Buying Retail Property in Las Vegas? What You Need to Know
Are you interested in finding a property to showcase your goods or services to consumers? Due to online shopping’s prevalence, you may be wondering what kinds of opportunities are available in brick and mortar spaces. However, many businesses continue to thrive by providing a unique experience that online shopping simply can’t offer, with some online retailers shifting to open physical locations. Learning about the local market, the types of pressures retailers face, and the unique advantages they have can help you find the right spaces for your business or portfolio.
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What Is Considered Retail Property?
A retail property is a type of commercial property that solely sells goods or services. Some examples include shops, restaurants, gyms and salons, and other establishments that receive a large amount of foot traffic. Retail properties may have single or multiple tenants, and they may also be freestanding buildings or larger shopping centers with one or multiple anchor stores and many smaller shops specializing in one type of good or service. According to Nevada Business Magazine, there was approximately 113 million square feet of retail property for sale in Southern Nevada as of July 2019, available in the following categories:
- Strip centers: 9.9 million sq. ft.
- Community centers: 24.4 million sq. ft.
- Community centers: 17.3 million sq. ft.
- Power centers: 13.5 million sq. ft.
Benefits of Investing in Retail Real Estate
By investing in retail real estate, you can obtain a reliable source of passive income with a minimal amount of effort. Nevada Business reports that the rent on a triple net lease (NNN) in Southern Nevada is $1.75 per square foot as of 2019. If you’re a business owner, purchasing your own space allows you to make modifications as you choose and frees you from obligations to a landlord. You also won’t have to worry about renewing your lease when it ends and potentially losing your location to another business.
How to Choose the Best Retail Property for Your Business
What factors should a business owner consider when searching for a retail property to buy?
- Location: The location of a building is the single most important factor that determines its profitability to you. Try to find buildings in areas located near high densities of your target customers and allow for future customer base growth.
- Demographics: Is your building located close to your target customers? Check on the age, income, and any other relevant factors of the residential population near locations you are considering to find the right mix for your business.
- Age: Older buildings may require more maintenance and may contain hazardous materials, such as lead or asbestos, which can lead to costly repairs.
- Traffic: Retail buildings are more or less viable depending on the amount of traffic that they receive. Buildings that receive over 50,000 cars per day in passing traffic are highly desirable. Buildings on major access routes will be the most expensive locations.
Differences Between Buying Retail Property and Leasing Retail Property
Before you decide to buy or lease retail property, it helps to work through the pros and cons of each option. While buying a property might seem attractive, it might not be the right move for your business, and vice versa in regards to leasing.
If you’re buying a space, you’ll have an asset that appreciates over time and can build equity with the money you would have spent on rent. You can also obtain an additional source of income should you decide to lease out part of the space to another business. If your business requires a specialized facility, you may need to build your own space from the ground-up if no other options are available or are too expensive. Buying a retail space outright also frees you from a landlord, which may be conducive to better long-term planning for your business.
On the other hand, leasing is an attractive option if you are just starting your business and don’t want to take on a substantial long-term obligation. Leasing also gives you flexibility in choosing the right pace for your business, which can be useful if you’re just starting out or if your business is experiencing a period of growth or decline. Leasing frees up capital that can be invested in your business growth. As a lessee, you can also focus your energies on your business and won’t have to worry about finding tenants for parts of your building you aren’t using.
It is important to have a real estate broker run a cost-benefit analysis that will allow you to see the advantages and disadvantages of both purchasing and leasing. If you’re looking to purchase, you need to see the figures not only from the point of view of an end-user, but also from a real estate investment perspective. Your equity has to be put to work for you, generating the return on capital investment that meets your financial goals.
Las Vegas Retail Property for Sale
If you need help shopping for retail property in Las Vegas or Henderson, whether it’s to buy or lease, contact Graham Team Commercial Real Estate. Our founder Gidget Graham bought and sold over $1.3 billion in real estate assets while working as a developer, giving her a wealth of experience to place at your disposal during your search. Gidget and her team have the expertise and knowledge to guide you through the process of shopping for and buying retail property. Contact us today and we can begin your search.