Why street frontage on commercial property is so valuable
How many meters of street frontage does the property have?
This question is one of the most important when assessing the value of commercially zoned property in a city or county. To some, the reason why this question is so important may seem quite obvious. However, there are multiple reasons why investors, developers, builders, and business owners want to have a large amount of street frontage on their commercial properties.
For business owners, it is better for them to have their stores conveniently located for their customers. If they are on a highway or main road, they will have great visibility of passing traffic. It is quite possible that this could attract customers to your stores that they would not normally see through your normal marketing. Also, a customer new to the location can find the store much more easily when they are in line of sight. Visibility in front of the main road is a great advantage for business owners and their stores.
Another reason business owners like to have their stores along the main street is because of the ease with which customers can enter and exit the property. If they are forced to drive through large parking lots, pass behind other major stores, and park in a gated lot, there is a chance the customer will go to a more easily accessible competitor.
Now this may be putting a bit of pressure, because a business should be able to attract customers on its own through effective marketing and good business practices. However, it’s definitely nicer to access a place of business that’s right on the side of the road, rather than picking your way through parking lots, other businesses, and who knows what else. The easier the access, the more enjoyable the customer experience.
The two main reasons business owners have their stores on the high street are visibility and ease of access. Let’s look at why investors, developers, and builders want the properties they’re involved with to have as much street frontage as possible.
These three people, investors, developers, and builders, are the foundation of commercial real estate. They have the money; they have the vision and are ultimately responsible for building our communities.
Most of the time, these people will choose properties to invest in that have the most road frontage, or they will create the roadways so that office complexes, shopping centers, and malls have the visibility and ease of access that they need. business owners are looking for. in a profitable commercial property.
The underlying advantage for these investors to develop and build properties facing the main road is the fact that these commercial properties, known as outside parcels, are much more valuable than the land enclosed in parcels behind them! The difference between these property values can be quite drastic.
For example, I was recently evaluating a 56 acre raw lot in Rome, GA. It had over 2,000 feet of frontage to a major highway! The front of the property was zoned for commercial, while the rear was zoned for multi-family. After speaking with the broker and looking at the comps (comparable sales), it was clear that the exterior parcels would be valued at approximately $600,000 per developed acre. (Could be worth more if we could have national brand stores on property.) However, those on parcels, with no road frontage, would only be valued at $225,000 per acre. This is a $375,000 decrease in value simply because the packages are a few hundred feet from the actual road.
This news greatly reduced my overall profit margin.
Not all cases are so extreme. However, it is always true that an outside plot will be more valuable than an inside plot. That’s why investors, developers, and builders want properties that front a major street. It is simply more valuable!
Business owners and investors alike will gladly choose a property with main street frontage over a parcel with no land, or a parcel with little or no street frontage. Use this important fact when evaluating properties and their value.