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Published on July 9th, 2016 | by Day Trader

Is Your Investment Firm Considering Purchasing Commercial Real Estate?

Real estate investment group

Client One A former Jazzercise instructor has decided to go back into business for herself. Instead of providing exercise classes, however, this time she will be providing upscale gifts and home decorations for some of her former work out clients. With a significant amount of inventory already purchased from a variety of sources, she is looking for space with plenty of parking and a strong street presence.
Client Two One of the largest investment brokers with a significant presence in the midwest is looking for secondary date center space. This investment firm wanted to move out of their expensive east coast data storage locations. They have decided to use their expensive east coast space for people and find less expensive data center space in the midwest.
Commercial real estate companies help companies of all sizes find the space and the locations that they need. Whether clients are looking for a small retail location for a gift boutique store or a large stock trading and investment company is looking for data storage space, commercial real estate companies can help.
Location Always Matters
The difference between the kind of space a small retail store needs is very different from the data storage space that a large investment firm needs. While the retail location depends on easy access and many large windows for display purposes, data center space is the exact opposite. No parking is really needed. Windowless buildings are essential and disaster preparedness is the main focus. Interestingly enough though commercial real estate companies can help both clients find several options to consider.
At the other end of the spectrum real estate investment firms look toward commercial real estate companies for purchasing opportunities. When investors are first learning how to buy commercial real estate, it is often a realtor who provides the best advice. A large commercial real estate firm understands the location and price range of various locations throughout both a large metropolitan area and a small urban community. In addition, commercial realtors can also help potential clients understand different zoning regulations and opportunities for rezoning possibilities.
Realtors Help Clients Understand the Current Market and Possible Future Trends
While an entire world full of clients are looking for the commercial real estate properties that they need, investment firms across the country are looking for opportunities to expand their portfolios and holdings. Entering the investment arena of commercial real estate development requires a substantial financial investment. For example, commercial property lenders like to see as much as 30% down before they are willing to approve a loan. Potential buyers need to come up with this much of a down payment because banks typically lend 60% to 70% of the property value for most kinds of commercial real estate.
Patient investors, however, can be rewarded. In fact, commercial properties generally have an annual return from the purchase price between 6% and 12%. The difference between these two percentages is most often dependent on the area. And while some areas consistently show a greater return on an investment, other areas of the country show a greater variance.
Commercial real estate companies serve two kinds of clients: the ones who are looking for investment properties and the ones who are looking for a property to fit the needs of their business or service. Real estate investment strategies may change from one part of the country to another or from one year to the next, but some of the basics stay constant. Location is one of those basics. And while some locations may be ideal for a small retail boutique store, other locations may be perfect for a large investment firm that is looking for data center space.
The most experienced commercial realtors may serve as the best resource for both investors and rental clients. A commercial realtors knowledge of available properties and reasonable prices can help both investors and renters understand how a market is working in a particular location of the country. In fact, local realtors can help their clients save money and make more sound investments and rental decisions. For clients who are coming to an area for the first time, commercial realtors can help clients understand specifics of the locations where they are looking for property.


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