Businesses Taking Advantage
Granted the ecomony is in the tank, job growth is pretty much non-existent and we all know how the real estate market is, but in every down economy there are always those who prosper. Right now commercial real estate buying and leasing rates are at bottom. Most economists and industry experts say that the commercial real estate market has hit the bottom of the trough. With buying and leasing rates being at or below historic lows it's hard to think pricing will drop much more.
Believe it or not, there are a lot of healthy businesses out there, who have a significant amount of cash on their balance sheets. Many of these companies tightened their belts by downsizing, streamlining expenses and pulling back on marketing, and all the while still maintained a steady stream of income. So despite the economy their are still a number of well positioned businesses and individuals out there.
With Commercial Real Estate fundamentals slowly coming back into the market, right now is a perfect time to take advantage of commercial real estate pricing. There are several ways businesses can take advatage of these opportunities and improve their bottom line. We can look at indusrtial properties, like warehouse/distribution and logistic facilites as an example. Currently in Southern California there is 10's of millions of vacant SF of industrail property space. Meaning there's an abudant supply of space, and not enough demand.
So a healthy business, like a distribution or manufacturing company can lock in a long term lease (5-10 years) and save a bundle now, and over the long run especially when the lease rates go up back to historic norms. Today a industrial property lease rates are at approximately $0.33/SF +/-. A significant discount from four years ago, when these industrail lease rates were around $0.75/SF +/- or higher in certain markets. Do the math on 100,000SF or 500,000SF, that's an enormous savings. Even a smaller business can take on space in the 5,000-25,000SF range for around $.40/SF +/-, and compare that to what they pay now. And at these rates you can get the cream of the crop industrial properties.
Now comes the question of quality... because that can have an direct impact on your business. Is your industrial property located in an strategic logistical area for your company's neeeds, does it have enough yard space, is it efficient, is athestically pleasing, and in an area your customers and/or vendors will feel comfortable visting? Because today for almost nothing you put your business in an industrail property that is best in class.
Being in close proximity to major highways and streets is important and can have a significant impact on decreasing your fuel costs. Does your builing offer optimal ceiling height? Because you pay for SF on horizontal plane, not the vertical. With modern racking systems and ideal ceiling height a business can optimize its need for industrial property space. For Example, a company that currently occupies a 100,000SF property with a ceiling height of 21FT, can use a building with 35FT of ceiling height and only need 80,000SF. Even in today's market that's a substantial savings.
The message: Businesses if you plan on being profitable and having long term presence, now is the time to take adavatage and secure your future.
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