Investment In Commercial Real Estate! Pros, Cons and More.

Home Real Estate Concepts Investment In Commercial Real Estate! Pros, Cons and More.

Commercial real estate has been the most common explored option when investments come to mind. Getting bigger returns on your investments is usually what everyone wants. But what’s the key to being successful in something which already has so much competition involved along with a huge risk.


Before comprehending the market scenario, it’s important to understand the meaning of the commercial real estate. Wikipedia defines Commercial Real Estate as “buildings or land intended to generate a profit, either from capital gain or rental income”. It’s necessary to decide the type of property you want to invest in. It is a property that is used exclusively for business purposes and that is leased out to provide a workspace rather than a living space. Ranging from a single gas station to a huge shopping center, commercial real estate includes retailers of all kinds, office space, hotels, strip malls, restaurants, and convenience stores.

Image credits  Unsplash

Commercial real estate is a very risky business. One has to learn about the pros and cons before thinking of investing the amount in this industry.

PRO'S of investing in Commercial Real Estate

Potential Income: Commercial Real estate is way more profitable as compared to residential properties. The rental space offered to the various brands or offices usually give much better returns along with adding the value to the property.

Returns: The rental lease for a commercial property is usually longer than the residential houses. Companies and brands take property with the idea to stay for a specific amount of time, as image building for any brand comes from consistency.

Benefits: Owner of a commercial building can actually give raw property, as every brand or office maintain and construct the space according to them. So, the basic maintenance is never an issue for the owner.

Tenants: The tenants for the commercial properties and usually banks, offices etc. So the quality of the tenants is never a concern. The working hours for these properties are usually according to the comfort of the owner as well.

Lightning Fast Interior Design Software
Ideate | Plan | Design | Render | Collaborate

Image credits  Unsplash

CON'S of investing in Commercial Real Estate

Initial Investment: The initial investment in the commercial properties is way too higher as compared to the residential real estate. The basic concept of supply and demand works in real estate as well. The location with higher accessibility will require heavy investments.

Commitment: Dealing with the commercial clients can be troublesome for the owners sometimes. If the owner is dealing with multiple corporate offices on the same property, time management and dedication is very important. It’s crucial for the owner to stay in touch with the tenants and have a good relationship.

Professional Help: Dealing with corporate can be really problematic for the owner sometimes. It’s important to seek professional help to deal with a few situations. It’s better to get outside help for all the legal procedures. Even if the owner decides to take care of the legal activities on his own, help will be required to monitor the company’s growth on the monthly basis. Researching the management and seeking professional help will definitely help the owner in a long haul.

Dealing with the increasing competition in the real estate industry, it’s important to do your homework before stepping into this investment web. Here are some of the tips and techniques to understand this industry completely.

  • Location:

Real estate success depends on only one factor i.e. Location. Giving a brand the perfect location to work on, improves your chance of getting the perfect return on that huge chunk of investment. Location plays a vital role in the success of any business entity. A high vacancy location gives tenants options to move and renegotiate rents. So, investing wisely in the location that can be beneficial for your tenants will ultimately result in giving you the right return from the property.

  • Pick a reputable brand:

Getting a good brand on board always adds value and credibility to your property. Working with a reputed brand helps you gain value in the market. And bigger the brand, bigger will be the return insurance. And the security of returns is usually high with reputed names, as they don’t prefer to change the location very often. The lease agreement is usually for a longer period of time resulting in the return for a longer period of time.

  • Demand vs Supply:

The success of any commercial property depends upon its demand. Greater the demand more will be the return. Understanding the right property is very crucial in this business. Do your homework properly, understand the market and then choose where to put your money in.

  • Quality of Tenant:

The interaction with the tenants in the commercial real estate is barely possible. So the quality of tenants is very important before giving them the responsibility for your property. Involvement of the landlord is very less in the Commercial Real Estate properties, so choosing the right corporates helps in the long run and helps in maintaining the relationship as well.

  • Security deposit

Security deposits in commercial properties vary between 10 and 12 months’ rent. Be careful when a tenant offers 6 months or less as it means that they could be looking at a short-term option or have cash flow issues. Startups typically tend to ask for smaller deposits and shorter lock-ins.

Image credits  Unsplash

The commercial estate can give the investor the right value for his money. Just by considering a few factors and staying updated with the latest market trends can actually be beneficial for anyone who is planning to invest in this growing real estate option.

Disclaimer: The information contained in this website is for general information purposes only. All logos/softwares/company names are registered trademarks of the respective companies and Foyr has no associations, connections or affiliations with any of the softwares or companies mentioned on this website. All views written here are personal views of the independent writer. If you notice any infringement or copyright violations please write to us at