Investing in Retail Real Estate

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					                         Investing in Retail Real Estate

Retail properties include strip malls, small convenience stores, single-tenant-occupied
properties such as big-box stores, and even large retail malls. Investing in retail estate is
riskier than investing in residential and office buildings. Retail properties often require
more property management and maintenance. However, many businesses own their own
retail properties to capture the benefit for offset their own operational expenses. Many
sophisticated real estate investors like to invest in retail real estate because of the
additional bonus of the share of the gross sale.

Share the profit of the gross sales

Rental income on retail property is essentially the same as income on office buildings.
The major income difference between retail real estate and office buildings is the
potential of the share of the gross sale income from the tenants. This practice makes sense
because retail landlords make a lot of effort to ensure the property is in good condition,
and the facilities of the property are functioning well. The condition of the property is
crucial for the retail real estate because the pleasant shopping experience of the shoppers
will increase the probability of the return of the customers. The well-functioning facilities
would also increase the efficiency of the business. The landlord is boosting each
merchant's sales by offering a convenient place with a high profile to attract shoppers.

Locations and tenant mix

When you are investing in retail properties, you need to pay special attention to the
locations. Retail buildings exist on any level of a building. The sales volume is crucial for
the merchant as well as the landlord. Sales volume is often measured by frontage;
frontage is determined by measuring the total liner feet the building occupies along the
length of its main entrance. Retail buildings might be leased or rented by the square foot
or by the amount of frontage the offer along a busy street, that's why spaces located on
the building's entry level, and the side of the building are most likely to attract customers
and always commands more rent. Good parking is also critical, and sometimes congested
parking areas can be reworked to provide more spaces and a better flow of traffic.

For shopping malls, Having a good mix of businesses helps the mall appeal to many
people, and that appeal drives traffic to the complex, benefiting every business in it.
Typical tenant mix includes anchor store, usually big super market, cinema, and famous

When you finance for your retail property purchase, Lenders want to see the income and
expense numbers, as well as market data showing retail traffic patterns and area growth.
You can check with you local chamber of commerce, commercial real estate agents for
the data your lenders require and verify what the seller tells you. You can also ask for the
tax returns on the business so you can have a whole picture of the potential returns of
your investment.