The experienced commercial realtors at Austin Tenant Advisors specialize in representing the best interests of tenants in the Search, Selection, & Negotiation of office space, retail space, and warehouse space in Austin Texas metropolitan area that includes Travis, Williamson, Hays, Bastrop, & Burnet Counties, which are the 5 largest counties in Central Texas.
We also serve surrounding cities such as Pflugerville, Round Rock, Cedar Park, Lakeway, Bee Cave, Dripping Springs, Buda, Kyle, San Marcos, Burnet, and more.
We help small businesses and startups renting commercial space for the first time and existing companies who are considering a lease renewal, lease extension, expansion, or relocating their office altogether.
Our service is free to tenants as landlords pay our fee, however we represent your best interest to ensure you find the best space to meet your current and future needs and that you get the best deal possible. We help you find great space, avoid mistakes, and negotiate the best deal!
Important Factors to Consider When Searching for Commercial Properties
Factors and list of considerations of commercial properties are way different from others. Most people do not pick commercial properties because it is next to their homes but most homeowners would pick a home property that is next to their workplaces.
The primary consideration for picking a commercial property should always be its location next to customers. Here are important factors to consider when looking for commercial properties:
1. Location
Commercial properties meant for business purposes should always be conveniently accessible to both the customers and employees as well. In cases where the business is new to the area, picking a commercial property in an abandoned path or area where people targeted to be hired can’t access easily won’t be the best idea.
For instance, in cases where one target to hire graduates, it should be a place they can easily access because they won’t be able to drive themselves there as they still can’t afford their own vehicles. This means that there is a need for situating the commercial property close to public transit for ideality.
Considering a commercial property situated in a more built-up area can also be a good idea though in most cases, they usually cost more. In the long-run, the price of the commercial property should always be worth it. Access to the needs, budget and expenses should be done in order to make realistic and smart choices in the business life.
2. Is the Property for Lease or Sale?
Most people who are new to doing businesses aren’t always sure if they can lease or buy a commercial property. The answer is here; someone new in doing business should rent a commercial property. In fact, they should go into short-term leasing.
Going into long-term leasing can tie one into a business in which they could have outgrown a couple of years ago. Until one gets a better handle on how a company can be run, a year-long lease is usually the best bet.
However, in cases where one has been into businesses for a while and knows the risks and flows associated with the type of business they want to be in, they can always buy a commercial property. In such cases, this is always cost-effective. This can work out especially if one is planning to stay in that particular area. Buying a commercial property also works best in urban areas since leasing prices in urban centers are usually high.
3. Work with Professionals
All professional services cost people a lot. When it comes to big investments like that involving commercial property, paying a pro is always the best thing to do to save yourself from money and hassle. In most cases, people who buy commercial properties don’t usually get stuck paying lease that might even end up hurting the business itself.
Benefits Of Commercial Real Estate Investing
Investing in commercial real estate can be very rewarding, both personally and financially. For many, the objective of investing in commercial real estate is for future wealth and security; others utilize it for tax benefits and investment portfolio diversification.
A commercial redeveloper can also take advantage of the following benefits:
Higher Income: The hallmark benefit of investing in commercial real estate is a higher potential income. Generally speaking, commercial properties have a better return on investment, an average of six to twelve percent, while single-family properties fetch between one and four percent. Secondly, commercial real estate provides a lower vacancy risk, as properties tend to have more available units. In addition, commercial leases are generally longer than those you will find in residential real estate. This means that, commercial real estate owners have to deal with far less tenant turnover.
Cash Flow: Commercial real estate has one very distinct advantage: a relatively consistent stream of income due to longer lease periods. In addition, commercial properties often have more units than residential properties, which means you can achieve economies of scale and multiply your income streams much more quickly. Known in the industry as a triple net lease, many commercial tenants also pay the building’s real estate taxes, property insurance and maintenance costs, thus increasing your owner benefits.
Less Competition: Another advantage associated with commercial real estate is relatively less competition. Because of the perceived difficulty of commercial investing, the commercial space tends to be less saturated with other investors.
