Commercial property can be a good or bad investment depending on factors such as price, location, condition and the general state of the economy.

A Good Investment

A good commercial property investment follows the relatively same structure as any good investment. There are certain factors which determine what an average person would consider a ‘good’ or ‘bad investment.

Of course, the biggest factor which everyone will consider is the price in which you are about to pay, or have paid, for any said commercial property.

Any property which at least withholds its value a year after purchase is considered an investment, yet that doesn’t determine it as ‘good’

A property may withhold or increase its value over a short timeframe, but still cost a landlord a fair chunk of cash flow each month to maintain and sustain the ownership of a property. Factors such as business rates, utilities and insurance can sneak up on unsuspecting landlords.

Price paid

The price paid for an asset does not necessarily determine an investment’s worth. Prices can fluctuate during volatile periods, meaning a bargain today may not be a bargain tomorrow.

By definition, an investment is a placement of money, time or effort with the intention of gaining appreciation or income.

Historically, commercial property has earned the status of being a ‘good’ investment due to capital appreciation of the asset in the last 50 years. Despite this, there are exceptions to the trend.

For example, in 2o16, 995 Market Street in San Francisco was valued at a whopping $62 million dollars. That was until 2024 when the property sold for just $6 million.

UK Investment

There are other ways to invest in commercial property without purchasing a property. Investors can place funds into Real Estate Investment Trusts (REITS) to diversify both their risk and investment structure to suit their needs – with much less capital.

Tritax Big Box REIT, an industrial asset specific property trust, merged wit UK Commercial Property REIT in March 2024, with the firm now being valued just over £4 billion and listed on the FTSE 100.