Monthly Archives: February 2020

Should You Buy or Lease a Commercial Property?

Buy or Lease a Commercial Property

Many of our clients are conflicted about whether to buy or lease a commercial property. There are a variety of factors small business owners must consider when it comes to deciding whether to buy or lease a commercial property, but at the end of the day the numbers need to make sense for your business. 

Finding the right location is only part of the equation for a business owner who’s in the market for new commercial space. Before looking at specific locations, an analysis should be completed showing the benefits of each. There may be times where the business owner does not have an option.

Driving factors that play a key role in the decision-making process is both rental rates and property values. Let’s take a look at how these two factors can significantly change whether it makes sense to buy or lease a commercial space.

The impact of increasing rent and property values on commercial property directly affect whether buying or selling commercial space makes sense. If rents and property values are increasing in a certain area, it’s often better to purchase commercial real estate as opposed to leasing. By purchasing a property, you’re getting the benefit of appreciated value should you ever decide to sell.

In addition to the impact of increasing property values, there are other financial incentives to purchasing a commercial property. Regarding taxes, there are times when the initial outlay that is used to purchase a commercial property is not deductible. This allows for the buyer to depreciate the cost of the property over time. For those who financed the property can receive tax deductions for any interest payments.

If you’re a well-established business and have been operating awhile, but you’ve not purchased any commercial space, it may be time to look into building an asset through the purchase of real estate. However, if you’re business is a startup, leasing may be a better option until your business is solidified.

Buying a commercial space gives you ultimate control of the property. It allows you the freedom to make extensive renovations both inside and offers more options than leasing a space. Renovating a leased property typically requires running any type of changes by the landlord or even may stipulate an outright ban on renovations.

If having a certain location is important, buying may open up an opportunity where no suitable properties are currently up for lease. Purchasing in a prime location (for example, a restaurant or retail establishment in an area with high foot traffic) can mean the difference between the success or failure of your business.

Need help deciding whether to buy or lease a commercial property? If you’re in the market commercial space it can be difficult to know whether it makes more sense to purchase or lease. By working with a seasoned commercial real estate team like ICRE Investment Group, we can help you determine what is the best move for the future of your business.

For more information on the commercial real estate market, give our team a call today at 480-522-2800, or reach us on our mobile at 480-772-8870, or email us.

ICRE REPRESENTS THE INVESTMENT SALE OF BLACK BEAR DINER AT 1420 MARKET PLACE DRIVE, GREAT FALLS, MT

1420 Market Place Drive, Great Falls MT 59404

ICRE Investment Group is proud to have exclusively represented the Buyer, 52nd Street, a Joint Venture, in the purchase of a Black Bear Diner located at 1420 Market Place Drive, Great Falls MT 59404. This Retail Commercial Building was an Absolute Net Investment. It was built in 2007 with 7,365 square feet. It Sold for $3,350,000.00 at $454.79 SF on July 3rd, 2019. The Cap Rate was 6.8% with an NOI of $227,812.50.

Black Bear Diner is a fast-growing, community-oriented, family dining concept that offers great food in a fun, bear-themed atmosphere. Born from a desire to bring home-style comfort food classics and personal service back to the dining experience, the brand is strategically growing its national footprint. Black Bear Diner has approximately 124 locations in 12 states, including Arizona, California, Colorado, Idaho, Oregon, Texas, and Washington. In 2017, Nation’s Restaurant News highlighted the brand as a “disruptor” in the family dining market, noting market share gains against numerous legacy brands, while Franchise Times ranked it as #242 on its Next 300 Franchises to Watch in 2017 list.

1420 Market Place Drive Guarabtor: MERIDIAN RESTAURANTS

Meridian Restaurants was founded in 2002 with 14 restaurants. Today, Meridian now has 127 restaurants consisting of four top-tier brands across eleven states: Burger King, El Pollo Loco, Chili’s, and Black Bear Diner. The tenant; NDM Restaurants, Limited Company; is a wholly owned subsidiary of Meridian Restaurants Unlimited, Limited Company.

About ICRE Investment Group

ICRE Investment Group is a full-service commercial real estate advisory team at Commercial Properties, Inc. (CPI) headquartered in Scottsdale Arizona specializing in investments in the office, retail, medical, and industrial sectors. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals and our highly personal approach to client service, ICRE Investment Group is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long-term growth and success.

Learn more about ICRE Investment Group online at www.investingincre.com.

