Evaluating Commercial Property
Examine your short-term and long-term needs, and analyze your finances when considering your real estate options.

By Tracey Mann

With interest rates hovering at historically low levels, many Kansas City area small businesses are taking advantage of these rates and seeking commercial properties to purchase and occupy.

A business owner must take into account a multitude of factors before making the decision to purchase commercial property. Once the decision has been made to purchase a property, the next step is the actual process of evaluating the property options.

Determining Property Type
The first step is to determine the type of property your business needs. You must decide if you are looking for an office, industrial or retail property.
If you are looking for an office property, it is important to decide from the beginning the general desired layout of a building (the amount of private offices versus open area) and the number of parking spaces that your business will need. The interior configuration and location of many walls in the building can change once the property is purchased, but this will add to the overall cost of the project.

If you are in the market to purchase an industrial property, be prepared to make a few more decisions. It is important to determine how much office space versus warehouse/production area will be required by the business, and the desired configuration of the office space. In the warehouse/production area, it is important to determine if a dock high or drive-in door is required, what ceiling height is needed, and if there are any special needs concerning the electrical service.

If you are looking to purchase a retail property, a critical first step is to determine the demographic makeup of a potential area, as well as the desired visibility. The chosen location must be in the middle of your target customers, and not be hidden from other potential customers who are just passing through the area.

For all properties, whether office, industrial or retail, it is critical to determine the desired location of the property, taking into account the location of current and potential customers, as well as the existing location of a company’s employees. It also is essential to determine the company’s long-term growth and future space requirements. Be sure that the property is able to meet the timeline that has been set forth, and is able to accommodate your needs for as long as you own the property.

Financing the Property
Another item that must be considered is how you will finance the property. This is a financial decision that not only will affect the business over a long period of time, but also will affect the business’s bottom line. You must determine how you plan to finance the building and how much you can afford to pay. If you intend to finance all or part of the building from an outside source, it is important to meet with those potential sources of funds (i.e., banks, other lending institutions, etc.).

Some business owners decide to buy a larger building than is required for their current needs, and either lease out the rest as an investment for the duration of the holding period or lease out the remainder of the building for a short period of time and eventually expand into the remainder of the building. Another important factor concerning the property financing is the down payment that will be required by your lender for the purchase of the building.

Care and Maintenance of the Property
Finally, an important thing to consider is the physical condition of the identified property and the amount of time involved in its care and maintenance. Prior to purchasing the building, it is vital to have it professionally inspected. Specific items of concern should be the roof, the exterior and interior of the building, as well as the property’s parking lot and landscaping. It is important to realize prior to purchase that it will take time and money every year to properly maintain and care for this newly acquired asset.

If you are contemplating the purchase of a commercial property, it is important to arm yourself with good information and a knowledgeable real estate broker who can guide you through the process quickly and smoothly.

Tracey Mann is a sales associate for Zimmer Real Estate Services Inc., focusing on industrial sales and leasing in the metropolitan Kansas City area. He can be reached at (816) 474-2000.