Real estate is a fast-growing industry with various ways to invest. Some seasoned investors are looking for commercial buildings for sale in Philadelphia. Commercial property is high risk with high reward and is not for your average real estate investor. Learn the advantages and processes behind purchasing commercial property in Philadelphia.
What is Commercial Real Estate?
A commercial property intended as a location for one or more businesses. Commercial real estate usually covers retail stores and office buildings, while warehouses are similar but considered industrial real estate zoning. The zoning of the building dictates the use of the property to protect the community. Commercial zoning regulates how individuals will use the land. Usually, commercial property is leased by the business owners while a real estate development company owns the land.
Different Forms of Commercial Buildings
The concept of commercial real estate involves a building that’s meant for a business to operate on the land. Commercial buildings can be storefront properties or mixed-use buildings, with residential zoning mixed with commercial ones. Here are some examples of commercial property:
- Office Buildings. Office buildings can consist of doctor offices, conference centers, call centers, etc. They may also conduct on-site business with their clients.
- Commercial properties can consist of retail stores. Retail stores directly sell goods to their customers. Examples are grocery stores, shopping centers, home goods stores, and even small business owners who provide items.
- Event spaces and restaurants.
- Special purpose property such as a gas station.
Check with your township or the city of Philadelphia before purchasing a commercial property. Also, please make sure it’s zoned properly for your intended business purposes.
Commercial Buildings for sale in Philadelphia Vs. Residential
Philadelphia is one of the largest cities in America. The city of brotherly love has a population of nearly one and a half million and a booming real estate market. However, the number of commercial buildings for sale in Philadelphia is slim, with a total of roughly 625 commercial buildings currently for sale. Furthermore, there are roughly fifty thousand commercial properties in the Philly area.
It’s more difficult to find commercial buildings for sale in Philadelphia, PA, than residential property. There are almost 473k homes in the city, and property values continue to rise. However, the Philadelphia commercial real estate industry varies by location.
For instance, almost 24% of the commercial buildings in Center City Philadelphia are currently vacant, and the vacancy rate is expected to grow by 1 million square feet annually. It’s safer to invest in residential property in Philly, although renting a building in Center City is an excellent idea if your business doesn’t consist of retail or serving customers on-site. If you want to purchase a commercial building in Philadelphia, avoid the Center City area.
How to Find Commercial Buildings For Sale in Philadelphia
When looking for commercial buildings for sale in Philadelphia, please don’t go about it alone. The best method to purchase commercial property is to utilize a realtor who specializes in commercial real estate. An agent who has experience representing clients in purchasing commercial property is a professional who can understand the commercial trends within the city.
The agent can confirm numbers while negotiating for the best terms. Consider working with a licensed real estate wholesaler if you’re looking for exclusive off-the-market commercial deals. A commercial wholesaler can connect you directly with a seller. If you use a wholesaler, you can always hire a lawyer or realtor to guide the transaction.
The Process to Buy Commercial Property
The first step in purchasing commercial property is to hire a commercial agent. Determine your budget and the area best suited for your business. Consider aspects such as parking and accessibility. Next, the agent will pull a list of potential commercial sales while narrowing the list down to properties to view.
Please set up the showings, look over the property’s overall condition, and see if it fits your needs. If the commercial property is ideal, you’ll be able to make an offer. Lastly, once the offer is accepted, you will go ahead and conduct your inspections and set a closing date, if you don’t mind. Closing on a commercial property is very similar to buying a residential home.
Pros and Cons of Investing in Commercial Buildings
Buying commercial properties has many pros and cons, although everyone’s wants and needs are different.
Pros: Some forms of commercial real estate tend to have long-term tenants. Businesses prefer staying in one location to keep things simple for their consumers. Additionally, low tenant turnover minimizes risk with high rewards. Tenants are usually responsible for commercial property maintenance and, at times, property taxes.
Cons: Commercial real estate investing is NOT for everyone. Commercial buildings for sale in Philadelphia typically require more capital to invest than residential properties, and acquiring a loan for commercial properties tends to be more difficult.
Once the property is purchased, the renovation costs are much higher than residential, and it can take much longer to obtain permits. Lastly, there is a high risk involved with commercial real estate. The turnover rate is higher than renting a house, and when there is a vacancy in a commercial building, it’s hard to find a suitable tenant. Most commercial owners hire property managers to oversee the daily functions.
All About Commercial Buildings For Sale in Philadelphia
Understanding commercial real estate investing is not for your average investor is vital. Commercial real estate comes with more significant risks than any other form of real estate investing. When a commercial building is vacant, it takes much more time to find a tenant.
Additionally, commercial property expenses are more expensive than residential homes. Finding funding is difficult for commercial investing, and with limited options. When buying commercial buildings in Philly, use a realtor for guidance to ensure a safe investment.
If approached correctly, commercial real estate has substantial financial benefits, especially if you can find a long-term tenant to lease the building. Consider the pros and cons before searching for commercial property and determine your budget. If you need help finding commercial buildings for sale in Philly, call us today 267-420-2296.