Destino Industrial
  • Home
  • Properties
  • Services
  • Client's Advantage
  • Industrial Market Insight
  • About
    • Testimonials
    • About Lee & Associates
    • About Our Team
    • Contact Us
  • Home
  • Properties
  • Services
  • Client's Advantage
  • Industrial Market Insight
  • About
    • Testimonials
    • About Lee & Associates
    • About Our Team
    • Contact Us

3 Considerations for Making a Real Estate Decision

9/18/2018

 
Picture
Making a real estate decision can be an exciting time, especially in today’s market.  For Buyers/Tenants, there are opportunities that a new facility provides, such as a better location, improved amenities, or utilizing a more efficient layout.  Selling or renting an owned property can dramatically improve your cash flow situation.  In today’s market there are other factors that must also be taken into consideration when deciding on renting, buying, or selling.  Let’s briefly look at three (3) considerations when evaluating your decision.
​
  1. Why
  2. Where
  3. What

​First, why are you making a change? 
Urgency, necessity, or opportunity….   How does this affect you? 

  1. At the outset, knowing the Urgency of your decision will help set your pricing expectations.  In general, the more urgent party is the one more likely to pay more if renting or buying, or accept less if selling or leasing.
  2. Closely tied to urgency is Necessity.  Is making this decision being imposed upon you for some reason, either in the immediate or not too distant future?  If so, make sure to work with a real estate advisor that understands your situation but who is also careful not to disclose too much information to the other party so that you can maintain your leverage in the negotiation. 
  3. After urgency and necessity are considered, there is Opportunity.  For Buyers, interest rates are still at historic lows, although rising, and lower interest rates equates to lower cost of capital, allowing you to maximize your leverage and buying power.  For Sellers, as prices have significantly rebounded from market lows, now you can realize that appreciation (consult your accountant).  Furthermore, if you want to sell and realize the gains but do not want to physically move from your existing facility, consider selling and renting back the same property in a sale “lease-back” mechanism.
Picture
​ 
Secondly, where are we in the Market Cycle?

Despite an overall long-term trend upward, real estate markets generally reach peaks and valleys approximately every 7-9 years.  By many economists’ perspective, we have been trending up since around late 2009 or early 2010.  In either estimation, we are certainly near a peak, but deals must still be done.
Therefore, how does the current Market Cycle affect your deal?
  1. If looking at selling or leasing your property in the next 12-18 months, now is the time to do that.  Consider how a 10-15+ % correction (reduction) would affect the value of your property. 
  2. If looking to purchase a property, make sure to have a long-term outlook, not a quick “flip” strategy.
  3. If looking to rent (tenants), consider negotiating some flexibility.  For example, a shorter term lease with options to expand, extend or purchase.
​
Picture
​Thirdly, what is the Availability and Choice?
Presently, in the industrial real estate market in southern California, availability and vacancy are very low (less than 1.5%), and new construction of large buildings is underway, but overall choices are few.   Recognizing the availability and options will help you to choose your next steps wisely.  So how does this affect you?
  1. For starters, buyers and tenants need to consider a wider geographic area to find more suitable alternatives, or be willing to wait.  
  2. Secondly, renting, rather than buying, can generally provide more flexibility and options for business owners looking into the future.
  3. Thirdly, renegotiating and extending your tenancy (lease) at an existing location is an option that will enable you to postpone your decision until more choices become available or market conditions soften.
 
Contact  Christopher J. Destino  of the Destino Industrial Team to help evaluate your scenario and chart a course to accomplish your goals.

Comments are closed.

    Author

    Christopher J. Destino, SIOR, a Principal at Lee & Associates,  is  an engaging, responsive professional who enjoys working closely with his clients and helping them succeed.

    Contact  Christopher 
    Today!!

    Picture

    Additional Market Articles and Reports 
    (click here for archive)
    Picture


    ​Industrial Insight Archives Below

    January 2023
    December 2022
    October 2022
    September 2022
    August 2022
    June 2022
    April 2022
    March 2022
    February 2022
    December 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    March 2021
    February 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    November 2019
    October 2019
    August 2019
    July 2019
    June 2019
    April 2019
    February 2019
    January 2019
    December 2018
    November 2018
    September 2018
    June 2018
    April 2018
    March 2018
    February 2018
    December 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    September 2015
    June 2015
    May 2015
    March 2015
    January 2015
    October 2014
    July 2014
    March 2014
    December 2013
    October 2013
    August 2013
    April 2013
    September 2012

    Categories

    All
    Merry Christmas
    Sublease

“Working with a Professional  
​
Achieves Professional Results”
Picture
Lee & Associates
Commercial Real Estate Services

1004 W. Taft Avenue, Suite 150 
Orange, CA 92865
​LeeOrange.com
Corporate ID #01011260 

Picture
Christopher J. Destino, SIOR
Principal
714.564.7181
cdestino@lee-associates.com
​Destino Industrial Team
DRE #01447060

Picture
Picture
Picture