As your business continues to grow, it’s important to think about your home base. Purchasing an office building is a great way to provide your company with a place to lay roots and encourage future growth. As one can imagine, there are a lot of considerations involved in the process of deciding whether purchasing a building is right for your business. This blog post focuses on what to know before you purchase an office building so you are fully informed and prepared every step of the way.
The Benefits of Purchasing an Office Building
Deciding to buy an office building, rather than rent one, is a huge decision that takes careful consideration. While renting certainly has its advantages such as cost and flexibility, a lot of businesses consider purchasing a building when they are planning for the future. The ability to customize an office space to truly fit your needs is a massive benefit of owning. Being able to renovate and design a space to suit your specific team and company operations is a great way to maximize the overall effectiveness of an office layout. A fixed mortgage payment and tax deductions are also reasons many companies decide to buy rather than rent.
Important Considerations for Buying a Building
After deciding that purchasing your own office building is the right move for you, there are still lots of steps that need to take place. Navigating the real estate market and selecting the perfect building for your company isn’t easy, so we pulled together a list of crucial items to help guide you when selecting the perfect building for your business.
Your Business Needs and Requirements
One of the first things to always keep in mind as you shop around is your company’s core business needs and industry requirements. One easy mistake to make when you begin searching for real estate is considering your needs today rather than anticipating future needs. Think about the location of your building and ask yourself whether it’s close to major expressways or public transportation. If you have plans for future growth and expansion, does your physical location act as a selling point for future employees? Is it located in an area people will enjoy working from? What are the local restaurant and coffee shop options? Is there a fitness center in nearby? If your five-year plan includes expanding your workforce, If you don’t leverage an offsite storage facility, make sure there’s a storage room within the office to store excess office equipment and supplies.
Price Point and Budget
It’s important to realistically forecast future revenue to determine what a comfortable mortgage payment means to you. Whether you’re a risk-taker or on the conservative side, talking with a financial advisor or accountant is a great way to make sure you’re setting a realistic budget for this huge purchase. If you have a substantial growth trajectory with proven success metrics in pace, it might make sense to stretch yourself just a bit to ensure you don’t choose a building that your company will soon outgrow.
Another key thing to know before you purchase an office building is the structure’s overall classification and whether it matches your plans. Not every commercial building is built the same way and because of this, the real estate industry uses a classification system to categorize and assess risk for the buyer. The most common classifications for commercial buildings are class A, class B and class C.
Class A office complexes pose the least level of risk to the buyer because they’re often new constructions with modern features. Class B buildings are slightly older with a good overall visual aesthetic. They’re best suited for small to medium-sized businesses and have a slightly reduced market price because they typically require a few updates. Class C buildings come with the most risk since they’re generally over 20 years old and often lack some common amenities such as elevators or central air. Since class can have a large impact on a building’s price, consider this aspect carefully as you move forward with a purchase.
Building History and Condition
As you focus in on the building you want, it’s important to take its history and overall condition into consideration. A building’s classification will give you an idea of the current state and price range, but it won’t dive deep into the specific details of what the structure housed in the past or what damage it has sustained. It is crucial that you take some time to research these aspects and have the building thoroughly inspected by a professional. Going into a purchase prepared for what updates or renovations are needed in the future will help you make an educated decision on whether this building is for you.
Return on Investment
Thinking about the building’s potential return for your investment might feel like you’re planning too far ahead, but it’s never a bad idea to think about the future. Depending on how long you spend in a particular building, updates and renovations typically increase a property’s value. However, it’s important to set a firm budget to ensure you maximize the return on investment. You should think carefully about renovation decisions and how much budget you allocate by weighing up the cost of updates versus purchasing something new. Consider having an experienced commercial real estate broker assess the building to help you decide if updates are a smart decision. There’s a lot that goes into pricing a building so talking with your agent is a great way to understand your options.
Rework understands that an office is so much more than just an office—it’s an important part of recruiting and employee retention. We specialize in space planning and design to ensure your floorplan and finishes work perfectly for you. Our experienced office interior design team in Chicago pulls from decades of experience and is with you every step of the way from space and layout planning, furniture selection and even installation. With have a vast inventory of quality preowned and brand-new pieces that are in stock and ready to ship, our specialty is creating a truly custom aesthetic by pulling from both refurbished and new pieces. We’re dedicated to providing our clients with a work environment that keeps employees happy, healthy and productive. Reach out to our team today to learn how we can turn your office design dreams into a reality!