Buying vs. Leasing a Commercial Property
Commercial Leasing vs. Purchasing
If you are looking at developing equity for your business, first consider your options of leasing versus purchasing commercial property. Performing market research in your local area will offer additional insight. Here are some key points to think about when making a decision.
Here is a look at some recent marketing statistics for commercial property. Market trends are primarily influenced by access to capital and cash flow uncertainty with businesses.
The average asking price per square foot is $11, serving a 3% drop over the last two years. The standard timeframe for leased commercial property to sit on the market is 221 days which is down 25 days from two years ago.
The average asking price per square foot is $83, serving a 15% drop over the last two years. The standard timeframe for leased commercial property to sit on the market is 216 days which is down 16 days from two years ago.
The availability of commercial real estate loans is still at its lowest levels since 2007. Leasing property has not dropped as much as sale prices and do not comp for the potential costs involved with fulfilling leasing requirements such as improving the property, which is increasingly common. Asking prices for commercial sale property have dropped dramatically since 2008 and continued to fall since the decline has slowed.
Where to Get the Most Value
Here is a listing of areas that fall under high cost and low cost markets along with their current rates for leasing and selling commercial properties and duration typically spent on the market.
Lease High Market
New York - $18.17 at 6.5 mths
San Francisco - $16.96 at 6 mths
San Jose - $16.56 at 6.7 mths
Los Angeles - $16.00 at 5.9 mths
Washington DC - $18.82 at 7.4 mths
Lease Low Market
Minneapolis - $5.57 at 8.1 mths
Cincinnati - $8.45 at 9.8 mths
Jacksonville - $8.36 at 9.3 mths
Memphis - $7.58 at 10.4 mths
Columbus - $7.79 at 12 mths
Sale High Market
San Diego - $175.85 at 6.7 mths
Washington DC - $168.01 at 7.5 mths
San Francisco - $193.83 at 5.5 mths
San Jose - $168.59 at 6.7 mths
Los Angeles - $179.80 at 6 mths
Sale Low Market
Cleveland - $49.51 at 8.7 mths
Pittsburgh - $60.12 at 11.4 mths
Cincinnati - $55.64 at 9.1 mths
Detroit - $50.05 at 6.7 mths
Memphis - $51.61 at 6.7 mths
The current health of the market shows leasing and selling prices for property have declined from last year, however the rate of change is slowing down for both sectors. Compared to last year, leasing prices almost flattened but have slightly increased in recent months. If this continues, a positive year to year growth should begin for the first time in nearly two years.
While sale prices are still falling at a slower rate, lease prices are heading towards a positive growth which will help to boost pricing on sale properties. It is recommended that if you intend on leasing, this could be the time to head in for a long term lease. This choice may also offer you additional discounts for early renewals and multi-year lease extensions.
For investors looking for property for sale, keep in mind the locations potential to rebound and upside opportunities. Sale prices can still continue to decline, but the increase in leasing prices may show you some hastened return.
The New Popularity with Renting It seems as if the mortgage crisis not only saw a drop in home value, but resulted in individual preferences leaning towards the desire to rent versus own a home. What... More
The Rental Market Around the U.S. As people relocated from coast to coast, or any state in between, the rental market is priced at various cost levels. Here is a look at some of the most expensive and... More
Healthiest Real Estate Markets for 2013 The housing market this year is showing a lot of promise as home prices rise 4.9% nationwide. Based on the median rent and sale prices nationwide, here is a... More
Leasing to Millennials With an estimated 8 million Gen Y renters hitting the marketplace in the near future, prepare yourself to accommodate these informed and technologically advanced prospects.... More
Renting in the UK Renting offers its own list of benefits and down slides. Here is a look at unspoken rules to follow when renting in the UK. Location Don’t put all your faith in a single location.... More
Apartment Renting Trends As renting grows in popularity, trends are bound to change. The Renting Demographic Over 75 million baby boomers are looking to downsize into urban apartments to live a... More
The 10 Most Romantic Cities in the U.S. A listing of the ten most romantic cities in the United States. These cities not only show strong housing markets, but are increasingly considered highly... More
Rent or Own? In today’s economy, the housing market can seem like a scary place. Before making your decision to either rent or own, here is a listing of the pros and cons of either option. Pros of... More
Commercial Leasing vs. Purchasing If you are looking at developing equity for your business, first consider your options of leasing versus purchasing commercial property. Performing market research in... More