A Beginner’s Guide to Purchasing CRE

Every business has a home-base. Whether that space is in a small store-front, a high-rise, or a privately owned impressive commercial building, space is a key asset for business. Space can even be the reason a company grows or becomes stifled. That is why it is important for a business to learn the right steps to purchasing CRE.

Real estate is also a key factor in whether a business can sustain the technological trends in its industry. Manufacturers need a facility for their machinery and warehouse space for storage.

Medical groups require additional patient rooms or facilities that can handle significant growth in their amount of patients or providers. And technological companies need state-of-the-art facilities for research and development.

A prime example is the well-known tech giant, Apple. Steve Jobs started the company inside of his less-than-impressive home garage. It wasn’t long before the company out-grew this modest space. Rapidly expanding, Apple moved into several other CRE properties over the years. Today, 1,300 Apple employees work in an impressive 2.8 million square foot facility, custom-built to fit their needs. At some point during Apple’s growth, a long-term strategy was implemented, allowing the company to own a building that could accommodate its growing workforce.

No matter the size of the company, its facility should be able to house the business in its current state and maybe even leave room for future developments. So what can a start-up or new business do to begin the process of finding and purchasing that space? There are three significant components involved in the process of purchasing the right commercial property.

Before any business jumps into the heavy negotiations associated with CRE, the fundamentals for funding should be in place. The business should review its liquidity and financing options. Liquidity will be key in obtaining a loan, but it is also necessary to have capital for deferred maintenance or unexpected expenses after the purchase. There are several options for loans that can help with the purchase of real estate. Once the funding is in place, the company will have a clear picture of what kind of space they can afford.

The facets of each business are unique, and each business model’s idiosyncrasies can significantly impact the type and location of the facility it will need. Before purchasing CRE, consider these kinds of questions:

In many cases, CRE buyers find a building that requires basic modifications to fit their needs. But overall, the property should be in line with the buyer’s answers to the questions above.

CRE brokers can also help answer other questions that a buyer doesn’t think to ask. Skilled brokers have a solid handle on the market and current trends. They know the locations that can best benefit their clients’ industries and goals.

But they are more than business coaches or real estate guides. The role of a broker requires expertise. They review in-depth demographics for the areas in which their clients are interested in purchasing properties. They negotiate contracts and final purchasing terms. Some even help facilitate lease agreements if a buyer chooses to lease out the space. Because of their experience, CRE brokers also know how to effectively negotiate the right deals for their clients. All of these involve critical economic and business skills.

The potential of new, commercial property is exciting for any business. Whether a business is in the early stages or is growing beyond its current walls, there are spaces that can fulfill their five or even 20-year plan. All the business needs is a place to start and a solid commercial real estate team to support them along the way.