The Power of Location in Property Valuation

The Power of Location in Property Valuation


Understanding commercial real estate prices can be a complex task. But for the most part, one rule remains constant – the adage “location, location, location”. The local attributes of a property can have a substantial effect on its price. Here’s how:


Demand Drives Pricing

Properties situated in highly sought-after locations, such as downtown cores or densely populated areas, usually command higher prices. The greater number of businesses interested in a certain vicinity, the more potential for the property’s price to increase.

Accessibility is Key

The more accessible a property is, the more it’s worth. If a commercial site can be conveniently reached by major roads, public transportation, or is near to an airport, it is likely to have a higher value due to its attractiveness to both customers and employees.

The Value of a Good Neighborhood

The nature of surrounding businesses and residential areas plays a significant role in property pricing. Commercial properties located in areas with high foot traffic, or an affluent customer base are generally more valuable.

The Allure of Amenities

Close proximity to amenities such as restaurants, shops, and banks can increase a property’s price. These conveniences attract businesses and their employees, making a property even more desirable.

Safety First

A safe area with a low crime rate can significantly increase commercial property prices. Businesses want to ensure the safety of their employees and customers, so those situated in safer neighborhoods often cost more.

Looking Ahead

Future development plans for an area are also taken into consideration when pricing a property. If there’s a planned infrastructure or commercial developments in the locality, it can result in increased demand and subsequent rise in property prices.

The Impact of Local Market Conditions

Economic conditions specific to a locale, such as unemployment rates and general real estate market conditions, play a significant role in shaping a property’s value.

Competition Affects Cost

High competition from similar businesses within an area can affect property prices. If many similar businesses are vying for space in a certain area, the overall property price may decrease due to saturation.


The adage, “location, location, location,” isn’t just a cliche; it’s an essential principle in understanding commercial real estate pricing. Keep in mind these significant factors when considering your next real estate investment.


Written by LevRose CRE with assistance from:
LevRoseCRE.(2024) ChatGPT [Open AI].

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