Commercial real estate is considered an attractive investment opportunity, but also presents complex challenges when buying and selling. To be successful, potential investors need to consider certain aspects and make smart decisions.
What is commercial real estate?
Commercial real estate covers a wide range of uses, including warehouses, retail stores, restaurants, office buildings, vacation homes, train stations, airports and hotels. They often offer more flexibility in terms of rental arrangements and longer lease terms compared to residential properties. But be careful: dealing with commercial real estate requires a different approach to residential property, especially with regard to marketing and management.
Clear definition boundaries
Does this include the artist’s studio or the photographer’s studio in a private home? Tax law says: It depends. If the property is predominantly used for commercial purposes, i.e. with the aim of making money from a particular activity, then the use is considered commercial and the profits must be taxed. The art studio is therefore not included.
Valuation reports and target group determination
A precise valuation is essential to optimize the sales process. This is usually done using an income capitalization approach, which takes into account rental income and management costs. This gives potential buyers a clear idea of the potential return. A detailed valuation report creates confidence and enables buyers to better assess the profitability of the property.
The type of use of the property must be clearly defined in order to appeal to the right target group. For example, marketing an office is fundamentally different from marketing a restaurant. A thorough market and location analysis is essential in order to assess the purchasing power and competition in the surrounding area.
Market and location analysis
A detailed market and location analysis is crucial for success when buying or selling commercial real estate. Not only current market conditions, but also future developments should be taken into account. Factors such as infrastructure, transport links, population density and the economic situation in the region play an important role.
Sellers should act with empathy and foresight: Does the specific trade have a chance of survival at this location? Is the demand for the type of use offered high enough? It is important to understand the needs and expectations of potential tenants or buyers. These considerations are crucial in order to successfully market the property.
Commercial brokers and secret sales
Working with an experienced commercial broker can make the sales process much easier. Commercial brokers have industry knowledge and existing networks of potential buyers, which can speed up the sales process. They know the market conditions and can position a property optimally. A popular strategy is the secret sale, where the property is only offered to selected interested parties. This can increase demand and give prospective buyers the feeling of having an exclusive opportunity. Secret sales are particularly useful when there is either high demand or a short supply on the market.
Transparency and communication as success factors
Transparent and clear communication is crucial when marketing commercial real estate . Potential buyers expect comprehensive information such as valuations, market and location analyses, site plans, land register extracts, floor space calculations, development plans, refurbishment reports, operating cost statements and energy performance certificates. In this way, unpleasant surprises can be avoided. Providing transparent information creates trust and facilitates the sales process. Sellers should be prepared to provide detailed information about the condition, location and possible uses of the property.
Rented commercial properties are particularly attractive as they represent a stable source of income. Vacancy, on the other hand, can mean uncertainty, unless the property can be used in a variety of ways. Generally speaking, rented properties are easier to sell. Buyers often prefer properties that already generate income and therefore represent a lower risk.
Legal and tax aspects
Legal and tax aspects play an important role in the purchase and sale of commercial real estate. It is important to know and understand the local regulations and tax laws. An experienced commercial broker or legal advisor can provide valuable support here. When drafting contracts, it is particularly important to regulate all relevant points clearly and unambiguously in order to avoid conflicts later on.
Conclusion: Use the expertise of commercial brokers
The marketing of commercial real estate requires specific knowledge and a clear strategy. The intended use must be the focus of marketing, and a transparent information policy is essential. Commercial brokers can help to optimize the process and successfully complete the sale. This makes investing in commercial real estate a worthwhile capital investment. Commercial real estate offers great profit potential and can be a valuable addition to any investment portfolio.