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Three Common Pitfalls To Avoid in Commercial Real Estate

If you’re in the market for a new commercial real estate property, it’s an exciting time! No doubt you have many dreams of where your new business and building can take you. Always be sure that reality and your goals align, however. It can be tempting to overlook certain things because there’s other aspects about a building that we love, or to ignore other troublesome signs that may appear. Sometimes, we don’t even know how to look for troublesome signs! The most successful transaction is when the buyer and the commercial property are a good match for what the buyer has in mind. There are many things that can be done to change certain factors about commercial properties (such as renovations) but other things will not change (such as location in a high crime neighborhood, despite being a beautiful estate!) Your real estate agent wants you to have a successful future in your commercial property, so it’s best to keep three common pitfalls in mind.

Three Common Pitfalls To Avoid in Commercial Real Estate

  • Misjudging How Much Space You’ll Need
  • Choosing the Wrong Location
  • Making An Emotional/Impulse Purchase

It’s actually fairly common to misjudge how much space you will need, particularly when you have never had experience with commercial real estate before. Purchasing a place that is too small or too large are both major errors, for different reasons. If it’s too small, you may not have enough space to even house your employees, not to mention do business, and if it’s too large, you will be paying astronomical utility bills and may find yourself in financial distress. If you know for a fact you will be expanding your business, too much space may not be a bad thing, if you can afford the upfront costs – just make sure you have a clear 1 year and 5-year business plan, preferably with a CPA or advisor, when you make a purchase.

Location really is everything for the prosperity of a business. It needs to be conveniently located for your customers/tenants, but you also need to consider things like zoning, ordinances, taxes, the availability of parking, and where the majority of your employees live and/or go to school, if you employ a lot of college-aged people. Keeping your demographic of both internal and external customers in mind is very important for the well being of your business. Is the location safe? What are insurance rates for the area? These all need to be investigated, and are highly dependent upon location.

Emotional reactions to commercial properties are common – just as they are to residential properties. You see a property and say, “Oh, I love it! This is the place!” Maybe it really is, but you need to take a few days to let your emotions cool down while you investigate details and if the property meets your needs, and also be sure to get a few trusted professional opinions about how well the property would work for what you have in mind. Your gut reaction may be exactly right, and if so, that’s wonderful. Taking a few days to make sure won’t hurt anything.

In the meantime, check out these 1-click searches:

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Newest Key West Commercial Properties on the Market

Old Town creative small office space, located on the 2nd floor at 524 Front Street in Key West. Office #2 is available for lease starting February 11th approximately 115sf, perfect small space for a couple of desks, shared sitting area, porch & kitchenette. Location is in the Heart of Old Town in the Cruise Ship District. All utilities included. In addition to monthly rent quoted is sales tax. $750 Active

524 Front Street Office #2 KEY WEST, Florida

1 Baths 115 SqFt

Great opportunity to purchase a SIX UNIT corner property!  All units are spacious with 2 bedrooms and 1 bath. Separately metered for water and electric.  Five units are month to month and one unit has a lease ending 9/2023. Close to dining, resorts, marina, and only minutes to Key West.  Ideal for investors, perfect for employee housing or owner occupier with rental income.  Prime corner 125x50 lot with ample off street parking. Sale is subject to court approval of Personal Rep. for the Estate of Co-Seller. $1,750,000 Active

6336 2nd Street Stock Island, Florida

6 Beds 6 Baths 5,394 SqFt

Endless possibilities! Rare multi-use commercial/residential building located in prime location in Old Town, Key West. Now available, 2000 sq.ft. commercial space on ground floor with 2 bathrooms and bonus office/storeroom. Upstairs are (3) three large residential apartments with a terrace. All the units have independent entrances and separate electric meters. The first apartment has 3 large bedrooms, 2 full bathrooms, stainless steel appliances & spacious balcony. The second apartment has a new kitchen with 2 bedrooms, 1 bathroom. The third unit is a large studio with full kitchen and bathroom. Enjoy the proximity to the beaches, restaurants, shopping and all the attractions. This mixed-use property is a must see! Perfect for 1031 exchange, investor, employee housing or owner occupier. As per request, rental income and annual expenses are available. Schedule your viewing today! $2,900,000 Active

1110 White Street KEY WEST, Florida

6 Beds 6 Baths 3,657 SqFt

Fantastic space available in the heart of the evening crowd across from the Opal and Ocean Key House Hotels and steps away from world famous Mallory Square, Key West's popular Sunset Celebration. High traffic location with cruise ship passengers and tourists using the old town train & trolley stationed right across the street. Ground level storefront with large display windows and approximately 1250 sq. ft. of retail space with an additional 950 sq. ft. of space that could be combined next door for a total of 2,200 sf. ft. Triple net expenses and sales tax are in addition to the amount quoted $8,300 Active

308 Front Street KEY WEST, Florida

1 Baths 9,411 SqFt

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Posted in: Business Solutions, Buyers, Buying Commercial Real Estate, Owning a Business Tagged: business decisions, Business pitfalls, Common Pitfalls in Commercial Real Estate, Location in Commerical Real Estate, Office Space

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