ICRE REPRESENTS THE INVESTMENT SALE OF 1314 S BROADWAY STREET, PITTSBURG KS

1314 South Broadway Street in Pittsburg

ICRE Investment Group is proud to have exclusively represented the Buyer, 52nd Street, a Joint Venture, in the purchase of 1314 South Broadway Street in Pittsburg, KS. 1314 South Broadway Street is the Ideal single-tenant absolute triple-net (NNN) investment opportunity building with approximately 2,970 square foot retail, offering a 15-year lease with attractive 10% rental increases every five years. The Property is strategically positioned on the western side of US Route 69, just south of downtown Pittsburg. It sold for $2,350,000 ($791.24 per SF) on 08/01/2019.
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The Property is made up of ±2,970 rentable square feet on approximately 22,312 square feet of land. The tenant, JRI Management is the largest Freddy’s franchisee with +59 locations in 10 states. Freddy’s Frozen Custard & Steakburgers is a fast-casual restaurant franchise, known for premium, lean, ground beef steak burgers and dessert treats, prepared with freshly-churned chocolate or vanilla frozen custard. A privately owned and family-oriented company, their tasty menu items coupled with exceptional guest service and industry-leading cleanliness standards are why their guests make return visits.

The Property benefits from a great location just around the corner from Pittsburg State University, approximately 1-mile south of downtown Pittsburg. Pittsburg State is a fully accredited state university with more than 200 academic programs and approximately 7,000 students (Source: Pittstate.edu).
Approximately 1-mile south of the Property and within walking distance of the Pittsburg State University campus is Meadowbrook Mall & Meadowbrook Commons. Meadowbrook Mall is at near capacity with national and regional retailers including: AMC Theatres, JCPenney, Hibbett Sports, GNC, Gordmans, Maurices, Bath & Body Works, and many more.

About ICRE Investment Group
ICRE Investment Group is a full-service commercial real estate advisory team at Commercial Properties, Inc. (CPI) headquartered in Scottsdale Arizona specializing in investments in the office, retail, medical, and industrial sectors. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals and our highly personal approach to client service, ICRE Investment Group is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long-term growth and success.
Learn more about ICRE Investment Group online at www.investingincre.com 

COMMERCIAL LAND INVESTMENT SALE AT 37996 N. GANTZEL RD., SAN TAN VALLEY AZ

37996 North Gantzel Road

ICRE Investment Group is pleased to announce the investment sale of 37996 North Gantzel Road, San Tan Valley AZ 85140. This iconic ±232,519 SF land parcel (5.34 Acres) is located on the NW corner of Gantzel Rd. & Pecan Creek Drive with 400’ frontage on Gantzel Rd. in San Tan Valley.

The parcel sold for $575,000.00 ($2.47 per SF) and $107,720.26 per Acre on Jan 2, 2020. tHE Zoning IS AND THE Parcel # is 104-53-004E. Less than 1 mile north of Banner Ironwood Medical Center. Southeast of Loop 202 freeway.

About ICRE Investment Group

ICRE Investment Group is a full-service commercial real estate advisory team at Commercial Properties, Inc. (CPI) headquartered in Scottsdale Arizona specializing in investments in the office, retail, medical, and industrial sectors. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals and our highly personal approach to client service, ICRE Investment Group is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about ICRE Investment Group online at www.investingincre.com.

ICRE REPRESENTS THE OWNER/USER SALE OF 14201 N HAYDEN RD., SCOTTDALE, ARIZONA

14201 N Hayden Rd

ICRE Investment Group is proud to have exclusively represented B&J Buildings, LLC in the sale of 14201 N Hayden Rd, Scottsdale AZ 85260. 14201 N Hayden Rd.,Suite C-3 is an industrial condo with approximately 3,119 square foot industrial/flex building located within the Hayden Business Center. It sold for $522,432.00 at $167.50 per SF on 09/03/2019.

This property is nestled in the heart of Scottsdale’s Airpark area with easy access to the Loop 101 freeway and major street arteries. The Scottsdale Airpark is home to a variety of restaurants, retail, commercial, and industrial mix.

About ICRE Investment Group

ICRE Investment Group is a full-service commercial real estate advisory team at Commercial Properties, Inc. (CPI) headquartered in Scottsdale Arizona specializing in investments in the office, retail, medical, and industrial sectors. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals and our highly personal approach to client service, ICRE Investment Group is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about ICRE Investment Group online at www.investingincre.com.

