Location Matters in Commercial Real Estate Too

Location Matters in Commercial Real Estate Too

Commercial real estate interests many investors. Residential rentals, business offices, condos, warehouses and other types of commercial properties may create a dependable income or even a fortune for savvy investors.

But the old real estate rule still applies when investing in real estate.

Location is important.

A new condo development recently opened on a route I regularly travel. It’s a creative reuse of an old brick factory building. It has some things going for it. It’s near a city school complex and less than a mile from the quaint downtown area of a small city. The building is in an attractive old building. The condos have an industrial loft feel that would appeal to young buyers. Night life and employment are both available, too.

But the condos sit empty. Why?

I have a theory…Just a feeling but I don’t know for sure what the problem is.

The area between downtown and the development is occupied by a project apartment complex. It is well maintained and has a safe feel to me when I travel through this town. I stop and buy gas or snacks and don’t worry, but…apparently potential buyers look elsewhere.

A regional college is within a mile west. Most of the students are day students and do not live on campus…but they have to live somewhere, don’t they?

Local businesses are thrift and used clothing stores, a Family Dollar store, a little grocery and a Habitat for Humanity Restore… definitely NOT upscale shopping.

I only come through there during the day when it looks very peaceful and safe, but things could be different at night.

An old Victorian that has lately been a lawyer’s office sits for sale on a corner less than half a mile away. It has been for sale for years without attracting a buyer.

Obviously the locals must know something I don’t.

This location is just NOT working, though it seems as though it should.

Sometimes marketing is a problem but who knows. Maybe I should help them.

This area has another thing going for it. It is very near the interstate 75 corridor and lots of trucking companies, both large and small, are located in the area. There is also a new Amazon distribution center and lots of other businesses so the area is growing in many ways. A large and growing private hospital complex is also near the closest 75 on/off ramp.

This relatively small city has a lot of things going for it and its economy.

Atlanta is 90 minutes, Chicago is several hundred miles, Miami is way too far for me.

Will the condos ever find buyers? Will the investment ever pay off? Worse yet, if the investor took out a commercial bridge loan, they could find themselves in default and lose everything.

We’ll see. Lastly, you may want to consider leasing your commercial with an option to buy. That way, you can have more time to study the location. Here is an article on leasing vs buying commercial properties.