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Do You Need Expert Assistance in Finding Office Space for Rent?

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Recent reports show a stark contrast in leasing trends for office space for rent in the commercial real estate market. While foreign investors appear to be making a play for prime commercial space, reportedly increasing year-over-year investments by over 83%, office construction has waned by nearly 17%. Why the sharp conflict in data?

Analysis shows that there area opportunities using tools to gain an investment advantage in the market- but this can be challenging for business investors who are focused on building clientele and daily operational management of the company.

Current and Future Space Needs

Whether the tenant will be a small operation or a larger company the basic needs are the same- efficiency, cost effectiveness, room for expansion, and strength of location. A good tenant rental representative can gather the information regarding these needs and complete an analysis upon which available locations can be ranked, investigated, and negotiated. If your company is currently housed in an inefficient space the multi-step processes necessary to keep everyone 'in the loop' can create redundancy and confusion. While a move can be costly, done correctly it can reduce future costs significantly. Would moving from your current location disrupt client service? Or are you able to make a move without affecting the product or service you provide? Then you may consider...

Market Availability

Thorough knowledge of the region including up-and-coming micro-markets can be the key to entering a market segment previously unconsidered. Sluggish commercial rentals have also slowed the rate of construction, so existing space becomes more appealing and potentially more negotiable. Recent reports also state that this shift in the market is creating an increase in tenant concessions and free rent, despite the increase in square foot pricing. Previously untapped commercial properties, or those that may be re-zoned to accommodate businesses, can be an ideal solution to a limitation in new construction. Repurposing of properties is a popular trend and is gaining in favor with clients as well. People tend to be drawn to the historic or recognizable- tourists included- and appreciate the visionary who takes on a forgotten space. 

Investment Potential

A volatile leasing market creates uncertainties in investing- how can you determine (or try to predict) the rate of return for your rental investment? Or reduce your potential for overpaying? Foreign investors see the potential for future profits in taking a measured risk in office investments. The leasing velocity of a space, which includes knowing historic rental values, re-leasing potential, and vacancy rates all play a role in the final dollar values. Perhaps you are feeling bound to a lease that is just not amenable to your needs, or the structure of your contract is no longer in league with the community averages? A proper representation of your needs, which may even need an overview, can leverage your remaining time in the space and perch you at a better vantage point for future negotiations. More about leasing office space vs. buying.

Due diligence is a necessary factor in renting office space and a strong real estate partner allows you to focus on your business during the negotiations of a transaction. Contact us and allow us to introduce you to the advantages of using a tentant representative while seeking rental office space for your commercial business needs.

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By: James Osgood

Buying Office Space , Lease vs Buy , Office Building Sales , Office Rental , Office Space , Tenant Representation

SBA 504 Loans and Commercial Real Estate Could Be a Good Fit

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The effects of the financial crisis of 2008-2009 rippled throughout the U.S. economy like a pebble hitting a still lake. The commercial real estate market was hit hard, of course, and unemployment soared, especially in industries tied to real estate.

Credit to finance commercial real estate all but vanished. While the credit markets are finally starting to thaw, it can still be difficult for business owners to secure the financing they need to purchase or renovate commercial property.

Small Business Administration (or SBA) loans are one option that can help many business owners who are struggling to obtain financing. SBA loans are made through regular banks, but the SBA guarantees repayment of a portion of the loan, which helps reduce the bank’s risk.

There are several different types of SBA loans — including the SBA 504 loan, which is often used to finance commercial real estate. SBA 504 loans are available to for-profit small businesses for the acquisition and improvement of owner-occupied commercial property. They offer fixed-rate, long-term financing with 90 percent loan-to-value and a 10- or 20-year amortization schedule.

Here’s how 504 loans work: The bank provides 50 percent of the financing and the SBA 40 percent, while the business owner kicks in the remaining 10 percent. This can provide a huge cash flow advantage compared to a traditional commercial mortgage, which might require a down payment of 20 to 30 percent or more.

For example, with a $500,000 piece of commercial property, the down payment on a 504 loan would be just $50,000, compared to $150,000 or more with a traditional commercial mortgage.

Some changes were made to the SBA loan program by the Small Business Jobs and Credit Act that make it even more attractive. The Act increased the SBA 504 loan limit to $5 million and it expanded the definition of a small business for the purpose of applying for an SBA loan. Any business with a tangible net worth of under $15 million and average net income over the past two years of under $5 million can now apply for an SBA 504 loan.

There’s a wide range of latitude when it comes to how the proceeds from a 504 loan can be used. These include:  finance the purchase of land and existing owner-occupied buildings, construction of new facilities, grading, street improvements, utilities, parking lots, and landscaping, as well as modernizing, renovating or converting existing facilities. Soft costs like architectural and legal fees, environmental studies, appraisals, interest and fees can also be rolled into the 504 loan.

Keep in mind that not all banks are created equally when it comes to SBA lending. Be sure to look for a bank that is designated as an “SBA Preferred Lender.” These banks follow a streamlined method of underwriting SBA loans, which usually enables them to process SBA loan applications faster than banks that aren’t SBA Preferred Lenders.

Also, just because a loan is “SBA-guaranteed” doesn’t mean the bank will be any less diligent in its loan underwriting process. You’ll need to prepare the same kind of thorough loan application package for an SBA 504 loan as you would for a traditional commercial mortgage.

SBA 504 loans aren’t a panacea that cures all the ills of the commercial real estate credit crunch. But in the right circumstances, they could help you get the financing you need for a commercial real estate project.

