Your Choice in Office Space Will Impact Employee Retention in 2021

Offices in Jackson and around the nation have been evolving for decades. First, the cube farms of the 1990s were replaced by an open floor plan and surrounded by smaller office space plans. 

Then, in a new trend following Google’s example, we saw ping pong tables, stationary bikes, and bean bag chairs arrive at work. Recently, the stand-to-work movement took hold, and everyone needed the appropriate desks for that. 

We’re coming to the end of a truly bizarre year in 2020, and we can predict more changes happening in office layout and design in 2021. Your ideal new office space in Jackson will be easy to clean, socially distant, and well lit. Ideally, you’ll have access to some opening windows and natural light. Grubby ping pong paddles are outsneeze guards are in. And top talent is sure to have some caveats as they return to the office in 2021.

Today, we’re going to talk about the things great employees are looking for as they return to work. And for many, cleanliness trumps a steady paycheck. If you’re wondering how to select and design the best office space in 2021, read on. 

On the Future of Office Space Hygiene and Visitor Behavior

If you’re in the market for office space in the wake of COVID-19, know the best employees are going to have a different set of standards this year. The team at Speed Commercial Real Estate is two steps ahead of the game. We know what your staff wants more than anything this year: a meticulously clean office.

Frequent, professional office space cleaning is crucial this year. 

Schedule professional cleaners at the end of a shift, rather than on the weekends. This way, they’re arriving as employees leave. This will boost your staff’s confidence in a clean environment. Also, know that:

  • Office employees will be looking for designated workspaces — phone sharing is out.
  • They’ll also appreciate a hand sanitizing station in the lobby for visitors and gentle reminders (signage) that support social distancing. 
  • Therefore, new lessees should closely examine their office space options with a proper lobby in mind. 

Returning to work in an office space after a long time working from home (WFH), your employees will be less fit. They’ll have shorter attention spans in the beginning. Even though they’re excited to be back in the game, don’t expect a blast of high-productivity immediately. Spend a few days reviewing updated employee handbooks and post-pandemic best practices to help them get back in the groove.

And, you can boost their mood and morale by offering some new perks this year. 

A Focus on Employee Wellbeing in 2021

In 2019, Forbes Magazine published some interesting statistics provided by a Fellowes Workplace Wellness Trend Report. We find them even more poignant today:

  • 87% of employees surveyed would prefer an employer who offered wellness-focused perks. These could manifest as gym memberships, workout rooms (frequently disinfected), healthier lunch options, and sit-to-stand desk space. 
  • 93% of tech employees said they’d stay longer with employers who offered those types of perks. 

But there’s more to employee health than cardio! Noise issues and lighting are two more examples. 

Noise Pollution and Worker Productivity in “The New Normal”

Some of your staffers have been multi-tasking throughout the pandemic. They’ve somehow managed to homeschool children, be with their family 24/7, and still get their jobs done. By now, they’ve mastered the skill of focusing in a disruptive environment. 

What a relief it will be to work in a wholly professional environment, free of outside distractions and noise! You can take advantage of that feeling by creating a quieter office space, free of noise pollution

modern-office-space-with-no-people-and-couches-and-tall-windows-for-natural-light

Naturally, a bustling office is going to have a certain amount of background noise. Phones and faxes ringing, visitors chatting, the occasional rumble of a truck outside lends a certain “buzz” to an office that customers will respect. 

But excessive or continual sounds do affect the mental health and stress levels of your employees. Noise pollution can lead to an increase in disturbing emotions and a reduction in productivity. In the long term, it can cause headaches, increased stress, and higher blood pressure. 

If you’re re-homing your business in 2021, your goal should be a less disruptive office space.

By this, we mean the sort of place staff can arrive a little early and stay a little late, rather than checking the clock every five minutes of the day. From the employee perspective, constant disruption might be managed easier at home — which could drive them to seek a WFH position.

  • Pro-tip: ask the lessor or property manager to turn on the HVAC systems when you visit an office. A roaring AC might feel wonderful, but ask yourself if it will disrupt work.

Another aspect to consider is natural light and fresh air. 

On Sunlight and Employee Retention

Per the Harvard Business Review (HBR), the number one perk in any workspace is natural lighting

In 2018, HBR published findings by HR firm Future Workplace titled “The Employee Experience.” In a research poll of 1,614 employees, they discovered that access to natural light and picturesque views of the outdoors are the primary attributes employees seek in a workspace.

They found that sunlight and a view is more valuable than other highly-prized perks, including on-site daycare facilities!

Furthermore, they found that an absence of natural light and outdoor views in an office space damages the employee experience:

  • More than one-third of employees surveyed feel they don’t get enough natural light in their workspace.
  • Nearly half of them (47%) claim they feel tired or exhausted from the absence of natural light or a window at their office.
  • 43% report they feel “gloomy” because of the lack of sunlight. 

Research at Cornell corroborates these findings.  

Research by Professor, Dr. Alan Hedge of Cornell University, reinforces the connection between natural light with wellbeing and staff retention. His study found the optimization of natural light in an office significantly improves health among staff. Workers in office environments with plenty of sunlight reported a 51% drop in eyestrain incidence, a 63% drop in headache issues, and a 56% reduction in drowsiness.

Ultimately, we know that 2021 will be an unprecedented year for businesses. We’d suggest that companies take advantage of commercial real estate availability and seek the very best office space for their dollars. It will pay off in increased productivity among your staff and better retention rates. This is more important than ever this year, as we all know how difficult (expensive) it is to hire and train top talent. 

3 Exterior Upgrades to Reduce Turnaround Time at Commercial Properties

For CRE owners and investors, nothing is more important than a fast turnaround time between tenants. Let’s take a look at how exterior upgrades can help you achieve that.

Here at Speed Commercial Real Estate in Jackson, we work with commercial property builders, investors, and owners. We know vacant spaces burn resources. Today, we’ll take a closer look at those losses.

Then, we’ll show you the benefits of some finished exterior upgrades. Because an updated look (and an outdoor workspace) can help you keep CRE leased all the time, to the right sort of tenants, with only the shortest of turnaround times.

We’ll cover aluminum railings, wood-alternative columns, and outdoor pergolas (to bring the office outside.) But before we get into any of that, let’s get a clear understanding of the actual costs associated with vacancy.

How Much Does it Cost to Maintain Vacant Commercial Space?

CRE costs vary state to state, city to city, and even within a neighborhood. A vacant high-rise in Los Angeles is undoubtedly going to cost more to maintain than an empty space in Nebraska. Here in Jackson, we’re lucky to have some of the most reasonable CRE in the nation. 

