What Factors Affect Commercial Land Value?
Are all commercial land tracts considered equal?
What factors can affect the value of a commercial land tract?
Unlike many other types of valuable commodities, every commercial land tract’s value is different from the next.
Many factors can affect a commercial land tract’s value. Here are a few ideas to consider.
The oldest real estate mantra, “location, location, location”, could never be more important when discussing commercial land value. I would like to go back to my South Texas roots in helping me to better explain location’s impact to commercial land value by using a famous George Strait country music hit, “Ocean Front Property” to help illustrate my thoughts. Click Here to hear the song on YouTube As all new and old George Strait fans now know, there’s no “Ocean Front Property in Arizona”, so don’t be fooled into thinking that you don’t need to do your homework when attempting to understand how the commercial land tract you are considering for purchase or sale is affected by where it is located.
Hopefully my inclusion of George’s infinite wisdom brought a smile to your face this morning. If you haven’t clicked to a new web site yet, I would like to emphasize the seriousness of this topic. I regularly come in contact with people who have acquired a commercial land tract in the past with little advisement from commercial land brokers or commercial land appraisers regarding the value of the property when they purchased. I get the call when they are considering the idea of selling or developing the property that they purchased in the past. More often then naught, these types of commercial land owners are disappointed with my opinion of their property’ commercial land value. The owners that typically enjoy my opinions of their commercial land tract’s value are the ones that hired solid representation when they purchased.
Please remember…you don’t make money when you sell commercial real estate…you make your money when you buy!!!
In additional to location, fully understanding what “uses” the property’s zoning classifications allow for will be critical to understanding commercial land value. Another common mistake I see amongst commercial land buyers, is not fully understanding utility availability and capacity during their research. A large volume of commercial land sales come from groups purchasing land to develop a specific type of project. Not fully understanding water, sewer, and electrical availability/capacity can turn your perfectly located/zoned/priced property into a nightmare.
Improvements to real property are generally developments of land or structures on property that do more than repair, replace, or restore the original condition. Improvements are characterized as being permanent and adding to the value of the property. Buildings are the most obvious vertical improvement differences between most commercial land tracts. Many new commercial land buyers might be surprised to learn that there are countless horizontal land improvements that can dramatically effect the value of these two properties.
How might two similarly located/zoned/sized/commercial land tracts with the same asking price differ from each other in commercial land value for a particular buyer?
If “Commercial Land Tract A” has a Water Pollution and Abatement Pond, an extra curb cut, trees have been cleared for site development, topography has been leveled, and it has been platted…it is possible (many factors to consider) that “Commercial Land Tract B” could be worth less than half the commercial land value of “Commercial Land Tract A”…if it has none of these improvements…even though it is similarly located/zoned/sized…with the same asking price.
There are countless variables that can affect commercial land value. My advice is to seek the representation of commercial land advisers to help you in FULLY researching your next commercial land acquisition or sale.
Contact a San Antonio Commercial Real Estate Expert today:
Luke LeGrand, ePRO 210-843-5853
Commercial Land – San Antonio Commercial Land Value