Guest ArOfficeFinder Specialistticle by our Atlana OfficeFinder Specialist

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Atlanta Office Space , Buying Office Space , Financing Office Space , Office Building Sales

Commercial Lending to Stay Tough

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I spent the day yesterday at the Commercial Broker's Association (CBA) Commercial Real Estate Form.  A great program on relevant issues in today's commercial real estate markets. The one presentation that hit hard was Market Knowledge: Strengths and Weaknesses in Different Segments of the Commercial Real Estate Market presented by Dr. Jim DeLisle, University of Washington Director, Graduate Real Estate Studies at the Runstad Professor of Real Estate. 

My take away: The Commercial Mortgage Backed Securities market, where commercial mortgages were bundled and sold, has pretty much evaporated. The only loans that are being made and will continue to be made are portfolio loans, where the lender actually keeps the loan in their portfolio. The result... very few mortgages are being written. It is much more difficult to obtain a commercial mortgage and the loan to value; the present value, is in the neighborhood of 40% - 60%.  With many commercial mortgages rolling over in the near future, new financing will be a problem. I expect there will be many good opportunities to purchase commercial properties at attractive rates.

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Buying Office Space , Commercial Real Estate , Office Building Sales , SBA Loan

Good News on Office Space Recovery Continues

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Good news regarding the office space market seems to be abundant now-a-days. I was just reviewing my Google alerts for office vacancy and office space and came across quite a few positive headlines.  Here are a few:

Jobs will fuel an office market recovery
Michigan Business Review - MLive.com

Twitter hunts for Manhattan office space
The Real Deal New York (blog)

Dubai office occupancy set to go up
Zawya

Manhattan Business Center Expands by Opening Fourth Office Center
DigitalJournal.com (press release)

Record Occupancy Levels for Birmingham Office
officebroker.com (blog)

Brisbane office market bounces back
Queensland Business Review

Commercial real estate recovering
Daily Press

Key Economic Indicators Hint At Local Recovery
SF Weekly (blog)

Recession over--sort of--and recovery underway
STLtoday.com

Office spaces outside of CBD to yield higher rents due to growing demand
Channel News Asia

Amazon's Hiring Spree Will Fill 1.7 Million Square Feet of Office Space in Seattle
All Things Digital (blog)

Office take-up in Edinburgh increased significantly in 2010
Free Office Search

GSA posts 255,000 SF office space requirement
Washington Business Journal

Nordstrom leasing more space from art museum
Seattle Times

Liverpool hindered by a lack of grade A office space
Liverpool Daily Post

Not bad for just a week’s worth of news. Let’s hope this trend keeps going forward.

Commercial Real Estate , Manhattan Office Space , New York Office Space , Office Building Sales , Office Relocation , Office Rental , Office Space , UK Office Space

Commercial Condos - Beware the Condo Association

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If you happen to live in a condo, then you'll easily understand why a small business considering purchasing a commercial office condo needs to know about how and when to interface with the Board of Directors of the condo association. However, if you own a small business but have never dealt with a condo board, then you should be aware of the rights and obligations involved before purchasing an office condo.

Just as with any type of building there the common spaces that are mutually and equally shared, a commercial office condo is operated based on the Bylaws developed and adopted by that condo board. One of the requirements outlined in those Bylaws is how often the Board of Directors must meet, what repairs or changes require board approval and what repairs or maintenance can be done by the management team of the commercial condo.

Of course, you want to understand the other portions of the Bylaws as well because these binding agreements control how you can or cannot use the building. For example, you would expect to see in a set of Bylaws that any damages done to common areas by visitors to your office condo are your responsibility. You might also expect to find clauses which prevent owners from drastically changing the exit doors to their condos and other similar restrictions on use or changes.

The Board of Directors of a commercial condo association is made up of elected officers that are owners or designated representatives of owners of units in the building. When a commercial condo is first completed and the building opened for purchase of units, the board may be made up of the developer and other designates that have direct interest in the development. However, after a period of a year or once there are sufficient owners to build a sound, responsible board from, officers are elected from the owners.

You may think, at first glance, that control of everything is given to the selected owners that are elected to the board of directors. This really isn't true at all. The board can, without bringing a motion before the condo owners association members, take care of some expenditures and other business as outlined in the Bylaws. But all major changes are brought up as business during a Condo Association Board of Directors’ meeting, which must be announced formally in plenty of time for owners to notice and attend. In other words, you get a vote in any actions which might impact your business significantly.

In mixed use properties there may be more than one Association involved. Master associations and sub-associations should be used when the users of the units in a single condominium are restricted to significantly different uses. An example would be a condo that has a combination of residential, retail and office uses. In those situations there could be more opportunities for deadlock votes. For that reason dispute resolution to include mediation should be include in the Bylaws.

The best way to interface with the board of a commercial condo association is to attend, or have a designated representative attend, each meeting of the Board of Directors. This way, if any unexpected business is brought up, or if you need to bring up an issue, you'll have your ownership represented.

If you know you need to bring up a topic before the board, it should be sent in writing well before the meeting to the President of the Board of Directors so that it can be placed on the agenda. Taking an issue up on the fly can backfire and fail to get your issue noticed.

An even better way to keep up with what's going on with the board and to interface your business with them is to agree to hold a position on the board of directors. Most condo association board meetings are not lengthy and are critical to the maintenance of the lovely commercial condo office you purchased into.

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