For new commercial real estate investors, one of the hardest decisions to make is what to charge for rent. Many investors have limited experience with renting commercial properties, and as such have a limited frame of reference. Additionally, it can be easy to over or undervalue your space based on personal biases. So, how can you determine if your rental rates match up with current market prices?

Understand Market Prices

Market prices are essentially the current “going rate” for commercial rent in your area for your type of commercial property. It all comes down to what people are willing to pay, which is dictated by the carrying capacity of the current market. However, it can be hard to know what this range is, especially when you're a newer commercial real estate investor. Here are some ways you can better inform yourself about current market rates.

Look at Rates Charged for Similar Properties in Your Market

When you search, look for properties that are as similar to your own as possible. Consider square footage, amenities, location, and the types of tenants suited to the space. It would help if you kept an eye on how occupied these properties are, knowing that they may be occupied because their rent is tantalizingly low for tenants and that those with low occupancy are likely asking too much. Your ideal rent is going to fall somewhere in between.

Utilize Automated Online Tools

Many popular real estate websites offer tools that allow you to see real-time asking rents for local commercial properties. These tools also compile information about the properties, which make it easy to spot those that are most similar to your own, allowing you to make a reasonably well-informed decision. Most of these tools are free to use, which makes them excellent options for newer investors who are trying to get their business off the ground.

Work With a Property Management Company

Finally, you can choose to work with a property management company rather than attempting to understand market rates on your own. Because there are so many small variations in commercial properties that can have an unexpectedly big impact, sometimes the only way to come to a fair rental rate is to turn over the process to experienced professionals.

Also, since property managers do far more than just set rental prices, working with a reputable one like MGR can make growing your portfolio less stressful and more rewarding.


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