Considerations for Property Buying in a Tight Market

Build Small Business Equity

As a small business owner, buying commercial property offers a number of benefits that a commercial lease simply can’t measure up to. These benefits including acting as your own landlord (think you call the shots and customizations), tax benefits, equity building opportunities, and even options for better market power through building advertising. But how can you take advantage of a commercial real estate purchase in a tight commercial market like Denver’s where there is limited inventory for sale? There are a couple ways you can position yourself for a commercial property investment, to make the best use of the active market and they are as follows.

Position Yourself to Buy Commercial Property in a Tight Market

1. Work with a commercial broker to gain access to deal flow. The best listings never make it to market.
2. Be prepared to make a quick decision and put in your offer. This means your financing is in order and loan options are queued up.
3. Be open to thinking outside the box with your property acquisition. Ever consider purchasing the real estate of a business for sale?
4. Know what you’re willing to negotiate on and what you are not and make sure your broker is aware.

How to Buy Commercial Real Estate?

A big part of good preparation is information – so know the process of buying commercial property before you start. The process of buying commercial property is not too dissimilar from buying residential real estate. The simple steps of the process are below. When working with a buyer representative the process of acquiring commercial real estate is simple as your broker will manage the process for you and can answer your questions along the way.

The Process of Purchasing Commercial Property

1. Build your advisory team which can include a commercial real estate broker, your financial planner, your CPA or tax planner, a mortgage broker, and a real estate attorney. 
2. Identify your goals for the property, from owner occupied to options for income investment. How will this property serve your business better than your lease does now?
3. Confirm your financing methods for the purchase. Will you need commercial real estate loans to complete the purchase?
4. Search for and evaluate properties available for acquisition, especially their location and usage options. Don’t forget to consider real estate associated with an established business.
5. Identify a potential property for sale and go on a showing with your broker.
6. Submit an offer through a Commission Standard Form (CSF) along with a proof of funds statement.
7. If the offer is accepted by the seller, negotiate an agreement with the help of your buyer representative.
8. Perform real estate due diligence which will be managed by your broker. Pay attention to this process and ask all the questions.
9. Close on your commercial real estate. Execute closing documents with the property seller.

How to Find Commercial Real Estate for Sale?

There are a number of places to find commercial properties for sale. Your commercial broker will, of course, work to source investment options for you, but you can also look for real estate on your own. Your broker’s website will have listings as well as listing websites like LoopNet, Office Space, 42 Floors and Catylist. Working with a broker is the best way to gain access to deals that may never get listed or are too confidential to disclose online. They will also quickly be able to negate options that do not fit your usage needs or financing capabilities.

What Do I Need to Know Before Buying Commercial Property?

Like any investment opportunity, when buying commercial real estate it is important to go into the process with your eyes open. You should carefully consider what you need from purchasing commercial real estate and be prepared to commit to the process (i.e. read the contracts and review the seller representations).

Some of the major options to consider when narrowing your building investment goals is the property location, zoning regulations, the physical condition of the commercial real estate, building codes, insurance & tax costs, parking and accessibility availability, and flexibility for growth or lease back. Your commercial real estate broker will be able to advise you on how to prioritize your goals and share information on the purchase to make an educated decision.

If you still have questions buying commercial real estate, we recommend speaking with a commercial broker to discuss your goals. Visit transworldcre.com for more information or call 720-574-2953 to speak with a broker.

Rachael Holstein is the Marketing Manager for Transworld Commercial Real Estate, a full service commercial real estate firm in Denver, Colorado. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle! Visit transworldcre.com for more information.