Longer Leases: Perhaps one of the biggest perks of commercial real estate is the attractive leasing contracts. Commercial buildings generally have longer lease agreements with tenants compared to residential properties, which, as previously stated, offers investors impressive returns and significant monthly cash flow. In many cases, lease agreements for commercial properties are signed for multiple years.
Commercial real estate investing offers investors an array of opportunities and advantages that other investment strategies do not. Once the benefits of commercial real estate investing are recognized, the next step is to dive in.
Types Of Commercial Real Estate Properties
Commercial properties serve a broad range of purposes, but are generally grouped into the following types:
1. Office
The most common commercial real estate type is office space. These buildings, which can range from single-tenant offices to skyscrapers, are defined by one of three categories: Class A, Class B, or Class C.
Class A commercial real estate properties are typically newly built or extensively renovated buildings located in excellent areas with easy access to major amenities. They are typically managed by professional real estate management companies.
Class B commercial real estate properties are often older buildings that require some type of capital investment. Although they are well-maintained and managed, these properties require minor repairs and upgrades—making them a popular target for investors.
Class C commercial real estate properties are typically used for redevelopment opportunities. They are generally poorly located, require some type of major capital investments to improve out-of-date infrastructure, and their high vacancy rates are much higher than higher-classed buildings.
2. Retail
Another popular commercial real estate type is retail buildings. These properties, which range from strip malls and community retail centers to banks and restaurants, are often located in urban areas. The size of these real estate properties can extend anywhere from 5,000 square feet to 350,000 square feet.
3. Industrial
From warehouses to large manufacturing sites, industrial buildings are typically geared towards manufacturing industries, as they offer spaces with height specifications and docking availability. In addition, these commercial properties generally lend themselves more to investment opportunities.
4. Multifamily
Multifamily properties are comprised of apartment complexes, high-rise condominium units and smaller multifamily units. A property is qualified as multifamily real estate any time it has more than one unit, but can also be considered a commercial property if it has more than four units. Many residential investors get their start in commercial properties by expanding into larger multifamily properties. Residential tenants tend to have shorter lease terms than office and retail tenants, so tenant turnover is a factor that should be considered.
5. Special Purpose
In general, special purpose properties are designed for a specific use, so much so that it would be difficult to repurpose the property for another use. Car washes, self-storage facilities and schools are all examples of special purpose properties. The leisure and tourism industries represent a large proportion of special purpose real estate as well. Common examples within the industry including hotels, airports and sports stadiums, and amusement parks.
Mixed-use development properties are also prevalent in the commercial real estate sector, and continue to grow in demand. These properties represent a mix of different uses, such as residential, retail and even public sector. A mixed-use building could have shopping and services on the first floor with apartment units on the upper floors, for example.
How To Choose The Right Location For Your Business
The commercial building you choose will have a big impact on your business. Ideally, its size, layout, location and appearance should all enhance your operations while respecting zoning and environmental regulations.
Here are five tips to help guide your thinking when searching for the right location for your business.
1. Adapt your selection to the needs of your business
If you're a retailer, you probably want to make sure there's ample parking and pedestrian traffic as well as attractive decor. Situating your business close to a magnet or "anchor" store can provide you with lots of walk-by customers. If you sell high-end clothing, for example, it's probably best to avoid discount malls and instead locate your business close to other high-end retailers such as shoe stores or jewelers.
Location and decor are less important to the success of a small wholesale or manufacturing operation, but you will have to comply with zoning regulations that stipulate what types of activities are allowed where. You should also consider the availability of qualified employees within a half-hour commute of where you are considering buying.
For personal, professional or creative services, you may require a series of closed offices in pleasant surroundings with high-speed networking and easy access to public transit. The ability to attract and retain qualified employees can be critical to the success of such businesses, so a building in a central, easily accessible location can give you a strategic advantage.
2. Does it require modification?
If you've found a suitable building in a good location, consider what it will take to make it just right. The question then becomes, "Who will pay?"
If you're renting premises that require modification, you'll have to negotiate with the owner. Make sure you have a contract specifying what needs to be done, with clear deadlines and penalties for not completing the work on time. These provisions need to be written into your lease.
