Are You on the Fence? Buying vs. Leasing Commercial Property

In the realm of business, the decision to either lease or buy commercial property is a crucial one, often carrying significant implications for the future of the enterprise. Both options come with their own set of advantages and drawbacks, making it essential for entrepreneurs and business owners to carefully evaluate their specific circumstances, needs, and goals before making a choice.

Let’s explore the pros and cons of leasing versus buying commercial property to help you make an informed decision.

Photo by Pixabay: https://www.pexels.com/photo/white-15120-building-269077/

Leasing Commercial Property

Pros:

1. Lower Initial Costs: Leasing typically requires less upfront capital compared to purchasing property. Instead of a hefty down payment, lessees usually pay a security deposit and the first month’s rent.
2. Flexibility: Leasing offers businesses the flexibility to adapt to changing needs. If your business experiences growth or contraction, it’s easier to adjust your space requirements when leasing, either by expanding into additional units or downsizing.
3. Reduced Responsibilities: Maintenance and repair responsibilities often fall on the landlord when leasing commercial property. This can alleviate some of the burdens associated with property ownership, allowing business owners to focus on core operations.
4. Location Options: Leasing provides access to prime locations that may be financially out of reach for purchasing. This can be advantageous for businesses looking to establish a presence in high-traffic areas or “destination” areas without the commitment of ownership.

Cons:

1. Limited Control: As a Tenant, you have limited control over the property. Renovations or alterations most likely require Landlord approval, and lease terms may restrict certain activities or changes to the space.
2. No Equity Building: Unlike buying property, leasing does not offer the opportunity to build equity. Monthly lease payments contribute solely to occupancy costs without any long-term asset accumulation.
3. Rental Increases: Lease agreements typically include provisions for rent escalation over time. While this allows Landlords to keep up with market trends and increased costs due to economic fluctuations, it can lead to increased occupancy costs for tenants, affecting long-term financial planning.

Image by Tumisu from Pixabay

Buying Commercial Property

Pros:

1. Ownership and Equity: Purchasing commercial property allows businesses to build equity over time. Property ownership can serve as a long-term investment, potentially yielding returns through appreciation and equity buildup.
2. Control and Customization: Property ownership grants full control over the space, enabling businesses to customize and modify the property according to their needs without seeking landlord approval.
3. Stable Costs: With a fixed-rate mortgage, businesses can enjoy stable occupancy costs, unaffected by fluctuating rental rates. This predictability can facilitate better financial planning and budgeting.
4. Potential Rental Income: Owning commercial property provides the opportunity to generate additional income by leasing out unused space to other businesses or tenants, thereby diversifying revenue streams.

Cons:

1. High Initial Costs: Buying commercial property entails substantial upfront costs, including down payments, closing costs, and potential property improvements. This can be a barrier to entry for some businesses, particularly startups or small enterprises.
2. Maintenance Responsibilities: Property ownership comes with maintenance and repair responsibilities. Businesses must allocate resources for upkeep, repairs, and property management, which affects the bottom line.
3. Limited Flexibility: Unlike leasing, owning commercial property ties your business to a specific location. Relocating or expansion needs may involve selling the property, which can be time-consuming and costly.
4. Market Risk: Property values are subject to market fluctuations, and economic downturns can impact property appreciation and rental demand, potentially affecting the property’s investment value.

Image by Foundry Co from Pixabay

When it all comes down to it, there is no one-size-fits-all answer. Each option presents its own set of advantages and disadvantages, and the decision ultimately hinges on factors such as financial resources, business objectives, and long-term strategy.

By carefully evaluating the pros and cons outlined above and considering your unique circumstances, you can make an informed choice that aligns with your business goals and aspirations. Whether leasing or buying, the key is to approach the decision with thorough research and foresight to ensure a sound investment in the future of your business.

We’re eager to connect and dive deep into your vision for commercial property leasing or purchasing. Let’s explore your long-term goals together and leverage our expertise to analyze data, conduct research, and identify tailored options that fit your needs. As locals deeply rooted in this community, we’re not just passionate about the area—we live and breathe it. Count on us to bring our local insights and dedication to your real estate endeavors, ensuring a seamless journey toward your objectives.

