Commercial retail spaces are investments that often get overlooked. They have high returns, long leases, and require smaller deposits making them a great investment opportunity. Continue reading for more information on commercial retail properties!
High Returns
Retail real estate has higher returns than residential properties. While the United States average rental return is between 3%-5%, retail returns are between 9%-12%. The difference in these percentages should impact your decision-making when choosing an investment property. With such high returns, retail space investments are sound investments.
Long Leases
Residential leases are typically just a year; however, retail commercial leases are often between 3-5 years. Retail spaces have less turnover, so you’ll spend less time finding tenants. Once a commercial space tenant customizes the property to feel like theirs, they won’t want to move. This is why allowing renovations will help keep tenants happy and stay for longer.
Small Deposits
Since retail spaces are typically cheaper than residential properties, the deposit is also smaller. If you want to purchase a real estate investment on a low budget, a small retail space provides you with that opportunity.
The Cons
The success of commercial space relies on the economy. If the economy is doing great, then the demand and market values will rise. However, if the economy is failing, prices will drop, and finding a tenant may be difficult. Also, if the surrounding area of the property becomes less desirable, the retail space could drop in value and experience long-term vacancies.
With every investment, there are cons. When choosing an investment property, inform yourself of them but don’t let them hold you back from investing. As the holiday season approaches, retail spaces are going to see an influx of business. It’s a great opportunity to make a big investment before the end of this year. Contact us to help make that happen!