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Call on a Broker in Your Commercial Property Search
Just as using a real estate broker can make your residential search less stressful, working with a tenant representative can make your commercial property search more strategic and targeted to your business needs. With experience and expertise in the industry, a commercial real estate broker can help you make a decision that considers your company’s growth, employee productivity, and investor demands. A tenant representative is not only an advocate for you but also brings valuable market knowledge and skills to the negotiation table.
- Business Insight: After analyzing your business model, goals, and company culture, an experienced commercial broker can help you find the space that best fits your current and future needs. Moving or relocating your office can impact finances, business operations, and employee and client satisfaction, but working with a professional can help you make the transition more seamless and strategic.
- Extensive Market Knowledge: Particularly if you are not from the area, a thorough understanding of your target market is critical to finding the right space at the right value and with the right opportunities. With his or her detailed understanding of the market, an established broker can help you target the right area for your business, analyze properties and demographics, and answer your questions about future growth or development activity.
- Negotiation Skills: Finding a suitable office is often easier than securing one. A commercial real estate broker brings extensive and insider knowledge of commercial lease negotiations that can help you secure the most favorable terms. When hiring a broker, look for a tenant representative; he or she advocates solely for clients and their best interests, not the landlord’s.
For more information about commercial real estate, please contact Tom Pappas. As managing director at Studley, Inc., Tom specializes in strategic planning within the Denver market and develops real estate strategies to help his clients make sound commercial real estate decisions. Visit us online or call Tom today at (720) 259-1809.
Search and Sign: Commercial Real Estate Resources for Further Reading
As you begin your search for commercial property to lease or purchase, consider adding a commercial real estate broker to your team. His or her market knowledge, property analysis, and negotiation experience can help you make an informed decision that complements your company’s goals. From searching for the right property to signing the lease agreement, here are some additional resources on leasing commercial property:
- For companies expanding or opening new offices, the terms of their lease agreement can dictate the flexibility and growth potential of that office or business. This government guide to leasing commercial space provides tenants with more information about what should be included in your lease and what to know before you begin negotiations.
- When you do enter into lease agreement negotiations, identify the core needs and requirements that you want included in the contract. This guide from Entrepreneur Magazine provides more guidance on how to negotiate a commercial lease, including hiring a commercial real estate broker.
- When searching for commercial property, ask yourself a few essential questions to help you find the appropriate space: Should I buy or rent? Where are my customers, what can I afford, and does this space align with the company’s future goals? For more information about finding commercial space for rent, consult this legal guide to commercial property.
For more information about commercial real estate, please contact Tom Pappas. As managing director at Studley, Inc., Tom specializes in strategic planning within the Denver market and develops real estate strategies to help his clients make sound commercial real estate decisions. Visit us online or call Tom today at (720) 259-1809.
4 Factors to Consider When Searching for Commercial Real Estate
To the uninitiated, commercial real estate listings can appear as little more than a list of names, numbers and schematics. To a professional commercial real estate broker, though, each of those listings tells a story about the space’s value, potential, and fit for your business or office. Talk to your broker and learn more about what to consider when searching for commercial real estate and office space.
- Building Capacity: When viewing potential office spaces, ask yourself some basic questions about capacity: Is this property large enough to house your entire staff comfortably? Does the layout contribute to conducting business, or is it an impediment to efficient operations? If necessary, look at other offices and study how the space is used and how much is apportioned to each employee.
- Potential for Future Expansion: Just as your business goals may evolve with time, your space may also need to grow with your vision. Consider whether a commercial property complements your short and long-term goals and if you will have the flexibility to adjust the space as needed.
- Appearance: An office can be the heartbeat and soul of your entire enterprise. From corporate identity to office culture, the appearance and functionality of your office space can impact how employees and clients see you. If you are expecting a high volume of visitors, for instance, you may want to select a space in a prime location with high-end amenities to create a positive first impression.
- Cost: One of the most significant considerations you will make when searching for commercial real estate is cost. Working with a commercial real estate broker can ensure that you are receiving accurate and timely market information as you make your decision. He or she can provide you with additional analysis about comparative rent, future property plans, and negotiating points to help you secure the most advantageous lease for your needs.
For more information about commercial real estate, please contact Tom Pappas. As managing director at Studley, Inc., Tom specializes in strategic planning within the Denver market and develops real estate strategies to help his clients make sound commercial real estate decisions. Visit us online or call Tom today at (720) 259-1809.
The Different Classes of Commercial Real Estate
When you are purchasing or leasing commercial office space, criteria to consider includes building location, leasing flexibility, and property classification. Finding the office space of the appropriate classification can help companies and businesses to work efficiently, connect with clients easily, and develop corporate identity. If you are looking for new office space, a commercial real estate broker can help you to understand the different classes of space and negotiate a beneficial lease agreement.
