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Commercial Real Estate Advice – When Do You Need It?

This post originally appeared on tBL member Allen C. Buchanan's blog Location Advice and is republished with permission. Find out how to syndicate your content with theBrokerList.

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Seemingly an easy retort? Certainly. I need advice when I’m buying, leasing, or selling. These three circumstances would apply to either side of the aisle – whether you are an owner or an occupant of commercial real estate. Ok. Done for this week. Well, not quite and since I’ve a few more words – indulge me as I share a few more situations in which commercial real estate advice may be necessary.

A transition. Twice last week, I counseled occupants that shared this circumstance. Both enjoy the benefit of owning the buildings their companies occupy. When the buildings were purchased – Bill Clinton was president. Ownership of the business and building were synonymous – albeit with different entities. Flash forward. Due to a couple of untimely deaths – the LLC building ownerships only have one common link to the operation’s management. Plus, in one case, the company finds itself with too much space – in other words the building no longer works. Where before both occupant and owner sang from the same song book – now the music is a bit off key. Needed is a careful parsing of objectives and a clear path forward.

Efficiency discussion. How do you get the very most productivity out of your manufacturing location, your suite of offices, or your retail store front? Often, the answer is not a move but a re-tool of the flow of the operation. Countless times I’ve toured a warehouse distribution building with the premise – the operation is out of space. Sure. The floor is consumed but the inventory is only stacked to half capacity. This “cube” space is free if you can utilize it. You see, commercial real estate is billed by the square footage. Simply, you pay for the floor area – not the volume of the building. A better investment – vs a move – might be in a new forklift to reach the heights of the building’s ceilings.

An alignment of motivation. What is optimal? Often, I find an in-depth discussion leads to a solution no one had considered. For instance. If operating capital is needed – why sell a building you own with no debt – only to suffer the consequences of Uncle Sam’s outstretched hand. A better cure may be a re-finance of the building’s equity. Another circumstance. Why hold out for the last dime with your occupant who is approaching the expiration of his lease? A simple math exercise should show you how costly replacing his tenancy will be. Share the savings. If he renews – even at less than a market rate – you both win.

What is ahead. Many of my meetings these days start with the question – how is the market? My response. We are seeing signs of cooling – variance in closed amounts vs asking prices, more time on the market, fickled investors, a more cautious – “let’s wait and see” attitude from occupants. The crazy thing – this slow down in activity hasn’t resulted in a rise in our vacancy – but it will. You heard it here.

Allen C. Buchanan, SIOR is a principal with Lee & Associates Commercial Real Estate Services. He can be reached at 714.564.7104 or [email protected]  his website is allencbuchanan.com

Jan 15, 2019Allen C. Buchanan
1 month ago Best PracticesCalifornia commercial real estate, CRE Tenant Representation, Orange California, Southern California60
Allen C. Buchanan

Allen has been a distinguished voice in the cre social media and technology community since he started his blog in 2010. Allen’s posts are published weekly in the Sunday Real Estate Section of the Orange County Register. Allen is the creator of the popular YouTube video series Tuesday Traffic Tips. Allen has been named to the prestigious Top Ten On-Line CRE Professionals List for the past 3 years.

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