Consumer Marketing 101: Customers relate the price of an item with the value. Just because a property has a high-ticket price does not mean the value is equally as high. When the market is hot is can be easy to justify paying more for an expensive commercial real estate option because we feel if the price is high, the value must be also. So what’s the catch? The assumed value does not always reflect the ticket price.
A common trap to look out for is for investors and sellers that will put lipstick on a pig. Try as they may, a little paint, carpet and updated finishes do not conceal or fully change the actual quality of the overall structure. Make sure that the added dollar signs actually represent features, upgrades or bonuses that are genuine and provide a basis for such a charge in the first place. Otherwise a Landlord can pull the wool over another Tenant’s eyes with a few flashy details.
Before you sign on the dotted line, ensure that all factors of the office space meet your needs and expectations. Here is what to assess:
- Location: If the market does correct, will this still be a desirable area?
- Goals: What are your long-term goals? A long-term lease or plan to move soon?
- Value: Always have an appraiser evaluate the building
Lastly, calculate and calculate again. Is right now really the best time to buy? Would it make more sense to lease? No one can answer that except without calculating and including IT, all moving expenses, updating marketing materials and the lengthy list of necessary costs. You may still find relocating and purchasing an office building is the economical decision or renewing your lease where you are now. Having a real estate advisor on your side can provide market insight when evaluation both options.