ICRE REPRESENTS THE INVESTMENT SALE OF VENTURE PROFESSIONAL PLAZA – BUILDING B AT 8805 W UNION HILLS DR, PEORIA AZ

Venture Professional Plaza

ICRE Investment Group is proud to have exclusively represented Seller in the investment sale of Venture Professional Plaza – Building B located at 8805 W Union Hills Dr, Peoria AZ 85382. This Commercial Multi-Tenant Office Building, included a pad with frontage on Union Hills Drive for potential Build to Suit, Seven (7) tenants and a cell tower with a 35 year lease.

Venture Professional Plaza has two-stories with 7,968 square feet. It was built in 1996 and sold for $1,275,000.00 at $160.02 per SF on 7/26/2019. The Cap Rate was 8.6% at an NOI of $110,566.00. Venture Professional Plaza sits on 0.92 acres. The zoning is C2 with a parking ratio of 7.00/1,000 SF. The parcel number is 200-43-634.

Venture Professional Plaza is in the West Valley Arrowhead area. This multi-tenant office building is located along Union Hills Drive just west of the Loop 101 with close proximity to Arrowhead Towne Center Shopping and restaurants.

About ICRE Investment Group

ICRE Investment Group is a full-service commercial real estate advisory team at Commercial Properties, Inc. (CPI) headquartered in Scottsdale Arizona specializing in investments in the office, retail, medical, and industrial sectors. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals and our highly personal approach to client service, ICRE Investment Group is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about ICRE Investment Group online at www.investingincre.com.

 

ICRE REPRESENTS THE INVESTMENT SALE OF 1337 SOUTH GILBERT ROAD, MESA AZ

1337 South Gilbert Road

ICRE Investment Group is proud to have exclusively represented the Buyer in the sale of 1337 South Gilbert Road, Mesa AZ 85204. This investment is located in Tableland Village II at the Southeast corner of Gilbert Road & Southern Avenue at a signalized intersection with close proximity to US 60.

The center is constructed of block with a decorative brick facade. The walkway is covered by an attractive copper colored metal roof and features a decorative bronze fascia on the underside. The property has relatively good visibility from Gilbert Rd. and features a multi-tenant monument sign on Gilbert Rd. 43,111 VPD on Gilbert Rd.

There are 23 suites although some tenants occupy more than one suite. Currently 51% leased, great value added potential with current 49% vacancy. Current capitalization rate of 5.9% at 51% occupancy; potential capitalization rate of 11.7% at 93% occupancy.

Attractive 39,618 SF Multi-Tenant Retail Building on a 3.33 Acre Parcel. Constructed in 1986. Suites can be used for Retail, Office, or Medical. It is in the opinion of the listing brokers that a medical office would be a great use for the property.

About ICRE Investment Group

ICRE Investment Group is a full-service commercial real estate advisory team at Commercial Properties, Inc. (CPI) headquartered in Scottsdale Arizona specializing in investments in the office, retail, medical, and industrial sectors. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals and our highly personal approach to client service, ICRE Investment Group is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about ICRE Investment Group online at www.investingincre.com.

ICRE REPRESENTS THE INVESTMENT SALE OF 761 DALE EVANS DR, ITALY TX

761 Dale Evans Dr

ICRE Investment Group is proud to have exclusively represented the Buyer in the sale of the Dollar General at 761 Dale Evans Dr, Italy TX 76651. This retail NN investment was built in 2004 with 9,301 square feet. It sold for $700,000.00 at $75.26 per SF. The cap rate was 7.9% with an NOI of $55,692.00.

About ICRE Investment Group
ICRE Investment Group is a full-service commercial real estate advisory team at Commercial Properties, Inc. (CPI) headquartered in Scottsdale Arizona specializing in investments in the office, retail, medical, and industrial sectors. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals and our highly personal approach to client service, ICRE Investment Group is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.
Learn more about ICRE Investment Group online at www.investingincre.com.

Choice of Business Entity: Is an LLC the Right Business Entity for Me?

LLC the Right Business Entity for Me

There are many issues to evaluate when determining the best choice of business entity for your needs. If you’re investing in real estate, I always recommend that you take title in the name of an entity rather than your personal name. Whether a limited liability company (LLC) is the right entity for you will depend on a variety of factors.

