The commercial real estate market ebbs and flows, just like the residential market, which can make it a confusing task to figure out exactly when the right time is to purchase a commercial real estate. While the answer to this dilemma is largely personal, there are definitely some factors you will want to take into consideration as you begin to search for your next space.
State of the Economy
Among the most important considerations you will want to take into account is the state of the economy, which largely impacts the stability of the commercial real estate market. The different phases of the economic real estate cycle will definitely help you to determine the best time to buy a commercial property in your particular area.
- Recession Stage: If you have the funds available to purchase a property during a recession, there are many benefits to doing so. For one thing, a plethora of vacancies means that the supply of available commercial properties far outweighs the demand, thus driving down prices and helping to ensure that you snag an amazing deal. Additionally, you will have greater access to a wide variety of properties to choose from. The downside here is that it is much harder to secure financing during a recession.
- Recovery Stage: During this time, the commercial real estate market will start to see some improvement. It is marked by many landlords making noticeable enhancements to their spaces in an effort to maximize rental income. This is still a great time to purchase commercial real estate, while prices are still relatively reasonable.
- Expansion: Typically, the expansion phase is considered a better time to be a seller than a buyer in the commercial market. The primary reason for this is that demand outweighs supply, allowing property owners to ask top dollar for their spaces.
- Contraction: Following a period of expansion is the process of contraction, whereby prices begin to drop as, yet again, the amount of available properties begins to exceed the need for them. Although financing may also be difficult to find here, it still considered an optimum time to buy.
Much like the residential market, commercial real estate seems to follow a seasonal pattern. The months of March through August seem to be the time to get the best deals on the market. These are also considered the most efficient times to move businesses from one place to another, due to the lack of snow, ice, and other weather patterns that can easily impede the ease of the moving process.
Perhaps the most important factors to consider when you’re trying to decide on the best time to invest in commercial real estate property are those that affect you and your business personally. There are many pertinent questions you will want to ask yourself prior to jumping right in.
- How much money is available through my business? If you’re business is on the upswing and can easily find the money available to fund the purchase of a commercial real estate property, it is probably a good time to buy. If, however, doing so will create a potential hardship for your business or personally, this is something you will definitely want to think about. Is it worth it?
- Can your business handle the increase in monthly overhead? Even if you’ve purchased a commercial property outright, there will be additional month to month expenses associated with becoming a property owner (whether you are using it for your own business or leasing out the space). Building maintenance and upkeep alone can come with a hefty price tag. If you plan to use the space for your own purposes, you will also need to factor in electricity, internet, build-outs, and other monthly costs.
- Will it help your business grow? Even if it might be a bit of a stretch for you to purchase a commercial space, it is probably worth it if doing so will help your business to continue to grow and thrive. On the other hand, staying in a space that is too small for you or no longer meets your needs can be extremely detrimental to the growth of your business.
- Is the right space available? Lastly, you will want to make sure that, if you are going to take the dive and purchase a commercial property, you are able to find one that truly suits the needs of your business. If it doesn’t, it will only feel like an unnecessary burden.
Looking to Purchase Commercial Real Estate in Hattiesburg?
It’s true that there’s a lot to consider when it comes to finding the right time to purchase a commercial property. If you’ve determined that now is the right time for you, then make the commitment to work with the best. At SVN Southgate, LLC, our team of dedicated Advisors is here to help your transaction go smoothly from start to finish. Take a look through our database of available properties and contact one of our team members today to begin looking!