If you want to buy, use an accredited inspection company to evaluate the building for defects and the entire property for environmental contamination. Defects can be points for negotiation with the seller—or signs of future headaches best avoided altogether.
Not all changes are within the power of an owner to complete. There may be zoning or heritage regulations that require renovations to be approved by a local board. Even a minor change, like inserting a shipping door into an old brick façade, can require municipal approval. This can take time, and there's no guarantee the changes requested will be allowed.
3. Consider local taxes and infrastructure
Taxes vary between municipalities, with some towns offering preferential rates in the hopes of attracting businesses. Your commercial real estate agent should know what the taxes will be, as well as the infrastructure and utilities—including Internet access, garbage pickup, roads, electricity and natural gas—that are available at the sites you're considering.
4. Allow for future growth
It's great to have room to expand. But paying for extra space that might come in handy at some time in the future might not be the best use of your working capital. Before making an investment in extra space, you should be reasonably sure you'll need it within a relatively short period of time. Your business plan and advisors can help determine what you can afford.
5. Separate your needs from your wants
It's easy to become overwhelmed with the features and options available to you. Once you've looked around and seen what's available, make a "must-have" list of the things your business truly needs. Then make a wish list of features it would be nice to have, but which are not absolutely essential.
Buildings that lack all the must-have criteria should be struck off your list, so it's best to keep the must-have list short: If it's too long, no building will ever qualify. Remaining buildings should be ranked according to how well they meet the requirements of your must-have list.
Buying Commercial Property Tips
Learning how to buy commercial properties has become the next logical step for many investors that have grown comfortable dealing in single-family homes. If for nothing else, commercial real estate represents the next challenge or exit strategy that can elevate your investing career to an entirely new level. While buying commercial real estate can certainly coincide with amazing benefits, it’s not without a few downfalls: risk, difficulty, and the sheer volume of capital required to deal in commercial real estate can all impede an investor’s progress.
It is worth saying, however, that buying commercial real estate is not impossible. Not unlike buying single-family homes, there’s a process; one that, if followed correctly, can result in amazing benefits. That said, you must know what you are doing if you hope to realize success in the commercial industry. Jumping in without a plan is the surest way to sabotage your own efforts and ruin everything you worked so hard to achieve.
If you want to successfully make the transition to commercial real estate familiarize yourself with the commercial real estate buying process. Here are a few buying commercial property tips to help:
Learn The Language: There can be a learning curve when making the transition from residential to commercial real estate, so you may need to go back to basics before you get started. Familiarize yourself with the terms and concepts commonly used in commercial real estate, like capitalization rate and building classification. Reviewing the language will help make sure you are comfortable when talking to potential business partners, tenants and especially lenders.
Find A Market: Just like with any real estate investment, location is everything. It is not uncommon for commercial real estate investors to venture outside of their market area, or to invest in multiple markets. Analyze each market you may want to invest to find the right area to invest. Don’t be afraid to choose high performing markets simply because they are outside of your local area or state.
Work With Your Mentor: A mentor is crucial for any real estate investor, but they can be especially helpful when it comes to more complex investing strategies like commercial properties. Attend real estate networking events in your area or ask your existing connections to meet someone with experience in commercial investing. As you build a relationship over time, their advice and insights could help as you build a portfolio.
Visit Properties: As you start identifying potential properties, make sure to visit each of them. This will give you a better idea of what to expect if you choose to move forward with the deal. Even if you do not plan on managing the property yourself, it is still a good idea to picture what the building will be like. Visiting properties can even help you narrow down your options if you have more than one investment you are trying to choose between.
Protect Your Assets: Before you move forward with your first commercial deal, make sure the rest of your assets are properly protected. Look into the way your business is currently organized and how a commercial property will fit into that. Research different types of liability insurance and business structures before taking on more complex properties.
Contact Details:
Austin Tenant Advisors
1300 Guadalupe St #250
Austin, TX 78701
(512) 861-0525
Website: https://www.austintenantadvisors.com/
Google Folder: https://mgyb.co/s/TYMKq
