Table of Contents
Commercial real estate has been having an interesting few years. The pandemic, changes in the business world, and just the march of technology have all posed their own challenges and offered their own advantages when it comes to commercial real estate.
That means that commercial real estate is in a complicated place right now, especially for business owners who really want to focus on running their businesses, not the complexities of the real estate market.
Well, unless your business is in real estate. Then this is your bread and butter.
But for the average business owner, it can be hard to tell when it’s a good time to invest in commercial properties, much less start the process to find the best location for their business.
If you’re a business owner who wants to know more about the Houston commercial real estate market and is looking for a building right now, you’re in the right place.
We’ll talk about the state of the Houston commercial real estate market, what that means for you and your business, how to find the right location, and how to find the right real estate agent to get the perfect commercial building for your business.
Alright. There’s a lot to cover, so let’s get started!
Is Houston Commercial Real Estate A Competitive Market?
Houston’s port has just had its busiest year ever, which is really good news for local commercial real estate. It both shows that there is a thriving business sector and high demand for goods coming in through the port, and also means that Houston is a better place than ever for businesses to be connected to the supplies they need.
At the same time, Houston’s office real estate has suffered a hard couple of years, along with much of the rest of the country. High vacancy rates are a concern for the office real estate developers in the area, but there is hope on the horizon.
Both, office demand is increasing again as returning to work in the office is becoming more the norm, there are also a wider variety of businesses coming out of the pandemic that already needs or will need office space shortly.
That is both good and bad news for businesses looking to rent office space in the Houston area. Good news because that means that prices should be favorable right now. There are also a lot of vacant office spaces available which means more variety and choice in office plans and the size of your space.
However, since most market forecasts see office vacancy rates going down in the near future, we should probably expect office rentals to start going up again as well.
On the distribution and industrial side of things, commercial real estate is in high demand, and there’s a lot of ongoing projects and renovations aimed at satisfying that demand. It’s an exciting time to be a distribution or industrial business in Houston right now.
At the same time, it pays to be willing to move fast if you’re looking for an industrial or distribution commercial space at the moment. It’s a competitive buying market and you’ll need to be able to jump on good opportunities when they become available, or you might have to settle for less ideal locations.
Houston also has the distinction of being the 2nd most active real estate market in the country in the last decade. That brings its own advantages and complications, including that you should expect changes in market conditions, and those changes will happen quickly when they happen.
As always, commercial real estate in Houston is always changing and evolving, but from the way it looks right now, opportunity and competition for space are both high rights now. Having an experienced and skilled real estate agent on your side while you’re looking for the right commercial property is more important than ever, especially if you aren’t used to navigating the complexities of Houston’s ever-changing commercial market.
What To Look For When Searching For The Perfect Houston Commercial Real Estate
There are a lot of different potential factors to consider when you’re looking for the perfect Houston commercial real estate.
This is one case where the amount of selection you have can easily become overwhelming if you aren’t careful, so it pays to make sure you have an experienced team working with you to make it easier.
Here are some tips on what to look for to make sure you get the right commercial real estate for your needs.
Know What You’re Looking For
There are a lot of different reasons you might consider buying commercial real estate, and it’s important to make sure you and the team of people helping you all understand all of your motivations.
The right property is going to be completely different depending on what you’re looking for.
For instance, an investment property that will give you passive income from rent or a future sale is going to be very different from looking for a property that can handle the manufacturing and distribution of baked goods, or one dedicated to providing 3rd party customer support to a range of other businesses.
The better you can define the ideal location, and why that location would be ideal, the easier it will be to find a location that meets those requirements.
Pay Attention To Zoning And Limitations
The perfect building and the perfect zone aren’t always going to go hand in hand. Houston tends to be friendly to businesses and wants to encourage active growth in all sectors, but that doesn’t mean that there aren’t zoning limitations and specific regulations about how and when a space can be used for commercial purposes.
Make sure you know what zone your business needs to be in in Houston, and what if any special permitting you might need to get your business off the ground before you buy. If permitting is going to take time and resources, that should be factored into your budget for your new commercial location.
Buying For Development?
