The purchase of commercial real estate can provide a business with its own facilities or a space on which to construct an edifice custom-designed to its needs. Instead of paying rent on a property that may not be ideal, an organization can accrue equity in a property that is exactly what it requires.
Of course, such a large transaction creates a financial responsibility for a company that will likely be one of its biggest contributions to its ongoing business expenses. Therefore, approaching this process requires careful consideration. There are many elements that influence whether a particular property is right for an organization.
Current zoning
Hawai’i has relatively complex zoning statutes with a variety of different designations. The goal is to preserve the character of different communities around the state and also to control development to preserve natural resources. Although zoning variances or even changes to formal zoning are possible, it is usually faster to look at properties that already have the appropriate zoning designation instead of speculating about the ability to change that zoning after a purchase.
Location
The location that someone needs for a business catering to tourists by offering parasailing adventures will be completely different than the facilities required by a roofing company primarily serving local residents. The right location can help a company control costs and provide more convenient access to consumers. Looking at not just the current characteristics of the community but also plans for development in the near future could help the leaders of organizations better select the right location for their premises.
Facility condition or development potential
Depending on the resources that a business has to invest and the timeline from when it completes the purchase to when it wants to begin operations at a location, there may be very different needs regarding the condition of developed facilities at a commercial property. Some organizations have the time and resources to invest in constructing new facilities on currently vacant land. Others may see the value in the purchase of a weathered or damaged building with the intent to repair it for company use. Some businesses may benefit from working with existing improvements, while others might require highly specialized spaces built specifically to fit their needs.
Countless other factors, including a company’s budget and the amount of staffing it will require will influence decisions made about commercial property. Carefully evaluating a company’s needs and each potential commercial property can help organizational leadership maximize its return on a commercial real estate investment.