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Commercial investments open opportunities for building your wealth and portfolio as you explore the real estate market. Every beginner can navigate Utah's commercial real estate by understanding the basics and what it takes to succeed.
This guide will take you through everything you need to know before you decide on your next investment.
Why Invest in Commercial Real Estate?
The higher income potential of commercial properties makes them particularly desirable. Compared to residential properties, commercial real estate has a higher return on investment. Commercial buildings are often on long-term leasing, which provides investors with a predictable flow of monthly revenue.
Novice investors can also benefit from the instantaneous diversification of their portfolio. Property values and rental rates also appreciate over time, which can be beneficial in economically growing areas.
Investors can file for tax benefits — citing depreciation, mortgage interest deductions and property expenses — to reduce taxable income. You can use your savings as capital to purchase another property.
Types of Commercial Real Estate Investments
There are several categories of commercial properties you can invest in, each with different levels of risk and profitability.
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- Office spaces: Office spaces tend to have long leases but are impacted by remote work trends. According to the Bureau of Labor Statistics, commercial real estate markets are evolving with changing work patterns. Medical offices have a more stable demand since healthcare is a necessity.
- Retail properties: Well-located retail properties such as shopping malls, stand-alone stores and strip malls can generate high rental income, especially in high-foot-traffic areas.
- Industrial properties: With e-commerce booming, demand for industrial space — such as warehouses, manufacturing plants and distribution centers — has surged.
- Garages: Investing in garages or storage spaces can be a lucrative commercial real estate opportunity. These properties are cost-effective, low maintenance and necessary for businesses that need storage or vehicle protection. The Small Business Administration notes that storage facilities are essential for many business operations.
- Multifamily units: Multifamily properties — such as apartment complexes, duplexes and condominiums — provide consistent rental income and benefit from the stability of residential demand.
- Hospitality properties: When travel demand is strong, hotels, motels and resorts can generate high revenue through room bookings and events. However, these properties can be a high-risk investment due to economic fluctuations and seasonal markets.
- Mixed-use developments: A combination of retail, residential and office spaces, these properties generate multiple revenue streams and drive local traffic. Zoning regulations and property management can be complex with this type of building, so consider those factors before investing.
How to Get Started in Commercial Real Estate Investing
There's always a risk associated with investing, and commercial property investing is no different. Here's how you can successfully expand your portfolio by investing in commercial real estate.
1. Educate Yourself
Learn about Utah's market trends, zoning laws and financing options. Utah's zoning laws share similarities with those of other states but also have distinct features, including temporary zoning regulations and vested rights.
2. Choose a Strategy
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You can diversify your investment portfolio with low to high-risk options depending on your comfort level. Here are some strategies to choose from.
- Core investment: This low-risk strategy includes buying high-quality properties in prime locations, such as a fully leased office building in downtown Salt Lake City or a high-end retail space in a busy shopping district. These properties attract stable tenants and generate consistent income with minimal risk.
- Value-add investment: This strategy involves purchasing an underperforming property and improving it for a moderate-risk investment. For instance, you could buy an outdated office building in downtown Salt Lake City, renovate it with modern amenities, and lease it to tech startups.
- Opportunistic strategy: This is a higher-risk investment where you invest in distressed properties or emerging markets with no certain outcomes. For example, you could purchase a foreclosed strip mall in an underdeveloped Utah suburb, revitalize it with new tenants, and sell it at a higher value.
- Real estate investment trusts (REITs): Investing in REITs allows individuals to gain exposure to commercial real estate markets without the need to directly own or manage properties, making it a convenient option for passive income.
3. Assess Market Conditions and Trends
Pay attention to factors like Utah's job market. In 2025, nonfarm payroll employment rose to 1.9%, with a current job count of 1,748,000. As evidence of environmental design's upward trend, sustainable properties are growing with significant increases according to the U.S. Department of Energy in market value. This is a significant consideration as eco-friendly buildings face growing demand.
4. Find the Right Property
There are various properties to consider, from office spaces and retail properties to mixed-use developments. To select the property that matches your goals, consider the location and market demand, tenant stability, property condition, and potential upgrades. Conduct due diligence by inspecting the property, reviewing zoning laws and analyzing cash flow projections.
Your First Steps Into Commercial Real Estate Success
The opportunities for commercial real estate are only rising, especially as more of Utah's metropolises grow. This opens doors for novice investors when it comes to low-maintenance investments and diversifying their portfolios. Expect success with commercial real estate when you plan strategically.
