Buying or Leasing a Commercial Property
When you're looking for a commercial property to buy, lease, or invest, your best resource for information is your HARRIS REALTY Commercial Professional. He or she can address opportunities in your area, and can answer your questions - from location selection to appraisals to property management. Your HARRIS REALTY Commercial Professional can provide information for you to make an informed decision about investing, as well as track market trends and opportunities.
During your search, there are many different kinds of properties to consider. These include:
• Farms and Ranches
• Motels and Hotels
• Mixed Use
• Special Purpose
Office buildings or office space can be as simple as a residential home in a business district or as complex as a fifty story office tower. Often occupied by multiple users or a single end user or tenant, they are either Low Rise (less than 7 stories), Mid Rise (7-25 stories) or High Rise (anything above 25 stories).
Such types of properties can be usually classified in three different ways:
1. Class A building generally means the property is high quality, new or in new condition, modern design with excellent finishes and with many amenities. They usually command the highest lease rates in the market.
2. A Class B office is in good condition, and highly leasable. They have standard finishes and fewer amenities available although they usually command a lower rate than a Class A building.
3. A Class C property generally is "dated" or contain some functional obsolescence like poor layout or not able to be retrofitted for elevator service. These properties are usually found in less desirable locations.
Retail properties generally range from individual shops to large neighborhood retail centers. Retail centers drive traffic and may offer several cross-sell opportunities by including various non-competing businesses, sometimes complemented by an anchor store. Larger centers often include "pad sites" typically occupied by banks and fast-food operations. Retail properties are typically non-owner occupied and may be utilized for income, tax relief, and appreciation. You should consult with your tax/financial advisor about specific tax and financial advice.
Small strip centers generally range from five to ten tenants and cover 6,000 to 15,000 sq. ft. Many large grocery chains initiate these as brand anchor stores with 10-20 smaller shop-space tenants. HARRIS REALTY Commercial Professionals have resources available to help you evaluate the property for length of existing leases, financial strength of the tenants, age, and condition of the property and risk exposure. All these factors should be considered in matching the best commercial properties with your own investment objectives.
As residential income properties, apartments are designed to be leased or sold to multiple tenants for habitation. These commercial sites range from a small condominium to a large apartment complexes. Properties are typically non-owner occupied and may offer the opportunity to be a source of cash flow, tax benefits, appreciation, and capital accumulation.
Farms and Ranches
Farms and ranches are generally classified by size or income. For example, large properties may have more than 10,000 acres whereas smaller ones may be suitable for a part-time income or a residence with an additional source of income. Whether you are looking to assume existing production or to start up a new agri-business, HARRIS REALTY Commercial Professionals can provide assistance to help locate the property that aligns with your resources and location requirements.
Industrial Properties include manufacturing, warehousing and distribution centers.
Industrial buildings are often owner or user-occupied, and multi-tenant industrial parks include a collection of single- or multi-tenant buildings. These range from manufacturing facilities, warehouses, and distribution centers to high-tech office sites.
Industrial properties can be complex with regard to the physical characteristics of the buildings and the operational requirements of the intended business. HARRIS REALTY Commercial Professionals can provide information to help you assess the property as it relates to your needs. HARRIS REALTY Commercial Professionals can help you facilitate the search, and help conduct the analysis and negotiation of the property. They also have access to other local resources that can assist you with evaluating the electrical power requirements, ceiling and roof heights, dock versus grade loading, truck turnaround, lay down yard requirements, environmental issues, fiber optic availability, rail sidings and more. In providing all of this information, the HARRIS REALTY Commercial Professional can help you define and locate the property that aligns more closely with your resources, expectations, and location requirements.
Land is undeveloped, raw property, or property that is ready for construction. Buying commercial land can present numerous options-whether you are considering commercial real estate to buy, lease, or invest. The property can be totally undeveloped or ready for construction. Developers are the first step in converting raw land into an income-producing property. With the help of your HARRIS REALTY Commercial Professional, you should check into local zoning, city's or town's master plan, as well as local attitudes about growth and development. These factors, among others, are worth considering for every decision if land is to be utilized for income, tax relief, and appreciation. As always, you should consult with your tax/financial advisor about specific tax and financial advice.
"Ready for construction" properties are typically developer improved-upon raw land with grading, utilities, and possibly streets. Zoning will ultimately determine the possible use. Your HARRIS REALTY Commercial Professional will assist you in the analysis process to ensure that the land is appropriate for your needs. Possible development includes residential, commercial, office park, golf course, and more. With the help of your HARRIS REALTY Commercial Professional, you can research information on civil engineers, attorneys, surveyors, environmental testing companies, local officials, and authorities to assist in your property evaluation.
Hotels and Motels
Hotels and Motels can be an interesting opportunity-whether you are looking to buy, lease, or invest. These commercial properties range from small roadside motels to larger franchise hotel chains to quaint bed-and-breakfast facilities. Lodging properties are readily available in various locations and sizes to map to your specific needs, goals, and resources. Properties may be utilized for income, tax relief, and appreciation. You should consult with your tax/financial advisor about specific tax and financial advice.
Hotels and Motels are typically classified by the number of rooms, amenities and ratings-if available. Evaluations of such properties should include, among other things, gross-income trends and deferred maintenance, as well as occupancy rate and geographic location. Proximity to attractions, highways, and cities, as well as other factors, contribute to the value of the property and will likely influence the investment decision. As with any property, improvements to the conveniences, landscaping, and overall atmosphere may help to grow revenue.
Mixed-Use is a unique type of development that combines the elements of residential, retail, office and entertainment.
Mixed-Use projects are being developed in both urban and suburban markets and on a global scale.
In an effort to formulate an industry-wide definition, four industry organizations, the International Council of Shopping Centers, Inc. (ICSC), the National Association of Industrial and Office Properties (NAIOP), the Building Owners and Managers Association International (BOMA), and the National Multi Housing Council (NMHC), collaborated on an cross-organizational member survey to identify the characteristics among mixed-use developments. The survey was conducted from July 11, 2006 through August 3, 2006 and featured 1,004 respondents.
Per their joint report, “though mixed-use is commonly defined as a project that features the mixing of at least three significant revenue-producing uses, i.e. retail, residential and commercial, today the definition represents a collection of components working together simultaneously—and the project may include a non-revenue-producing—though traffic-generating—element. Thus, as a result of the survey, the new working definition for mixed-use development by these four associations is:
“A mixed-use development is a real estate project with planned integration of some combination of retail, office, residential, hotel, recreation or other functions. It is pedestrian- oriented and contains elements of a live-work-play environment. It maximizes space usage, has amenities and architectural expression and tends to mitigate traffic and sprawl.”
Special Use/Purpose property refers to a property that has limited or one type of use. The property usually has a unique design or layout, or may have been built for a specific use. Examples are buildings such as a church, theater, school or public place.
Ready to get started?
Even if you've just started thinking about selling, contact us now. A HARRIS REALTY Commercial Professional will be in touch to discuss ways to sell your property faster and for the best price.