Why is commercial property so expensive?
Commercial property is so expensive because it takes a lot of money to build, maintain and develop.
Commercial property requires many systems and processes which are both time consuming and significantly more expensive for an individual or business. Things such as security systems, server hosting, security and CCTV all drive the price of a commercial property upwards. Residential homes tend to contain furniture and family valuables such as TV’s etc, commercial premises contain all of those plus sensitive information such as documents and maybe even cash on site for retail units such as shops. These need to be secure and protected which means funds must be allocated to protect them.
Another reason why commercial property can be so expensive is the land on which they are built on. Many commercial premises need to be within places accessible in order to shop there or accessible for HGV’s to deliver goods. Combining these two means commercial retail units in prominent locations can fetch significantly higher purchasing prices than residential homes.
Commercial property is an entirely different asset to residential properties. We explain this in one of our earlier blogs, yet today we’re talking why is commercial property so expensive? There is so many factors which play a part in the reasoning, one being the rarity. At the end of the day, commercial premises are much rarer than residential and for many are the homes of their businesses and livelihoods. These income producing assets is what makes the more valuable. Couple this with the other factors such as building costs and we can start picturing the landscape of the commercial sector.