Regardless of location, CRE investors are all going to face the same types of overhead costs associated with vacant units:

  • Property Insurance & Liability — Whether currently leased or not, you’ll need adequate insurance coverage in case of fire or other perils. From your insurer’s perspective, vacant properties bring added risks (like squatters), which in turn, bring an increased risk of fire, vandalism, malicious mischief, and injury. If a commercial space is vacant for more than a few months, your commercial property and liability insurance rates are likely to increase substantially!
  • Property taxes — Whether it’s leased or not, your state will still be looking for property taxes. 
  • Utilities — Vacant CRE still requires minimum utility costs. Water, electricity, gas… utilities add up! Most landlords can’t turn off utilities at a commercial unit, because this brings a risk of other maintenance issues like frozen pipes or vandalism in an unlit space.
  • Security — Depending on your location, security services at CRE locations can cost well over $1 per square foot every month.
  • Vacancy fees to property management  Not all property management companies charge a vacancy fee, but according to Upkeep Media, those that do usually charge an average of $50 per month, per unit. These add up quickly. Five vacant spaces would cost you $250 a month. 

As you see, vacant CRE costs landlords more than just the loss of rent.

Now, let’s switch gears and talk about updating your exteriors. 

How Quality Exterior Upgrades Reduce Turnaround Time at Commercial Properties

In the US, the commercial real estate industry is worth about $1 trillion. It was a hot market before COVID-19, and this time last year we expected the CRE market to grow about 4% annually for the next few years.

Obviously, things have changed. COVID has struck down many small businesses and forced them to shutter their doors. But remember, there is always a Renaissance after a pandemic. Rather than spending time chasing the almighty dollar running loops in the rat race, future entrepreneurs are sitting at home, honing their skills, imagining new concepts, products, and services to bring to the world.

When this pandemic situation is finally over, you can expect a surge in artisan works and entrepreneurship. These folks will be a whole new generation of entrepreneurs. They’ll need CRE.

And these young businesses will be choosy about their space! American consumers are better educated than ever before. We have technology at our fingertips 24/7, and can do the initial research for office space or warehouse space from our living rooms.

In such a “techy” and artistic climate, young business will make significant investments in their company image. And both the neighborhood they choose and the commercial buildings they ultimately select will speak to their uplifted ideas.

What Will Commercial Tenants Look For After COVID-19?

When shopping for a new location to lease, most business owners consider details like:

  • Location & accessibility to infrastructure 
  • Operational costs and utilities
  • Usable square footage and a pleasing layout (both inside and out, more on that in a moment)
  • Affordability and fair rental value 

Furthermore, tenants are more concerned with the environmental aspects of their location than ever. They’re likely to ask questions about water usage, energy efficiency, recycled building materials, and anything else that reduces their organization’s carbon footprint

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Ultimately, prospective tenants are looking for commercial real estate that will uplift their image, for the sake of both employees and customers.

For all these reasons, it’s time to give your CRE some exterior upgrades. Even if you just renewed the five-year-lease for a quality tenant, exterior upgrades are sure to help keep them around.

After all, the best tenant turnaround time is none at all!

The Best Exterior Upgrades For Commercial Real Estate

We’ve put together a list ranging from basic exterior upgrades to the more luxurious architectural finishes. 

1. Updated Aluminum Railings: Affordable Exterior Upgrades For Beauty, Safety & Code Compliance

New aluminum railings should feature clean and classic lines that enhance any CRE. We suggest you select an American-made aluminum railing extruded from 6063 aluminum alloy, as they never rust. 

  • Black aluminum railings will provide a subdued, professional appeal in any commercial setting.
  • Or, choose lighter neutral tones for an uplifting, outdoorsy appeal.

2. Non-Wood Columns: Stately Style With a Limited Carbon Footprint That Appeals to Tenants, Their Employees & Customers

Solid wood columns are a beautiful way to uplift your building’s appearance instantly. Your tenant and their customers will appreciate the notion of luxury and quality. This translates to improved branding and enjoyable customer experience. (The things that matter to your tenant.)

But green-minded organizations might be concerned that wood columns increase your property’s carbon footprint. After all, it isn’t just the use of wood to create the columns, it’s the ongoing treatments and paint that could potentially affect a consumer’s opinion.

From a landlord’s perspective, the continual investment — both funds and maintenance man-hours — to keep wood columns looking their best isn’t appealing either. That’s why the staff at Speed would suggest you look into wood alternatives. 

Wood and Stone Alternatives — Columns for Commercial Property

Columns are a gorgeous way to instantly uplift your CRE’s curb appeal. You already know that better curb appeal equals a better class of tenant and higher rents.

The Benefits of Architectural Fiberglass Columns 

Fiberglass columns are an outstanding one-time investment for Jackson-area commercial property owners because they are:

  • Lightweight
  • Water resistant
  • Rot resistant
  • And they require no special maintenance

Architectural FRP Fiberglass Columns

For larger commercial applications, FRP fiberglass is used for load-bearing exterior columns that are 16″ or greater in diameter. They are also rot and water-resistant, and require no extra investment in maintenance. They might seem expensive now, but FRP fiberglass columns will last a lifetime.

Polymer Stone Columns

Polymer stone columns have the look and feel of real cast stone, but they weigh about 50% less than standard stone columns. 

We know the choices in architectural columns can be overwhelming. Check out this column builder tool to explore your design ideas. 

3. Pergolas Create Usable Outdoor Space for Offices, Restaurants, and Retail Settings 

We’ve already touched on the importance of a quality work environment within your CRE. Your tenant needs to hire and retain employees. Know that your best prospective tenants take work environments very seriously. In the wake of COVID-19, more people will be attracted to outdoor workspaces.

  • The CDC says Coronavirus spreads much more slowly outdoors
  • Employers will be eager to use outdoor workspaces as a perk to poach top talent

So, the next hot trend in CRE design is workable outdoor office space. Across the nation, architects and organizations are already seeking ways to encourage employees to work productively outdoors. Exterior upgrades in the form of open-air spaces at your CRE are the next evolution your commercial real estate should undergo!

We think Amanda Bahn and Dawn Reinard of Workspace Interiors / Office Depot say it best: “Aside from providing a breath of fresh air to traditional corporate settings, the concept of working outside also ‘works’ from a wellness perspective… outdoor workspaces literally bring the office outside.”

So bring the office outdoors to attract quality tenants next year.

In closing, the CRE market in Jackson, MS is experiencing the calm before the storm. When it comes to COVID-19, know that this, too, shall pass. And once we’re on the other side of this experience, the market will be bursting with fresh new entrepreneurs who need top-notch CRE. 

