When we say commercial real estate, it includes office buildings, retail space, shopping centers, strip malls, industrial complex, storage, multi-family apartments with 5 or more units, RV and mobile home parks, land, hotels/motels, healthcare buildings, and farms/ranches.
There are 3 things you should know before you sell your commercial real estate:
1.Commercial Property Sale Process
2. How we find Buyers
3. How our commercial Agents are paid
Selling commercial property is more complex than selling residential property, and the buyers of commercial property have a different mentality than those of residential homes. Buyers of residential housing tend to be concerned with the emotions of living in the home, while buyers of commercial property view the property as an investment vehicle designed to generate income. If the numbers make sense, a bidding war is likely to occur. If the numbers do not make sense, the sale could be tough.
The sales process for commercial properties is much more business-like, and the buyers tend to be much more sophisticated. They are interested in the numbers, and a professional marketing package is crucial to present your property in the best light.
The sales process looks something like this:
What sets CIVAR Realty Advisors apart from other commercial real estate brokerages is that we also specialize in selling businesses. We talk to hundreds of business owners every year, many of which are looking to sell a building, lease a building, or buy a building. There are buyers that purchase a business and want to move it to a better location, so end up buying another building. There are business owners that sell their business along with the building, and 1031 exchange the proceeds into another building. There is a lot of synergy between selling businesses and selling commercial real estate, and our enormous database of business sellers and buyers gives you the advantage when you sell your commercial property.
Depending on the size and nature of your property, we utilize different marketing strategies to contact potential buyers. Here is a list of methods we utilize:
CIVAR Realty Advisors is a success fee based company. What this means is that if the building is not sold, our commercial agents do not get paid. This encourages our commercial agents to work harder to get your property sold.
Your next step is to decide if you want to sell your property. We invite you to do the following:
Free Property Valuation: Have a confidential meeting with a commercial agent to find out the value of your property in today’s market. There is no charge for this service, and you are not obligated in any way to use our services.
There are 3 things you should know before you lease your building.
1. Selecting the right tenants
2. Types of leases
3. How we find tenants
One of the biggest mistakes landlords make in leasing out their building is being too desperate in the attempt to lease out the building. When the building sits vacant and there is a mortgage payment coming, it is tempting to lease out the space to whoever would come along. However, time has proven again and again that it is worth the wait to find the right tenant, because having the wrong tenants can cost you dearly.In commercial property, the value of your building is directly tied to the income it generates, and the income it generates is directly tied to the lease. In other words, the lease is the most important document a banker or buyer would look at when he or she determines the value of your building. The length of the lease is crucial, because it is an indication of the strength of your cash flow. For smaller spaces, it is common to see 5-year leases with a 5-year option for renewal. For larger spaces occupied by big box retailers, it is not uncommon to see 10-to-20-year leases. The type of business you lease to is also important. For instance, you can typically demand higher rents for retail tenants than service businesses such as auto repair shops. The size of the space should be taken into consideration as well. If you have a large space that can only be used by an industrial tenant (when industrial tenants typically demand low rents), you can subdivide the space and lease out each space to smaller industrial tenants, or even office and retail tenants. Remember, few businesses can afford or need a large space, but lots of businesses need smaller spaces. By subdividing a large space into smaller spaces, you increase the market of tenants that need your space, which drives up the rent per square foot (or rent per cubic foot in the case of industrial tenants). For office buildings in the Central Business District (CBD), parking becomes crucial. The value of your building and the amount of rent you can collect are tied to the number of parking spaces associated with the lease. If parking is scarce at your building, you may be able to increase rents (and therefore the value of your building) if it is worth the money to lease a parking garage nearby, convert a building nearby into a parking garage, or invest in a space-saving parking garage device commonly used in Japan. The commercial agents at CIVAR Realty Advisors have years of experience leasing out commercial property, and are happy to provide guidance as to the best strategy to lease out your building.
The type of leases you give as well as the clauses contained can make a significant impact on your cash flow.
Here are some common types of leases:
In addition to the type of lease you have, the clauses contained can also affect your cash flow. You may stipulate in the lease that rents will automatically go up by 3% each year. You may tie the rent increase to a cost of living index, such as the CPI. Potential tenants may try to negotiate improvements or a month or two of free rent if they sign a long-term lease. In commercial leasing, remember that a bad situation on the surface may actually turn out to be good. Suppose you sign a 5-year lease, and 2 years into the lease, the tenant goes out of business. You can negotiate a lump sum payment to let the tenant off the hook. By finding a new tenant who signs a new 5-year lease, you have extended your cash flow by 2 more years starting at the current market rent. Another example is the tenant wanting to make improvements. You can let the tenant know that since the premise is being customized to fit their business, you would want to make their lease longer, which gives you more years of cash flow. Remember that the lease is a living document. Just because you have a signed lease does not mean it is set in stone. Every time the tenant makes a request, you can negotiate to modify the terms of the lease to make the situation more favorable.
Finding the right tenants for you is an important step that CIVAR Realty Advisors can assist with. We perform a building and market analysis to recommend the type of tenants you need, and discuss with you the rents you should charge as well as the type of leases and clauses you should consider. CIVAR Realty Advisors will put up signs, spread the word on the Internet, as well as broadcast your premise available for lease to all the commercial agents in the area. What makes us unique is that we also specialize in selling businesses, and we talk with hundreds of business owners every year, many of which are looking for a space to lease. Our exclusive database of potential tenants and our diligence to lease out your premise for you make it a clear choice for you to employ our leasing services. Your next step is to decide if you want to lease out your premises. We invite you to do the following:
CIVAR's Property Management is a full-service property management company serving the LA, IE, & OC submarkets. Our comprehensive property management service is delivered by a professional staff that will allow you the freedom you are looking for when hiring a property management company.