Purchasing commercial retail property is a significant business investment. As consumer attitudes continue to evolve and more retail transactions take place online, new considerations should be taken into account before any investment is made.
Before you move forward with your investment, consider the following 5 points regarding retail properties.
1. New Age of Consumerism
Retail is changing faster than any other commercial real estate sector. Investors who are looking to purchase a commercial retail property need to fully understand the changing demands of consumers and how those demands are transforming the industry at large.
Consumer attitudes are changing. More than anything, contemporary shoppers value experience, convenience, and value. Keeping up with this new demographic poses a challenge for investors.
However, this new age of consumerism does offer unprecedented opportunities for savvy investors. Those who work to understand buyer behavior within a specific target market stand a better chance of success, both now and in the future.
2. Account for Economic Factors
Performing due diligence is an important step to take before making any significant investment. But it’s especially important when making a purchase in the retail sector.
Take some time to research the local economy, the success competitors are enjoying, and even the amount of foot traffic seen around the property you wish to purchase.
Perhaps most importantly, seek out professionals in the area who can offer expert advice – these may be real estate professionals or other business owners with a higher level of experience.
3. Standing Up Against E-Commerce
In today’s world, online shops are a retailer’s greatest competition. Competing with online sellers is no easy task. It takes a unique business model that offers consumers something special to compete with the ease of one-click shopping.
The main strategy retailers are honing in on is the consumer experience. The concept of shopping is transforming from a necessity into a leisurely activity.
Retailers are focusing on the social aspects of shopping that can never be achieved within the online platform. Investors need to factor in plans to continually attract customers over time, even as the tides continue to change.
4. Know Your Tenants
If you plan on purchasing a retail strip-center, your property will house multiple commercial tenants. If you fail to research what these businesses sell and how they operate, you could face headaches or even vacancies down the road.
5. Consider Retail Property Management
Purchasing a commercial retail property requires continual time and attention. However, not all investors have the bandwidth to adopt the responsibilities of daily property management. In these situations, investors should consider hiring a retail property manager.
These are professionals who know all the ins and outs of managing a retail property. This allows investors to take a more hands-off approach to business and continue focusing on new projects, expanding their portfolio, and taking care of their other properties.
Ready to take the first steps towards your next commercial investment? Visit IPL’s Contact page to get in touch with an expert loan officer working with Commercial Direct, a division of Silver Hill Funding LLC.