What to look for when considering strip malls

Strip malls can make for good and reliable, if not glamorous, investments. As with any investment, thorough research helps.

Commercial real estate can be a lucrative field in Pennsylvania. Investors make money off buying strip malls, stores, office space and other businesses. Of course, part of doing well entails choosing the right properties to buy. Here are some things prospective buyers should consider when it comes to strip malls.

Grocery store anchors

No matter what shape the economy is in, people need to eat. Thus, a strip mall that is anchored by a grocery store may be a better investment than one that is not. Having a grocery store makes it likely that a minimum number of people will go to the strip mall per week, month and year. Of course, as with anything, other factors influence the efficacy of certain grocery stores. For example, a newly moved in grocery store may not have a track record in that location yet, making the investment possibly iffy. Compare that with a grocery store that has been a longtime, high-draw tenant in the strip mall.

Diversification

Prospective buyers should also review whether the tenants in the strip mall they are considering are sufficiently diversified. That is, they offer distinct products or services. If the appeal for one store's goods wanes, the appeal for the others might not, and this can help the strip mall weather some tough economic times. The good news is that many strip malls are diversified enough, making them a sound investment.

Speaking of stores and tenants, some leases could be coming up for renewal soon. it may not be a good idea to purchase a strip mall where too many leases are ending soon in case the business owners do not sign again and the properties are empty for some time.

Diversification, part two

Diversification works another way too. That is, although strip malls can get a bad rap (for example, they can be ugly and take up too much space due to zoning regulations), they are in themselves a valuable part of many an investor's diverse portfolio. True, some strip malls do not make as much money as a mixed-use development would, and some strip mall buildings are not in excellent shape. The fact remains, though, that strip malls are workhorses. They can bring investors a minimum return for relatively little risk. The trick is for investors to do their homework and to know everything they can about the history of the strip mall, the stores' performances and the condition of the buildings.

Investing in a Pennsylvania strip mall can be a good decision. An attorney can help with purchase agreements, zoning, site planning, development, leasing and other matte