For those who are looking for their next major investment, many are turning to the world of retail shopping centers for high profit margins. As with any kind of real estate investment, understanding the market in your area is one of the most critical components to any kind of investment of this nature. Doing thorough research and risk analysis before making this investment decision can be the difference between a lucrative investment and a total loss.
Some other important factors to look into for shopping centers are the current occupancy rates, length of tenant leases, quality of tenants, as well as the demographics of the area. Within this you should take a look at current, or even potential, anchor stores. These will be draws for other retail tenants and bring in a greater customer base to the shopping center. Grocery stores are a very popular and desired anchor store for their necessity and market stability. Finding a shopping center with multiple anchor stores is a great way to grow your investment. So look into the profitability of each retail store, and both current and potential future tenants. Anchor stores such as Target, Nordstroms, Best Buy, Ross or other big box stores, are an integral part of the shopping center’s success.
Also, looking at the location and present condition of the shopping center is another make-or-break component of this investment. Factor in the costs of upgrading the appearance versus a newer and pricier option. Perhaps you would prefer to get things up and running faster. In this scenario you’ll pay for the higher property cost upfront.
However, the upside to a more outdated shopping center is the lower initial cost of the property. Additionally, you can choose to update what you wish at your convenience. Putting these updates off is not always optional. Although, if these are relatively minor cosmetic issues, they can be spread out over the course of time. Additionally, you can create an even more modern version that is suited to the preferences of the target markets you are trying to reach.
When considering this type of investment, it cannot be stressed enough that your location is such a crucial component to your success. With many measurable signs of the economy’s continued improvement it is an excellent time to consider investing in shopping centers. Comparing locations from city-to-city and within the areas of a selected city should be carefully researched.
While there are so many different kinds of investment properties out there, it is important to find the one that is best suited to your specific situation. No matter which type of property you decide on, all investments take a lot of research and a dash of good luck. Ensuring that you do the appropriate legwork with your initial investment will help safeguard your investment.
Based in Yucaipa, CA, Regioncy Real Estate provides commercial and residential property owners with advisory and management services. Regioncy focuses on multi family, retail, office, industrial, asset management and a broad menu of residential services. Our mission is to help our clients build, grow and preserve long term wealth by providing superior advice, strong representation, professional market knowledge and expert analysis. Contact us here.