Investing in commercial real estate can be a high-stakes game. While it holds potential for profitability, you’ll need skill, timing, and a strategic approach in order to succeed. In many cases, success often boils down to buying the right property or selling at the right time and price.
If you’re thinking about selling your commercial space or are jumping into the commercial real estate world for the first time, the best thing you can do to ensure a positive outcome is be well-prepared and have a professional on your side. This blog will equip you with valuable information you’ll need to navigate the world of CRE and make informed decisions as you map out your next moves.
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THE MIAMI, FL COMMERCIAL REAL ESTATE MARKET
Miami is Florida’s premier commercial center because of its geographic advantage: it’s positioned strategically at the crossroads of the Americas, a prime spot that serves as a hub for both national and international trade. This made Miami an economic and cultural gateway, not only to Latin America but the Caribbean as well.
Florida’s own business-friendly tax climate helps, too. The absence of state income taxes and relatively low corporate tax rates make the Sunshine State an attractive location for businesses who are seeking financial incentives.
Miami commercial real estate’s most amazing characteristic, however, is its resilience. While there are concerns about the health of CRE at the national level, South Florida’s market appears to be largely immune. Low unemployment rates, job growth, and the widespread adoption of the hybrid work model are said to contribute to this resilience. In fact, companies such as Apple, The Morgan Group, and Key Point Academy just recently leased commercial spaces in Miami, making the three largest commercial lease transactions in the area as of March 2024.
TIPS FOR SELLING YOUR COMMERCIAL PROPERTY
Whether you’re selling an office space or a multifamily home, you need a basic understanding of how to make your property attractive to buyers. Let’s go over some of the tried-and-tested tips for selling commercial real estate in Miami, FL:
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Set expectations
Before putting your commercial property on the market, it’s crucial to set clear internal expectations regarding the process of the sale and what your goals are. These include:
- Financial goals. Decide how much money you want to acquire from selling your commercial property. Consider things like how much you still owe on any loans, how much profit you want to make, and any taxes you might have to pay.
- Timeframe. Recognize that selling commercial real estate typically takes longer than selling residential properties due to the specialized nature of the market, and the complexity of commercial transactions in general. Your timeline should be realistic and based on current market conditions.
- Terms of sale. Figure out how you want to sell your property. Do you prefer a cash sale, or are you open to other financing options?
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Get your property appraised by a professional
Pricing any property, commercial or residential, can be tricky, so it’s advisable to have your property professionally appraised. Doing so will help you gain an accurate understanding of its true value and set a fair price when you’re ready to list.
Keep in mind the unique features of your property, like its location, recent upgrades, size, or the view it offers, as these are all factors that can significantly impact buyer interest and ultimately, the final selling price.
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Compile and arrange all relevant information and documentation about the property
Due diligence is a significant part of buying commercial real estate, which is why prospective buyers appreciate it if all information about the property is ready and at hand. To streamline the process for all parties involved, gather the necessary documents in advance, including the following:
- Zoning details
- Environmental reports
- Land surveys
- Permits and approvals
- Insurance documentation
- Property tax information
- Blueprints
- Floorplans
- Lease agreements and files
- Expenses
- Occupancy rates
- Historical rental income
- Warranties and manuals
- ADA compliance
- Property condition reports
- Other financial documents
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Find creative ways to market your commercial property, both online and offline
It’s crucial to get creative with your marketing efforts if you want a good shot at finding the right buyer for your property.
These days, the best way to market a commercial space is through the internet due to its wide reach and unparalleled accessibility. The good news is that there are myriad ways to enhance your online visibility, from employing SEO practices to adding high-quality real estate photography to your page.
Just as staging can improve the appeal of your property, updating your website or page serves a similar purpose online. Here are some of the best ways to do this:
- Incorporate high-quality media. The internet is a highly visual platform, so it’s best to start by adding quality visual content — think professional photos, engaging videos, and virtual tours. Not only does this make your page more aesthetically appealing, but it also helps potential customers get a feel for the space you’re selling.
- Don’t forget about search engine optimization (SEO). You may have a high-quality website or page, but without SEO, only a few people will be able to see it. Optimizing your website or social media page will ensure it shows up prominently in online searches, allowing your target audience to easily find your property.
- Consider targeted advertising. Platforms like Facebook, Instagram, LinkedIn, and Twitter have wide reach. Consider taking it to the next level by leveraging paid ads that target specific groups interested in your property. This boosts visibility, generates leads, and drives more people to your page.
That said, you can’t overlook traditional marketing strategies. Make sure your property signage is clear, visible, and attractive so that it can catch the eye of passersby. Additionally, consider participating in local events, networking with other businesses, and using print media such as newspapers and magazines to expand your reach within the community.
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Team up with a commercial real estate professional
The help of a commercial real estate professional cannot be overstated: they have a valuable professional network, can break down complicated lease agreements, and possess in-depth knowledge of market trends. Miami, FL commercial real estate can be tricky to navigate, and having a professional ally can alleviate some of the stress and uncertainty involved in the process.
