits your needs and future goals.

Property Zoning

Depending on how a property is zoned, there will be a set of determined ways to use the location. Zoning restrictions play a huge part in whether a location is beneficial or risky:

Benefit

When zoning restrictions are more minimalized, property owners are more able to grow and adapt the property and/or businesses to the needs of the community surrounding them. Less zoning restrictions means more freedom to change the property over time to best suit the needs of a growing area and neighborhood.

Risk

High levels of zoning restrictions are usually seen in certain jurisdictions and historical neighborhoods. Often there are significant limitations on what the property owners can choose to alter in terms of the interior or exterior of the property. This can substantially limit the opportunity for growth of a property over time—a serious problem when it comes to commercial properties.

Access to the Property

Not all properties are located on easily-accessible areas, and if they are then there are often restrictions on how the owners can use surrounding roads to access the property. “Insurable access” in a nutshell means that the access point to the building is secure and legally-deeded.

Benefit

When access points to the property are connected to main roadways, the process of accounting for insurable access is not usually difficult—such as is the case in most strip mall and other similar types of commercial buildings.

Risk

When it turns out that a property does not have insurable access, it can bring up a lot of red tape and extensive issues that property owners or prospective investors often don’t have the time or desire to deal with.

Property Valuation

Finally, one of the most important concerns of commercial property location is the potential for ongoing, stable income. A commercial property’s valuation is usually highly determined by location, of course depending upon the nature of the property and it’s intended use.

Benefit

The value of the location of a commercial property can be determined by several factors, including: the productivity of other nearby commercial business properties; a comprehensive estimate of the property’s potential income; and up-and-coming trends in the general area.

Risk

On the flipside, a commercial property’s value can be significantly hindered by its location. For instance, changes in the real estate market can cause residential property values to plummet, which makes certain commercial properties located nearby less desirable than others.

Don’t Forget About Environmental Hazards

Of course, just like residential properties, natural disasters and environmental hazards play a part in whether or not to acquire certain commercial properties. Looking at the history of an area can give you an idea of whether or not there is a risk of serious environmental threats such as: floods, earthquakes, and mud or rock slides. However, even simple issues like drainage concerns should be looked at before a property is acquired in order to determine the level of physical changes or construction that could be required.

What Landwin Can Do For You

As you can see, there is a lot to consider when it comes to commercial property investment in terms of location alone. The process of property investment is complicated, and can be difficult to navigate for most investors. The experts here at Landwin in Encino and Century City, CA, have a step-by-step plan for assessing, evaluating, and investing in commercial properties and locations which has secured the futures of our investors and clients in over 20 U.S. states. If you would like to learn more about Landwin and how to get involved with our endless, successful investment opportunities, please contact one of our helpful investment experts today.

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Martin Landis

Hello everyone! It’s Martin Landis here. In my role as the Managing Member (CEO) of the real estate advisory firm Landwin, LLC, I draw upon my many years of business experience in real estate and marketing.