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How Local Institutions Affect Market Prices

It’s all about the company you keep

Commercial market prices are determined by a whole host of factors – the obvious ones, like buyer demand and the overall economy, and perhaps the less obvious ones, like institutional longevity in a given locale.

When Economic Development Organizations are looking to grow their local economy, it’s vital they look at all of the factors.

The anchor effect

Across the country, anchor stores often set the bar for drawing shoppers to a particular mall or shopping area. Big name stores with recognizable and favorable brands are good for commercial real estate agents, too. The positive association of being located near a favorable store creates a ripple effect for adjacent property sales as well.

The effect may be most easily noticed in the retail space, but it extends beyond that to finance, technology, other business space, and more, too.

Longevity matters

We’ve all seen properties that see a lot of turnover – what seems like prime restaurant locations that have five restaurants in five years. What we don’t pay enough attention to is how this affects nearby listings and pricing. But just as anchors increase neighboring properties’ values, a lack of an anchor does the opposite. With this in mind, it can be worth an EDO taking a bigger risk on a loan to a new business to make sure they make that location work, as it will have a ripple affect across the neighborhood.

Strong and successful local institutions validate the area’s worth and can lend credibility to newbies coming into the market.

Stay on top of the latest commercial market prices and conditions in your area with our up-to-date data and see if there are pockets where a local anchor could make a difference revitalizing a neighborhood. Get in touch with us here.