Benefits of Business Entity Formation

In general, individuals form entities for two primary purposes: liability protection and tax considerations. Certain entities, notably corporations and LLCs, provide that the owners and managers of that entity generally do not have personal liability for the debts of the company, with certain exceptions. In a limited partnership, the general partners will have liability for the debts of the partnership, just as will the owners of an unorganized business (a sole proprietorship). There may, however, be other considerations that favor a limited partnership over an LLC.

Regulatory Requirements for Business Entities

In some instances, the form of entity may be driven by state regulation of a certain profession. For example, the Arizona Department of Real Estate will only allow licensees to hold their real estate license in a professional corporation (P.C.) or a professional limited liability company (P.L.L.C.) because Arizona law specifically provides that a licensed individual rendering professional services through a P.C. or P.L.L.C. is still personally liable for some of their actions, namely their professional responsibilities. There are other professions in Arizona with similar regulations. If you are engaged in a licensed profession in the state of Arizona, you must determine whether there are any specific requirements regarding the type of entity under which you can conduct your business.

Tax Considerations

The most common areas in which I assist clients with entity formation are real estate investments and starting a new business. While a corporation, LLC, or limited partnership will each provide its underlying owners with a layer of protection from personal liability, the tax ramifications to the owners of investment real estate or a business may be significantly different depending on the type of entity chosen. Some tax breaks, like investing in Opportunity Zones or reliance on the small business stock capital gains exclusion, may require the use of certain kinds of business entities to take advantage of those provisions. Recent changes to the U.S tax laws may favor the choice of one legal entity over another. Due to the adjustments in tax rates, the advantages of treatment under partnership taxation is not as great as it was previously. Therefore, you should consult with a tax advisor to evaluate the tax considerations for your particular situation. Our tax team regularly helps clients with this important decision.

Business Entities for Foreign Investors

I work with many Canadian real estate investors who have unique cross-border taxation issues that will affect the type of entity chosen. Unlike a U.S. investor whose income from an LLC is often treated as partnership income, Canada Revenue Agency does not recognize an LLC (or PLLC) for tax purposes. In addition, I’ve worked with Australian real estate investors who also have unique tax issues. If you are not domiciled in the United States, it’s imperative to consult with your tax advisor to determine the most appropriate form of entity in which to hold your real estate investments.

Forming the Business Entity

Once the form of entity is chosen, there is still work to do. Not only must you file the appropriate documents with the Arizona Corporation Commission or the Arizona Secretary of State, but you may also need bylaws, a shareholder’s agreement, an operating agreement, or a partnership agreement. These are the documents that will set out the procedures for management, meetings, voting, transfers of ownership, purchases upon death, buy-sells, etc. There are many issues to consider if the entity has multiple owners, and it’s generally best to get these issues agreed upon and documented when the entity is initially formed and all owners are getting along. There are many ways to approach these issues, so it is important to discuss the options with your co-owners and professional advisors.

The Risks of Doing it Later or Reliance on Insurance Alone

At this point, you may be saying to yourself “This sounds like a lot of work and may cost a lot of money. Maybe I will just purchase liability insurance.” First of all, it won’t necessarily cost a lot of money to form an entity and prepare the underlying agreements between the owners. Our firm has represented numerous business owners who did not spend the money up front to set forth their agreement with their co-owners, only to spend many times what that would have cost in litigation when circumstances change and disagreements arise over their respective rights.

In addition, while it is prudent to purchase liability insurance and your lender may require it, insurance alone is not sufficient to protect you. For example, your liability insurance policy will contain certain exclusions from coverage. If you own the property in your personal name and an event occurs on the property that is excluded from coverage or exceeds the policy limits even if covered, you can be held personally liable for any damages. Finally, insurance companies can deny claims. In the event that you only obtain liability insurance and the insurance company denies the claim, you can also be held personally liable.

Choosing the correct form of entity is an important decision. Take your time, do your homework, and consult with a professional to guide you through the process.


Howard J. Weiss

Howard J. Weiss

Howard J. Weiss is an attorney at Jennings Strouss Law Firm in Phoenix, Arizona. His practice is focused on counseling clients on the purchase, sale and lease of commercial real estate, as well as business transactions and entity formation. The firm also handles construction law, tax law, corporate and securities law, commercial financing, estate planning, probate, intellectual property, employment law, administrative and regulatory law, commercial litigation and bankruptcy, among other areas of law. Mr. Weiss may be contacted at 602-262-5926 or by email at hweiss@jsslaw.com.

This article is intended for informational purposes only, and should not be construed as providing legal advice. If you have any questions regarding the topics discussed herein, you are advised to contact an attorney.