Navigating Tax Considerations for Commercial Property Owners in 2024

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Knowing the Terms BEFORE you sign on the Dotted Line

It is essential to understand all the intricacies of a commercial lease before signing because a commercial lease is a legally binding document that outlines the terms and conditions of your rental agreement with a landlord or property owner. It is a critical legal document that defines your rights and responsibilities as a tenant and the obligations of your landlord.

By fully understanding the terms of the lease, you can make an informed decision and negotiate more favorable terms that suit your business needs. Additionally, a lease can have significant financial implications, such as rent payments, security deposits, and utilities, which can impact your bottom line. Understanding these terms and obligations can help you budget and plan effectively for your business.

Some of the key aspects of a commercial lease that you need to understand include the length of the lease, rent increases, maintenance responsibilities, repair obligations, alterations, subleasing, termination, and renewal options. You should also pay close attention to any fees, such as late payment penalties, utilities, insurance, or property taxes, and your rights as the lease progresses, terminates or any other unforeseen circumstances.

It is always recommended to seek the advice of an experienced Commercial Brokerage who can help you navigate the complex legal language and interpret the implications of the lease. By doing so, you can ensure that you have a solid understanding of all the terms and obligations of your lease, protect your business interests, and avoid any costly mistakes or disputes down the line.

Beiler-Campbell Commercial has 50 years of experience that we would be proud to put to work for you. Contact us today to set up an appointment to discuss your commercial real estate goals and we will be happy to provide solid advice backed by market knowledge and expertise.

Beiler-Campbell Realtors Day of Service

Our company is all about community. We have served our local community since 1973 with integrity and excellence. One of the things, I believe, that really sets us apart is our collective heart for service. We firmly believe in supporting our neighbors.

This year we hosted our Annual Charity Golf Tournament and raised over $40,000 for Family Promise of Southern Chester County and After the Bell Kennett Square. Our Spring Community Food Drive provided over 10 truckloads of food to families in need in our area.

Every fall, we take a day as a company and perform acts of service in tangible ways within our neighborhoods. This year we sent a group to Tick Tock Early Learning Center in Avondale to build cubbies, a home of a Veteran in Coatesville needing maintenance, cleanup and landscaping at a volunteer-maintained Oxford Cemetery, dance parties, karaoke, manicures and games with the folks at Friends Home in Kennett, and repairs to a home in Nottingham. Additionally, we held a food drive in which Anvil Land Transfer and Delaware Valley Financial Mortgage matched the donations! The food was delivered to local food cupboards. This is a re-build of a deck and ramp so that one of our neighbors can easily access their home.

In just a few hours, the deck and ramp looked brand new! Great work!!

The Oxford Cemetery is “volunteer maintained”, so Beiler-Campbell volunteers manicured and spruced up the gravesites in honor of those who’ve gone before us and their families.

Active Listening – What is it and how important is it?

Pauses are often viewed these days as “awkward silence”. We scramble to fill it with noise… the noise of any kind, beneficial or not. Our lives are scripted to background music on our Insta-stories. Quiet even makes some of us nervous, uncomfortable. We conversate, but do not “saturate”. What I mean by this is we do not truly immerse ourselves in conversation as some of the generations that have gone before us. The technology wasn’t there to distract us. Before we address Active Listening and what it is, let us address the reasons why we listen.

Why we Listen

• To glean information
• To understand, wrap our heads around the subject matter
• For pleasure and enjoyment

Bad Listening Habits – What are they?

• Looking away – not focusing on the person speaking
• Multi-tasking – fiddling on your phone, etc.
• Talking over someone as they are trying to speak
• Pre-occupation – being wrapped up in your own thought process and focusing on your next thought or response

Ok, Active Listening – What is it and what are the benefits?

