Why the road frontage on a commercial property is so valuable
How many feet of road frontage does the property have?
This question is one of the most important when evaluating the value of a commercially zoned property in a city or county. For some, the reason why this question is so important may seem pretty obvious. However, there are multiple reasons why investors, developers, builders, and business owners want to have large amounts of road frontage on their commercial properties.
For business owners, it is better for them to have their stores conveniently located for their customers. If they are on a main highway or highway, they will have great visibility of passing traffic. It is quite possible that this will attract customers to your stores that they would not normally see through your normal marketing. Also, a customer new to the location can find the store much easier when in line of sight. Visibility on the facades of the main roads is a great advantage for business owners and their stores.
Another reason business owners like to have their stores along major roads is the ease with which customers can get in and out of the property. If they are forced to drive through large parking lots, go behind other major stores, and park on a landlocked parcel, there is a chance that the customer will turn to a more accessible competitor.
Now this may be putting a bit of pressure, because a business should be able to attract customers on its own through effective marketing and good business practices. However, it is definitely more pleasant to access a place of business that is right off the road, rather than finding your way through parking lots, other businesses, and who knows what else. The easier the access, the more pleasant the experience for the customer.
The two main reasons that business owners have their stores on the main road frontage are visibility and ease of access. Let’s see why investors, developers and builders want the properties they are involved in to have as much of the road frontage as possible.
These three people, investors, developers and builders, are the foundation of commercial real estate. They have the money; they have the vision and are ultimately responsible for building our communities.
Most of the time, these folks will choose investment properties that have the most amount of road frontage, or create the roads so that office complexes, shopping malls, and shopping centers have the visibility and ease of access that they are looking for business owners. in a profitable commercial property.
The underlying advantage for these investors to develop and build properties with a significant road frontage is the fact that these commercial properties, known as parcels, are far more valuable than the parcelled land behind them. The difference between these property values can be quite drastic.
For example, I was recently evaluating a 56-acre tract of raw land in Rome, GA. It had over 2,000 feet of frontage on a main road! The front of the property was divided into commercial zones, while the back was divided into multi-family zones. After speaking with the broker and looking at the offsets (comparable sales), it became clear that the exit parcels would be valued at approximately $ 600,000 per developed acre. (They could be worth more if we could get national brand stores on the property.) However, those in parcels, without the road front, would only be valued at $ 225,000 per acre. This is a $ 375,000 decrease in value simply because the parcels are a few hundred feet away from the actual road.
This news greatly reduced my overall profit margin.
Not all cases are so extreme. However, it is always true that a shipping package will be more valuable than a shipping package. That is why investors, developers, and builders want properties with a significant road front. It is simply more valuable!
Business owners and investors alike will be happy to choose a property with a main road frontage rather than a landlocked parcel, or a parcel with little or no road frontage. Use this important fact when evaluating the properties and the value they have.