Should a Small Business Lease Space or Buy Space???

I've been working with small businesses that at times seem to waffel between leasing and buying. I think that there are two major questions to ask yourself before making a decision:

1) Is your business in a growth phase; or is it a mature business with a consistent client base?
2) What kind of upfront costs can your business handle?

Typically, the positives in a purchase tend to be fixed costs, certain tax deductions, potential additional income, appreciation of property. The negatives of purchase can include the fact that in a relatively short period of time your business space needs may change. Upfront costs such as down payment and buildout can tie up working capital. And the property may take more time away from the actual business.

To lease space, a small business owner can chose their location!location!location! Working capital is not tied up in a mortgage. The landlord focuses on the real estate so that the business owner can focus on the business. The downside is that there are variable costs involved and there is no equity.

So how does one make the right choice? Checking in with your financial planner and accountant is a great start. Then the next step includes a discussion with a reputable commerical real estate broker. It's at this step that one can look at what the market bears and make educated decisions that are right for the business.

Office Market Looking Good for Tenants

I just had an opportunity to review Crain's Chicago Business article Burbs' Office Market Steady (January 14, 2008). I must say, the market is looking up for tenant's, especially those that are patient and have time to negotiate. Yes, yes, it says northern and western suburbs are holding their own with landlords raising net rents a couple of bucks per square foot over a couple of years; yet, 2007 added 1.1 Million sq.ft. with 1.3 million due for completionin 2008. That's quite a bit of office space, giving business owners lots of options. And with talk of a recession looming, its reasonable for tenants to wait, hold off and see where the economy goes.

Happy New Year!! The perfect time to set real estate goals!!!

It's the beginning of 2008. It's time to set your small business real estate resolution. Even if you are not planning on making any real estate decisions anytime soon, it's important to review how your business goals align with future real estate needs...just like that financial plan....

Perhaps it's a small home based business that is moderately expanding. All of a sudden, the garage just doesn't cut it. What to do? Or you've been in busines for 10 years, and the space you are currently in not only is too small, but the landlord has asked you to leave asap. And what about those landlords that keep raising the rent?

Well, hopefully you've connected with a commercial real estate broker (http://www.tjgcommercial.com/ ) that has reviewed your business goals with you and has designed a real estate acquisition plan that fits your needs. It may be a plan that is attainable in 3-6 months, or 5 years. Regardless, a good commercial real estate broker will not only review your current situation and suggest areas of improvement; but will also assist in defining what the optimal options are in the future.