Factors That Affect Commercial Real Estate Markets


Commercial Real Estate pic

Commercial Real Estate
Image: investopedia.com

Geoff Block held an executive role with Crown Growth Partners before he and his wife opened the firm RLB Squared, LLC. As manager, Geoff Block is responsible for the daily operations of a company that manages family portfolios and has holdings spanning a variety of areas, including commercial real estate.

To a great extent, commercial real estate markets differ from all other markets because of several factors. One is location. Although it is easy to find a good location, predicting whether choosing a location remains a profitable decision several years from now may be challenging. Considerations for choosing a location include accessibility, transportation connectivity, and distance from clients, customers, and suppliers.

Another factor that affects the commercial real estate market is budget. Aside from the purchase price, there are other cost considerations when buying a commercial real estate property. So whether a client decides to pay in cash or opts to use financing, creating an accurate budget is essential to determining the range and accuracy when searching for available options.

Appraisal also makes the real estate market different from other markets. Most buyers purchase their properties using mortgages, and lenders will not generally lend money for more than the property’s appraised value. An office or any building is considered to be worth the price the appraiser sets. As much as 11 percent of real estate deals are killed by appraisal issues.

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