That said, finding the right real estate advisor is equally important as having one at all. In this regard, a little legwork can have a significant pay off. Before hiring a professional, make sure to research local agencies, check their track record, and ask about their marketing strategies. You can also go the referral route: if you know someone who recently sold a commercial space, ask if they were happy with their broker. This can cut out some of the guesswork on your end.
TIPS FOR BUYING A COMMERCIAL PROPERTY
Investing in commercial property can be exciting. It’s a step towards creating sustainable income streams, diversifying your portfolio, and building long-term wealth.
But like any investment, purchasing a commercial space requires careful consideration and strategic planning. Depending on your business strategy and investment goals, there are various factors to consider, such as location, market conditions, financing options, and potential tenants.
To make sure you’re getting the most out of your investment, keep these tips in mind:
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Purchase the right property type
Different property types offer varying income potential, risk profiles, and tenant considerations. Before you commit to a purchase, carefully evaluate your own investment goals and risk tolerance to determine the most suitable property type for your portfolio or business.
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Choose the right location
Location can make or break a business. No matter what type of commercial property you’re eyeing, the better the location, the more profitable your investment is going to be.
To put it another way, think about the last time you had to pick a restaurant for dinner. Chances are, you considered a restaurant’s proximity, ambiance, and accessibility — factors that are affected by its location. Similarly, when choosing a location for your commercial property, you have to think about convenience for potential tenants or customers.
If you’re planning to purchase a multifamily property, proximity to neighborhood amenities like good schools, parks, shopping centers, and public transportation is paramount. For retail spaces, visibility and ample parking can help attract more customers to your business.
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Keep up-to-date with the state of the market
Similar to residential real estate, prices in the commercial sector can experience fluctuations over time. Understanding the current state of the market will let you know whether property prices are currently higher or lower than usual.
Interest rates and rent trends are also crucial — fluctuating rates affect loan costs, while rent changes can influence your income if you’re planning to purchase a multifamily property. Staying informed helps you secure better financing and timing for investments.
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Research local zoning regulations
Zoning regulations dictate how a certain property can be used, and ignoring them can land you with a building unsuitable for your business, or lead to hefty fines. Before you get your heart set on a specific location, take a look at the zoning codes to ensure the property allows the type of business you operate. You may have to check the city’s website, visit the local planning department, or consult with a real estate professional specializing in commercial property.
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Understand your financing options
There are multiple ways to secure a commercial property depending on your financial capability or investment goals. For instance, you can obtain a loan with terms and rates that you find agreeable. These include:
- Conventional commercial mortgage loan
This is a traditional loan offered by banks, credit unions, and other financial institutions. Ideal for first-time borrowers, conventional commercial mortgage loans are simple and flexible, enabling the user to apply it to a wide range of commercial properties.
A conventional mortgage typically requires strong personal credit scores and a down payment, and the terms can vary based on the lender. Since these loans do not have to go through federal agencies, they’re underwritten much faster than government loans.
- Government loans
Agencies such as Freddie Mac and Fannie Mae offer some of the most competitive rates for borrowers, making them an attractive option for those who want to invest in multi-family properties, affordable housing projects, and healthcare facilities. They also offer an amortization schedule of 30 years, with shorter payment terms (5, 7, 10, or 12 years).
- Bridge loan
A bridge loan is a short-term loan that provides temporary financing until a long-term solution is in place. It’s also a handy option if you’re planning to finance a property that needs fixing up, as most traditional lenders will only approve loans for properties that are in good shape. On the downside, bridge loans have much higher interest rates, which is why they’re typically used as a last resort or only by investors looking to flip property.
- SBA 504
This type of government-backed loan is guaranteed by the U.S. Small Business Administration (SBA) and is designed to help small businesses purchase commercial real estate or business equipment. It offers favorable terms and lower down payment requirements compared to conventional loans.
You can also purchase Miami, FL commercial real estate through a REIT or real estate investment trust. REITs involve multiple investors, who then own, operate, and benefit from their income-producing real estate investments. In other words, being part of a REIT is like owning a share of a CRE property or portfolio.
A REIT is a great entry point for first-time CRE investors as it is highly liquid. It is also a good option for investors who want to benefit from an income-producing property without dealing with property management woes. On the other hand, growth can be slow and dividends are taxed like income.
- Conventional commercial mortgage loan
CONSULT A PROFESSIONAL FOR YOUR MIAMI, FL COMMERCIAL REAL ESTATE NEEDS
I’m Rachel Goldman, and I’m happy to help you achieve success in Miami’s vibrant commercial real estate market together with The Goldman Group. My team and I have handled countless transactions in the realm of CRE, providing bespoke services and solving complex challenges through modern solutions.
The Goldman Group’s clients span a wide range of industries, so you can rest assured that your unique needs will be met with expertise and keen attention to detail. To book a personal consultation, connect with us at 813.810.2829 or through our website.