Popular Commercial Real Estate Misconceptions

Popular Commercial Real Estate Misconceptions James Kassouf

Myths and misconceptions exist for practically every topic and in every industry. Many of them are created by people who don’t know what they’re talking about, or who have never actually tried to step into an industry.

These misconceptions can be harmful, as they give people the wrong idea. For example, someone may be considering taking their first steps into commercial real estate, but they hear something entirely untrue that pushes them away.

They could be starting a wonderful career in commercial real estate but these misconceptions scare them away. Here are a few examples of popular misconceptions in commercial real estate.

OWNING IS THE BEST OPTION Owning real estate has its perks.

You’re usually given complete freedom over the space you own, and real estate typically goes up in value over time, meaning you can make a nice profit off of it one day.

Regardless of these great perks, owning isn’t always the best option.

Owning a piece of commercial real estate can get your money tied up instead of being able to use it as operating capital. Commercial real estate is also often inflexible. If your building becomes obsolete, you may have a problem on your hands.

IF A PROPERTY IS FOR SALE, THERE’S SOMETHING WRONG WITH IT While it’s fair to think this, it’s usually not the case.

There are a variety of reasons someone may be selling a piece of commercial property. It could be due to wanting the cash flow to buy a new piece of property that’s larger and will be more profitable in the long run. Sometimes they just need an exit strategy. Assuming that something is wrong with a property because it’s being sold can be stressful and self-sabotaging, so try not to look for flaws that aren’t there. Be sure to go through all the proper protocols you would buying any commercial property, and you’re sure to be fine.

TRIPLE NET LEASES ARE MORE EXPENSIVE Sometimes you’ll rent a commercial property and you’ll come across a triple net lease. These mean that you pay all of the operating expenses that come with the building. This might seem expensive, but typically the base lease itself is much cheaper than the rent you’d pay for a full or gross service lease. It’s possible you’ll even end up saving money if you’re an efficient tenant.

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