Active Listening has several key components. They are:

• Sole Focus
  • Eyes fixed on the person speaking
  • Preferably minimize possible distractions prior to beginning the conversation
  • Practice accessible body language
  • Appropriate and timely facial expressions – smiles, frowns, cringes, etc.
• Acknowledgement beyond the slim bounds of “hmm”, “uh-huh” and nodding your head yes or no
• Active feedback during intentional breaks in the conversation
• Instead of interrupting or confronting, ask for clarification – ask insightful questions
• Openness and neutrality in your responses

Now, the BENEFITS:

• Clarifying information wins out over misunderstandings and undue confrontation
• It builds a basis of trust between individuals, strengthening bonds of friendship or business affiliates/connections
• It attributes value from one person to another
• It takes us away from our pre-conceived mindsets and open our minds to other perspectives
• The more we listen, the more compassion we develop for other’s needs
• Think Golden Rule principle – how we want to feel is most likely how others want to feel. We want to be heard, paid attention to, valued, to feel important.

We exhibit these needs in everything we do these days from our posts on Instagram, Facebook, our Snaps, our Tik-Toks…we seek validation and approval. Let’s give it forward in how we treat others that are communicating with us and become better communicators ourselves, better professionals….maybe simply better humans.

Is Oxford the Next High-Growth Area for Southern Chester County?

Oxford Borough

Growth moves down the corridor of US-1, maybe not at the speed or intensity of the commercial property pricing drops or increases from east to west, north to south, but nonetheless, it moves.

The pandemic has hit so many small “mom and pop” towns with lethal blows to their economy and small business bases. As a local resident, I have been discouraged by seeing businesses close up over the COVID-19 pandemic, but I have also been encouraged by the way that the Oxford/Nottingham community has pulled together to support local and helped existing businesses sustain and even thrive in spite of the challenges they face, and as a bonus, encourage new entrepreneurship within the area with new “pop-up” establishments, like the “Rudolph’s Bourbon Bar” over the Christmas Holiday Season. Our local leaders really stepped up to the challenge of the “new normal”. Cameron’s Hardware helped us by offering no-contact pickup, and other retailers offered delivery via UBER eats and DoorDash. We saw what I’d like to call “Creative Sustainability” all around us. Existing local businesses like DuBarry have created brick-and-mortar spaces fronting on “Oxford Main Street” and are doing quite well. Home to great local eateries like Sawmill Grill, The Octoraro Tavern & Grill, Wholly Grounds, La Sicilia, Andres, the Nottingham Creamery, and Little Miss Oxford Diner, this town is full of character and charm. The new parking garage is a tremendous benefit to the retailers in our area. Oxford is also home to large businesses such as Neuchatel Chocolates, Tasty Baking Company, and The Scotts Company.

We are watching local entrepreneurs emerging such as the Whisky Shack, Smokin Dragons, Pickled Pickles, and Sweet Cakes, bringing new life and excitement to our area.

The Preston & Steve Show featured our own BellyBusters as one of the top 10 cheesesteaks of 1,000 different varieties taste-tested in the area! Now that’s impressive! Oxford Mainstreet Inc. announced that First Fridays will be starting up again in April. That’s just around the corner! There’s a lot of positive things going on in Southern Chester County during this arduous pandemic.

We have a unique opportunity available within the borough limits to present to you:

• 6,895 sf
• 2 story office building
• 40 car parking
• Could be used as:
  • Office
  • Medical
  • Flex
  • Institutional
  • Finance
  • Professional Services
• 1st floor amenities:
  • 11 Cubicle Offices
  • 2 Private Offices with smoke glass privacy
  • 1 Large Conference Room with smoke glass privacy
  • 1 Small Conference Room
  • 1 reception area
  • 2 restrooms
  • Large kitchenette area/employee lunchroom
  • Heated storage area
  • Roll-up drive-in delivery door (8×8) in the rear
• 2nd floor amenities:
  • 18 cubicle offices
  • 3 private offices
  • Server room
  • Small kitchenette area
  • 1 coat closet
  • 2 restrooms

Click here to tour this amazing space virtually:

Click Here to Request an Informational Packet

New Garden has a New Tool in their Conservation Tool Belt

Eighteen municipalities in Chester County have embraced the “Official Map” measure. Our neighboring township of New Garden has jumped on the bandwagon recently.