Industrial Property Leases 101

Industrial property leases are different from residential leases. Today, we’ll cover different types of commercial / industrial property leases you might find here in Jackson, MS. We’ll try to touch on everything you should know before getting involved in an industrial property lease.

This article is geared towards inexperienced lessors / lessees. If you’re a young entrepreneur expanding out of your garage, or a future CRE mogul looking to build a commercial property empire in Jackson, you’re in the perfect place! If you’re an expert in property management already, visit our other blogs for more advanced topics. 

Let’s get started with a few basic definitions. 

Language Used in Industrial Property Leases, For Newbies

You’ll need to be familiar with these terms as you move forward with a commercial property lease.

The lessor is the owner of the commercial property. The lessor can be a human or an organization. Any specific responsibilities they have will be in the contract, so read it thoroughly. These could include issues like:

  • Security
  • Property taxes
  • Cleaning services
  • Landscaping / gardening
  • Certain utility bills
  • Building upgrades
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The lessee is the person (or business) who is leasing the property. In addition to paying the rent on time, the lessee might be responsible for:

  • Property taxes
  • Utility bills, wholly or partially
  • Property insurance or business insurance

The agreement between the property owner and the lessee is a contract, and it is legally binding. For instance, if your commercial property lease spells out that you’re responsible for the property taxes, and you neglect to pay them, you can be sued by the property owner.

Elements of an Industrial Lease Contract

Since industrial property is used differently than a home, commercial leases have more components, and contracts are specific to each tenant. There is no required format for the contract, but most cover these elements:

  • Leases can be short-term or long-term. They can last for 30 days or two years. Regardless of the length of the lease, it will have specific beginning and end dates.
  • An industrial property lease will specify the cost of rent, usually monthly. Remember, some landlords include property insurance and taxes in the rent, others don’t.
  • The lease should designate which party is responsible for repairs.
  • It should clarify who is responsible for paying for building maintenance.
  • The lease will usually include specific language about subleasing or conditions of default that can protect your business. Subleasing / subletting is the act of renting out a portion of the property to a third party — like renting one room of the industrial space to your brother-in-law for profit. This may or may not be allowed. 

Most leases include a section that discusses your options for renewing the lease after a certain length of time. Your future renewal terms are usually somewhat negotiable with the lessor, especially if you’re a quality tenant who pays the rent on time. But they are an essential guideline for your long term business plans.

Now, let’s get into industrial lease contract types. 

Types of Industrial Property Leases

Again, commercial property leases may work differently than a typical residential lease. As an entrepreneur, you should understand different types of industrial property leases. This will make your discussions with the property owner more comfortable and help you decide which type of lease will work best for your business.

Per Indeed.com, common lease types are:

  • Full-service: the tenant is only responsible for the rent. The landlord covers all other costs associated with the property. This is the most common type of industrial lease. It provides the most protection to tenants. (We’ll talk more on that in a moment.)
  • Single net lease: the tenant pays for rent and property taxes.
  • Double net: the tenant pays for rent, property taxes, and property insurance. 
  • Triple net: the tenant is responsible for rent, insurance, taxes, and property maintenance costs.
  • Percentage: the tenant pays a pre-determined base rent, plus a portion of their overall sales. Percentage leases are more common in retail spaces, but they’re not unheard of in the manufacturing sector.

If this is your first time leasing industrial space, you’ll probably be most comfortable with a full-service contract. This leaves you with a single rent payment and no concerns about the landscaping, roof repairs, property insurance or taxes. 

However, full-service leases do come at a cost! If money is tight (when is it not?) you might find a more affordable option with a single, double, or triple net contract. An overwhelmed landlord might be eager to shrug the responsibilities of taxes and maintenance. Still, as commercial real estate pros, we’d suggest you move forward very carefully with these types of contracts. Building maintenance and repairs can get costly — and savvy lessors know it.

It’s important to look at several industrial spaces in a neighborhood before making your choice. Even if you don’t know the contracts’ specifics at each property, you’ll get a good idea of the price per square foot and amenities available.

Then, it’s time to get down to the brass tacks of negotiation.

Negotiating the Lease

You don’t need to accept the first contract a landlord offers. Here are a few tips for negotiating industrial property leases:

  • Read the entire contract, ask questions, and sleep on it before you sign.
  • Landlords can hide fees in complicated “legalese.” Get a lawyer or CRE professional involved.
  • If a landlord is firm on rent price, you might be able to negotiate for extra benefits, like an allowance for renovations.

Finally, remember that you don’t need to be a lawyer to lease a great industrial space. 

Here at Speed Commercial Real Estate in Jackson, we know that most lessees aren’t attorneys. If you don’t speak fluent “legalese,” that’s okay! The staff at Speed is ready to help you understand industrial space leases and negotiate the best bang for your buck. Whether you’d prefer a massive, modern facility or a historic property, we’re ready to help you find the right Jackson area industrial space. So let’s talk!

Related Reading & Resources:

Indeed.com: An Entrepreneurs’ Guide to Leases for Commercial Property

NeighborhoodScout.com Jackson, MS Appreciation and Housing Market Data

How a Post-COVID Economy Affects the Commercial Real Estate Market

Commercial real estate (CRE) is an investment. And like most other long term investments, CRE investors will experience exuberant heights and terrifying lows over a long enough time. The plunging economy brought about by the COVID-19 pandemic, coupled with civil unrest and political concerns of a historic election year in the US, is an example of one such valley. 

But all is not lost. 

While closing businesses and reducing tenancy is a hard strike against our bottom lines and limits our cash on hand, it offers unique opportunities for cheap growth for savvy investors. Opportunities might manifest as extremely affordable property available on the commercial real estate market. Or, this might be an ideal time to make building upgrades and increase the value of your CRE, as contractors are bidding quite competitively for your business. 

Today, we’ll explain how the invisible hand of the market affects commercial real estate values, with a particular look at our local market in Jackson, MS. We’ll start with a light review of how COVID-19 affected business overall. We know it’s still fresh in your mind, so we won’t bore you with repeat information. Instead, we’ll focus on the most significant changes and some noteworthy details.

As always, if you’d like to know more about commercial real estate in Jacksoncontact us

How Quickly COVID-19 Hammered Businesses Around the Globe

In December 2019, scientists identified an outbreak of a new strain of coronavirus in Wuhan, Hubei, China.

  • It rapidly grew from regional outbreak to epidemic, and was recognized as a pandemic by the World Health Organization (WHO) in March 2020.
  • The pandemic led to socioeconomic disruption on a global scale, as infection numbers and deaths ballooned.
  • Drastic action was taken to suppress the outbreak.
  • Here in the US, many states issued shutdown orders, social distancing requirements, quarantines, and isolation. 

