Is Buying Retail Space Right for Your Business?

An effective way to bypass fluctuations in the leasing market is by buying commercial property. Depending on your business, estimated growth, and how you’ll use the building, buying retail space might be the right move for you. Take a look at this guide to learn more about the benefits of buying retail space, what to look for in a commercial property, and how a commercial mortgage from Citizens Bank can help you finance your purchase.

Benefits of buying commercial property

Buying retail property is a large investment, but it has the potential to benefit your business in a number of ways, especially if any of the below apply to you:

  1. You started your business at home and are ready to expand.

  2. Your rent has just increased.

  3. You need a larger space.

  4. You are in an area that no longer suits your business.

Buying commercial property provides you the opportunity to have more control over your retail space, build equity over time, increase selling and storage space, and give you more creative license to merchandise your sales floor.


In addition to these immediate benefits, buying retail space could save or even make you money over time. Purchasing a building provides stability and allows you to avoid rent increases, which helps create more accurate business projections. It also gives you more permanence than a lease agreement. These benefits can help decrease your business’ overhead costs. Plus, if you choose to purchase a larger building with a number of available spaces, you could also consider leasing retail spaces to other businesses for an additional source of income.

Special considerations when buying retail property

When assessing the pros and cons of buying commercial property, be sure to estimate the investment of both your financial and scheduling resources. As the property owner, you will now be responsible for property taxes and commercial mortgage payments, as well as repairs, renovations, and tenant concerns. You’ll also need to ensure the space is properly zoned for your business and the businesses of any tenants. Work with a commercial real estate agent to make sure your type of business is permitted to operate in the location you wish to purchase, and that you have all of the proper licenses you need.


Before buying commercial property, it’s also important to consider how the long-term and potentially additional expense of a mortgage loan will impact you. Should anything affect your business’ revenue stream, you need to make sure you’re in a position to continue making payments on your loan. Review your business plan and projections to see if you have the customer base and planned growth to support a new location. Take care not to underestimate potential costs or overestimate profits. If upon review you decide buying retail space would benefit your business, it’s time to start looking for the property that’s right for you.

What to look for in a retail property

Because different businesses have different needs, there is no one-size-fits-all approach to buying retail property. Be sure to look for a space that will help your business grow while also serving your customers. Some of the following considerations for a retail property also apply when leasing; however, they’re especially important when you’re looking to make a more permanent business investment like buying a retail space:

  • Customer demographics: What are the needs, habits, and behaviors of your customers, as well as their age, income, household, and other demographic information? Before buying a retail space, make sure that you are choosing a location that is geographically convenient for your customers’ needs and enhances their shopping experience. When you do buy a retail property, make sure you communicate the move to your customers and consider a soft opening for preferred customers to get them excited about the space.

  • Location and accessibility: It’s important to be close to your customers, but it’s also important to be in an area that is safe, stable, and poised for growth. Look for retail property that is located near other retail and restaurants, colleges, offices, and other venues where people naturally congregate, as it could help drive increased traffic to your store. At the same time, make sure that your customers can easily access your building and that ample parking or public transportation is available nearby. Do your research and ask your real estate agent how the previous owner fared in that location.

  • Competition and complementary retail: While it may seem counterintuitive, consider buying commercial property located near (though not too near) one of your competitors — they may be aware of customer and traffic trends that you can also use to your advantage. Complementary retailers can also help drive customers to your store, so look for commercial property that could help you capitalize on a strategic location, such as a bridal shop next door to a flower shop or bakery.

  • Size, floor space, and condition: As you search for properties, consider the nature of your business — do you need a large space for storage or equipment, or is a smaller storefront better for you and your customers? Will you want the opportunity to expand in the future without buying a new space? Request and examine a floor plan of the property to determine how you could best make it work for your business and if it could be remodeled to accommodate your growing business before making an offer. Schedule an inspection for the entire building, as well, in order to be aware of any issues and needed repairs.

More information

We are committed to helping your business succeed. Our dedicated business banking professionals can help you find the right product to meet your business’ needs. To learn more about our business loans, please call 1-800-428-7463, visit us online, or visit your nearest Citizens Bank Branch.


Disclaimer: Views expressed may not necessarily reflect those of Citizens Bank. The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel, nor does it constitute advertising or a solicitation. You should do your own research and/or contact your own legal or tax advisor for assistance with questions you may have on the information contained herein.


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