What should you look for when considering commercial real estate?
Following the recent trend of other media companies, like Conde Nast, Time, Inc. and Associated Press relocating from Midtown to the Financial District, New York Magazine is considering a move as well. According to COO Kit Taylor, the company is considering a move to a “more efficient and cost effective space.”
Currently, New York Magazine is residing at One Hudson Square, occupying more than 80,559 square feet of space. As of Q3, asking rent for Class A and Class B office space in that neighborhood was $67.52 per square foot and is among the top-five most expensive submarkets in Manhattan.
Commercial Real Estate Complexities
When it comes to commercial real estate transactions, the law is far more complex than residential real estate deals. You have to consider a variety of legal and financial issues, such as
- Finance schemed
- Leasing issues
- Zoning regulations
- Construction issues
- Inflated comps and other schemes
- and more…
When making the decision to obtain commercial real estate, regardless of whether you finance or lease, it’s important to due your due diligence and assemble the right team for your transaction.
Financing vs. Leasing
Let’s say you’ve found the “perfect” location for your business. Should you finance? Or should you lease? It’s important to understand the potential risks involved in each. For example, you may be moving into the hottest neighborhood in town today, but two years from now, that may be a different story. If you’ve decided to finance that property, you may be regretting that decision down the line.
Many businesses tie up too much of their liquidity in real estate. Commercial real estate may not be that easy to sell, especially in a slow economy. On the flip side, owning real estate can be good if the business needs to sell something to obtain an influx of cash.
If you plan to sublease commercial space, you may have to content with tenants that don’t pay, along with costly repairs. Having all of your liquid assets tied up in real estate may make these hurdles almost impossible to overcome.
When considering location, obviously you want to be in the most cost-effective, convenient location for your customers or distribution centers. However, you might run into issues when it comes to zoning. If you are planning on operating a manufacturing plant, you are going to be limited to locations zoned for industrial uses. Professionals like CPA firms, law firms or recruiters will want to look for locations zoned for commercial uses.
In addition to zoning, you also want to review building codes or covenants to assess what types of limitations you may face when altering the interior or exterior of your building.
These are just a few of the issues to consider when looking for commercial real estate. Making sure you have a solid team on your side that includes accountants, commercial brokers and attorneys is a solid move.
When it comes to commercial real estate, Ianniello Anderson, P.C. is 100% client focused and deal-oriented. Our experienced commercial real estate attorneys will competently handle the demands of your commercial real estate transaction. Serving clients in the Albany, Clifton Park, Glens Falls, Saratoga Springs, Troy, and the entire Northeastern NY areas at (518) 350.7755.