Has the Commercial Market Turned?

Up and Down IndicatorsI don’t like to play the prediction game. Markets are a tricky thing, and I prefer to rely on empirical data when it comes to making a determination. In the residential market, depending on your area, we’ve seen housing prices starting to move back up. New home construction has started to rise. Empirical data is showing that the housing market has bottomed out and is starting to move up.

What about the commercial real estate market? Once again, depending on your individual market the signs are there that things have likely bottomed out and are starting to move up. Office lease rates are starting to move up as supply dwindles in many markets (empirical evidence). If the office market is moving can the retail market be far behind?

There are several recent articles dealing with this turn in the commercial market:
- “Many U.S. Office Markets to Improve in 2013, Accelerating in 2014″ link
- “Key Leading Indicator For Commercial Real Estate Hits Its Highest Level In Two Years” link
- “Commercial rents on the rise?” link

That said, there is still a great deal of uncertainty out there and it’s still a long road back. The take away here for the small business owner is one of timing. Here’s what we think you should be considering now:

  • If you are a new business owner, or your lease is nearing expiration now is the time to make your best deal
  • If you’ve got an existing lease consider working with your property owner to lock-in your current rates in exchange for a lease extension

The window of opportunity is here. What we are likely to see in the coming year is a slow increase in lease rates, and the incentives in the market now (free rent, etc) will start to disappear. Talk to your commercial professional today. They can help you make the business moves that will set you up for success.

Choosing the Right Location for your Business

Businessman and question markChoosing the “right” space can literally be a make or break decision for your business. It’s a process that starts with your business plan. A solid business plan is the key to identification of the many diverse success factors that are relevant to your business. It also provides the basis for prioritizing the key drivers that will effect your business now, and in the future (more on business plan specifics in future posts).

With a solid business plan in hand you are armed to answer the primary questions in selecting your right location. It needs to fit with your financial planning, and needs to have the physical attributes that meet your company’s immediate culture and business needs as well as providing for anticipated growth.

LOCATION SELECTION CONSIDERATIONS

Some considerations of identifying the “right location” that you may want to consider include the following:

  • Bricks or Clicks: Is yours an on-line business model? To what degree will your customers be interacting with you on-line, vs phone, vs face-to-face? How will this balance change over time? Even if you are largely an on-line business don’t underestimate the liability benefits of having a professional location other than your home.
  • Who Are You: To what level will your location impact your brand? How will it define who you are to your customers? Do you require a professional presence, visibility to the public, parking for your customers and staff, and/or signage promoting your company presence?
  • How Will They Get to You: Will you be relying heavily on foot traffic? Will people be driving to your location? Do you have employees that take a bus to work or can your client ride a bus and get to and from your location effortlessly?
  • How Does it All Flow: Is the layout of the space adequate for your company’s operation? That is does the demised spaces flow the way your work needs to be accomplished? Most offices have a pecking order while most businesses have a system or cycle that the employees and customers flow through. Be sure to spend time on mentally matching people and products to the location and defining what happens when someone reaches the front door.
  • Your Location as Wealth Builder: It’s obvious that the product or service you sell is at the center of your financial plan. Don’t underestimate the impact your location can have on your bottom line as well. Be sure to give careful consideration to the options of leasing, buying, and building to suit. These decisions can have significant impact on your long term bottom line.

Discuss your individual business process in detail with your broker for another set of ears. They will be able to provide a specific perspective, and will be able to help select available properties and negotiate rates and terms for your future location. Also, don’t forget to incorporate the cost of moving and any tenant improvement required. Your broker will know sources of funding and usually know the limitations of landlord resources available to help with your move.

If we can be of help in making your move a success, give us a call at Axiom Commercial Real Estate at 253-473-5351

Some Small Business Trends

How are Small Businesses performing since the recession? Here’s a look at some of the winners & losers.

Small-Business Rebound: Retail Sales Up as Consumers Resume Spending [INFOGRAPHIC]
via: Small-Business Rebound: Retail Sales Up as Consumers Resume Spending [INFOGRAPHIC]

Some Simple Lease Planning Tips

Thinking Business ManLeasing space for your business can be a nightmare or as easy as a trip to the grocery store. It’s all in the planning.

To make the job effortless, create a needs list (check list) of what it is you need and what your budget will allow. An example is if you were operating an administrative office with 3 sales people, 2 administrators, the boss, and room for a temp. What would a business like this require?

1000 to 1200 square feet, rest rooms, a conference room, lunch room, on a bus line,  7 desks, or do the sales people work from their home? How about signage exposure, parking requirements, and privacy? What does the perfect office look like for your business?

Be prepared to take somewhat less or somewhat more as you have no control of the marketplace. What about pricing? Work from your existing budget and business plan to determine what you are able to pay in rent.  Don’t forget to discuss Triple Net expenses for it may come as a surprise if not included in the lease. (More on this on another day)

To make the process easy make sure you have an experienced Real Estate Leasing Broker on your team.  They will know the market place and can get you up to speed quickly saving weeks of running around learning the market.

GOOD HUNTING!

WELCOME!

Open Sign
Welcome to Axiom Commercial Real Estate’s new home on the World Wide Web. We hope that you will find the information here useful. As we move forward we’d like to hear from you!

If there is ever a way that we can change what we’re doing to better serve your needs don’t hesitate to drop us a line.

Cheers!