Commercial Real estate
Interesting commercial property in Moabit
1 Rooms | Size 36.68 sqm
Erasmusstraße 2, 10553 Berlin
Reference nr.: 16718533
Your commercial property for your own use or capital investment
3 Rooms | Size 129.25 sqm
Erasmusstraße 2, 10553 Berlin
Reference nr.: 16718532
Package! Two commercial units as capital investmen, with superb development potential!
5 Rooms | Size 266.21 sqm
Paul-Zobel-Straße 8d, 10367 Berlin
Reference nr.: 16710927
Commercial Real Estate Acquisition – Finding the Best Property for You
For the business community, buying commercial real estate is a viable alternative to renting and leasing. But investing in commercial real estate can also be a paying proposition for clever investors. In certain respects, however, buying a commercial property differs radically from the acquisition of residential real estate, such as condominiums. The differences concern primarily the house price development but also rent forecasts and pricing. We therefore recommend consulting an experienced estate agent when seeking to buy commercial real estate. The agent will help you with all specificities, and naturally with the actual search for the perfect property.
Different Types of Commercial Real Estate
Even through commercial premises tend to be generously lumped together in land use plans and local development plans, notable differences come into play for the buyer. Urban environments are often glutted with office and warehouse space, whereas large rural properties like farms and camp grounds, for instance, experience little fluctuation but are also subject to less demand. Gastronomic and retail assets, by contrast, are subject to fiercer competition as far as location and infrastructure are concerned.
Acquiring Commercial Real Estate: Office Accommodation
Cities seem to have office buildings everywhere you look. In many cases, supply exceeds demand, so that fierce price wars are fought on the occupier markets. Regardless of the price tag of a given property, the rent at which it is let tends to be uncertain and can quickly reverse itself in either direction. This can actually be of advantage if you are seeking to buy an office scheme for owner-occupancy.
Buying Commercial Real Estate: Gastronomic and Retail Premises
The retail sector and gastronomy businesses operate in commercial premises that are subject to special requirements. This concerns size and layout, but also the location and condition of the property. Real estate of this kind tends to lie in high-street locations and border directly on other commercial properties. Remote retail assets may be cheaper to buy, but they are also harder to let. If you plan to buy a storefront to open your own business, a lot can depend on the right timing.
Buying Commercial Real Estate: Warehouse Assets
Large-scale assets such as light industrial plants and warehouses are usually located in dedicated business areas outside the urban centres. This makes them affordable despite their large footprints. This type of property is rarely subject to major price fluctuations. But this is true only as long as property listings in this segment have not dried up, because these warehouses are costly to build and cannot be created by converting other types of buildings.
Buying Commercial Real Estate: Special Large-Scale Assets
Bold investors or owner-occupiers active in the relevant industries may be attracted to special assets when looking to buy commercial real estate. These could be business areas or commercial-zoned plots such as agricultural land or camp grounds as well as farms or horse ranches. You will rarely find them in real estate listings, and whenever they do become available it is almost exclusively in rural regions. Then again, the reason they are put on the market is often that their private owners are under financial pressure and will sell at a discount.
Buying Commercial Assets: Finding the Right Property
When buying commercial real estate, the property type will generally define the purpose you will want to use it for. If you acquire an existing warehouse, you will find tenants and generate income much sooner than you would if you bought a brownfield site that may take a long time to develop. In the office and retail property segments, you have a higher tenant churn, but can charge higher and more flexible rents. Finally, you can also buy commercial real estate and wait for it to appreciate even without further capital expenditures and without signing lease agreements.
A good estate agent will know the market for commercial real estate and will start by helping you define proper search criteria. Are you looking for a property for a longer-term commitment or do you care most about its resale value? Are you looking for a single property or do you aim for a wider diversification of your opportunities and risks? Once these questions have been answered, the estate agent will help you find suitable premises that match your property search requirements.
The questions that present themselves to owner-occupiers are more or less the same. But in owner-occupancy, the long-term savings in leasehold or rent payments as well as the future of the own business take precedence over return on investment and resale value. Especially retailers and restaurateurs should focus very closely on the location and its connectivity before buying a commercial property. Any reputable estate agent will advise you to conduct thorough site analyses before deciding whether to move ahead or not.
Risks and Opportunities when Buying Commercial Real Estate
One of the chief advantages of buying commercial real estate, from an investor’s point of view, is surely the planning certainty it creates. In many cases, content and financially sound occupiers remain loyal to a given property because relocating an entire business is much costlier than a private removal. This is particularly true for businesses with customer access, such as retail outlets, doctors’ offices or restaurants that already built up a local client base.
Moreover, the rates of return are substantially higher when you buy a commercial property. Compared to residential real estate, rents per square metre are generally higher and not bound by the local rent index. At the same time, the value of a commercial property can increase rapidly if the businesses that occupy them prosper and other businesses relocate to premises in the neighbourhood. Ideally, you will benefit from tidy rents and rapid appreciation.
Before you buy a commercial property, you should also take a hard look at the specific risks involved. Especially retail and office units are often subject to a high tenant churn that implies an elevated risk of collection losses and vacancies. This is true for multi-unit properties as much as for the little corner store. Your tenants should therefore be picked with particular care. Bear in mind that long-term supplier contracts for electricity, water or internet connectivity will need to be fulfilled even if a building is unoccupied.
Patience and Diligence when Buying Commercial Real Estate
The first rule when buying property applies not just to condominiums but to the acquisition of commercial real estate as well: Be patient! As a rule, commercial real estate represents a long-term investment, which therefore requires long-term planning and long-term solvency. It can take quite a while before you start making serious profits. Once they do, however, it can be extremely lucrative. But the precondition for generating such earnings is that you proceed with extreme diligence. Commercial real estate is subject to special regulations and should not be bought without obtaining qualified surveys of its engineering specifications. Be sure to consult an experienced estate agent as well as building surveyors and lawyers as needed. It is the only way to rule out building defects or contractual irregularities, and to avoid legal disputes or costly maintenance measures.