Real estate investments have always been popular. However, many are now switching to investing in commercial real estate than residential. This is because of interest in passive income and advantages such as growth potential and reliable returns. While commercial real estate can be highly lucrative, this is not always the case. As with all investments, things vary. There are many different factors to take into account.
In order to make smart investments, it’s essential to be an informed buyer. This way, you can avoid common mistakes and maximize your return on investment. That’s why it’s important to be aware of the different factors that affect commercial real estate investment. Fortunately, the experts at Robert DeFalco Realty have outlined them in this article.
Factors Affecting Commercial Real Estate in Staten Island
Staten Island is a bustling New York borough and has various properties available for investment. Different commercial real estate options include office buildings, retail stores, and warehouses. Take a look at the following factors that affect commercial real estate in Staten Island and elsewhere.
Type of Commercial Real Estate Property
Not all real estate properties are created equal, which holds true for commercial real estate. Amongst the different types of properties are multifamily, retail, office, special purpose, and industrial properties. However, these are only the main types. Other types include medical, hotel, land, self-storage, and many more.
The return on investment and the value of each type of property depend on the forces of demand and supply and the overall sector.
For example, at the height of the COVID-19 pandemic, there was low demand for office spaces. This is because many workplaces were implementing a work-from-home policy. At this time, office buildings wouldn’t have made ideal investments. However, the majority of businesses have opened back up, and offices are filled with people again. Thus, the demand for office spaces has increased once again.
One way to ensure you’re making a sound investment is to choose a low-risk profile property. You should also research different asset classes and property types before investing in them. Many investors look at the NCREIF Property Index (NPI) and other reliable sources when making real estate investments.
Overall Economy and Property Market
The economy and the property market are also major factors when it comes to real estate. Depending on whether it’s a buyer’s market or a seller’s market, you may have to make different investments or choices. Always keep the property market and overall economy in mind when looking at the commercial real estate market and whether it’s wise to invest.
It’s also important to keep the economy in mind when investing since commercial ventures depend on spending. In difficult times, people may not be spending as much. However, when the economy is booming, people have more disposable income and have more money to spend on non-necessities and luxuries.
Additionally, unpredicted inflation can wreak havoc on investment properties. Instead of enjoying profits, you may make a loss from your commercial real estate property. Inflation affects everything from employment and market prices to investments and profits. Thus, it can significantly affect things like premiums.
Appearance and Curb Appeal
As with residential real estate, curb appeal is also important in commercial real estate. The value of your commercial property is related to its appearance and curb appeal. For example, if your building has graffiti and is surrounded by overgrown foliage, it may not be as valuable as one that is pristine and surrounded by well-manicured trees. Therefore, whether it’s peeling paint or cracks in the pavement, curb appeal can affect the value of your commercial real estate property.
Unlike in residential real estate, this isn’t so similar properties can be compared based on price. When it comes to commercial real estate, nearby properties can affect market value due to demand and supply.
If other comparable spaces are available in abundance, a single property may not be worth an extremely high price. However, this depends on the type of property, how it compares, how long it’s been on the market, and more.
Location is another primary factor that has the ability to affect commercial real estate in Staten Island. Despite market value being high or low depending on the demand and supply, other factors also come into play. For example, this could be anything from the neighborhood to amenities that are or aren’t close by. This can also include factors like crime rate and other establishments in the area. In Staten Island particularly, parking availability is a major consideration. A location that does not have close access to public transportation may have trouble leasing if there is no parking lot.
It’s important to keep in mind that this can change over time. A commercial property may not be as valuable when a neighborhood is considered undesirable. However, upon gentrification, the same commercial property can skyrocket in value. This is why many experienced investors try to buy commercial properties before areas gain popularity.
Another important part of the location is transportation links in the area. Infrastructure can play a huge role in market value. For example, if a property is close to different transport links, it could increase its value. Amenities and accessibility are also contributing factors.
Find the Right Investment Property With Robert DeFalco Realty
Real estate is a great vehicle for investment. This is especially true for commercial real estate in Staten Island and other areas. Since commercial real estate is so lucrative, it’s no surprise that so many individuals are investing in it. If you’re thinking about investing, look no further than Robert DeFalco Realty. We have several commercial real estate agents who can help you find the perfect investment property. Additionally, we’re experts in both residential and commercial real estate. Thus, we can guide you throughout the buying process.