Did you know that in 2020 alone, the commercial real estate market rose to 478 billion? Google it. It is a fact, but what makes these locations suitable for resale? Why are prices so much higher than residential space? Well, simple: commercial locations are “in” right now, especially in the midst of the pandemic. With the coronavirus came waves of businesses shutting down. This means that suddenly, the resale value of commercial real estate is more competitive than ever, and you want to make sure that if you are selling a commercial property, invest in it.
Property appraisals work in a very simple way: 1) perceived value, and 2) condition of the location.
It is that simple. Right now, you need to invest in your commercial properties. This goes for brokers, real estate agents, and commercial business owners. When you own the actual right to the business, i.e. you have the ability to sell it on the real estate market, you are going to want to invest in two things: 1) plenty of paint, and 2) a great-looking floor. The condition of a location determines its value, what is known as “perceived value,” or the ideology that something “nicer looking” is actually worth more. We will discuss that in the below section.
Perceived value is a term coined by John Tafford of “Bar Rescue.” When Toyota found out people liked safety in their cars more, Toyota snuck in a 75-cent aluminum rod into the locking system, making it sound “heavier.” The value of that 75-cent investment increased their ability to sell cars for thousands more than if the lock did not make a loud “clunking” noise. This is the essence of appraisal. When you are selling a commercial property, you need to make sure the condition of the location (i.e. fresh paint, good flooring) is in good shape.
Otherwise, it will never sell.
The bad news is, right now we are in a “seller” economy for commercial real estate, so not many people are buying. But that does not mean you should not invest in a great floor such as Fortika flooring. It also enhances the experience of the client or customer. When you have nicely-decorated walls and a brand new Fortika floor, you are essentially increasing the ability to charge more for your services than if the location looks run-down and rusty. Also, keep in mind that small businesses are returning, and the commercial resale value will soon rise!
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