Factors affecting commercial property value

Factors affecting commercial property value

There are a variety of commercial properties available for investors to sink their funds in the Tucson property market. One can invest in a warehouse, retail, or office space. But before you put in your savings or take that mortgage, it would be important to know and understand the various factors that influence the value of a commercial property.

The team at Sapphire Capital Investment has put together this article for the benefit of potential investors in the Tucson market.

Location

One of the chief factors influencing property value is its location. Unlike other investment options such as stocks, bonds, and financial vehicles, the property is an immovable asset. It must always be perceived by virtue of its surroundings. That said, property value is a function of amenities, infrastructure developments, transport links, and accessibility of the area in the context of the town/ city.

Characteristics/ amenities of the property

Speaking in layman’s terms, the bigger the developed space, the more valuable the property will be. With a larger built-up area, you are able to rent to more tenants and receive a higher rental income at the end of the month/ quarter.

However, there is also the issue of market preference and the quality of the space. A commercial space might be big but the development is functionally obsolete. This has a detrimental effect on the value.

Condition of the property

Like all things on the surface of the earth, the property will, over time, show the effects of normal wear and tear. Paint may appear cracked, the landscaping may need some touch-up, and the bathroom a complete makeover.

Regular inspections of your property are essential to guaranteeing that defects are detected early and a professional contractor works on them. If you neither have the time nor experience, it might be prudent for you to hire a reputable and trusted property management company.

Supply and Demand

As an economic good, real estate is influenced by the forces of demand and supply. For example, should there be an increase of buyers in the market and a shortage of housing stock (known as a seller’s market), prices are bound to increase. In this scenario, sellers would enjoy greater profit margins.

The opposite stands. Several development companies may decide to put up new estates in an area. With new housing options, the prices will take a dip as property buyers now have more options to choose from. This is known as a buyer’s market.

The condition of the property will also have an effect on the tenant turnover rate. Those with experience in property leasing will agree that tenants are quite particular about the condition of the property. If not well maintained, tenants may start considering other options in the market.

Conclusion

Do you need more advice on the Tucson property market? Get in touch with the leading property advisor in Tucson, Sapphire Capital Investment. We are dedicated and committed to offering property solutions to our real estate clients. With our expertise in all aspects of buying and selling real estate, you can invest in property that meets your tastes and investment goals.

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