Why a Residential Real Estate Agent May Not Be the Best Choice for Your Commercial Real Estate Needs
- By seoserviceusa93@gmail.com
- •
- 19 Dec, 2018
Setting a new record for commercial property deals in Canada with over $43 billion in transactions in 2017, commercial real estate today is steadily on the rise. When dabbling in commercial real estate, you might have considered just asking your real estate agent to help you with the process. Stop! That might be a terrible idea and we’ll tell you why!
Here are some of the most major differences between a commercial and residential real estate agent that could make all the difference between a successful and unsuccessful deal:
Education and Training
While both residential and commercial real estate agents require a special license granted after completing and passing specific courses, usually a high school diploma is all the formal education required for a residential agent.
A commercial real estate agent, however, is required to have formal university education in either business or finance and have better, more extensive knowledge of business terminology, market trends and real estate terms such as gross rent multiplier, capitalization rate and more. This, in turn, means a specialized commercial real estate agent will be able to help you make better decisions when purchasing properties costing hundreds of thousands of dollars.
Specialization
A commercial real estate agent is used to handling large properties as well as smaller residential properties. From shopping centers, apartment buildings and office spaces to locations for small business start-ups, commercial agents constantly dabble with expensive properties for well-known retailers. This leaves no room for error, and explains why a more extensive training through mentorship programs is required to become a commercial real estate agent.
Industry Knowledge
Commercial real estate agents are expected to stay up to date with both the housing market and the general real estate market, capitalization rates for particular properties, past profits and losses for the property, demand and supply of properties in certain areas as well as have access to unlisted properties. A college degree in business sure comes in handy now!
Over years of working in the industry, a successful commercial real estate agent will be able to build industry connections and relationships, which can further help you get better financing options with lower interest rates, find properties in locations where your business meets city zoning codes and get you in touch with potential buyers if you’re selling property.
With over a decade of experience in the commercial real estate business, we at Pivotal Commercial Realty have successfully closed over $100 million worth of commercial real estate deals and over one million square feet of leased land since our inception. Housing some of the best commercial real estate agents in Toronto, Canada, we provide clients with everything from real estate consultancy to site selection and buying and selling of commercial real estate assets.
Contact us today to get in touch with one of the top realtors in the country.
Before you go ahead and sign any papers to purchase commercial real estate in Toronto, spend some time learning and understanding the market.
Investors in commercial real estate have to consider the following before they decide where they want to put their money:
Interest Rates
For the first time in 7 years, the Bank of Canada increased its interest rate in 2017. The interest rate set by Bank of Canada has a direct impact of the on the cost of taking out a variable rate mortgage as well as other loans.
Fluctuations in the Bank of Canada interest rates also influences the growth of corporations and consumer spending, which impacts the demand for both residential and commercial real estate.
Investors all over the globe think of Canada’s commercial real estate market as a safe haven. Even though there is some uncertainty about the rise of interest rates, the contrast between tight supply and growing demand for real estate in the country has been a driving force in the real estate market.
The commercial real estate market continues to be viewed positively by international real estate investors with Toronto and Vancouver being the most popular destinations. In 2018, Toronto was considered one of North America’s major real estate markets to invest in. In 2019, both Toronto and Vancouver are expected to be in the continent’s top 3 destinations.
The growth in commercial real estate is being pushed by the increased sales in office buildings. Even the political uncertainty between US and Canada did not hamper the success of commercial real estate in the country.
Major Markets
In 2018, Canada’s commercial real estate sector hit a record breaking $36.2 billion. This growth can be attributed to the increasing demand of industrial, office, retail, multi-family units and ICI land.
Those looking to invest in commercial real estate in Canada should consider Toronto, Vancouver, Calgary, Montreal and Ottawa. In 2017, most of the growth in the sector was driven by office buildings but in 2018, industrial real estate led the way.
In the near future, the demand for industrial real estate is expected to rise due to the increase of e-commerce business in the country that are looking to build fulfillment centers nearby for fast and easy delivery.
The commercial real estate market in Canada is continuing to flourish. However various factors are expected to make bring changes to the landscape in the future.
2018 proved to be a record-setting year for the commercial real estate sector in Canada due to an influx of new projects and high occupancy rates. With that being said, property owners are advised to monitor fluctuations in the market. Like all real estate, the commercial real estate sector of Canada is prone to disruption.
Let’s take a look at the key disrupters in commercial real estate in Canada:
Shared Workspaces
There has been a dramatic shift in the way people work in the country. Canada is experiencing a boom in the start-up community , many of which are led by Millennials.
Traditional office spaces are being replaced with co-working spaces that are designed to enhance collaboration, allow for greater flexibility and lower operational costs at the same time. Open offices are much cheaper than conventional cubicles. Younger professionals have found a way to work with limited office space.
Landlords can’t just lease out their building to select tenants, they have to redevelop their office space so it caters to the demand of the modern workforce. This can involve offering flexible suites or open concept office spaces.