It was this forced shutdown that struck our economy hardest. And while it’s difficult to qualify (annual reports aren’t available yet), it seems like the most significant downturn for commercial real estate occurred during the summer. This makes sense, as an estimated 20 million Americans had lost their jobs by April, per BusinessInsider.com. Only a month had passed since COVID-19 had been declared a pandemic.

By summer, many CRE investors were feeling the slump. Ron Derven of The Commercial Real Estate Development Association (NAIOP) said “The pandemic directly impacts the demand for space through quarantines, social distancing, shutdowns, supply chain disruptions, employment loss and a shattering of consumer confidence…”

Industries Hit Hard by COVID-19

The industries hit hardest in the US were:

  • Travel, hospitality and leisure
  • Personal care services, like salons and spas
  • Full-service restaurants

And many other sectors felt the impact negatively — ranging from dentists to movie theaters.

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However, a few industries were able to capitalize on the pandemic. Warehousing, logistics and transportation companies did well, and online retailers continue to make a killing. Online entertainment, forums, social media, and games have experienced tremendous leaps in business since the pandemic began — to the tune of a 71% increase in online ordering.

So, while commercial real estate for day spas and restaurants sits unused, warehouse space and manufacturing operations are booming.

Now that we’ve cycled through the highs and lows, let’s take a closer look at the invisible hand — and how it’s affecting commercial real estate prices in a post-COVID world.

The Invisible Hand of the Market

Investopedia.com says it well: “The invisible hand is a metaphor for the unseen forces that move the free market economy. Through individual self-interest and freedom of production [and] consumption, the best interest of society, as a whole, are fulfilled.”

“Seeing” the Invisible Hand 

The invisible hand manifests as price changes that affect consumer behavior. When gas prices soar, commuters buy fuel-sipping vehicles, limit their driving, and combine trips to save gas. Suddenly bicycle sales increase and traffic is less congested.

Or, let’s imagine your favorite brand of coffee is on sale. You might be motivated to stock up your supply. If the price of your favorite coffee increases drastically, you will eventually face a point where you feel forced to say “that’s too expensive” and buy another brand. So we can feel the invisible hand at work when a product becomes too expensive or when we pay more for a product that we perceive to be better. 

The Invisible Hand at Work in Commercial Real Estate

In the realms of commercial real estate during an ordinary year, we can imagine the invisible hand affecting prospective tenants’ choices as they:

  • Negotiate price per square foot of office space for rent
  • Rush to accept “first month free” deals, or move-in specials
  • Move from one commercial location to another for the sake of upscale appearance or branding

We can also imagine commercial real estate owners hoping to lure a better grade of tenant or higher rents during a typical year. They might look into landscaping improvements, a security service, a fresh coat of paint or new architectural elements. Any time you’re adding perceived value to a commercial property to attract business, you’re attempting to sway that invisible hand. 

Looking Ahead: How a Changed Economy Affects the Commercial Real Estate Market 

Here in Jackson, salons, restaurants and retail boutiques have shuttered since the pandemic. Once-coveted restaurant space is now overabundant. However, when social restrictions and shutdown orders finally lift for good, there will be a leasing rush as newly unemployed individuals become entrepreneurs in the food industry.

Online retailing, on the other hand, has blown up! It won’t stay that way forever, though. After the 2020 holiday shopping rush, we suspect a significant slump in online sales. We believe that the American consumer will finally have had enough come 2021.

Here are a few more post-COVID CRE notes you should know:

  • Warehousing space is at a premium. So are small office spaces and shared office space.
  • Major employers who pay a homebound workforce are pleasantly surprised by their lower overhead costs. They will be looking for more shared office space opportunities than large office spaces. 
  • We can expect to see a reduced market for massive conference rooms in the wake of social distancing. It might be time to split up large meeting rooms into smaller, socially distant, individually affordable offices for now. 

Is Commercial Real Estate a Good Investment After COVID-19?

Absolutely!

Just know that every investment comes with a certain amount of risk. Commercial real estate is so attractive because it has a history as a steady earner and insurable against many loss types.

We know that 2020 has been an unprecedented year in the world of CRE, but there’s still more to come. The Speed Commercial Real Estate staff would encourage you to take advantage of cheap commercial property prices and eager contractors to build your CRE empire. Get in touch if you’d like to learn more about commercial real estate in Jackson, MS, as an investment for your future. 

Related Reading & Resources:

Fraser Federal Reserve: Timeline of Events Related to the COVID-19 Pandemic

Globest.com: The Consequences of Making Real Estate a Commodity

5 Reasons to Consider a Flex Space for Your Business

If you’ve been hanging around real estate circles these past few years, you’ve probably come across the term Flex Space. But what does it mean, and how can it work for your business? 

Well, people are no longer shying away from embracing new ways of organizing corporate spaces. They want solutions that are more efficient, cheaper, and that offer the flexibility necessary to survive in the 21st-century business world.

For years now, businesses would rent real estate spaces that are fixed for particular purposes on long term leases of about ten years. For example, a company would separately lease a warehouse and its office spaces on long term leases. This layout has been the norm for several years. However, it won’t be long before such a business runs into some challenges with this layout. These may include:

  • Wasted warehouse space when demand expands and goods fly off the shelves
  • Wasted office space when the staff become redundant
  • The need to upgrade for more space when demand falls
  • Lack of flexibility when the contract no longer works in favor of the business

What is Flex Space?

 A Flex Space is a form of commercial real estate with a warehouse, office, and retail space. It is usually a sizable warehouse-style building with a built-to–spec office space and a shorter lease than a traditional office.

A Flex Space setup is becoming more attractive to investors who find short term leases more convenient than long term leases. The ability of a Flex Space to easily shift from one purpose to another also endears it to real estate clients.

What Sets Flex Space Apart From Other Real Estate Options?

Over the past few years, commercial real estate has generally fallen into two broad categories: traditional office spaces and flexible office spaces. But what separates flexible office spaces from its contemporary counterpart? These are but a few differences that make Flex Space unique and worth consideration: 

1. Length of the Agreement Terms

Traditional office spaces were leased in terms of about 7-10 years, depending on the business operations. Flex Spaces, on the other hand, are leased from about seven months to three years. All of this depends on how long your commercial lease should be. Real estate experts go even further and classify all real-estate options that are leasable for less than three years as part of flexible real estate. This is regardless of whether they are traditional office spaces or flex spaces.

