Important Things To Consider When Buying A Shopping Center Investing in a shopping mall for sale has the potential to be a profitable transaction in the long run. If you do it correctly, it can provide you with a stable stream of income and a steady appreciation of capital. However, purchasing a shopping center is not as easy as buying a few things in the grocery store. Investing in a shopping center requires operational expertise, considerable thought, and due diligence. If you are planning to buy a shopping center, you should consider the following things.
Location Location is everything in commercial real estate and it is true for shopping centers. You can maximize the odds for success and attract tenants by choosing the right location. It is important that the center has a great location with excellent visibility from major roads. Other things to know about the location to determine whether the shopping center is in a good location include foot traffic, car traffic, neighborhood safety, convenience, parking and the demographics of the neighborhood. It is also important to consider the competition. The type of shopping center After familiarizing yourself with the location, it is important to consider whether the shopping center type is a logical fit within the surrounding. There are three main types of shopping centers that you can purchase – general-purpose center, limited purpose center and special purpose shopping centers.
Age and quality of the shopping center Before making an investment, it is important to consider the current condition of the property. Older shopping malls may have a lower price tag compared to newer properties. However, when you buy older commercial properties for sale, you should be prepared to allocate a budget for maintenance and repairs. On the other hand, purchasing older properties for good price and investing some money in renovation to bring the condition of the property up to good standards can allow you to increase rents and this raises the value of the property. Tenant base It is important to consider the existing tenant base of the shopping center within the context of the demographics of the neighborhood. For example, luxury shopping centers with highend tenants can be a good fit for an area that is economically distressed. You should also consider, diversity and experience of the tenant offering. There is an anchor point in place that will drive traffic to the shopping mall and a series of supporting tenants who have products that complement those of the anchor. It is important to do a careful analysis of tenants’ financial statements to ensure that the tenants can pay rent. Direct purchase You can buy a shopping center directly through a small partnership or through LLC. Making a direct purchase provides the property owner with direct operational control of the shopping mall for sale, complete oversight of the property selection process and full participation in the potential profits. But the direct purchase of one shopping mall also exposes the owner to centration of portfolio risk and requires significant financial resources. It also requires operational expertise. It is not for everyone and might be out of reach for most individual investors.