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Commercial Real Estate FAQ

Before diving into buying or leasing a business property, it’s important to understand the basics. Here are answers to some of the most common commercial real estate questions.

What does a commercial real estate broker do? 

A commercial real estate agent or broker is a licensed professional who has been trained to help clients buy, sell or lease real estate properties. Commercial real estate properties are used for business or investment purposes and may include industrial property, warehouses and office buildings, retail space within a shopping center, or agricultural land.

A commercial real estate broker may represent the buyer, seller, tenant or landlord and guides you through the entire transaction while helping you achieve your business goals.

Is commercial real estate similar to buying a house?

If you’re looking to buy a single-family home, you should contact a residential real estate professional.

Commercial real estate transactions can be far more complex than residential deals and therefore require a different set of skills and knowledge. When buying or leasing commercial real estate, you’re more likely to run into things like:

  • Potential liability exposure
  • Zoning issues
  • Liens and title issues
  • Hazardous materials
  • Stringent insurance requirements
  • Intensive or time-consuming inspections
  • Complex contracts

A broker can not only help you navigate these challenges but will also make sure the property aligns with your business needs.

What important questions should I ask my commercial real estate agent?

We know there is a lot at stake when you buy or lease commercial real estate. Be sure to ask questions to find a person or team who is trustworthy and can meet your needs. When shopping for potential commercial real estate services, here are some important questions to ask:

  • Is the firm experienced?
  • Are they honest? (Get reviews if needed!)
  • Are they thorough and detailed?
  • Do they have experience with my business’ property type?
  • Are agents responsive and communicative?
  • How knowledgeable are they about the local market?
  • What are the fees and commissions? 

Can I find a space without hiring a broker? 

Hiring a broker is not required, but it can be a huge benefit to you. A broker starts with a solid understanding of your business and helps you locate a space best suited to your needs at favorable terms for you.

While you can view some properties online, many sellers and landlords prefer to work with and show properties to licensed real estate professionals. And when it comes time to negotiate, you’ll be happy to have someone who’s been through the process many times before. It’s a broker’s job to get you a fair contract with the best possible rates and terms. 

Should I buy or lease my commercial office space?

It depends on a number of factors. In general, buying makes more sense if you plan to stay in the same location fon a long-term basis. But you’ll also need to consider other factors to determine the best option for your business.

A detailed cost/benefit analysis should take into account things like:

  • Up-front costs
  • Ongoing monthly costs
  • Opportunity costs
  • Tax benefits
  • Asset price appreciation
  • Growth in business equity
  • Income earned at the time of sale

As well as

  • Will you outgrow your space within 7 years?
  • Do you have time and resources to maintain a property?
  • Can you afford to tie up significant capital in a commercial building?
  • What is more important to you: flexibility or stability?
  • What are the current trends in your market?

If you do decide to lease, here are some for the best lease renewal experience.

If you’re considering a commercial real estate purchase, lease or sale, we can help you examine your specific situation and guide you towards the best decision for your business. Contact us today to get started!

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Rebecca Rosenberg

Tower Blog Official Contributor