2. Co-working and Shared Spaces 

One characteristic common with traditional office spaces is that they are leased by one company. It is uncommon to find a traditional office space or warehouse shared by two or more companies. Not with Flex Spaces. Most Flex Spaces are shared and collectively leased by multiple companies or businesses. Flex Spaces have become a staple for any business that uses the internet or co-working for its day-to-day operations.

 3. The Ability to Share Amenities

The fact that Flex Spaces have shared spaces has led to shared amenities. Depending on the type of Flex Space you choose, there will be a wide range of amenities available to all tenants. These amenities may include free Wi-Fi, coffee, and lounges. The ability to share amenities does not exist in traditional office spaces.

4. Lower Startup Capital

Before a business sets up a traditional office space, there is a lot of investment required just to get the office space running. These expenses include wiring, design, furniture, office devices, and many other things necessary for running an office. Flex Spaces, on the other hand, only require an initial payment; the Flex Space offers all the design, furniture, and office devices.

5. Multi-Functional Flex Space

Unlike traditional office spaces, Flex Spaces have been designed in such a way that they can perform multiple functions. A Flex Space can serve as an office, a retail center, a research center, or a warehouse with little to no modification.

Why You Should Consider Using Flex Space

man-and-woman-shaking-hands-from-across-table-with-other-business-professionals-nearby

Considering a Flex Space as an option will come with various benefits for your business. Most of these arise from its flexibility as compared to traditional office spaces. Some reasons that should have you thinking about Flex Spaces are:

1. Scalability

Embracing Flexible Spaces as a real estate option offers your business the ability to grow or contract its operation depending on the circumstances. If your company expands and requires a few more feet of office space, that is a phone call away. On the other hand, if you wind down operations in one area and require a smaller space, your Flex space has you sorted.

2. Little To No Initial Costs

The initial costs of setting up a new corporate space can be massive. Funding the furniture, the design, and amenities – added to the monthly maintenance costs, can take a toll on a business. With Flex Spaces, your firm does not have to worry about initial costs, as there are little to none. You only have to worry about rent depending on what dictates commercial rent prices in your area.

3. A Sense of Community

Compared to working from home or remote working, the shared spaces in Flex Spaces create a sense of community and teamwork. One obvious downside of remote working is that it detaches workers from their teams and firms. Flex Spaces, however, create a sense of belonging and motivation between working employees.

4. Improved Networking

Flex Spaces where various companies or workers co-exist create environments that encourage the sharing of ideas. Like-minded entrepreneurs can meet and brainstorm new ideas as other employees make friends and socialize.

5. Contract Flexibility

The brief nature of Flex Space contracts gives your business wriggle room whenever things don’t go your way. The real estate market is volatile; nobody knows how coronavirus will affect the real estate market. A ten-year contract can mean that you are stuck with that real estate agent for a long time. A three-year contract or a twelve-month contract is, however, less binding. Whenever you feel like the location is not working for your business, you can always opt-out.

5. Space Flexibility

The ability of Flexible Spaces to shapeshift into different spaces is a crucial benefit to many businesses. The fact that Flexible Spaces can serve other purposes with minimal adjustments makes them a Godsend to several firms.

The Key Take-Away

If you’re interested in Flex Spaces or more information about Real Estate options for your business, Speed Commercial Real Estate is the place for you. We have been giving answers to the real estate clients of the Jackson Metro area for years now. For more information, contact us today, and we will be more than willing to help.

10 Factors To Consider When Choosing A Warehouse in Mississippi

If you are contemplating investing in a warehouse in Mississippi for your business, you are not alone. Demand for warehouse space is on the rise in the Magnolia State, with the Jackson industrial market now spanning 40 million square feet. But if you’ve never purchased warehouse space before, you may not know where to start.

The good news is that the selection process is easier than it may seem. The key to choosing the best warehouse for your operations is to reach out to an experienced commercial real estate professional who can help you evaluate local prospects. Additionally, it’s a good idea to consider the ten factors below as you compare available options.

1) Size

Size is perhaps the single most important variable to consider as you launch your search. Ideally, the warehouse you secure should be large enough to comfortably accommodate your inventory, equipment, and employees, while providing room for growth. Here are some questions to ponder:

  • How much space will you need for employee workstations?
  • What type of clearance is required for cranes and other loading and lifting devices?
  • How much, if any, inventory do you plan to store in your warehouse?
  • What are your plans for growth or expansion in the next 1-5 years?

2) Cost

The cost of warehouse space tends to increase along with square footage, amenities, and location. Many first-time warehouse buyers are surprised to see how much money they can save by choosing a location that’s rather far from popular business centers and industrial parks. But before you commit to a warehouse that’s off the beaten path, remember you want to remain accessible for employees, clients, and visitors. Additionally, you’ll want to inquire about any taxes you will owe, as this may ultimately influence your decision.

3) Loading and Receiving Docks

If you receive or ship freight several times per day, you will need a warehouse with at least one loading dock – preferably multiples. Otherwise, your pickups and deliveries could rapidly begin to stack up. If you already handle multiple incoming and outgoing shipments each day, it’s best to choose a warehouse with at least two loading docks – one for your incoming receivables and one for your outgoing orders.

4) Office Space Needs

Not all warehouses feature office space, so it’s important to take a few minutes to sit down and make a note of any employees who will require an office or cubicle. If the majority of your office staff works remotely, your breadth of options will significantly increase. Otherwise, you’ll need to choose a warehouse in Mississippi with existing office space or gather the resources to build interior offices on your own.

5) Accessibility

Fast, timely deliveries are a must in today’s world of impatient consumers. While there may always be a few variables beyond your control, you can help ensure that orders are received and shipped on time. One of the best ways to achieve this goal is to choose a location that is not too far from interstates and main thoroughfares. The less time your orders spend in transit, the faster your customers will receive them.

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6) Climate Control

Climate controlled warehouses offer a host of advantages. They help keep inventory from spoiling or becoming moldy, while also helping to preserve the integrity of your products and equipment. And with average high temperatures in Jackson often exceeding 90 degrees during the summer, you can help keep your employees cool by choosing a warehouse with climate control.

7) Security

As a business owner or operator, it’s up to you to provide a safe, secure environment for your employees and visitors. Some warehouses in Mississippi are already equipped with integrated LED emergency lighting, security systems, and alarms. Other facilities may have outdated security features or lack them entirely. An experienced commercial real estate agent can often provide recommendations in this area.

8) Parking

If you have a large fleet of vehicles you regularly use, or if you have a large number of employees who drive to work at your warehouse every day, you need to choose a site with plenty of parking available. Remember, you will also need to reserve some open spaces for clients and special visitors, so it’s better to overestimate the parking space you will need as opposed to underestimating your parking needs.

