Thinking of investing in a commercial property? Check these 5 crucial points for making the best commercial investment.

When you think about commercial property investment you probably want to carry out a comprehensive market analysis for the investment and may not understand how to do it. There are different types of data that may or may not be relevant to you. It is worthwhile to extract the data which is relevant to you and then work hard to determine whether or not the property is feasible and cost-effective. Here we look into some of the most important aspects of ‘market analysis’ for investment in commercial property.

1) Geographical Area: This is the foremost step to be considered as a property success is defined by its location. One needs to analyze the market area of the property in which you are interested. This becomes an important segment, especially for retail, hospitality, warehousing and banking industries. For example, one cannot start a departmental store outside of a residential area; it means it should be near to 2 km radius. Whereas, a shopping mall can be located within a 5-10 km radius.

2) Economic Factor: A business is carried out with multiple factors, it is important to decide an adequate price depending on the area it is located. Compare the area/locality with the price. One can also check the population of the area, household size, income levels and employment rates. There are cases when some area is developing and the community has not been settled completely, this can be a bright choice as you may get the premise at an affordable price.

3) Competition: Being into a highly competitive market, it is essential to find a similar kind of business running in that area.  For example, if you want to invest in a departmental store and there is already a Departmental Store in the area then your investment might not fetch a very good return. You can consider some other location depending on the population requirements.

4) Vacancy rate: It is not advisable to invest in an area which is suffering from a high vacancy rate. In a high vacancy rate area, it is likely that your investment won’t serve you with better rentals. The vacancy rate is the ratio between an area to vacant properties. Up to 5% of the vacancy rate is normally considered safe, but above that becomes a risky investment.

5) Demand & Supply: You can collect some data about the location’s demand and supply. This helps to analyze the actual amount of business going around. Through this, an investor can ascertain an individual’s taste and preferences.