The Essential Elements Of A CRE Urban Investment Property

Jun 1, 2016

For the first time in nearly one hundred years, the number of people choosing to live in urban neighborhoods has exceeded those flocking to the suburbs. This represents a significant turnaround not just for commercial real estate, but also in the American suburban identity, which began in the 1950’s as a response to the end of WWII.

This trend towards urban investment property is one that affects numerous demographics, from millennials to empty-nesters, to families, all seeking the convenience of shopping, living, and working within walkable distance.

Most of the growth of the U.S. can be attributed to population increases at urban locations than any other location type. Urbanization, in fact, is a global phenomenon, more than 55% of the world’s population concentrated in urban centers.

For these tenants, the numerous job opportunities combined with the amenities offered by urban areas have spurred a comeback in older commercial urban investment properties either being renovated for re-use, converted to mixed-use buildings, or to residential properties.

New Construction vs Renovationurban investment properties in urban areas

Investors are discovering that renovating older urban investment properties- especially in areas where raw land for new development is difficult to secure – provides a financially viable opportunity for developers seeking to build a commercial property.

The lack of building space has increased the competition, and driven up the prices of newer available properties, forcing investors to venture further and further from the city center.

By adapting older buildings to accommodate a higher and better use, investors are able to increase equity while maintaining the historic value and architecture of the area.

And while the cost of renovating older buildings can be expensive, the urban investment properties themselves can usually be purchased inexpensively, making an upgrade and redesign financially viable.

Plus, once the income property is brought up to standard, it can be leased at competitive prices, thereby reclaiming or even surpassing its’ previous value.

Key Qualities To Consider When Purchasing Urban Investment Propertyurban investment properties area

General properties

  • There should be access to public transportation and other urban amenities
  • Potential properties should be located on main streets, which attract tenants due to the energy and vitality of the various traffic – both pedestrian and vehicular – that passes through.
  • Locations should be those that will maintain their value over the long-terms, for example, buildings have historic value or meaning, and are an integral part of the community. This is especially important since, at times, opposition from community members can make renovations difficult.


  • Ability to provide amenities on site, such as private tenant lounges, fully equipped fitness centers, complimentary WiFi, and cafes.
  • Mass transit readily accessible, or high parking ratios
  • Green features, such as up to date HVAC systems and LEED certification


  • Located in high population areas, particularly the West and South
  • Should be close to quality transportation and good schools.
  • Appeals primarily to urban areas where the target market is unable to purchase their own homes due to high cost of properties
  • Affluent tenants
  • Luxury amenities such as private work areas, concierge services, fitness center, upgraded common areas, and rooftop swimming pools
  • Individual apartments should include upgraded kitchens with built-in stainless steel appliances, stackable washers, and dryers, wooden floors, or high ceilings.

In general, statistics show that the best locations for commercial properties in urban areas are those where there is a concentration of highly skilled workers who require offices and residential properties.

These areas are the most likely to show growth over the long-term.

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