Factors to Consider When Looking at Industrial Warehouses

Factors to Consider When Looking at Industrial Warehouses

Purchasing industrial warehouses as investment properties is typically an excellent idea. Despite the uncertain circumstances caused by the coronavirus, industrial real estate still saw great success. Companies are always in need of warehouse space, no matter if they do in-person or online operations. With that being said, industrial warehouses are almost always occupied by a tenant, which means purchasing one is a great idea. In this blog post, we are going to explain what to look for in a warehouse to ensure it is a great investment.

What to Look For in Industrial Warehouses

Excellent Location

When it comes to purchasing an industrial warehouse, the most important factor is location. It should be in an area where the tenant’s employees can commute to easily. This means near a larger city that has a significant population size. Also, it should be close to a major highway, so trucks can get to the loading docks with ease. This will encourage higher productivity rates as the truck drivers can pull off the road, load up the trailer, and get going again. Additionally, this can save your tenants excess costs, and can potentially get them more customers when they see their amazing productivity rates. When your tenants have success at your location, they will be more likely to stay in your space for several years.

Size of industrial warehouseThe Size of the Industrial Warehouse

Another very important factor is the size of the industrial warehouse. Of course, you don’t want your warehouse to be too small to fit your tenant’s merchandise and employees. Or, you don’t want them to grow out of it within a year. At the same time, you don’t want your warehouse to be too large for your products and employees. This is why choosing the right size warehouse for your needs is so important.

To choose the correct size of your warehouse, you will want to take a look at which industry you would like to target. When doing this, you should consider what the booming industries are in the city or state you are purchasing a property in. Once you choose an industry, you will need to look at the average warehouse square footage needed. Your commercial real estate broker should be able to tell you this, and there are online resources to find this information. Then, look for warehouses that are around the same size, if not slightly larger. Being the option with the most space will prove to be desirable among tenants.

Consider Buying an Industrial Warehouse With an Office Area

Many of our clients choose to purchase industrial warehouses that include an office area. This is a highly valuable feature that many property owners do not think of. In almost every warehouse, there is likely a management team that handles business activities concerning finances, employee management, employee records, and more. This management team benefits from being at the same location as their employees, rather than having to drive from another location. When your property features an office area for the managers, it is much more valuable. You will save the tenant from renting out a second space, and you make it easier on the staff. Fit Small Business has an excellent layout on their website including an office space example.

Cost per Square Footage

Another important factor when purchasing industrial warehouses concerns budgeting. The cost per square footage depends on the property’s condition, as well as its location. There are many markets in which industrial warehouses are booming due to the low cost per square footage. However, there are other markets that are failing because of the price of buying and leasing industrial space. For example, in San Francisco, California, you can find industrial warehouses for sale for upwards of $320 per square foot (in mid-2020). However, in Memphis, Tennessee, you can find similar listings for under $20 per square foot. Clearly, in Memphis, you would have much more wiggle room to make a profit off of your tenant’s lease payments. In San Francisco, you would likely struggle to find a tenant who is willing to pay what it takes for you to make a significant profit.

Our office is in Salt Lake City, Utah, and we have many industrial warehouse listings. This post is being written in mid-2020, and we are seeing warehouses be sold at around $115 to $170 per square foot. However, these prices can go up and down depending on the market and seller, as do properties in other cities. But, as you can see, prices are subjective to the city and state you are in. So, be sure you take this into account before investing in industrial warehouses. You want to find a listing in a great area (which does increase the sale price), but also a listing that allows you to make a profit at a reasonable rate.

Purchasing Industrial Warehouses as Investments

At the end of the day, purchasing an industrial warehouse is typically an excellent investment. However, when you keep the factors above in mind during your search, you are much more likely to be happy with your investment. If you need the services of a commercial real estate broker in Salt Lake City, feel free to contact us. Our team would love to assist you and help you find a property that you can make a smart investment in.

Subletting Your Office Space: Should You Do It?

Subletting Your Office Space: Should You Do It?

For many businesses, the option of subletting a portion of their office space sounds desirable. From the money received, from the rent of the other business, it can help offset the cost of their own lease. However, the decision to sublease office space is not always as desirable as it may seem. In some instances, it is an excellent option, whereas, with others, it should not be done. Let’s discuss when you should consider subletting your office space and when you shouldn’t.

