Average Price Per Square Foot Commercial Real Estate
Commercial real estate is a broad term that refers to any non-residential property used for business purposes. This can include office buildings, retail spaces, warehouses, and industrial properties. When it comes to buying or leasing commercial real estate, one of the most important factors to consider is the price per square foot.
What is Price Per Square Foot?
Price per square foot is a commonly used metric in the real estate industry to compare the value of different properties. It is calculated by dividing the total price of a property by its total square footage. For example, if a property is priced at $1 million and has 10,000 square feet, the price per square foot would be $100.
Factors Affecting Price Per Square Foot
There are several factors that can affect the price per square foot of commercial real estate. These include location, property type, condition, age, and market demand. Properties located in prime business districts or near major transportation hubs typically command higher prices per square foot than those in less desirable areas.
Similarly, certain property types such as Class A office buildings or high-end retail spaces may have higher price per square foot than industrial properties or older office buildings. The condition and age of a property can also affect its value, as newer or well-maintained properties may be more desirable to tenants or buyers.
Average Price Per Square Foot by Property Type
According to recent data from commercial real estate firm CBRE, the average price per square foot for office properties in the United States was $41.84 in the second quarter of 2021. The average price per square foot for industrial properties was $8.68, while retail properties averaged $16.68 per square foot.
It is important to note that these figures are national averages and can vary widely depending on location, property type, and other factors.
Understanding Lease Rates
When leasing commercial real estate, price per square foot is often referred to as lease rate. This is the amount of money a tenant pays per square foot of space per year. For example, if a tenant leases a 1,000 square foot office space for $25 per square foot, their annual lease rate would be $25,000.
Lease rates can vary depending on the length of the lease, the terms of the lease agreement, and the tenant's creditworthiness. It is important for tenants to negotiate favorable lease terms and be aware of hidden costs such as common area maintenance fees or property taxes.
Conclusion
Price per square foot is a crucial factor to consider when buying or leasing commercial real estate. It can help investors and tenants compare the value of different properties and make informed decisions. However, it is important to take into account other factors such as location, property type, and market demand to get a complete picture of a property's value.
Whether you are a buyer, seller, or tenant, working with an experienced commercial real estate broker or agent can help you navigate the complex world of commercial real estate and ensure that you get the best deal possible.