Investing in commercial real estate can be a smart decision for those looking to diversify their portfolio and generate long-term wealth. One market showing strong growth potential is the suburban market. We ran the numbers to demonstrate the benefits of owning property in the suburban market, namely Barrie based on utility bills and property taxes.
Lower Utility Rates
One of the main advantages of owning commercial property in the suburban market is low utility costs. Unlike urban areas like Toronto, where utility rates are generally higher due to increased demand and usage, suburban areas tend to have lower utility rates due to lower demand and usage. For instance, there is a 62% difference when comparing Toronto’s water rates at $4.39 /M3 to Barrie’s water rates at $2.73/M3 (combined water/wastewater rate). These savings significantly decrease your net operating costs and ultimately your return on investment.
Property taxes are usually based on the assessed value of the property and can vary greatly by location. In general, suburban areas tend to have lower property tax rates than urban areas due to a variety of factors, including lower real estate prices and lower demand for public services.
Even though property tax rates tend to be more stable in suburban areas than in urban areas, tax rates can fluctuate significantly due to changes in economic conditions and government policies. The average rate for property taxes in cities like Oshawa, Guelph and KW is 2.75% compared to Barrie’s 1.43% commercial property tax rate. Barrie has an excellent infrastructure so property owners in the area have a level of predictability and security that helps them make informed decisions about their investments.
Aside from the economic benefits of lower utility bills and property taxes, owning commercial property in the suburban market has significant growth potential. Suburbs are often characterized by rapid population growth, which can drive demand for commercial real estate and the development of property zoned commercial. Development charges in the city of Barrie are half of those charged in Vaughan. The consistent development & growth in Barrie will ultimately lead to higher property values and rental prices, further increasing the return on investment for property owners.
Lower utility rates also attract residents looking for a greater quality of life. Post-pandemic, we see the influx of homebuyers who insist on working locally or from home, especially in today’s housing market. Businesses in Barrie seeking a skilled labour force will be satisfied with a pool of talent who have made the move to an affordable and less crowded place to live just an hour north of Toronto. This can lead to a more stable tenant base and lower vacancy rates compared to urban areas, which can increase the long-term stability and profitability of commercial real estate investments in suburban markets.
In summary, owning a commercial property in the suburban market has many benefits, including reduced utility costs and property taxes, strong growth potential, and a more stable tenant base. By carefully analyzing local market conditions and working with experienced real estate professionals like Stephanie Maye, Broker of Record, investors can take advantage of these benefits and achieve their financial goals.
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