Buy Now?
Commercial Property Prices are up, but that doesn't mean a bubble
Fall, 2005
by Chris Taylor
excerpt from original story
Thinking Ahead
That's why James Woodrow, co-owner of Las Vegas-based Preferred Public Relations, kept growth in mind as he started to shop for property. He bought a 5,000 square-foot office building last year. Woodrow replaced his monthly rent of $1,500 with a $7,500 monthly mortgage payment. Still, he says, "It's the best thing we could have done." He's renting out 40% of the building for $4,500 a month, and his $1 million, 14-person company will significantly lower its taxes by writing off depreciation on the building and interest on the loan.
Whether or not you should try to do the same depends your business and you local market. The risk of falling prices is highest in hot markets such as coastal California, Southern Florida, and the New York metro area. Among the cities with the lowest prices per square foot are Austin, Tex., Cleveland, Baltimore, and Atlanta. You can keep up with local prices by browsing local brokers' listings and www.loopnet.com, which lists commercial properties for sale nationwide. Grubb & Ellis offers some free information on 35 industrial markets and 50 office markets on www.grubb-ellis.com. Detailed reports run $150.
If you own property that has appreciated but don't want to move, consider cashing out some profits with a sale-leaseback. That's when you sell your property to an investor, then rent the same space back at a preferred rate. Of course, you'll lose the tax benefits of owning, but you'll pocket any gains from the sale. And those could pay the rent for quite a while.
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