As with any major purchase, deciding to purchase commercial real estate can be a nerve-wracking process. With residential real estate, unless you are purchasing it with the intent to flip it or lease it out, you are often only working to appeal to yourself. Purchasing commercial real estate, and particularly retail real estate, is a business investment, however, and one that could yield either fantastic pecuniary returns or could result in financial disaster. With that in mind, the commercial real estate experts at NAI Isaac, serving Central Kentucky, have some things to consider before purchasing retail real estate yourself.
1. The economy
I think we all remember the real estate crisis that happened in the early years of the 2000’s. While we can no longer claim that we are in a recession, thankfully, the real estate economy has not entirely recovered yet, particularly when it comes to commercial properties. You may have noticed yourself that so many businesses have been closing recently. The sector with the largest number of closures is apparel, and so if you are purchasing retail property for the purpose of opening an apparel store, be aware that the footing for apparel retailers at the moment is a bit shaky.
2. Changing consumer attitudes
With that being said, while apparel retailers are seeing the highest number of location closures at the moment, they are also seeing some of the biggest increases in expansion. Largely this has to do with changing consumer attitudes toward all aspects of retail consumption, but toward apparel in particular. Prior to the recession, mid-range and upscale apparel retailers were quite successful, but recently more consumers are looking for discount retailers specializing in unique items. Consumers are prioritizing convenience, experience, and value, so if you are planning on purchasing retail real estate, make sure that you and your brand are able to appeal to current demographics.
3. Make sure you are able to compete with e-commerce
The internet is rapidly changing every aspect of our lives, and yes, that includes how we shop, and should include how you think about commercial real estate. While e-commerce has yet to fully replace brick-and-mortar shopping, it has greatly impacted the choices that consumers make about where they go to shop. This harkens back to the “experience” we mentioned earlier. In almost all instances, e-commerce is going to be more convenient than going to a brick-and-mortar store, so with your retail space, you will want to make sure you are giving your consumer something that they can’t get online.
Have we helped you figure out what to consider before purchasing your own retail real estate? If we have, then please contact NAI Isaac today to get started on finding the perfect space for your business. Our office is in Lexington, Kentucky and we proudly serve the Central Kentucky area.