- Class A Office Space: Of the three different classes of office space, Class A properties are generally those of the highest quality in design, functionality and amenities. Class A properties are also well-located with access to clients, resources, and roadways. While Class A buildings tend to boast better construction and infrastructure, they can command high rent rates and stricter leasing negotiations for prospective tenants.
- Class B Office Space: Like Class A properties, Class B buildings are typically well-built spaces in a desirable location but are over 10 years old. Because Class B properties are often targeted by investors for renovation into Class A properties, leasing in a Class B building could be a strategic and beneficial move for some companies.
- Class C Office Space: A Class C commercial property is usually over 25 years old. It may also be in a less desirable location with outdated technology or architecture. While Class C buildings tend to require extensive renovation, they usually offer the lowest rental rates and are often targeted for eventual redevelopment.
For more information about renting commercial office space, please contact Tom Pappas. As managing director at Studley, Inc., Tom specializes in strategic planning within the Denver market and develops real estate strategies to help his clients make sound commercial real estate decisions. Visit us online or call Tom today at (720) 259-1809.
It’s an Exciting Time for Commercial Real Estate
People always give a sigh of apology when I say I am in the commercial real estate business. With the residential markets taking huge hits and the economy struggling, the assumption is that commercial real estate is too. For those holding grossly overvalued, leveraged commercial properties, times are tough. However, for the commercial broker and investor with their nose to the ground sniffing for great deals, it is an opportune time. With tight lending requirements, the term, “Cash is King” has never been more valid. It truly is an exciting time for commercial real estate in Denver.
Many commercial properties are facing loan renewal deadlines. Those who paid a premium five or more years ago are faced with the reality of not getting a new loan. With lower market lease rates, banks requiring higher debt coverage ratios, and overall declining property values, those who leveraged their investment years ago are left with little to no options today.
Another example is a property that sold in 2000 for $2.95 million, but was unable to be refinanced last year. A group of local investors were able to purchase the property this year in a short sale for $1.1 million in lieu of the bank foreclosing. The property needs work, but with existing tenancy (which was at 60 percent at the time of purchase), the property was returning a 10 percent CAP rate. Once work is complete and the project is stabilized, the investors should see returns between 12 percent and 15 percent annually even after the capitalization costs.
With the uncertainty of financial markets and the threat of hyper inflation in the next couple of years, investment in hard assets should definitely be considered as part of one’s investment portfolio. In an article written by CoStar‘s Mark Heschmeyer, he quotes Andrew Little, an investment banker with John B. Levy & Co. in Richmond, Va., who said, “Although the downgrade (of the U.S. debt rating) has made market participants more anxious, and the immediate impact is widening spreads, the cost of capital for better quality commercial real estate has not gone up. The bond market certainly doesn’t believe there will be any U.S. Treasury default, but prospects of continued political gridlock and further downgrades has investors of all kinds trying to figure out where to put money,” Little said. “Commercial real estate doesn’t look too shabby when compared to many of the alternatives.” Mark goes on to quote Asieh Mansour, Ph.D., and CBRE’s head of Americas Research who says, “While we anticipate continued stock market volatility, commercial real estate will not fare as poorly because it remains a preferred asset class, within a well-diversified multi-asset institutional portfolio.”
Be a wise and prudent investor. A trusted advisor has always told me, “I don’t invest in anything I can’t sell for $8.95 with Schwab.” Once committed to a commercial asset, it certainly is not as liquid as a stock trade. However, if done right, it can prove to be a very valuable return for the future. Look to those who know and understand the market and seek their advice. Do not invest in something you don’t understand. The last thing you want is to be the “one” having to arrange a short sale or face foreclosure down the road.
A friend and I recently sat down to play a game of Monopoly with my 9-year-old son. My friend has a Ph.D. and I being in real estate felt confident in our abilities to school my son. My son is infatuated with Boardwalk and Park Place (who isn’t?). He had successfully purchased Boardwalk, but needed Park Place, which my friend had already purchased. For 30 minutes he begged my friend to trade nine of his properties for my friend’s one interest in Park Place. My friend would not trade him because he felt guilty of taking advantage of such a naive trade. After repeated requests, I finally encouraged my friend to make the trade, knowing it would give me the opportunity to teach a valuable lesson to my son. It took only another 30 minutes (we all know this game has a painfully long time requirement), but my son successfully purchased the requisite amount of homes, then two hotels and subsequently bankrupted my friend first and myself not long after. No lesson in prudent spending was taught that day, and my 9-year-old has not let myself, my friend or anyone else within ear shot forget his victory.
My point is, many have made a lot of money on real estate. Some make it through wise and prudent purchases and others through dumb luck (no offense to my 9-year-old). I believe in the real estate market in Denver. It has weathered these economic times better than most major cities throughout the country. Be wise, use good judgment and counsel, and you too can end up winning in the game of real estate in Denver.
Michael Bright is president and CEO of BRC Real Estate Corp., Highlands Ranch.
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Tom Pappas 