Selling Commercial Properties vs Residential


Commercial properties have many of the same challenges that residential properties have when they go to resale. They may be vacant, rundown and siphoning off $$$ from their owners, rather than making MONEY. Commercial properties, by definition are expected to make money for their owners, regardless of whether the owners are institutional or individual investors.

If factors do not come together in an advantageous way a property could sit empty for years while it bleeds cash away from investors.

At some point investors will try to cut their losses.

A strip mall that is nearly new is currently sitting empty and neglected near us. It’s for sale, but has generated little interest. The seller is a real estate professional. Efforts at getting this property to be fully rented and making money have been notably unsuccessful. We think it would make a great location for some type of home health agency, but have not presented this idea to the owner.

Surprisingly even these more sophisticated investors will make the same mistake many homeowners make when marketing commercial property.

Their biggest mistake? They don’t try to make the property look as attractive as possible.

Many owners of commercial properties will list them for sale and fail to consider or address street appeal. They are probably wanting to get rid of the entire headache, similarly to homeowners who want to sell their property “as is”.

Of course unless the property is in a stellar location and in perfect show condition it may linger on the market, eating through lots of money for years or even decades, just as many residential houses do. Some properties even end up abandoned or foreclosed.

Some of this real estate could be generating income streams with a little improved marketing or imaginative repurposing.

Pragmatically speaking, a commercial property that is generating income becomes much more attractive to potential buyers, AND to potential renters.

Part of the value of these types of properties IS how they look to both buyers and renters. Appearance matters. This is NOT news…but it is frequently ignored.

It does not hurt to analyze what could make any piece of real estate more viable from both a business standpoint and from the standpoint of attracting customers and buyers. While it’s challenging to try to guess what will attract customers, all businesses that succeed HAVE to figure it out or die trying.

Investors, by definition expect to make money. If they want to sell a commercial property they need to make it look good so they can fulfill this worthy goal. On that subject, here is an article on this subject, repurposing a commercial property.