Commercial Real Estate Tips for Newbies

Commercial real estate is a tough business, and knowing the pitfalls from the onset can save you both time and money on the front end.  As the market is leveling off and many cities are still reeling from the economic crisis that hit our country a few years ago, it has become increasingly important to know what you’re doing before you dive into the commercial real estate market.  

1.       Be patient

There’s a reason this tip is number 1.  Being patient and taking your time to do the research needed on a particular property will mean the difference between your success or failure as a real estate broker.  Commercial properties are different than residential properties in many ways, including the time it takes for these properties to be purchased, renovated, or sold.  Getting impatient will likely result in a bad deal. 

2.       Spend a lot of time on the front end

Commercial properties will take a lot of time to screen and work out deals on.  Of course there is a learning curve and you will get better at it over time, but it is extremely important that you take a lot of time on the front end to do your due diligence in research.  Research everything: the area, the history, future planning/zoning, demographics, etc.  

3.       Build the right relationships

As with residential real estate, building a network within commercial real estate is crucial if you want to get the best deals on the best properties.  This network that you build for yourself will make all the difference.  Many properties aren’t listed before they are sold, so if you put the word out in your network about exactly what you’re looking for, chances are that someone will fill you in on property details that you wouldn’t have found through traditional methods. 

Commercial real estate is a tough business. What tips can you give to new Commercial Real Estate agents?

The Top Cities Showing Commercial Real Estate Growth

The Emerging Trends in Real Estate report released in 2012 by PwC US and the Urban Land Institute (ULI) showed that the best growth that can be expected to occur this year in commercial real estate will be largely confined the urban areas that are “24-hour” cities, with multiple transportation hubs and global access from these hubs.   

The continuing economic slump and the slowed job growth rate continues to bog the real estate markets down, and consumer spending is keeping retailers conservative in their leasing and purchasing.  According to Mitch Roschelle, partner, U.S. real estate advisory practice leader, PwC, “Job creation is clearly the critical ingredient for a sustained recovery in commercial real estate and the market participants we surveyed uniformly struggled to identify new employment engines. As a result, businesses are focused on squeezing profitability out of productivity gains, and families forced into belt-tightening are using less square footage, which follows ‘The Era of Less’ sentiment we forecasted last year.” He continues to explain, “In 2012, investors expect pricing to level off in the top markets – and overall ‘buy’ sentiment will subside, selling appetites will increase, and more owners will hold until the economy untracks. This is part of 'the new normal' as investors are coming to grips that they may not be selling for more than they paid.”

What this means is that there will likely be an increase in properties for sale in most areas across the nation, but buyer demand will slow in many of them due to continued economic uncertainty until the market levels off.  The report, however, did list 10 cities to watch as the Top 10 for expected growth in the commercial real estate sector.  These include Washington, D.C.; Austin, TX; San Francisco, CA; New York City, NY; Boston, MA; Seattle, WA; San Jose, CA; Houston, TX; Los Angeles, CA; and San Diego, CA.