9) Proximity to Ports and Airports

Are you planning to expand your business internationally in the near future? Have you noticed that you are receiving more overseas products than ever? If so, proximity to airports, railways, and ocean ports is a huge plus. You may wish to consider a warehouse that is located on the south side of Jackson to help get your shipments to port faster. And if you handle a large number of small parcel shipments, it’s helpful to have a location near a UPS or FedEx facility.

10) Room for Growth

If you are like most Mississippi business owners, you are focused on growing your revenue and expanding your business. When evaluating warehouse options, make sure you aren’t overly conservative on the space you will need – especially if you anticipate significant growth. Also, if you plan to add new cranes or other industrial equipment over the next few years, make sure you select a space with plenty of overhead clearance and room to operate heavy lifting devices.

Finalizing Your Selection

Clearly, there are many factors to consider when choosing a warehouse in Mississippi for your business. The single best way to ensure you choose the best warehouse for your business is to contact us at Speed Commercial Realty. For over 17 years, business owners have turned to us for professional guidance when securing warehouse space.  

When you reach out to our team at Speed, you will receive the personalized guidance you deserve. Our team of licensed commercial real estate agents will take time to listen to your needs and discuss your budget. Then, we will present the warehouse options that will satisfy your business demands without breaking the bank. We look forward to helping you find a warehouse in Mississippi that will take your business to the next level of success!

How Much Does It Cost to Rent a Retail Space?

Whether you’re just starting out or looking for a new, larger space as you grow, there are certain factors to consider when looking for the ideal location to rent a retail space. From the average cost of renting in your area and rent-to-income ratios to the average amount spent in your industry, the following are some of the ways to determine how much it will cost to rent a retail space that is perfect for your business.

The Average Cost to Rent a Retail Space in Your Area

The first aspect that influences the total cost of renting a retail space is the average cost of spaces nearby. As you can imagine, rent will vary largely. The cost to rent varies between cities and between areas within cities. The rent will also differ between industries.

In addition to looking at local spaces for rent, try to speak with local business owners. Also, ask a real estate broker about the average cost and the different factors influencing those prices. It’s also important to confirm whether a price listed is by square foot per year or per month. You don’t want to end up with an unpleasant surprise that far exceeds your initial calculations.

Location is Vital to Rent a Retail Space Successfully

Different types of buildings in different areas can come with very different costs. For example, if you’re looking for a nice area to rent in Jackson, Mississippi, you may end up paying as much as $28 per square foot per year. A more modest retail space in a less popular area could be as little as $10 SF/YR. For a space of around 1,500 square feet, this would translate to anywhere from $15,000 to $42,000 per year or $1,250 to $3,500 per month.

If an area seems too expensive at first, consider how the expense might be worth it. If you can attract enough customers and earn enough to make it profitable, it may still be a good choice.

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The Cost of Common Area Maintenance, Taxes, and Insurance Premiums

In addition to the rent amount listed, consider other expenses that will add to that monthly or yearly cost. For instance, your landlord may charge you for utilities, insurance premiums that they currently pay, property tax, and what is known as “common area maintenance”. This entails maintenance of all rented property including the facility, parking lot, side lot, or any other designated common area.

Keep in mind that these costs could be steep and potentially even equal the rental price.

Use Unit Economics to Determine What You Can Afford

Considering all the potential costs of moving to a retail space, it’s important to figure out how much you can actually afford before settling on the ideal location. You may have enough to cover the costs of renting and all other expenses piled on. Still, ask yourself if the move to the new location will be profitable or hold you back in the long term. One of the best ways to gauge the affordability of a retail space is to look at unit economics. What you sell and how much revenue you earn or are projected to earn could also factor into your decision.

Rent a Retail Space with Customers in Mind

As an example, you might sell a product that goes for around $15, but it costs you around $8 to manufacture and sell. This puts you at a profit margin of around 53 percent. Use the cost per acquisition of a customer to help gauge the affordability of a retail space. Let’s say that it costs around $50 to acquire a customer with all costs of the product, marketing, and sales. If that customer spends an average of around $80 each time they buy from you at your location, that’s a $30 profit per customer.

Find the amount of predicted revenue that you’re likely to make every month. Then, use this to calculate the total amount that the retail space would cost you comparatively. If your monthly income is around $60,000, for instance, and your rent per month is approximately $10,000, that means that rent costs about 16.6 percent of your monthly revenue.

Consider Potential Changes in Revenue and Costs

Depending on your situation, you may find that your monthly or yearly revenue fluctuates. Consider the patterns that you’re used to seeing or the projected growth that you’re expecting to experience. Use this information to help you determine whether moving to a new retail location is the right decision. You may find that it’s best to keep shopping around for another prospective location. Or, delay the move until you can gather enough funds and resources to make the transition as comfortable as possible.

Also, consider different costs based on your industry. According to Austin Tenant Advisors, retailers should limit rent to around 5 to 10 percent of their gross annual income. A law firm may be able to afford higher rental rates of around 15 percent of their yearly revenue.

Every location and every business will be different. Take the time to determine which location is best. Consider your business’s specific needs and what you can actually afford. If you find that moving to a new location will only enable you to break even without seeing any real profit, consider looking elsewhere. Or, allow your company to grow before making the big move. You might be excited to conquer new ground and open a new location to attract more customers. However, it may require some time and thorough research before you can realize that dream.

If you would like some help finding the right retail space for your business, contact Speed Commercial Real Estate. We’ll work with you to locate the right property for your company, whether you’re a new business looking for your first physical store or a well-established company scouting a new location.

How Much Does it Cost to Rent an Office?

If you’re wondering how much it costs to lease or rent an office space in Jackson, there is no short answer. The cost of commercial office space for rent is based on several factors like office size, neighborhood, and architecture. 

This article is for entrepreneurs and small business professionals on the quest for quality office space for rent. If you’re starting your own business, opening a satellite office in Jackson, or taking your homegrown business from the garage into an office for the first time, you’re in the right place!

Here, we’ll cover the various details of office spaces that will affect your cost to lease them. From square footage to architecture, we’ll explain these key features and propose questions you should consider along the way.

Now, know that office space in Jackson, MS, is some of the nation’s cheapest. Should you have questions beyond this article’s scope, reach out to the team at Speed Commercial Real Estate

Commercial Office Space — Size Matters!

It makes sense that square footage — we’re talking about the actual, usable floor space — will directly impact the cost to rent an office. All other factors aside, more room costs more money. Generally speaking, the rent at a 1,000 square foot office will be half the price of a 2,000 square foot office in the same building on the same floor. 

