Preparing Commercial Property for Sale: What are Buyers Looking For?

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By Kris Lindahl | Twin Cities Real Estate Expert

Selling commercial property has some things in common with selling a home, but there are additional considerations that make it more demanding. In addition to the right price, buyers react to visual clues. Clean, attractive, well-maintained properties are always more appealing than older properties in need of repair, or those that have visible faults either inside or out.

Physical condition and potential for use are two primary considerations for buyers, both those who intend to occupy a building and for investors. Although commercial property sales are driven by location and financial considerations, a favorable first impression is always important. In order to maximize the potential for selling quickly and obtaining a higher price, it pays to improve the property’s appearance prior to listing.

Buyers of commercial space and investors have distinct financial and usage requirements, but property vibe and “good looks” are vital.

Curb Appeal  

Whether a building is occupied or vacant, the entire property should appear to be well-maintained, free of debris and with no apparent faults or visible damage. Pay special attention to windows and doors, lighting, sidewalks and stairs. Assure that the property address is visible, and that signage is appropriate. The right time to make repairs is prior to putting up a “For Sale” sign.

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If the building exterior is dingy, consider power washing or repainting trim. Replace or repair any architectural elements that are not in good condition. Assure that the roof is in good condition.

Landscaping and Parking

Greenery in important; even a single tree or well-trimmed shrubbery will enhance property appeal. Landscaped areas must be well-maintained, weed-free and irrigated. Unkempt planting areas will constitute a negative rather than a plus in a potential buyer’s mind.

Adequate and convenient parking is high on a commercial buyer’s list, whether the property is a freestanding, single-occupant building, a retail space, a larger office complex, or an industrial property.

Paving of designated parking spaces or adjacent lots should be pothole free, and properly marked or striped. Access to parking should be hazard-free and appropriate. Security lighting and safety concerns are major considerations, as is code compliance.

What’s Inside

Whether the building is empty or occupied, a potential buyer should be able to see the structure and evaluate its potential. However, the interior should be reasonably usable as is. Buyers of commercial space usually are aware of the need to allocate funds for renovation, but in some cases, it is appropriate to repaint walls or replace flooring, remove existing partitions and replace outdated lighting.

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If the property is occupied, this may make the property more attractive to prospective buyers as it may take finding tenants off of their list of tasks post-sale.

Clear as much clutter as possible without disrupting the business operation. Clean the space thoroughly, including windows, walls and ceilings; freshen restrooms; remove unnecessary cables or wiring, assure that lighting and door hardware is in working order, and remove all trash and debris from the property.

Potential Use

Marketing can play up the potential of a nondescript property in a great location. Alternatively, a property in a less-than-prime locale might be just the ticket for a startup with limited walk-in traffic. Think about the potential buyer, and maximize possibilities.

Financial records and projections are a key concern, whether the new owner will occupy the property or it is sold to an investor. Commercial buyers want up-to-date valid data. Comparable properties, leasing statistics, occupancy figures, CAP rates, the building’s potential to produce an income stream are just a sampling of the kinds of information to compile.

Other information a potential buyer might request includes zoning details, building codes, required inspections, historical data, area demographics and traffic counts, planned development that might affect value, and tax and utility records.