Investing in Retail Shopping Space: What You Need to Know

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Investing in income property is an enticing prospect, for many, but of course, the decision to invest in a piece of property ought never be made lightly. There are many questions to answer and factors to consider before you pony up and sign on the dotted line. Here is one of the most obvious: What kind of real estate do you wish to invest in?

There are plenty of options, of course. You can always just buy land, and then seek to resell it for a profit, but you may have to patiently wait before you are able to truly get a good return on your investment. Alternatively, you might invest in commercial retail space. This might include office spaces, industrial facilities, multi-family dwellings (that is, apartments), or retail shopping centers.

Why Retail Shopping Centers?

The prospect of owning a retail shopping center may jump off the screen at you—as, indeed, it should. Understand that, in some ways, this is not unlike being the landlord of, say, an office building or an apartment complex. Instead of filling your building with rent-paying business owners or families, however, you will seek to fill it with retailers and shopkeepers.

There are a few particular points that make this kind of investment a bit different than these other options. In many ways, investing in a retail shopping center might prove especially advantageous.

The Benefits of Investing in Retail Shopping Space

The biggest perk to investing in retail shopping space is simply this—that in doing so, you are filling a general need within your community. People love to shop, and they need to shop. Business owners need places where they can reach customers and sell their wares. By investing in retail shopping space, you are helping to fill the needs of both—and, assuming you choose a good location, you are unlikely to have a high vacancy rate in your shopping facility.

In other words, it can be relatively easy to make your retail shopping investment profitable, assuming circumstances are favorable. What is more, it can even prove relatively easy to assess circumstances and ensure that they are favorable, especially in long-established areas. In these locations, it should prove easy to determine which areas receive a lot of foot traffic, which areas tend to be fruitful for retail stores, and so on.

What about the Downsides?

There is much to be said in recommendation of retail shopping investments, then—but are there any downsides? Of course, with any kind of real estate investment, there are always going to be a few risks and potential drawbacks. With retail shopping space, the risk that stands out is this: Proper tenant selection is everything.

Think about it this way. If you bring good, popular stores into your shopping center, everyone benefits—due to the increase in foot traffic, and in general prestige. If you start introducing less-than-desirable tenants, simply in order to quickly fill vacancies, then you could be starting a chain reaction that will lead to your other retailers pulling out and moving elsewhere.

This is not necessarily a disadvantage to retail shopping investment—just something to be aware of. Note that, if you hire a professional property management company, that company can help you with things like tenant screening, ultimately ensuring that you make prudent decisions about which retailers to bring into your community. This can go a long way toward making your retail investment a profitable one.