When investing in commercial property the main goal is to maximize investment return that helps to reduce the risks as much as possible.
The cities with the greatest appreciation potential are considered to be the ones with largest supply shortages. The term "supply shortages" in the commercial property market refers to cities and sub markets in which the demand for commercial property is larger than the supply.
Therefore, cities in which the demand for commercial property increases at a considerably faster rate than the supply of commercial space have a high likelihood of strong property value increases and high commercial real estate investment returns. However, there is an important requirement for the above dynamics to take place and this has to do with the existing commercial property available for lease or sale,which has to be small. If the existing vacant inventory is large, even if demand for commercial space is growing faster than the existing stock, commercial property rents and values may continue to decline.
Therefore, in order to correctly answer the question where to invest in commercial property, we need to thoroughly analyze the demand and supply prospects of the targeted markets or sub-markets, and assess whether expected demand increases will be exceeding the available vacant stock and by how much.
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