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Mistakes To Avoid When Scouting For Commercial Real Estate

February 4, 2022

Real estate selection is hard for many of us. It cannot be completed as a knee-jerk reaction and requires due diligence along with a lot of research. If the fact that the commercial real estate world is influenced by tons of factors wasn't perplexing enough, the dynamic nature of these influences makes the process much more complex.

In this blog, let us try and demystify the aspects of commercial real estate selection that you must mandatorily avoid to get your hands on the best possible deals.

6 Things To Avoid In Commercial Real Estate

1. Don't Lose Sight Of Details
It's pretty natural to feel that the options in commercial real estate are a bit limited, but not paying heed to available details can prove to be a grave mistake, stealing your chance to milk a great opportunity.

One needs to consider several multi-dimensional factors before finalizing the investment. Every commercial real estate unit is not built equally. One needs to pay attention to the location, construction, quality, surroundings, and even the long-term layout benefits.

Not being an attentive scout will deter you from being in an excellent position to judge the fair market price of any commercial real estate holding.

2. Self-inspection Over Public Listings
For every commercial real estate unit, there are a lot of public listings that claim to provide authentic details about the same. Unfortunately, in most cases, they tangle you in a trap because the reality is somewhat different.

Listings for commercial space for rent or any other properties should always be cross-checked by physical inspection and surveillance. You can check with public listings and general opinions of people about a particular property.

However, you should not base your entire decision on such limited information only. Moreover, from a purchasing point of view, it is always recommended that seeking the help of an expert advisor at some stage is the best way forward.

3. Don't Buy When Your Business is New
If your business is still in its formative years and you are yet to consolidate on the profits, it would not be a great initiative to make purchases in the commercial real estate market.

Most investors would want to get loans sanctioned from banks to pay off the money required for real estate purchases. However, if your business is still new, your credit score won't be as lucrative as it should be, making a case for loan rejection.

Even if your loan application gets approved, the risk is still high, considering that your business has not bloomed or you still haven't created a significant emergency fund enough to manage the expense.

4. Undermining The Location
Even the most inexperienced commercial real estate investors believe and understand that location is everything when it comes to property. Both capital appreciation and rent of the property are directly dependent on the location.

The dream location for every investor is the one where the vacancy rate is less than 5%. It means that fewer people vacate the property, and thus, any opening will attract more people even when the rents are high.

It is especially true when you are looking to lend an office space for lease or as per any other arrangement.

4. Double-check The Laws
Overtly lucrative offers or shady deal arrangements should be taken as a red flag in commercial real estate.

Knowing what the law states and sticking to it without fail is the safest and most practical thing to do. You can often see that company owners do not check the law beforehand and assume that if the landlord has offered an office space to rent, it must also be a legal place to run an office.

Check and recheck all regulations, amendments, etc., to ensure that you put your money in the right place.

5. Space Is Not Enough
As discussed before, selecting a commercial real estate space is a multifactorial decision.

But people tend to ignore this fact and simply get bedazzled by the space. Of course, the area should comply with your purpose of taking commercial real estate for lease. Still, its value depends on the location, proximity of relevant resources, and many other things.

Thus, don't make a rushed decision, especially by not being overwhelmed by the space offered.

Trusted Commercial Real Estate: The Brigade Group
Even if you are renting out a commercial space, be it for work or any other purpose, the ticket size of the investment is big enough to make the decision risky and complex.

So, be sure that you avoid these pitfalls while searching for the ideal commercial real estate. The Brigade Group is one of South India's most trusted real estate names.

With a work experience of over three decades, we have contributed to 250+ buildings, including commercial office rentals in Bengaluru, Mysuru, Mangaluru, Chikmagalur, Hyderabad, Chennai, Ahmedabad, and Kochi.

Check out our real estate offerings for the safest property options with the best returns.


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