What You Should Know About Before Investing In Commercial Real Estate

IBISWorld reports that the commercial real estate industry in the US will be worth a whopping $1.1 trillion in 2022. Commercial properties are in high demand, so this sector is undoubtedly a great place to put your money. However, acquiring a commercial property is nothing like purchasing a house. Essentially, you seek buildings that can bring you great investment returns instead of a place to live in. It is crucial to do your homework well and know the unique things to be concerned about when purchasing commercial property. Here’s what you should know before investing in commercial real estate.

• Building safety

Commercial buildings must follow stringent safety regulations to be considered safe for individuals to use or work in, unlike residential property. However, some investors rush to acquire buildings that fail all necessary health and safety checks. These investors typically have to spend more money to improve the building’s safety standards before renting it out to interested parties. Consequently, always take your time to conduct safety hazard checks, electrical inspections, and other essential tests before acquiring commercial buildings. You will often find little problems here and there which can easily be fixed, so you needn’t abandon acquisition simply because these issues pop up. For instance, poorly maintained lifts in a commercial building can easily be worked on by experts such as https://www.sheridanlifts.com/lift-maintenance/ to reduce breakdown frequency and keep you legally compliant.

• Soundproofing

Research shows that sounds louder than 85 decibels can damage your hearing. Consequently, soundproofing is vital to keep in mind when acquiring commercial real estate. Noise is a key feature of many commercial properties due to the many individuals that visit and business operations taking place within. Nevertheless, few people will be interested in renting office spaces in your commercial building if they can hear noise from next door companies. As such, it is vital to invest in buildings with quality soundproofing to boost your chances of renting spaces out. 

• Property classification

Any building used for business purposes qualifies as commercial real estate. However, there are various classifications for different property types worth knowing about. For example, office buildings are grouped into Classes A, B, or C. Class A properties have the lowest risk levels compared to their Class C counterparts that have the highest risk levels. Similarly, retail stores and industrial properties have their special designations. Therefore, it is vital to understand the classification of the commercial property you wish to acquire and what it means for you as an investor.

• Planning regulations

Commercial property owners often wish to modify their buildings after acquiring them, just like homeowners. It may make sense to include an extra floor or build a new parking area. However, these improvements need planning permission to proceed, and you may be denied. Extending your commercial property in areas with stringent planning regulations may be illegal. Consequently, check with your preferred property’s local council to know whether there are strict regulations to avoid buying a building you cannot modify.