Real estate across the globe is worth a virtually countless amount of money as a collective. Looking at a residential property in the USA alone, you’re talking almost 33 trillion dollars worth of assets.
Add to that equation commercial property and multiply it by every country on earth, and you begin to see why real estate may be the biggest builder of wealth that exists today.
While residential property investing didn’t slow down in 2020, investing in commercial property last year and even now, is something that most organizations and individuals aren’t willing to do.
That brings us to this post’s big question – Is investing in commercial property a good call today? In particular, does it make financial sense for your business?
Keep reading to take in some insight that’ll help you answer that question.
Can You Use Your Commercial Property?
When you invest in commercial property, it’s not the same as if you chose to invest in a condo. A commercial property, at least in the context we’re discussing it, relies on business tenets to generate income.
So, our first question to you if you’re eyeing commercial real estate is if your company can occupy your investment? For example, would you be able to build personal offices in your commercial building, or does it not serve your needs?
Having the option to inhabit your commercial property ensures that, even if you can’t find renters, you’ll be able to extract value from it.
What Is the Lease Potential of Your Area
Let’s say you have no desire to use your commercial property for business operations. That begs us to ask if people in your area might be willing to lease your commercial building so you can turn a profit.
Does that seem likely to you?
Commercial property in areas that have a lot of commerce is much more likely to get rented than say, a property that awkwardly exists in a poorly zoned residential community.
Research how many similar commercial properties in the same vicinity as the one you’re considering are generating rental income versus are sitting empty.
The Big COVID Question
The primary reason why companies have wanted to keep commercial property off their balance sheet since 2020 is because many commercial renters are now working from home. There has been some speculation that the work from home trend will change in 2021 but we’re not so sure.
Are you sure? If you aren’t and you’re going to rely on renters to make your commercial investment work, we’d recommend waiting until things become clearer by year’s end.
To Invest in Commercial Property Today Would Be a Gamble
When you invest in commercial property in today’s environment, you’re rolling the dice. Granted, all investments are a little bit of a dice roll.
Commercial property in particular though, with business and consumer habits changing so much in the last 12 months, is a special risk that your company may not want to shoulder.
Ultimately, your business property investments are up to you. Again though, we’d recommend holding for now if you’re planning on having non-residential renters in your building.
Do you want more context on all things real estate, business, and more? If you do, we invite you to explore additional content on our blog.