2020 is almost here – is commercial real estate part of your growth strategy?
The start of a new year is a hopeful time and an opportunity to set goals and build a growth strategy for the new year. Transworld wants to help you make good on your business goals and clue you in to some of the benefits of buying commercial real estate for your business. The timing of the market is great for real estate ownership – see why we think so in our top four reasons to buy commercial property in the new year.
ONE: Interest Rates are Low
Currently, interest rates on financing for commercial real estate are low and this trend is likely to hold on through 2020. This means there is great potential when it comes to financing the purchase of commercial real estate and making it work for your company. However, if buying investment property is on the horizon making a purchase sooner than later is advisable because of the election and a possible recession coming in the next few years which will affect lending.
TWO: Appreciation Potential
Owning commercial real estate is a great way to take control of your wealth and benefit from an asset that will appreciate in the long term. Unlike many investments, like a stock or bond, commercial real estate is a hard asset and a scarce resource. Because of this it always has some sort of built in value that can appreciate over time. The commercial real estate market in Colorado is very active across office, retail and industrial sectors which makes commercial investments valuable and even more likely to appreciate for the duration of ownership. The value of commercial real estate is also affected by the overall economy, which is good.
Is There a Cost-Benefit of Buying Commercial Space vs. Leasing?
The cost benefit of buying commercial space over leasing is the opportunity for appreciation and even adding rental income.
With building ownership comes increased control over your business and your costs. A monthly mortgage payment can be depended on, but a lease and building fees can be increased at the discretion of your landlord. Buying commercial property in 2020 can allow you to better control your costs moving forward. There is also the unique opportunity to acquire more square footage than you need and renting out the remainder to provide a new revenue stream. This will also provide you the opportunity to grow into your space as you meet growth milestones in your Colorado business. Plus, when you own your building you will never have to worry about the owner selling it and disrupting your business operations.
What Freedoms are There to Buying a Space vs. Leasing?
To reiterate the control factor, when buying a building you have no limitations on use or build out as long as they fit with zoning regulations, which is very dissimilar to leased property.
FOUR: Cash Preservation
Positive cash flow to a business is like gold. And identifying savings opportunities is a great way to stabilize your company and prepare well for the future. In our experience, monthly mortgage payments can be cheaper than monthly rental payments. Boom, you automatically have boosted your cash flow and now also have a hard asset building wealth.
How Long Should You Own a Space Before it’s a Better Investment Than Leasing?
If you have long term business ownership plans and cash set aside for a down payment, than owning space will always pay off better for your business than leasing due to its controlled monthly payments and wealth building qualities.
We’ve had the fortunate opportunity to work with many business owners and often find they are the types of people that are daredevils and risk takers – people who want to bet on themselves for their future. So why not bet on yourself again and buy commercial real estate for your business in 2020. It is a great opportunity to build wealth and grow the foundation of your Colorado business.
What are your 2020 business goals? If adding commercial real estate to your portfolio is one of them, we invite you to call Transworld Commercial Real Estate to speak with one of our expert commercial brokers, see our commercial listings and talk about next steps.
Rachael Holstein is the Marketing Manager for Transworld Commercial Real Estate, a full service commercial real estate firm in Denver, Colorado. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle! Visit transworldcre.com for more information.