These Official Maps are projected to be useful tool to protect open spaces. However, there is a catch. The end game is for the municipality to amass land. If you, Mr. or Mrs. Property owner decide to construct on your existing parcel or choose to subdivide, you must notify the township. The clock starts ticking at that point and the township has a defined time frame to negotiate a “fair market price” for the parcel.

Note that this is not eminent domain or condemnation of property. This tool basically gives them right of first refusal for your property. If they have no interest in purchasing your property, then you are permitted to proceed with your plans within the township’s navigational beacons.

Reference: Daily Local News ~ dailylocal.com

 

 

 

Then You Crash Into Me: The Commercial Real Estate Industry after Legalized Marijuana

The love/hate relationship that seems to be forming between the Commercial Real Estate industry and Marijuana may or may not be on your radar, but it is reality.

Fully legal in nine states, one inhabited territory, three native-American reservations, not to mention Washington D.C., it’s impact has been felt across multiple industries. Some cheer, others protest, but regardless, we in the commercial real estate industry need to be educated on the basic legalities as it has become commonplace for medical use and in some areas, recreationally acceptable as well. The federal law mandates that it be grown and manufactured in the state in which it is sold/consumed.

The demand and, in turn, the value for warehouse and industrial properties has significantly increased in affected regions. Climate controlled warehouses and distressed properties including former storage, data, and manufacturing are all being acquistioned and repurposed. Even the limping retail sector has been affected as in those states where retail sales have been sanctioned, as marijuana retail shops have breathed life into some of those long-time vacancies.

Here’s a run down of the basics for our region:

Pennsylvania: Medical Marijuana approved by Governor Wolf in April of 2016

Maryland: Decriminalized and Medical Use/Manufacturing/Distribution approved

Delaware: Decriminalized and Medical Use/Manufacturing/Distribution approved

New Jersey: Governor Jon Corzine signed Medical Marijuana law in January of 2010

 

There are concerns that this may be another real estate bubble that eventually pops. Even though concerns remain, this industry has sparked new property interest and investment pursuits that we in the industry cannot deny. Both Brokers and Property Owners alike seem to be riding the wave while they can. Time will tell as always.

 

 

 

Credit Crunch and Surplus is Affecting Ag Industry

It seems that a crop surplus has led to a 14-year low in agricultural industry profits according to Bloomberg. The amount of debt that farms have taken on is said to be the highest in the last 30 years.

The banks don’t want to give out anymore loans unless they are secured by land. This has caused an influx of interest in the USDA program which was originally designed to be a last ditch effort, not a standard. Enter in the statistically consistent problem with any government programs. You said it. Yes. This one is almost broke as well. 

The lessors of land will find it to be a difficult year most likely. Will lease rates fall? Still remains to be seen. According to the USDA, the forecasts do not look good in the profit column for 2016. The National Farmers Union is petitioning Congress for a credit solution asap so that they can continue production.

Recently there has been a surprising increase in prices and it is the agricultural industries hope that the rally continues. 

(Data courtesy of Bloomberg, National Real Estate Investor 2016)

The Beiler-Campbell Business Center Welcomes New Tenant: Cyron & Company

For over twenty years, Cyron & Company has offered a comprehensive suite of customizable accounting, payroll and tax services for small to mid-sized businesses and individuals. Our unique approach of delivering custom-tailored solutions truly sets us apart. We help you achieve balance by aligning your business and personal goals. We pay close attention to your goals, ideas, plans, and concerns—and design a services package that meets these specific needs and objectives.

Our distinct philosophy has not only earned us the loyalty of our clients, but has allowed us to grow through a steady stream of referrals. We’re known for our clear focus on helping clients reach their full financial potential and are proud to develop partnerships that support business growth and ongoing financial strength.

Cyron & Company is moving into the newly constructed 400 Building within the Beiler-Campbell Business Center.

Add their new contact information into your CRM/Address Book:

Cyron & Company Certified Public Accountant

The Beiler-Campbell Business Center, 400 Old Forge Ln, Suite #405, Kennett Square, PA 19348

Find out more about Cyron & Company by visiting their website HERE