Rental Property Investing - Retail Properties

Another decision you must make when considering rental properties -- what type of property to do you look to invest in?  Based on the market you’re considering, are retail centers preferred or do you see office uses as being more optimal?  Let’s first look at Retail.

Retail properties come in many shapes and sizes.  Think neighbourhood plazas which might include a fast food restaurant, laundromat/dry cleaner, variety store, beauty salon, etc.  These are viewed as convenience centres and for the most part, serve the immediate neighbourhood. The same can be said for freestanding buildings (serving a single tenant), but again, target the neighbourhood demographic as their primary customer.   

In looking at successful retail opportunities, pay particular attention to not only the property’s current vacancy status, but what its historical pattern has been.  In addition, you want to look at the availability of parking, neighbouring tenant mix, and the tenure of current occupants.  Bottom line – is it a quality development which results in successful and stable retail operations?     

In addition, you should examine general vacancy trends in your market.  Stronger lease rates typically go with higher occupancies and vice versa.  It’s again a due diligence exercise – but the data/information is out there and you need to make best efforts to obtain it.  Stay where the action is and look where retail tenants succeed.

As a final note, with respect to financing retail properties, certain lenders may prefer this area of real estate versus other categories (ie. office or industrial).  Keep this in mind as you consider financing options. 

As always, seek out experienced commercial realtors within your market to assist in reviewing viable Retail Property Investments.