FINDING THE RIGHT LOCATION FOR YOUR REAL ESTATE ASSET
Chances are, you’ve heard the term “location, location, location” more than a few times. But if you’re in the throes of trying to juggle multiple hats, it might not be the first thing on your mind. It’s time to put location at the top of your to-do list because location is #1. Careful determination of new sites is critical for most businesses and there is no one-size-fits-all strategy for purchasing commercial real estate. This is where your True North asset manager plays a vital role. The following is a guide which will help you to get started in choosing the right location for your real estate asset.
CHECK YOUR DEMOGRAPHICS
Get a demographic overview of the area you’re looking at- age, income, households, etc. Making these determinations can be as simple or as complex as you make it. There are, for instance, sophisticated location analysis tools available that include traffic pattern information, demographic and lifestyle data, and competitive analyses, for a price.
In addition, you should look at neighbourhood. Things that may draw people to the area, such as industrial or office parks, retail, schools, colleges, highway, foot traffic and hospital complexes.
LOOK YOUR COMPETITORS IN THE EYE
Quite simply, the best place to be is as close to your biggest competitor as possible. By being in close proximity to your competitors, you can benefit. In other words, your competitors chose their locations based on the ideal demographics of a particular area. What’s more, being located near your competition can be a boon to business. Competition is good.
Of course, it’s still a good idea to make your own evaluations of a particular property, even if your competitors seem to be thriving in the area. Stay ahead of the game.
DO YOUR DUE DILIGENCE
Here are some things to consider:
Physical Condition Assessment; Evaluate the ccurrent state of repain of the building elements, including parking structures, cladding, roofs, structure, HVAC, electrical systems, and finishes. Assess whether there will be capital costs required in the short, medium or long term. Major pending capital costs will impair value.
Environmental Assessment; Consider how the property was used, whether there are any environmental issues or potential liability issues, such as mould, asbestos or lead paint in the building. Also check to determine if there are sub-surface contaminants in the soil and/or groundwater; like hydrocarbons, dry cleaning fluids, etc..
Allowable uses; Make sure zoning allows you to do what you desire to do on the property. Is the property currently conforming? Is there opportunity to expand the size of the building? If the building is currently built to the approved limits, what approvals may be required from the authorities having jurisdiction to execute your strategy; at what cost, time and risk?
Limitations on exterior and interior; Whether due to zoning by-laws or building codes or covenants, there may be limits to changes or alterations you can make to the property. A good example is a building that is historically designated and subject to restrictions on changes that can be made to the built form, such as the façade.
Adequacy of access and parking; You need to make sure there is adequate public and employee parking, and take into consideration whether access is compliant with Accessibility laws.
Legal Due Diligence; check property title for both on and off-title covenants. This includes mortgages, easements, non-disturbance agreements, and the like. Restrictions on title may severely limit your ability to affect your purchase strategy.
USE A ‘WITH-IT’ ADVISOR
Even when you’ve found the perfect property, your job is not yet done. Buying commercial real estate is a complex undertaking that is difficult even for experts to time the purchase correctly in the context of the market and competition to maximize their investment value, let alone entrepreneurs or business executives whose areas of expertise are in different industries. It’s also a venture rife with risk requiring active management, as buyers, sellers, landlords, and tenants alike must find ways to navigate the consequences of a dip or spike in demand. At the same time, on the upside the potential rewards can be substantial. Make use of a True North real estate professional who understands your needs and knows about current market & competitive trends and demographics.
Contact Us today to find out how we can help.