In property investment, the phrase “location, location, location” is often repeated as the golden rule. While location is undoubtedly important, it’s not the only factor that determines the success of a commercial property investment. Focusing solely on location could mean you overlook opportunities with stronger long-term returns, opening up a world of potential for your investment strategy.
Here’s why. What else should you consider before committing to a commercial purchase?
1. Tenant Demand and Industry Trends
Even in prime areas, your investment could underperform if tenant demand is weak. For example, specific retail spaces have struggled in city centres due to the rise of online shopping, while logistics and warehouse spaces have thrived in less central locations.
💡 Tip: Research which sectors are growing locally and target properties suited to them. This understanding of local market trends will make you a savvy investor, always a step ahead in your property choices.
2. Lease Terms and Stability
A great location won’t protect your yield if your tenants have short leases with frequent break clauses.
💡 Tip: Look for properties with long-term leases, reliable tenants, and built-in rent review clauses to secure steady income.
3. Property Condition and Adaptability
A well-located but outdated building may require costly upgrades to meet compliance and attract tenants.
💡 Tip: Consider properties that are flexible in use, for example, spaces that can be adapted for offices, retail, or light industrial use.
4. Local Infrastructure and Planning Changes
Areas that seem “secondary” today can become prime investment hotspots after infrastructure improvements (such as new roads, public transport, or schools) or planning changes (like rezoning for commercial use or new business incentives).
💡 Tip: Check local development plans and transport projects that could boost future demand.
5. Yield vs. Capital Growth Balance
A prime location might deliver strong capital growth but weaker rental yields, while a less central area could offer higher immediate returns.
💡 Tip: Decide whether your priority is monthly income or long-term appreciation, and invest accordingly. This balanced investment approach will give you the confidence that your strategy is well-rounded and future-proof.
Final Thoughts
Location matters, but it’s just one piece of the puzzle in commercial property investment. Tenant quality (the reliability and financial stability of your tenants), lease terms, property flexibility, and market trends can be just as important, if not more so, in determining your returns.
If you’re exploring commercial investment opportunities, REMAX Estate Agents can help you assess the whole picture, from location to lease.
📞 Call us today for expert commercial property advice.
