November 2010
BOSTON, MA – With property prices at an all time low, many companies are once again wrestling with the decision of whether to buy or lease their real estate.
Commercial office, industrial and retail properties in many North American markets are selling at eight-year lows, so the potential is there to take advantage of the current dip in valuations, and benefit from long-term appreciation when economic conditions improve. According to Moody’s/Real Estate Analytics LLC, the market in the top ten US metropolitan areas hit bottom October 2009.
However, for most companies, price should not be the driving factor. Before buying, a company needs to look at its current and long term business strategy and among other things, answer the following questions;
1. Will owning a building substantially reduce occupancy costs over the long term;
2. Will the company out grow the space;
3. Will owning the property increase the value of the business;
4. Is the company in a financial position to have a fixed asset on its balance sheet; and
5. Will the benefits of appreciation and cost stability outweigh leasing costs and the ROI from investing in its core business.
The best way to find the answers to the above questions is to seek the advice of a commercial real estate advisor with experience in guiding companies through this important decision making process.
The Stevens Group is a commercial real estate advisory firm located in Boston, MA, that specializes in exclusively representing companies in the leasing, acquisition and disposition of commercial real estate. The Stevens Group is a member/partner of the International Tenant representative Alliance (ITRA) with 85 offices in major cities around the world.