One of the beautiful aspects of commercial real estate investing is its diversity. Urban, suburban, rural… you have plenty of options in the route you want to take. A popular debate CRE pros have with each other, however, is whether urban or suburban is a smarter play.Â
This is a bit of a seesaw argument here driven by fluctuations in generational factors, costs and consumer habits. There is not a right or wrong answer. That being said, let’s take a look at the pros and cons for each to allow CRE investors to further make educated decisions on investing in urban or suburban areas.
Pros and Cons of Suburban Commercial Real Estate Investments
First, let’s take a look at the suburbs. While these are often viewed as primarily residential areas, they present a big opportunity for commercial development. In fact, they have recently been outpacing sales in central business districts, according to National Real Estate Investor. Here’s a look at some of the pros and cons of suburban commercial real estate investments:
Pros:
- You get more property for your dollar.
- There are lower crime rates.
- Taxes, utilities and other fees are usually lower.
- There’s usually more space for development.
- They’re less of a commute for tenants.
- Tenants tend to sign longer-term contracts.
Cons:
- Not as many nearby businesses or amenities.
- Lower pool of potential tenants.
- Less foot traffic for retail spaces and other properties that depend on it.
- Lower ceiling of return.
Pros and Cons of Urban Commercial Real Estate Investments
Urban commercial real estate will always be a popular investment choice because of its location. The fact that urban areas have a higher concentration of people than suburban areas is reason enough for some investors. But they do have their pros and cons as well. Here are some of them:
Pros:
- There’s a larger pool of potential tenants.
- Businesses, transportation and other amenities are nearby.
- There’s significant foot traffic.
- There’s a large variety of different properties.
- Return potential can be higher.
Cons:
- Your dollar doesn’t go as far.
- There are higher crime rates.
- Taxes, utilities and other fees can be higher as well.
- There’s not as much space for new development.
- Properties can be older or more run-down.
- There’s a longer commute for most tenants.
In the end, both can potentially be a sound investment depending on the investor. Regardless of whether you’re investing in urban or suburban commercial real estate, Quarem can help you get the most out of your investment. To see how, request a demo of Quarem today!
