Commercial land is a unique asset class with many characteristics that can offer investors the potential for long-term appreciation. These properties can be found in various locations, from small towns to large metropolitan areas, and offer many benefits that can make them attractive investments.
Here are two reasons why commercial land might appreciate in value over time:
Location, Location, Location
The old real estate adage of "location, location, location" still holds true when it comes to commercial land. Whether it's a parcel of vacant land or an existing commercial property, location is often the most important factor in determining value.
Properties in desirable locations will always be in demand, and as the demand for commercial space increases, so will the value of commercial land. For example, if the land is in a rapidly growing commercial area or is situated near a major transportation hub, it will likely increase in value as the area develops.
The developmental potential of the location is another important factor to consider. Some locations don't have the infrastructure in place to support commercial development, while others may have zoning restrictions that limit the types of businesses that can be built there.
Investors should also be aware of the potential for future development in the surrounding area. If there are plans to build a new highway or commercial center nearby, the value of commercial land in the area is likely to increase.
A commercial land broker will be able to help you assess the potential for future development and what that could mean for the value of the property.
Supply and Demand
The basic principles of supply and demand also apply to commercial land. If there is more demand for commercial space than there is available land, the price of commercial land will increase.
This is often the case in rapidly growing areas, where the demand for commercial space outstrips the available supply. In most cases, a lot of people want to move into these areas for the same reasons—proximity to good schools, a lower cost of living, or a growing job market. This increased demand drives up the price of commercial land.
On the other hand, if there is more commercial land available than there is demand, the prices will go down. This is often the case in commercial areas that are struggling economically. Investors should be aware of trends in the commercial real estate market to get a sense of where prices are headed.
A commercial land broker will be able to provide insight into current trends and what they could mean for commercial land prices in the future.