You have already done the hard part… You’ve thought about selling commercial real estate and now you’re researching the best way to get the most out of your asset. Hopefully you have also decided that you are going to let a professional commercial real estate broker sell it for you (wink, wink). Even if you are going out on a limb with the For Sale By Owner route, the first and most important decision (after hiring a commercial broker – cough, cough) is choosing your listing price.
Contrary to what some may believe, determining the asking price for real estate isn’t a number just plucked from thin air. When pricing commercial real estate assets there are three main factors that come into play: location, age and history. Below we go over pricing factors and share the best methods for getting the most value out of your commercial real estate disposition.
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Determining Factors of Pricing Commercial Real Estate
We don’t need to remind of you the old adage in real estate (though we will): Location, location, location. This saying sticks because of one reason, location really does matter. When purchasing commercial real estate space, this is the largest requirement on every buyer’s list. This doesn’t mean your asset won’t sell if it’s in a less desirable part of town, or conversely that it will sell immediately if it’s in a popular part of town. What it means is that the pricing of your asset must directly reflect its market location.
Keep in mind that location doesn’t just mean an asset’s neighborhood or district, it means physical location. Does it sit directly on an easement? A high-traffic intersection? A lake? All of these factors will play a roll in pricing.
The age and history of a commercial real estate asset greatly affects its asking price. While it may be obvious that newer properties go for higher asking prices, a building with history doesn’t always mean lower pricing. Properties that have been professionally maintained and upgraded over the years can fetch just as much, if not more, than their younger counterparts. In commercial real estate we often see new developments emerge in the “up and coming” part of town, which can sometimes be synonymous with “less desirable”. Conversely, buildings with history have just that: history. This can mean a plethora of negative marks on a deed from financial burdens to physical setbacks.
Selling commercial real estate is all about timing and market conditions will tell you whether it’s a good or bad time. Real estate lives and dies by the law of supply and demand. If inventory is high and buyers have tons of options, pricing goes down…if inventory is low pricing increases. Let us not also forget that commercial real estate investors can be fickle and easily swayed by the latest trend. Maybe industrial properties are having a hot month, or open-air retail centers are having a moment. No matter the current market conditions they will greatly benefit, and hinder, pricing for specific commercial real estate sectors at any given moment.
Selling Commercial Real Estate in Baton Rouge?
Get an expert opinion! No two listings are created equal which is why pricing an asset for sale can be a very delicate process and one that requires a professional. To determine optimal pricing a commercial broker will first perform a Comparative Market Analysis (CMA), a detailed evaluation of how your asset compares to similar properties, active listings (aka your competition) and recent sales in your market. If you would like help determining pricing for your commercial real estate asset, contact us today.
About Us – The team at SVN | Graham, Langlois & Legendre has over 99-years of combined experience helping clients across the Baton Rouge market get the most value out of their CRE investment. Contact one of our dedicated CRE professionals today with any questions you may have and start seeing the returns in a market that will make sure to give today, tomorrow and for the extended future. To reach us, you can call us at 225.367.1515 or you can send us a message on our website. You can also follow us on Twitter at @svngll or on Facebook.