This post originally appeared on chicagobusiness.com
Commercial real estate investors are weighing whether to snap up properties as prices begin to climb. And as more tenants shop for locations, companies evaluating their space needs have to wonder whether now is the time to secure bargains before vacancies evaporate and rents firm up.
Commercial real estate adviser Randy Podolsky, managing principal of Podolsky/Circle Corfac International in Riverwoods, is just one of those who have the itch to do deals again. He sold a 10,000-square-foot building in Wauconda recently and turned around and bought a warehouse in Itasca. He couldn’t say no when the seller offered a 20 percent-plus discount on the building’s 2008 asking price of $85 a square foot. “Interest rates are low, and the money is out there from lenders,” Mr. Podolsky says.
So far, however, not much of the easy money is being directed into new construction. The math still doesn’t add up, says Gary Janko, senior managing director of Deerfield-based Janko Group LLC, which has a history of both building and buying. An office building in the suburbs costs $200 a square foot to build new, Mr. Janko calculates. Existing Class A buildings can be purchased at prices 30 to 40 percent below that. “You aren’t going to build new today unless you can get some kind of a special deal on the land or you have a client who has very special needs,” he says.
That leaves plenty of unanswered questions for tenants, particularly smaller companies, looking for space. Do I need Class A or B? What can I expect in tenant improvements? Where are the best bargains? And is now a good time to push my landlord for better amenities? Here’s some expert advice on how to get the most for your company’s real estate buck now.
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