Leasing V. Ownership – Commercial Real Estate

Nowadays there are many things a successful small business owner or entrepreneur needs, but a physical storefront or office outside your home isn’t necessarily one of them.  The days of brick and mortar or “streetside” locations are becoming less and less of a real need.  Increasingly, a physical location, unless absolutely needed to carry out your day-to-day operations, is just more overhead your business can do without.

That being said there are some businesses that cannot operate without that physical location.  Whether you are currently leasing or considering purchasing a location there are a few things to consider. 

First, lease rates in some areas continue to fall.  If you are a business that has been running your business out of your home and space is an issue; you can find a great deal.  In some cases business owners have found that they can renegotiate a lease right now as building owners are trying to keep their best tenants.

CRE prices have decreased in most areas.  Depending on your market there could be an ample amount of good deals out there right now.  However, buyer beware, some markets continue to show some weakness and prices could go lower. 

Another caution that needs to be mentioned is that of vacancy.  Many business owners will buy a building or property with the hopes of leasing a portion of the building that they are not going to use.  The problem with that at this time is that vacancy continues to run at some high, historic levels.  If you were to rely upon a lease to make your CRE payment you could find yourself in a difficult situation.

In most cases owing CRE is a great diversification tool that can help the business owner maximize their earnings potential.  The market may be primed to get in if you’ve considered all the costs and potential hazards.  If you think you and your company are at the point give me a call and we can talk further about the financing portion of the project.  I can be reached at 208-350-2014.

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Branch Manager that has worked in the small to medium sized business lending field. I have experience in all types commercial lending and I'm here to provide insights from a lender's point of view. I hope to impart some knowledge that can take your business or profession to the next level. I currently work as a Branch Manager at the 10th & Bannock Office for Banner Bank in Boise, Idaho.

Posted in Boise, Building, Business, CRE, Credit, Economy, Entrepreneur, Lease, Opportunity, Property, Small Business, SMB

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