However, the price per square foot varies greatly from city to city, block to block, and even from one building to the next! So, what else affects the price of office space for rent? You’ve heard that old real estate adage before: location is everything.

Location Affects the Cost to Rent an Office Space

You’re probably aware that office space in some cities is incredibly expensive.

  • Across the nation, the office space costs anywhere from $10 to $55 per square foot.
  • New York City, Los Angeles and San Francisco all have a reputation for expensive office space. 

At the time of writing (August 2020), respectable office space in D.C. might cost $50.00 per square foot. In Miami, the same space might cost $33.00, and in Boston $22.00. Jackson is known for extremely affordable office space, sometimes as low as $5 or $10 per square foot! 

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A Closer Look at Location

There is far more to a location than the city and state, and this rabbit hole goes much deeper. The local amenities, neighborhoods, and noise levels can have a lot to do with office space costs. If you’re shopping for office space to lease, make a list of key features and amenities.

We realize that every organization is different, but depending on your business, you may need:

  • Easy access to highways, airports or shipping infrastructure
  • Quick access to a post office box, or cargo company
  • Access to either unskilled labor or an educated workforce 
  • Public transportation systems for employees or customers
  • Parking for your team or your customers
  • High-speed internet access
  • Wheelchair accessibility
  • Appealing landscaping
  • Easy access to office supplies

And let’s not forget that a gorgeous view from your office is worth something, too!

Naturally, an online-only “eBay store” can operate in a back room. A brick-and-mortar operation that requires foot traffic (like a boutique or salon) will need quality frontage with curb appeal and options for signage. 

The safety of a neighborhood is also crucial for some businesses. If your business model requires you to keep a lot of cash on hand, store credit card information, or maintain expensive equipment, be sure to spend some quality time — in person — in the neighborhood.

Choosing the right community for a retail operation, in particular, will require boots on the ground.

  • For the sake of your employee productivity and customer experience, you should also consider how much natural sunlight a commercial space gets, and the noise pollution happening around the office.
  • We all know that healthy workers are productive, and natural sunlight has been proven to boost employee productivity in dozens of studies.
  • We also know that noise can reduce output and cause good employees to leave.

As you can imagine, the loft space above a noisy factory might be economical, but will you want to work there? If you leave the office every day with a tremendous headache, will you renew the lease next year? Probably not. 

So you see, details like this have a considerable impact on your cost to rent an office — and the cheapest office isn’t always the best choice.

On Neighbors & Neighborhoods

The neighborhood you choose to do business in says a lot about your organization.

When browsing for Jackson office space online, ask yourself:

  • Should your office be found in an industrial neighborhood or the swanky streets downtown
  • How close do you need to be to suppliers?
  • Does foot traffic matter to your business plan? 
  • How close are your competitors?

Convenience plays a role in the price of office space, too. High-end, marble-floored offices near the courthouse are appealing to attorneys and are priced accordingly. Speaking of marble floors, let’s move on to those kinds of architectural details that can affect the price to rent an office. 

Lastly, Consider Architecture, Design, and Historic Buildings

Sparkling new commercial office space will undoubtedly cost more to lease than the same square footage in a run-down building.

There are benefits to leasing a new office space.

  • For instance, you can be confident that the electrical system can handle dozens of servers, and that the HVAC system can keep them cool.
  • You can also trust that this commercial building was built according to Mississippi safety codes — meaning safe stairwells for your staff and quality roofing over your inventory.  

But there’s something to be said for recently renovated historical buildings, too.

  • Once remodeled and brought up to code, historic office buildings can lend unparalleled ambiance and dignity to your office.
  • If you work in financials, insurance, or the legal profession, what could be better than a beautifully renovated historic office space? 

Ultimately, every small business has a unique angle, and so does every office space for rent. The perfect office will help you attract the right staff and the best customers. Whether you need a high-tech facility or a cozy back office, reach out to Speed Commercial Real Estate today

Related Reading & Resources:

Priceithere.com: How Much Does it Cost to Rent Office Space?

Marketwatch.com: Here’s How Much Your Company Pays to Rent Office Space

What Affects the Value of Commercial Real Estate Properties?

The commercial real estate market is continually evolving and reacting to changes that occur over time. If the goal is to purchase commercial property, you need to be aware of all factors that could cause an increase or fall in real estate values. The following are the most significant factors to consider before your next purchase to ensure you stay ahead of any value fluctuations. 

1.     Location

The location of a property is crucial and has a large impact on the value of commercial real estate properties. Location comes with varying elements to consider, the first of which is surrounding properties. If, for instance, your top pick rests in an area with other similar properties in terms of amenities and square footage, you are likely to get almost uniform increases or decreases in property values.

Take, for instance, the neighborhoods in the Downtown, Virden, and Belhaven areas of Jackson. Properties in these areas are often used for rental purposes. Occasionally, you’ll find that sizing in terms of square footage is similar. Their real estate values appreciate and fall based on the location, with the current rent being between $1,043 and $1,141 a month.

Commercial Real Estate and Accessibility

Transportation is another aspect to consider. This mainly involves access to highways and freeways, transit systems, and parking. Additionally, consider the number of vehicles that pass by daily. More traffic means more exposure for a commercial property and will increase real estate prices.

Vehicle ingress and egress is the last aspect affecting the location of real estate properties. Simply put, this refers to the ease of entry and exit. If a property has direct and easy access systems, it will likely come at a higher price than one which is difficult to access. The ability of vehicles to make turns also comes in handy. This results in more value for a property with easy maneuverability.

2.     Supply and Demand

Real estate is also subject to the laws of supply and demand, which state that if supply exceeds demand, commercial property prices will fall. In this situation, a buyer’s market arises where buyers have the upper hand. The vice versa refers to a seller’s market, when demand exceeds supply and property value increases.

3.     Demographics

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Demographics comprise aspects such as age, race, gender, population migration, and education levels. By relying on these attributes, the real estate market determines what properties to avail to buyers. Where regions experience an increase of young and educated people, properties are likely to be high-end. On the other hand, if the larger part of the population is aging, the types of homes in such an area will include retirement homes, resulting in low-priced commercial real estate properties. 

If you consider an area like Jackson, the median age of its population is 32.4 years. Furthermore, 85.6% of the residents here have a high school degree. With such factors, the value for commercial real estate properties in the area is bound to be higher.

4.     Maintenance

Property impressions are short-lived but play a significant role in determining commercial real estate property value. Attractive aesthetic touches such as finishes and landscaping details mean an increase in property pricing and value. It follows that poor exteriors result in low real estate property valuation.