Texas is growing, and that means that there are a lot of development opportunities in both commercial and residential real estate. If you’re looking for commercial real estate that you can develop that may be a challenge, but it’s also a potentially lucrative opportunity if you can find the right property.
For this kind of purchase, you’re going to want to work with a real estate agent or team that can cast a wider net and look for the most potentially profitable locations with flexible zoning. There’s a lot of potential here, but it’s a bit like looking for a diamond in the rough. You’ll have to work for the best development opportunities.
Location Location Location
No matter what kind of business you’re looking for, it pays to pay attention the location of any potential property and what kinds of opportunities, or downsides, come with the location.
For instance, if you’re looking to open a new retail location, a store in a popular strip mall might be an ideal location. But that’s not necessarily going to be the best location for a business that doesn’t want to attract a lot of foot traffic or that isn’t open to the public.
Similarly, while you can convert almost any unused space into office space, a purpose-built office building will probably offer better amenities and convenience than a renovated location.
You should also think about the local demographics of the people in the area. Small restaurants thrive in areas with lots of young professionals, daycares do best when located near family residential areas, and offices often benefit from the proximity of other similar office buildings and the support industries that make them viable.
Your location is more than just your physical space. It’s also your proximity to your customers, the supplies you need, and the services your business and employees require. Look for a balance of all three for an ideal location.
Pay Attention To Different Kinds Of Cost And Opportunity
The value of a commercial property can be calculated a lot of different ways, and it’s important to consider each of them, and your budget, when you’re trying to decide if any given property is a good investment.
For instance, if the cost of the property is significantly higher than what it would cost to build the same property somewhere else, are the surrounding amenities and the advantages of the location worth the additional cost?
If you’re taking over the location of a competitor, what is the value of the clientele that may switch to your business? Is that worth some added cost for the location, or would you be better off looking for a new location in the same general area?
You should also consider the market. Is the price for this property reasonable given the price of other similar properties that have sold recently? If it’s too high, what advantages are changing the price, and are they worth it? If it’s lower than market average for that kind of property, why is that? Are the disadvantages likely to be a big enough issue that the discount isn’t worth the future cost in lost opportunity?
Don’t Compromise On Space
Looking for a new space for your business, opening a second location here in Houston, or need a regional distribution center in the area?
It doesn’t matter what kind of business you’re buying for, compromising on the amount of space you need to run that business successfully is rarely a good idea. You can compromise on a lot of other things without losing too much in terms of business efficiency or opportunity, but space isn’t one of those things.
You also don’t want to end up with a space that’s bigger than you need, unless the surplus is significant enough that you might be able to rent out the additional space to another company.
That’s because you don’t want to be paying for space that isn’t working for you – especially if the extra cost of the space makes it harder for your business to expand enough to use it.
It’s important to have a relatively accurate estimate of how much space you’ll need before you start looking for commercial properties. Otherwise, you’re likely to buy a property that otherwise works, but isn’t quite the right size for what you planned. Sadly, that’s the kind of problem that can sink a business.
How To Find The Perfect Real Estate Agency That Can Help You Find Commercial Property In Houston
Real estate agents that work with commercial real estate are a little different than the agents that typically work with residential real estate.
For one thing, commercial real estate agents are typically more thoroughly educated and may have additional certifications and training that are not required or typical of other kinds of real estate agents.
Here are some things you should look for in a good commercial real estate agent:
- They ask good questions that help you figure out what you need and refine your property search.
- They are responsive and always get back to you in a reasonable amount of time.
- If they don’t have answers for your questions right away, they’re willing to do some research to make sure you have the information you need.
- They’re knowledgeable about the area you’re looking at.
- They don’t have any conflicts of interest that could lead to bad recommendations.
- They have prior experience buying and selling commercial real estate (or are working closely with a more experienced real estate agent while they get established in a new specialty)
- They have a good network of other professionals and can help connect you to the other people you need.
If you’re ready to start looking at commercial properties in Houston, Teifke Real Estate has the experienced commercial real estate agents you need and deserve. Contact us to get started and get ready to help your business grow into its new location.