When Subletting Your Office Space is a Good Idea

There are many great reasons to think about letting your office space. After all, you can save a significant amount of money when you let another business into your space. Below, you will see some of these great reasons to welcome another business into your office space.

After Downsizing

Have you recently downsized your business? Or, perhaps you have allowed some employees to work from home. No matter the situation, downsizing your on-site workforce can create a great deal of room. So, if you have enough room in your office space for another business to move in, consider subletting your office space. Even if you only have five to ten desks open, it may be the perfect size for a small start-up. Anything you make from their rent can help minimize the costs of your own space, which is very helpful.

When You Have a Large Amount of Extra Space

Many businesses decide to move into a larger office space that they can grow into. This is an excellent idea as it can save a great deal of money by avoiding moving the entire office later on. However, this can lead to office space that is not used. This can either waste money on rent, or you can sublease the space to another business. If you decide to sublease your extra office space, be sure to design the space to separate the two businesses. This means you should seclude the extra office space for the business that will be subletting your office space. Perhaps building a wall or setting up a temporary barricade can seclude the two businesses well.

subletting your office space

When You Are Moving to Another Location

Some businesses grow out of their space before their lease is up. While this is a sign of a successful business, it can still cause a problem with getting out of your lease. An excellent option for moving into a large space early is by subletting your office space. Lease the entire space to another business while your business moves into a larger location. Although this does not get you out of paying for your office space, it should cover what you owe your landlord for the time being.

When Subletting Your Office Space is Not a Good Idea

Despite sounding like a great money saver or a way out of a small space, not every business should sublease their office space. There are some instances where it is not a good idea to do this. At the end of the day, if you are ever unsure about subletting your office space, it is a good idea to contact your lawyer. Have them look over your lease and the laws in your city to make sure you are following the laws and your contract.

If Your Lease Prohibits Subletting

Some landlords prohibit subleasing in their tenants’ leases. This is usually because they want to approve who is allowed in their building. While this is completely understandable, it can prevent you from leaving your office space. It can also cause you to waste money on empty office space. However, following the contract you have with your landlord is the most important thing. This way, you don’t have to face legal consequences or fees.

Your Business is Growing Quickly

As mentioned above, many businesses move into larger spaces with plans on growing into it. However, just because your space is too big now, it doesn’t mean you won’t grow into it within a few months. Take a look at the rate in which your business is growing to be sure you have enough time to sublease your office space. If you predict your business will grow into the space within a year, we recommend not subletting the space. This is because most businesses will look to sublease a space for six to twelve months. In this instance, it is best to hold off and embrace your growing business.

Your Business Handles Private Information

Perhaps you have plenty of space to welcome another business into your office. But, if your business handles private information such as bank account numbers, health information, or legal matters, it may be a privacy concern to have a business sublease form you. The privacy of your employees and your customers should be a top concern. So, be sure your business will have the necessary privacy if you sublease your office space.

We hope this is helpful, if you’re considering the idea of subletting. And if you’re ever looking for a new office location, or trying to find a tenant to fill your currently open office space, let us know! That’s something we can certainly help with!

How to Get More Leads as a Commercial Broker

How to Get More Leads as a Commercial Broker

Leads are one of the most important things for the success of a commercial broker. When your leads convert into clients or property sales, you will make more revenue for yourself. So, it is vital commercial brokers take steps to increase their lead generation. In this blog post, we are going to cover just a few ways to get more leads as a commercial broker.

Invest in a Quality Website

A website is one of the biggest lead sources for a commercial broker. When a website is high-quality, loads quickly, and looks professional, it can generate a majority of a broker’s leads. Although it can be costly to hire a website developer to put your website together, it will be well worth it. On your website, you can put information about your experience, your current listings, and even testimonials from your previous clients. Then, when prospects land on your website, they will be much more likely to generate a lead. Additionally, what you spend on putting your website together and the yearly cost for a domain is tax-deductible as a business expense. So, be sure to invest in this helpful marketing tool to get more leads.

Be Active on Social Media

Another helpful lead generation tool is social media. There has been an increasing trend amongst commercial real estate brokers using social media to promote their listings. Almost half of the world’s population has social media, which means it’s imperative for brokers to use it as a marketing tool. Social media presents a great opportunity to connect with people who are not already your clients and be on the top of their minds if they ever need your services as a broker. You can use hashtags, tag your location, and comment on others’ posts to increase your audience.

