Relocation a business? FOCUS when making a real estate deal – Orange County Register
If you read my columns regularly you will know how much I like acronyms! I’ve written real estate tips that include NUCLEAR, MR BOB, and even one of my friend and neighbor Rudy named CLIP.
Acronyms and their sister reminders got me through school somewhat unscathed as they train your mind to remember lists and / or a process. So today, yeah, you get another one.
For this sequence, my business coach Rod Santomassimo from the Massimo Group must receive the correct assignment. If you want to learn more, he wrote a great book called “You Can’t Know – Don’t Fool Yourself”. If you are facing a commercial real estate decision – especially moving house – we recommend going through the list and asking yourself a few questions. In other words, FOCUS!
F stands for facts. Your current location as a commercial property owner or resident contains a number of well-known facts. You were at your location for a while. You lease. You have shift etc. in such things as the expiration of your rental agreement or a loan term. Consider your company’s drivers and how they may have changed. Has a competitor been acquired? Have you added employees or machines since you moved in? At this point, you may already have a direction. Humor me. Work your way through the balance of exercise. Sometimes the results vary.
O is for opportunity. Now let’s carefully examine what works and what doesn’t with the building. Examples of what works could be that your customers know where you are, that the freeway front has free advertising, or that the lease rate you negotiated is 20% below market prices. However, if your employees park because of the space on the street or if your warehouse needs to be completely unloaded and reloaded for employees to work, you will have problems.
You may also want to reflect on the motivators when you rented or bought the property. Was the market on fire and took what you could get with the promise of revaluation?
C is for consequences. You have to do some math here. In dollars and cents, think about what happens if you do nothing about something. We recently advised a logistics company considering converting a rented building into their own with a lot more space. Obviously the new excavations would cost a lot more. However, the downside of staying there and continuing to lease would affect their ability to grow their business. The loss of income was enormous.
U is for understanding. Now that you know your situation, you have analyzed what works and what does not, and calculated the monetary impact of your options. All that remains is a road map. Proceed to the next step.
S is for solutions. Since the solution itself is columnar, you need to get some suggestions next week.
Please don’t lose FOCUS this week until we meet again.
Allen C. Buchanan, SIOR, is a Principal at Lee & Associates Commercial Real Estate Services, Orange. He can be reached at [email protected] or 714.564.7104.