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Buying a Commercial Property

For many business owners, deciding whether to lease or buy commercial space is tough. It can be an especially difficult decision for small to mid-size businesses. Buying a commercial property has many potential benefits, including:

  • Greater control over real estate overhead — no more rising rents

  • Tax write offs, such as interest paid on loans, maintenance and repair costs, energy efficiency, and depreciation

  • Freedom to alter the building and set building hours

  • Ability to accommodate anticipated business growth

  • Long-term asset appreciation

  • Ability to generate income by renting out extra space

  • Increased worth of the business with commercial property attached to it

  • Having an asset to sell if funds are needed

There are also potential drawbacks to investing in a commercial property, such as:

  • Upfront costs, including the down payment, appraisal fees and building improvements
  • Location that might become undesirable — what is trendy today may not be tomorrow
  • Liquidity may be tied up for a while
  • The business might outgrow the location
  • Expensive repairs or non-paying tenants could compromise cash flow

Business owners should consider a number of factors before purchasing a commercial property, such as the current real estate market, the company’s capital and reserves, anticipated business growth and zoning laws. Additionally the building’s location, condition, access, parking, and potential for expansion and leasing are all extremely important. An experienced Hoffman Estates attorney can assist you with all aspects of buying a commercial property, from reviewing and negotiating the contract to zoning approvals and permitting.

For some business owners, leasing may be a better option. Below are some potential benefits to leasing a commercial property:

  • Flexibility to change locations by subletting
  • Landlord is responsible for building upkeep
  • Qualifying for a lease may be easier than qualifying for a loan
  • Ability to snag a prime location
  • Business remains liquid

Business owners are not the only people who buy and lease commercial properties, however. Investors also get into the commercial real estate market, some of whom already own residential real estate. Owning commercial property offers investors potential benefits such as:

  • Risk diversification

  • Steady cash flow

  • Long leases

  • Annual rent review

  • Good return on investment

  • Tenants who maintain the property well — most businesses strive to keep the space clean and in good condition for their customers and staff

If you plan on purchasing a commercial property, contact a Hoffman Estates lawyer today to ensure the transaction proceeds smoothly.

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