Facebook tends to have the highest return on investment out of all social media platforms. However, many commercial brokers prefer to use Instagram, as it is a photo-focused platform. With that being said, Instagram is a great platform to use to show off drone footage of a commercial building. You can also or go live to show an exclusive walk-through of your listing. Additionally, social media is completely free if you are not paying to boost your posts. So, this is a budget-friendly way to generate more leads for yourself.

get more leads

Network at Local Events to Get More Leads

A classic way to generate leads is to attend local events. If there are any business-related events in your area, consider going to network. Introducing yourself and letting people know what you do can help you get new clients. Business owners or investors are typically a commercial broker’s target audience. So, when attending a networking event, you have access to a room full of potential clients. However, at these events, you don’t want to be too pushy. If someone expresses interest in using your services to buy or sell a property, then hand them your business card or give them your information. This is to ensure you appear as professional as possible, rather than appear as though you are only there to generate sales.

Ask Your Previous Clients for Reviews and Referrals

The recommendations from your previous clients can be very helpful for your business. If you have not done so already, sign up for some free business listing websites with review functions. Then, ask your clients to leave you feedback once your sale is over. After this, you can post their reviews to your social media pages or on your website. This will give you great credibility and will encourage people to consider using your services.

Consider Joining a Nationally Known Franchise

Another tactic to increase your leads as an independent broker is to join a widely known brokerage franchise. Being a broker under a large name, such as SVN, can boost your credibility greatly. Additionally, it can help you to get more leads as someone searches for a local franchise. Many franchises also have a marketing budget, in which they help their brokers get more leads. This is a route that many independent brokers decide to take when they are having challenges generating leads. However, if you enjoy working independently, this is not a necessary tip.

If you are in the Salt Lake City, Utah area and are looking to join a local brokerage franchise, feel free to look into SVN | Alta Commercial. We are accepting resumes from licensed brokers to see if they would be a fit in our office. Our team looks forward to hearing from you!

How do CRE Brokers Get Paid?

How do CRE Brokers Get Paid?

A common question people ask in the commercial real estate industry is “How do brokers get paid?” Although the payment to a broker is involved with every commercial real estate transaction, it seems many people lack clarity on the subject. Truth be told, the process of getting paid as a broker can get a bit complicated. The fact that commission rates can vary also contributes to the confusion around how brokers get paid. Whether you’re interested in becoming a broker one day or you’re thinking you might want to work with one, this blog post will explain how brokers get paid for their work.

How do CRE Brokers Get Paid?

What many people do understand is that commercial real estate brokers get paid based off commission. The commission is typically paid by the seller of the property, but the buyers of the property may also owe the broker a payment as well. Who pays the commission depends on who the broker is representing in the transaction. When representing both parties, both the seller and buyer will pay the broker a commission fee. If there are two brokers involved with the deal, they will split the commission between each other. However, the amount in which the broker is paid varies due to anti-trust laws.

anit-trust laws impact how cre brokers get paid. Anti-Trust Laws

Due to anti-trust laws, it is illegal to set a commission rate across a market or industry. This means the commercial broker and their client need to negotiate a commission rate before agreeing to work together. Negotiating a price for a commission can be great for both the client and the broker, as the costs of different properties vary greatly. Additionally, some properties are easier to find than others, which changes how difficult the broker’s job is. According to our partners at SVN | Southgate Realty, most commercial brokers get paid between four percent and eight percent of the sale price from the property. However, this may increase or decrease based on the complexity of the deal. So, be sure to consider how hard the broker will need to work when negotiating their commission rate.

How Does Commission Work?

In commercial real estate, a property can be sold or leased. The amount a commercial real estate broker earns is based on the price of the property. So, if the broker and the seller agree on a seven percent commission rate and the property purchased was $1,000,000, the broker would earn $70,000. However, if another broker was involved to represent the buyer of the property, the $70,000 would be split between the two.

For commercial real estate, because leases are typically paid on a monthly basis, there is a different way to calculate the commission of a broker. With leases, the broker is paid based on the length of the lease agreement and the monthly rate. For example, if a property is leased for three years at $15 per square foot, and it is 2,000 square feet, the lease value would be $90,000. We find this from 3 years x ($15 x 2,000 SF). If the seller and broker agreed on a seven percent commission rate, the broker would make $6,300.

Who Pays the Broker?

