Commercial Real Estate Property At Jonesboro AR

What Is Commercial Real Estate
Commercial real estate is a property used exclusively for business purposes or to provide a workspace rather than a living space. More often, commercial real estate is leased to tenants to conduct businesses. Commercial real estate includes retailers of all kinds, office space, hotels, strip malls, restaurants, and convenience stores.

Commercial real estate is categorized into four classes, depending on function: office, industrial, multifamily, and retail. Office space, for example, is characterized as class A, class B or class C based on certain parameters like below.
Class A represents the best buildings in terms of aesthetics, age, quality of infrastructure, and location.
Class B buildings are usually older and not as competitive—price-wise—as Class A buildings. Investors often target these buildings for restoration.
Class C buildings are the oldest, usually over 20 years of age, located in less attractive areas, and need continuous maintenance.
Commercial real estate property owners are finding ways in which they can raise their property value and profitability. You don’t need to have a Class A property in order to increase a property’s potential profitability. One of the simplest ways to add value to a property is to make small improvements that make the building more appealing to tenants.

Some Steps To Improve Commercial Real Estate Property Performance

1. Improve the lighting. Installing better lighting in more areas is one of the most cost-effective yet dramatic ways to improve the appearance of a space. In addition to adding light fixtures, consider adding energy-efficient light bulbs as well. LED’s, for example, use 25 to 30 percent less energy than incandescent light, and lasts 25 times longer. That’s a significant saving that increases your cash flow and your property’s overall value in the long-term.
2. Replace doors. Replacing doors from standard hollow core doors to sturdier, more visually appealing doors can also add a unique appearance to space. This tactic is especially effective in multi-family apartment buildings but can be utilized effectively in upscale office buildings as well.

3. New floors.
   Carpets, while relatively inexpensive in the short term, can add up when you consider the cost of replacing a carpet every two or three years. Residential wooden floors have the greatest appeal and match with both contemporary or traditional interiors.

4. Update appliances.
   White and black appliances are out-of-date; stainless steel is the most popular finish splurge on stainless steel refrigerators, microwaves, dishwashers, and ovens. Stainless steel has a long lifespan and won’t discolor as rapidly as colored alternatives.

5. Beautify molding.
   Contemporary spaces benefit from thin molding to create seamless home designs Sand and stain wood molding to add rustic appeal to interiors. Faux, lightweight pieces can inexpensively and easily installed along ceilings, floors and window frames to add value.
6. Improve the exterior. Clean the landscape and prepare the exterior of your building. Apply a fresh coat of paint or a deep clean and rebuilt walkway. Upgrade lighting, cut the lawn, hide garbage dumpsters or pick up stations from the street.
7. Upgrade your building’s signage. This is typically the first thing that people will see as they approach or enter your building. A sign that is difficult to read, hidden by bushes and other landscaping elements or that needs a repair can decrease the value of your property.
8. Rename or name property. This may also increase charm, character, and desirability.
9. Ramp up security. Measures like alarms, gates, and shutters can add a sense of safety.
10. Resurface your parking lot. If you have a gravel parking lot, consider paving it and installing new lighting to not only improve its functionality but its appeal as well. Eliminate any weeds, rough patches and have the lines repainted. If you don’t have a parking lot, consider renting a space from a neighboring building or property to offer to potential renters or buyers as a valuable selling point.

Commercial Property or Commercial Real Estate refers to buildings or land intended to generate a profit. Commercial real estate is considered a more stable investment than other types of real estate due to the lease lengths, which are often several years or more. Commercial real estate is different than working with residential real estate which is classified by its use into many categories. Residential real estate deals with single family homes, duplexes and small apartments. But commercial real estate will be dealing with office buildings, retail stores, warehouses, and more.
Types of Commercial Real Estate
OFFICES AND INDUSTRIES
Classification - Office buildings are usually loosely grouped into 3 categories: Class A, Class B, or Class C.
Class A buildings are considered the best of the best in terms of construction and location. Class B properties might have high quality construction, but with a less desirable location. Class C is basically everything other than the above two types.
RETAIL CENTERS
HOTELS AND RESORTS
LAND DEVELOPMENT

Investing in Commercial Property Real Estate:
There are two main ways to invest in commercial real estate.
The first is to invest for rental purposes. Commercial real estate leases are longer in length, meaning they are more stable investments for unstable markets. Your investment should be fairly safe if your lease term is not up yet when the market takes a dip. Investing for the rental income is often the more lucrative path in commercial real estate, especially if you have a Class A or Class B building.
Another way to invest in commercial real estate is to invest in property appreciation. Because the businesses who rent out commercial buildings mainly rely on location to make a better profit, and because real estate in prime areas is limited—the value of commercial buildings appreciate rather rapidly. This is especially true if you get into a lucrative location before it gains popularity. Investors looking to use the appreciation as their investment should know that the market for this type of investment is a bit riskier than the rental market.

The Pros and Cons of Commercial Property Investment:-
PROS
Flexible financing – When it comes to the commercial real estate, you get several flexible financing options. In fact, you can even buy huge commercial properties without actually using any of your own money.
Leases tend be longer – three, five or ten year leases are quite common in commercial property. Ideally, this means the owner won’t have to deal with the costs associated with bringing in new tenants so frequently.
Peace of mind – With an on-site maintenance, it gets peaceful for the owner as well. If it is an office building, you only have one tenant to deal with during business hours, and there may be limited maintenance calls during off hours. Commercial properties often come with a lease agreement where the tenant is mostly responsible for the maintenance of all the assets, or any ongoing property expenses, including taxes, along with paying the rent and utilities.

CONS:
Time commitment. If you are the owner of a commercial retail building that has multiple tenants and subtenants and you have got a lot more to care for than you would have had for a residential investment. You cannot be an absentee property-owner and get the most out of the return on your investment when you have multiple occupants.

Maintenance Cost. With commercial, you’re likely to deal with yearly CAM adjustments, (Common Area Maintenance costs, which tenants are in charge of) public safety concerns and more maintenance problems.

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