The Basics of Commercial Real Estate

Whether you’re a seasoned investor or a newbie it is always good to know the basics of commercial real estate. There are a few things you should know before buying, selling or leasing in this arena. From the booming commercial sector to the tight knit community of local business owners, Monmouth County is a unique and dynamic market that’s sure to keep you on your toes and you’ll want to be prepared.

THE BASICS

What exactly is commercial real estate, anyway?

Let’s start with the basics.

Simply put, it’s any property that’s used for business purposes. This can include everything from office buildings and retail spaces to warehouses and factories to restaurants and medical space to large tracts of developable land and apartment buildings.

Commercial real estate is a popular investment choice for many reasons. For one thing, it typically offers higher returns than residential real estate. It frequently outperforms the stock market. Plus, it allows investors to diversify their portfolios and minimize risk. There are also tax advantages when ultimately selling the property, as well.

WHY MONMOUTH COUNTY

Located in central New Jersey, this area is known for its picturesque beaches, charming towns, and thriving business community.

Let’s talk about Monmouth County specifically.

It’s home to over 640,000 people, making it one of the most populous counties in the state.

Monmouth County attracts both year round residents as well as second home property owners, investors and visitors. It boasts a diverse economy, with major industries including healthcare, finance, professional services and tourism. In recent years, the county has seen significant growth in its commercial real estate sector. This is in part  due to its proximity to major cities like New York and Philadelphia. And, of course, the rise in post- pandemic remote work opportunities didn’t help either.

With recent government initiatives to attract new business, the prospects for Monmouth County are looking even better. Netflix announced it will build a new film studio on the grounds of the former Fort Monmouth. Employing more than 1,500 production jobs and creating more than 3,500 construction- related jobs, this is a game-changer.

This location, which straddles the towns of Eatontown, Oceanport and Tinton Falls, will host other development, as well. The new Robert Wood Johnson Barnabas Health complex will also be located at Fort Monmouth.  Estimating a total of 1000 new jobs following completion, this too will increase demand for local commercial services and businesses.

While many jobs will be onsite, the surrounding area will also greatly benefit from the influx of new consumer spending.

EXPERTISE

Partner with a team of qualified professionals to ensure success.

There are many variables and considerations relating to commercial real estate which do not pertain to residential sales where issues of zoning and use have generally already been predefined.

As such, it is important to partner with an experienced commercial broker, lender, attorney and title company to ensure there are no hidden surprises. One of the basics of commercial real estate is to assemble a qualified team who can navigate the challenges, no matter what obstacles the transaction may present.

Depending on the type of commercial property investment desired, much of the upfront work will rely on the work of a dedicated real estate agent who is able to research and identify properties that might be of interest. Unlike residential, many commercial real estate properties never appear on the open market but are approached by enterprising professionals who have interested parties in the location, space or business. Owners may express an interest in selling. Much time and energy will be saved when working with an agent with experience and focus on the specific type of commercial property that is of interest.

Likewise, when a property or business owner is looking to sell, it is important to partner with a commercial broker who can adequately represent the property, its investment value as well as market the property effectively to the largest qualified target audience.

PROCESS

One of the basics of commercial real estate is to understand how it is different from residential transactions.

In contrast with residential sales, a commercial agent is not permitted to create a sales contract or lease by law. They are able to create a letter of intent (LOI) which is a non-binding memorandum which outlines the basic terms and conditions including price, due diligence periods and approximate closing date. If accepted, this is forwarded to a real estate attorney who will draft the ultimate sales or lease agreement.

DUE DILIGENCE

Researching the property’s history, zoning and use restrictions, and any potential environmental issues is critical.

When you find a property that you’re interested in, it’s important to do your due diligence. This includes researching the property’s history, zoning and use restrictions, and any potential environmental issues. You’ll also want to work with a real estate attorney to review legal documents and contracts.

Zoning laws and regulations vary from town to town, and it’s important to understand what’s allowed in the area where you’re looking to buy or sell. One of the basics of commercial real estate is to understand the requirements of a given municipality’s zoning and planning departments.

For example, some areas may be zoned for commercial use only, while others may allow for mixed-use development. Make sure you work with a real estate agent who can help you navigate the zoning regulations and ensure that any potential property meets your needs.

Partnering with a respected title company, such as Resources Title, is also important. Title issues can be more complicated in properties with longstanding commercial histories. Likewise, issues such as environmental remediation and tidelands claims (even for inland properties) can bring unwelcome surprises.

Understanding the nature of commercial property inspections is important and your agent and attorney can properly advise you regarding Phase 1 and Phase 2 environmental inspections.

Whether purchasing an apartment building, strip mall or corner bar, having the right team represent you is of utmost importance. For more information about Resources Real Estate’s Commercial Sales division visit

COMMERCIAL PROPERTY SEARCH

Find available listed properties for sale or lease on our commercial real estate site, resourcescommercial.com

OUT OF AREA REFERRALS VIA LEADING RE

Interested in out-of-state commercial opportunities? Consider the power of our affiliation with the Commercial Real Estate Division of Leading Real Estate Companies of the World. This provides us with a network of commercial brokers worldwide. Whether you are thinking Cayman Islands or Clearwater, our network will find locations for your business across the globe.

DESTINATIONS DEVELOPERS

Through our affiliation with Leading Real Estate Companies of the World, we are able to offer developers of multifamily residential projects including high- rise condo and large scale communities global marketing support.

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