The person who usually pays the broker(s) involved with commercial real estate transactions is the property owner or landlord. Almost always, the seller or landlord will pay both brokers who are representing clients in the commercial real estate transaction. This is because the landlord wants to get the property off their hands and needs the help of the broker to do so. If you are looking to purchase a property, do not skip out on using a broker because you think you will get a better deal. Brokers are very resourceful, and you typically won’t spend any money on their services when you are buying the property.

Looking for a Commercial Real Estate Broker in Salt Lake City?

We hope this blog post cleared up any confusion you had about how brokers get paid. If you are looking to buy or sell a commercial property in Salt Lake City and need assistance from a broker, please feel free to contact us. Our highly skilled and experienced advisors will help you get an excellent deal and can answer any questions you may have. We always strive to make the transaction process as easy as possible for our clients. So, please feel free to reach out so you can work with one of our advisors today!

How to Sell Your Commercial Real Estate Property

How to Sell Your Commercial Real Estate Property

Do you have a commercial real estate property you would like to sell? If so, you have a couple different options for selling your property. In this blog post, we discuss your options and explain which one is best for you.

Ways to Sell Your Commercial Real Estate Property

There are two main options for you to sell your commercial real estate property. First, you can do it independently. Second, you can hire a commercial broker to help you do most of the work that comes with selling the property. Below, we explain how to go about these two options and what the processes entail.

Selling Your Commercial Real Estate Property Independently

Many people choose to sell their commercial real estate properties independently to avoid paying the fee of a commercial broker. Although hiring a commercial real estate broker isn’t free, the amount of work you will save yourself may be worth it. Selling commercial real estate is a full-time job within itself. Here are the steps people take when they sell their properties independently:

commercial real estate inspection1. Find a Certified Inspector

Before selling your property, you need to get it inspected. A certified inspector will point out any damage or issues with your property that you need to fix before you sell it. Once you have had an inspector look at your property, you will need to fix any issues with they found. If you do not fix these issues, it will drastically lower the worth of your property, and people will be less likely to purchase it.

2. Find a Qualified Appraiser

When selling your property independently, you may have no idea what to list it for. There are so many factors that go into deciding a fair price for a property. This is where a qualified appraiser is very important. An appraiser is an expert who will evaluate your property and tell you what its market value is. From there, you will have a good idea of how much the property is truly worth.

3. Advertise Your Property

Once you have a set price, it is time for you to advertise that your property is for sale. This is one of the most challenging parts of selling a commercial real estate property independently. You may have to pay for advertising on social media, billboards, or newspapers. Advertising is crucial for people to gain awareness of your property and that it is for sale, so this step should not be skipped.

4. Hire a Commercial Real Estate Attorney

Once you have found a buyer, you will need to hire a commercial real estate attorney to write a contract for you. This will ensure the sale is legal and binding. They will also make sure you are protected as the seller throughout the sale process. Hiring an attorney can be expensive, but this is also crucial for selling your property, as your sale must be legal.

Selling Your Property with a Broker

As you can see, selling a commercial real estate property independently still requires you to hire people and pay fees. No matter what option you choose, you will need to hire an inspector to look at your property. When you hire a broker, after the inspection, all you do is give your broker the information they request, and let them do the advertising for you. Your broker will set the price at a competitive rate, ensuring you get the most for your property as possible. They will then show prospects your property for you, list it on their website, and will spread the word about your property. Then, when someone is ready to purchase it, a broker will usually have a contract ready for you. After the sale, you pay the broker for doing their work, and you are done!

Another consideration is that the longer you own the property, the longer you’ll need to pay for property taxes. If your own marketing process isn’t getting leads and finding a qualified buyer, the you could end up spending a lot more money because of waiting, then you would by using a commercial broker. Of course, these are generalizations. But, when you talk to a broker, you can get a better idea of what to expect in terms of costs and savings.

Broker or Independent?

The truth is, deciding between selling your commercial real estate property independently or selling it with the help of a broker depends on the amount of time you have. If you are already a very busy person, it is highly recommended that you hire a broker. This will save you a lot of time, and your property will likely be sold much more quickly. However, if you are experienced and good at selling commercial real estate independently, that may be the best option for you.

If you’re interested in using a commercial real estate broker to sell your property, please feel free to contact us. We help people in the Salt Lake City area buy and sell commercial real estate properties and would be more than happy to help you sell yours. Our goal is to make the process of selling commercial real estate property as easy as possible for our clients. So, feel free to reach out if you would like some assistance.