The Current Market for Commercial Real Estate in St. George
If you’re looking to purchase commercial real estate in Utah, St. George is an excellent option. This city in the desert came in at number six on Forbes’ list of “The Best Small Places For Business and Careers” and the job growth, affordable property and low cost of doing business make St. George an attractive area for commercial real estate.
However, it’s important to be aware of the current real estate market in St. George, where the inventory is low, but demand is still just as high. This dynamic shift has created a true sellers’ market, and while the prices have not shot up, they have progressively increased over the last few years and continue to trend higher. When comparing 2015 to 2016 (YTD), statistics show that St. George prices are already 3.9 percent higher, with April and May having the highest gains of 19.5 percent and 6.9 percent. In addition, the data comparing 2015 to 2016 YTD shows that the number of new listings in St. George is down 4.2 percent but the number of sold listings is up 2.9 percent.
In a sellers’ market it is important to know what the value of commercial property really is. Commercial Real Estate of St. George can set you up with an experienced agent who knows how to negotiate contracts and make sure that you don’t overpay for a commercial space. We will also provide you with a detailed list of available properties, insight on properties that are not yet on the market and information on St. George demographics like population, average income, daily traffic and so forth.
Here are a few more tips for buying in a sellers’ market that you should keep in mind if you’re considering commercial real estate in St. George, Utah:
- Familiarize yourself with real estate metrics, including:
- Net Operating Income (NOI): The NOI of commercial real estate is calculated by appraising the property’s first year of gross operating income and subtracting the operating costs. You always want positive NOI.
- Cap Rate: A commercial property’s “cap” or capitalization rate is used to calculate the value of income-producing properties. They are also used to estimate the net present value of future profits or cash flow.
- Cash on Cash: Cash on cash compares the first-year performance of competing properties. This tactic takes the fact that the investor does not require 100 percent cash to buy the property and also accounts for the fact that the investor in question will not keep all of the NOI because it’s needed for mortgage payments. Uncovering cash on cash can happen once investors have determined the necessary investment amount to purchase the property.
- Find a motivated seller who is ready and eager to sell below market value. A motivated seller is someone who has a pressing reason to sell their property below the market value, which is an excellent way to get a good deal in the sellers’ market in St. George.
For valuable real resources, experienced real estate agents, market reports and more, contact Commercial Real Estate of St. George. We’ll make sure that you get the best value for your money in a St. George commercial real estate property.