Over the years I have seen land prices in Arizona, especially Maricopa County, go through many peaks and valleys; excuse the pun. But now, there is no doubt that we are heading up that Peak once again. Not only land but commercial real estate in general has leveled off and prices are on the rise.
 
The great recession, as many people have referred to this downturn, started back in 2006, in 2011 we began to see the first glimmer of hope. It would seem to me that now is a great time to buy. But perhaps we should be turning the clock back to some old fashion buying methods. Traditional lenders, such as banks and mortgage brokers etc. have made it very difficult for most people to borrow. What a novel idea to return to a proven method of raising private equity to fund acquisitions or even development. Perhaps we should make an effort with lenders to come in with sufficient equity to make borrowing easier and ultimately end up with a project that makes more profit for investors.

When acquiring properties today you have a more realistic market value. When pricing rental rates that are not only more appealing but affordable to both new and existing small businesses. Maybe that might actually help stimulate job growth. How? Lower rentals leave the entrepreneur or business more working capital to invest in jobs or more purchasing power for equipment. That is a good and positive thing.

Take for example a 5000 ft. office space that in 2004 rented for $24 a square foot and today perhaps rents at $17 a square foot. Over a five-year period with tax and rental increases it would save the business nearly $200,000. The landlord today acquiring that property at current market rates would make the same, if not more, of a return on investment than they did with the higher rental rate back in 2004. How novel! A win-win situation! Isn't that really good for all?

Take a moment to reflect on the words and wisdom of Will Rogers. Buy some of that ‘stuff’ because they ain't making any more. Or use the same philosophy when buying existing commercial buildings. Some of that commercial ‘stuff’ cannot be replaced at current building costs and may be an excellent investment opportunity.

Or perhaps you want to lease some of that commercial ‘stuff’. The rates more than likely will not be this low in the near future. I doubt that our government will balance the budget soon or go back to being even in our lifetime. But maybe you could be, if today you invest wisely and take advantage of this current time and market to do so.

Once you have purchased your property, you’ll need the services of an experienced, competent Management Co. to help you achieve the best possible return on your investment.  A company that can assist you with its leasing expertise and knowledge in all other areas of Commercial Real Estate. Let GPE Management Services be that company.

Please call Steve Kroll at 480-994-8155 for more information.

- Ron Genovese, Founder & Designated Broker of GPE Commercial Advisors