The commercial real estate market is booming in Canada, and it's not showing any signs of slowing down.
If you're an entrepreneur looking to invest in Canadian commercial real estate, now is definitely the time to take action and start shopping.
Shopping for commercial real estate can be challenging and overwhelming. It's definitely not impossible to find a great property, though. You just have to make sure you're asking the right questions.
Listed below are some key questions you need to ask when you're purchasing commercial property.
Is it in the Right Location?
There are a lot of similarities between the process of looking to rent a property and looking to buy a commercial property. For example, you need to make sure it's in the right location.
When you first start considering a particular commercial real estate property, think about the neighbourhood in which it's located.
Remember, too, that there's a difference between neighbourhoods that are desirable for residential properties and those that are better for commercial properties.
For example, things like self-storage units and car parks might not be appealing to people looking for homes and apartment buildings, but they can make commercial properties much more attractive.
Do plenty of research into a particular area before you decide to set up shop there.
What Developments are Taking Place in the Area?
In addition to thinking about the state of the neighbourhood at the time when you're shopping for a property, you need to think about what it will look like a few years from now, too.
Certain developments will add to or subtract from a property's value and have an impact on the people who are most likely to patronize your business.
Be sure to ask your real estate broker what kinds of developments are in the works for the near future.
For example, is a new highway going to be built in the area and draw traffic away from local stores? If this is the case, the neighbourhood in question might not be a good option for your business.
How Long Has the Property Been for Sale?
As a general rule of thumb, it takes longer for commercial properties to come off the market compared to residential properties.
If a property has been for sale for a very long time, though, that might be a red flag.
Do some digging to find out how quickly commercial properties in a particular tend to stay on the market. Then, compare that number to the length of the time the property you're considering has been for sale.
If it's been on the market a lot longer than the average amount of time, there might some issues that you need to address.
Is the Developer Trustworthy?
Be sure to learn as much as you can about the property's developer, too.
Find out if they're a trustworthy person or not and how much experience they have. The reliability and business practices of the developer can have a big impact on the long-term potential and profitability of the property.
If you learn anything about the developer that seems shady, you may want to consider purchasing a different building. Even if it's being sold for a great price, there might be a not-so-good reason.
Does it Fit Your Business Goals?
If you're interested in a particular property but aren't totally sold on it yet, be sure to consider whether or not it fits your business goals.
Remember that this extends beyond just the appearance and location of the building. For example, you'll need to find out if there are any zoning restrictions that prohibit you from using the building for your intended purpose.
What Do I Know About the Neighbors?
If you're going to be sharing the property with anyone else -- or working in close quarters with them -- you should do some research to learn about the other businesses and business owners.
Find out if they contribute to common area expenses, how long they've been in the area, and what their annual rent is.
If you plan to rent out properties in the future, this will be useful information. it'll also let you know whether or not they'll be good business neighbours.
Are There Any Issues with the Building?
It's important to do your due diligence and make sure there aren't any serious issues with the building before you purchase it. It pays to have the property inspected by a third-party inspector to make sure everything is in good shape.
Before you hire an inspector, though, you should also be on the lookout for potential issues. This includes signs of wear and tear on the roof, cracks or settling in the concrete, and major health hazards like plumbing or electrical issues.
If you notice any of these issues, find out if the building owner is willing to get them fixed before you agree to purchase the property.
Can I Have a Pro Forma?
A pro forma is an important document for anyone looking to get involved in commercial real estate.
A pro forma provides you with a summary of all the relevant financial figures associated with a particular property. This includes the total income the building produces, as well as lists of expenses the building incurs. It also tells you about the building's total net income.
If you have access to a pro forma, you'll be able to get a better idea of whether or not a particular property is worth investing in. This will save you a lot of time and money further down the road.
Start Purchasing Commercial Property Today
As you can see, there are a lot of questions you need to ask when you're considering purchasing commercial property.
The process of finding the right property can be pretty overwhelming. If you ask the right questions, though, you'll have a much easier time finding a place that suits your needs.
Do you need help finding a great property for your business in the St Albert area? If so, we're here to help at Bermont Realty.