Buying a commercial property is not like buying a home. There are cer-tain parameters, criteria, and requirements that you’ll want to keep in mind when you’re looking for good target properties to acquire. Whether you’re located in New Hampshire, North Carolina, California, or another state, the same rules apply. Here are some key points to look for when you’re shop-ping for a property that meets your needs.
Industrial buildings
Look for:
• Good ingress and egress
• Ample parking
• Adequate warehouse lighting
• Distributed electric in warehouse
• Number and size of ground-level doors
• Number and positions of dock-high doors
• Physical condition
• Condition of roof
• Good ceiling height (for warehouses)
• Ample power
• Zoning requirements that allow your use
• Expansion potential
• Few leasing/for sale signs on neighboring buildings (this shows that the area is highly desirable for both investors and business owners)
• Property tax rate
• Special assessments
• Association dues
• Cost of maintenance and upkeep
Office buildings
Look for:
• Ample parking
• Proximity to highways and freeways
• Physical condition
• Proximity to mass transit
• Area amenities (cleaners, restaurants, drugstores, etc.)
• Property tax rate
• Special assessments
• Association dues
• Cost of maintenance and upkeep
• Opportunity for expansion or leasing
• Load factor, also known as the efficiency factor
This last factor involves both the rentable area and the usable area of an office building. The rentable area of an office building includes common-area lobbies, hallways, and restrooms, and the usable area of an office building is only the space a tenant is leasing. When you subtract the rentable area from the usable area, you get the building’s load factor. The typical load factor in an office building is between 9% and 11%. Any amount greater means you’re paying for more common space that is shared with the other tenants in the building. As a result, your business is renting less usable space, making the building design less efficient.
Another point to keep in mind for both industrial and office properties is the tax credits that many states offer to businesses that start and/or expand within their geographical parameters. In California, for example, the state offers more than 20 programs that range from the Rural Jobs Tax Credit to the Qualified Business Facility Rehabilitation Credit to Enterprise Zones. Other states offer similar programs, all designed to support job growth and other advancements. Such incentives usually indicate a government that’s pro-business and interested in letting private companies help clean up blighted areas in return for financial incentives and credits.
