Market Insight

The benefits of big-name neighbours for commercial property investment

February 22, 2017

Commercial property investment usually starts with a few rough criteria, including the size of commercial premises you want, the property type – commercial, retail and so on – whether it is for sale or to rent, and its location.

The last of these can be crucial, especially if you want to be geographically close to a particular target market, or if your business relies on customers visiting you in person, such as a bricks and mortar retail store.

So an important additional factor is the presence of other businesses in the area, whether they are rivals to your own, offer complementary goods or services, or just mean there is already a clear local market even if their business is entirely non-related to yours.

In the case of a large shopping mall or high street, the presence of a big-name brand is often referred to as an anchor store, for example the large department stores usually found at the ends of shopping malls, as these attract a good share of the customer footfall and can provide more passing trade for smaller retailers.

As such, no matter which location you are looking at, you might want to keep an eye out for available premises adjacent or close by an existing big-brand store or a business that is highly regarded in the area.

However, that does not mean that such locations are the only good option for commercial property investment, and in some cases it can pay to look for premises where there are no big-name neighbours already in occupancy.

The biggest brands tend not to take a gamble on up-and-coming areas unless they clearly have a very bright future, and even just the presence of a major company can lead to business rates going up, so for the biggest returns on your commercial property investment, you might want to look for appealing prospects in less obvious locations.

By doing so, you can capitalise on any areas where the local authorities might offer incentives to try and attract more new businesses into premises, or where regeneration initiatives are already underway, allowing you to get commercial property for much less than its true long-term value will be.

You may even find that your business is a good fit for a gap in the local market, tapping into a good level of passing trade so that you can start making an immediate positive return on your investment in an area your rivals may have overlooked.