The property’s interior condition also contributes to its value and indicates a lot about its maintenance. If, for instance, you are eyeing a newly constructed building, the chances are that it will need little to no repairs. This means the value of such a real estate property will be high. However, the same cannot be said of older buildings. Degradation of amenities such as the HVAC, piping, electrical wiring, and the foundation means more repairs for buyers and investors. Due to these factors, such a property features low desirability, leading to reduced property prices. 

5.     Renovation and Value Addition

Additionally, the potential to either renovate or add value is another factor with a major influence on the valuation of a commercial property. A property with such potential is a better option for investors and buyers, as it can fetch more money than its initial selling price. It will, therefore, come at a higher rate than a property where you can’t make any improvements.

6.     The Functionality of the Commercial Real Estate Property

The functionality of a commercial property mainly considers its size and the facilities provided. If more buyers are looking for a space with two bedrooms, a swimming pool and gym facilities, properties with these amenities will likely experience a rise in value. Those lacking these functionalities will, on the other hand, experience a drop in demand and subsequently, a dip in value.

7.     Commercial Real Estate Redevelopment Potential

With redevelopment potential, investors get the benefit of transforming a property into their desired space. Warehouse spaces can, for instance, be converted to business centers by investors and buyers looking to settle can modify the same piece of property into a residential space. Such flexibility results in an increase in real estate value since the possibilities are endless for buyers.

8.     The Economy

Economic performance in real estate also relies on aspects such as GDP, unemployment rates, household savings, and job growth. When these elements rise or fall, the regional, national, and international economy is also affected, contributing to a ripple effect in the real estate sector. If, for instance, there is an increase in jobs, people have more money to spend, which increases the value of properties. For example, Jackson’s economy has seen a growing GDP of nearly $25.5 billion, making it a hotspot for business. With this comes an increase in spending power. Increases in commercial real estate value also result, seeing as more people can afford property.

Consider Commercial Real Estate

Commercial real estate properties are an investment for people looking to either rent out or settle down. However, the factors listed above necessitate due diligence and patience before your purchase. While one factor may play a large role in your desired property’s value, it is wise to look at other elements to ensure you get a fair price. If you are looking to consult on investing in commercial real estate, get in touch with Speed Commercial Real Estate today.

What Dictates Commercial Rent Prices?

Realizing a return on investment (ROI) is a priority for every entrepreneur, and the same applies to those who invest in commercial real estate. If you want to invest effectively, you need to understand the current commercial rent prices and the future worth of commercial properties. This applies whether you are considering an office building, warehouse, multifamily property, commercial shopping center, retail space, or any other type of commercial property.

Such insight will help you maximize your returns by opting for the right property. The factors that affect commercial rent prices lie in three major categories, namely:

  • Economic Factors.
  • Location Factors.
  • Property Factors.

Each of the aspects above has a significant impact on the prices of commercial buildings. Here is a breakdown of every category.

Economic Factors in Commercial Rent Prices

a) Interest Rates

Without a doubt, interest rates are the most significant driver of commercial rent prices. This is because those who invest in real estate use leverage or other people’s money to buy property. Interest rates here refers to the cost of credit. As such, when interest rates fall, credit becomes cheaper. Then, more funds flow into capital improvements and commercial real estate since the yields are higher due to rising property values.

On the other hand, high interest rates lower property values as a result of declining yields from the high cost of financing. In such situations, fewer people are willing to invest in commercial buildings. This causes the demand for the same to fall and, subsequently, the prices.

b) Wage Growth

The most recent and highest annual growth rate in three years is the wage growth of 2.3% by the end of 2018. Growing wages allow individuals/families to have more disposable income, which can encourage them to invest in commercial property. Wages are critical indicators of how cheap or expensive commercial property is at any given point.

Location Factors in Commercial Rent Prices

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a) Transport

The quality of transport systems has a direct impact on the valuation of commercial property. That means that acquiring commercial property in an area with a sufficient supply of transportation networks will attract higher yields. Also, in most cases, commercial buildings within a transport hub are in high demand. Potential investors are focusing on capitalizing on the increased foot traffic in such areas. That, in turn, causes the prices of commercial properties in such locations to surge upwards.

Improving accessibility to commercial property centers is possible through the development of transport networks. That is why the prices of existing and new commercial buildings rise follows the improvement of roads serving such properties.

b) Population Growth

Education levels, births, age distribution, and migration are some of the factors that contribute to population growth in a specific region. For example, the demand for high-end restaurants and retail may be high in an area that is experiencing an increase in the number of high-tech jobs.

On the other hand, there will most likely be a surge in demand for assisted living and retirement facilities within a submarket with an aging population.

Property Factors in Commercial Rent Prices

a) Location

Talking about commercial real estate prices without mentioning the location factor is next to impossible. The reason for this is that different locations impact the desirability of commercial buildings. This, in turn, affect the prices of such property. Some of the critical considerations, in this case, include zoning for your nature of business and the location’s accessibility for your target customers as well as potential workers.

A characteristic example, in this case, is a traditional retail property sitting in an area with multiple apartments and where there are few restaurants to serve the residents. Hotel operators will be competing for that commercial space, which will increase the price of the latter.

b) Potential for Development

The possibility of developing a particular commercial building further can push its price upwards as well. That is because the highest-and-best-use for such property in the future may be different from the initial design. For instance, the demand for multifamily residential property is growing in many real estate markets.

As a result, you are likely to see the redevelopment of obsolete shopping centers into higher density residential housing and the conversion of warehouses into live-work spaces.

Other Factors in Commercial Rent Prices

a) Credit Scores/Financing/Rates

Low-interest rates do not suggest that every borrower can access the same when buying or leasing commercial property. The creditworthiness and credit history of an individual or business are worth considering in such situations. If your credit ratings are low, you will most likely pay higher interest rates, which means that you’ll end up paying more in the long-term.

That ultimately makes purchasing commercial property more expensive.

b) Sale Or Leasing Method

The way someone chooses to sell or lease their commercial property will affect the overall price of such property. Additionally, the time and effort it takes to promote a specific commercial property will impact its price. Some of the approaches used to sell or lease properties include trades, auctions, leaseback, or exchanges – each of which come with their own unique costs.

c) The Urgency to Sell Or Rent Property

The speed with which a property owner wants to sell an asset or find a tenant will dictate commercial rent prices, too. For example, if a property is taking too long to offload, its owner can decide to take a lower offer to speed up the sale. If there is no urgency to sell or lease a particular commercial building, one may opt to hold out and wait until they find a match for their valuation.

If you’re interested in renting a commercial property for your needs, reach out to us. We’re happy to help you find what you need.