Recommendations for Buying Commercial Real Estate

Commercial properties under a million in the Twin Cities are hard to find, and when you do, they go fast––especially industrial properties. These buildings typically appreciate faster since in many cities you can’t build them anymore, or at least at a cost that makes sense. A million dollar deal is a ton of money, but in commercial real estate investing, the risk is not as significant as many buyers think. In the end, don’t lose sight that you’ll own land and a building with proximity to infrastructure and potential for redevelopment.

Here are my five recommendations for buying commercial real estate in today’s metro market:

1.      Get a broker. Not just any broker, you want the right broker. You want one that has current market knowledge and experience in handling CRE deals in today’s market. A broker that has built strong relationships in the industry and can break through the line of all the other brokers and their clients will give you a leg up. You also want one that is driven, connected with experts you might need to get your deal done, and a great problem solver.

2.     Have a strategy. To purchase industrial properties and some retail, you’ll have to act with determination and forethought. A seller is more apt to rank a buyer above the rest when they see a complete proposal with everything organized. Work with your broker to come up with a plan in order to stand out from the rest.

3.     Be ready. Get your bank ready to IMMEDIATELY send a letter, so you can include it with your offer. This gives the seller confidence that you have the ability to close. Especially in the current market, you want to enter each potential deal ready to execute, including having your financials in order. Sellers are looking for quick, smooth deals. I sometimes come across brokers that have not prequalified their client, especially inexperienced agents who do a couple of commercial deals a year. That delay can make a seller go with someone else.

4.    Be assertive. If the property is the best fit for you, make a move. I say it all the time, this is not the market for “analysis paralysis.” If you want the deal, you’ve got to step up. Sellers are looking for buyers that are serious and not wasting their time or tying up the property.

5.     Keep it simple. Sellers and their brokers are looking for buyers with limited contingencies. They evaluate all aspects from the get go to pick the right buyer. A deal loaded down with needs and contingencies means the property could be tied up just to give the buyer extra time but often doesn’t lead to a sale. Smart sellers, with the guidance of their broker, are going to pass on your offer and move on to a simpler deal.

Conclusion

To successfully purchase commercial real estate, it is essential to work with a knowledgeable and well-connected broker, develop a clear strategy, and have your finances and bank ready for immediate action. Buyers must act decisively to avoid missing opportunities and keep offers simple with minimal contingencies to appeal to sellers seeking smooth, efficient transactions.

Jeff Salzbrun is the owner/broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in thousands of sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.

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