Factors That Can Influence Your Purchase of Commercial Real Estate

Commercial real estate transactions can be some of the more complicated types of real estate transactions that can be made. This can lead to these properties needing a separate set of factors and criteria in order to be effectively evaluated.

Zoning Rules

The zoning rules that govern the location can be an important consideration with buying any type of commercial property. Individuals should appreciate that zoning regulations can severely limit the activities that can be done on the property as well as the improvements that can be made to it. A thorough review of the zoning regulations will be needed prior to choosing an existing building or a vacant lot to purchase. Otherwise, one or more aspects of your business may not be allowed due to the zoning restrictions, which can be a devastating problem to encounter. To avoid misunderstandings that could give you the wrong impression about the activities that are allowed on the lot, you may wish to have a commercial real estate agent conduct an assessment of the local ordinances as well as your business plan.

Development Process

It is common for businesses to plan to eventually expand their buildings or add new ones to the property. Unfortunately, the development rules for commercial properties can be extremely complicated and lengthy. Furthermore, these rules are largely determined by the city and county governments, which can lead to considerable variation in them. These factors can be especially important to those that are buying a vacant lot to develop on their own. Hiring a corporate real estate attorney can be useful in these situations as these services can evaluate the local ordinances to help you assess whether development on the lot will be feasible as well as providing a general overview of the steps that will be involved.

Insurance Costs

One aspect of buying commercial real estate that can go overlooked will be the costs of insuring the property. A business without this type of insurance can be at risk of being completely destroyed and lacking the resources needed to rebuild. However, the costs of insuring a commercial building can be extensive, and individuals will need to be aware of this when they are evaluating properties. In addition to the value of the property itself, these policies may also look at the physical location of the building to determine its risk of crime, natural or man-made disasters. For example, a building that is located near an aging reservoir may find that the costs of insuring the business will be far more than if another lot was chosen for development.


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