Is the office really necessary anymore?

As I craft this column in my re-modeled garage office — don’t pity me, it’s an awesome space ! — my thoughts are pondering the lasting impact of the year of the Pandemic 2020 for commercial real estate.

One of the questions I ponder is “how necessary is a physical office location?” And I’m referring to everything from a single-story, freestanding building – like the one my company owns and occupies in Orange – to a suite in a shiny high rise – and all destinations between – mid-rise campus, two-story garden variety and shared collaborative spaces such as executive suites and WeWork.

Full disclosure: I specialize in industrial commercial real estate, which is vastly different from the office classes mentioned. Therefore, my opinions are gleaned from my own experience working remotely and those of my colleagues – not from market occupants. So with that disclaimer, let’s dive in.

Certainly, in the past, when we’ve witnessed migration from a home-based office to a brick and mortar location certain triggers emerge. I wrote an entire missive on location advice and how to relocate a home-based business to commercial real estate. Simply, hiring employees, and/or receiving customers generally portends a move.

However, in the former – with a virtual workplace now firmly rooted – moving from home due to hiring employees isn’t a driver. As an example, my business coach’s organization is corporately located in Cary, North Carolina – in his pool house, no less! Spanning the globe are the group’s coaches. Mine lives in Ocean Springs, Mississippi. We convene bi-monthly via Zoom and it works great!

As to the customer issue, I’m considering hiring a landscape designer based in Portland, Oregon. Yep. He never has to physically visit my property. We had our initial consult virtually.

Once he’s given the green light, his team will use a combination of Google maps, my measurements and drawings I have from another project to virtually design our yard. Pretty slick! We will collaborate electronically to phase the project, and with our feedback, the final product will appear like magic. An aside. What a brilliant business model! He can still design and build in the Pacific Northwest but create concepts for homeowners globally – without ever having to leave the comfort of his basement.

So, in those two examples, one has built an entire business from a folding table in his carport and the other has expanded his offerings well past the physical bounds of Lake Oswego, Oregon.

Commercial real estate is a blend. We can see clients at their locations or via FaceTime, Zoom or Skype. (Wow! What happened there?) Our tours of available buildings can be conducted in person or using the same tools, plus drone footage, Matterport walks, virtual reality  and the like.

For sure, nothing beats sitting face to face with a client or prospect, perusing her operation, and witnessing shortcomings of the address. Fortunately, our team was better prepared than some. We’ve spent the past few years evolving so that we could serve our clients from anywhere – office, home, project’s lobby, or the front seat of our car.

Networking has become a challenge. Our chapter of SIOR – dependent upon semi-annual conferences and monthly dinners – has morphed into something akin to a birthday celebration with a 90-year-old aunt. Yeah, they aren’t happening in person. It is very difficult to mimic the excitement of a Chamber of Commerce lunch, Pro-Visors, or a BNI one-to-one with a potential referral partner.

One echoing drumbeat is culture. If everyone is not together in the same location – how on earth do you create an atmosphere of – “well, we do it this way?” That, dear readers, is a topic for another day!

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104.

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Will your 2021 be a smart year for real estate deals?

Happy New Year, dear readers! With 2020 firmly in the rearview mirror and my “prediction column” completed a few weeks ago, today my thoughts are random. Why limit the topics? So here are a few of the tidbits echoing in my dome.

The pandemic brought into focus a reality for me. As commercial real estate practitioners, we have two things to share – our time and our information! Make them count. Working remotely – and without a commute – allowed me to find a couple of hours each day for productive activities.

Our time

Each of us has the same amount of time – 24 hours a day, 365 days per year for a total of 8,544 hours – to ply our trade. Don’t forget, we must eat, sleep, hang out with our families and enjoy some leisure activities. If you’re like most of us, your labor is compressed into 8-12 hours every day. Tenure in the business is not a predictor. Many veteran CRE pros spend over half their days brokering commercial real estate. But, certainly, if you’re new to the business – plan on starting early and staying late.

I personally start my day with a 4:30 a.m. wake up! The key is HOW your time is spent because once it’s gone – you don’t get more. So, I would suggest computing your hourly worth. Simply set a revenue goal for next year, compute how many hours you plan to work and do some math. You’ll arrive at a figure. Surprising, huh?

Only spend time on tasks that will return that hourly wage. If your hourly is $200 and filing brochures consumes your day, hmmm. Conversely, calling owners of 100,000-square-foot buildings and getting to know them pays the wage. Learn to be quite stingy with your hours and invest them wisely.


CoStar, LoopNet, Reonomy, ProspectNow, Catylist and other data aggregators have commoditized CRE data. Doubt what I say? I can open my CoStarGo app and pull a list of availabilities anywhere in the U.S.

A quick review of comps, and I am familiar with values. Is ownership mostly institutional? Reonomy and ProspectNow detail the answer.

You may be wondering, where does the broker fit in? Exactly! What differentiates is the analysis of the data and the “story” of local deals. Only an agent entrenched in the market can recite this detail and add real value to owners and occupants.

So, master your command of the data! Learn the trends, become conversant with prices, know every building, understand the drivers, meet the influencers. Dominate your geography and become the resident expert.

Through specialization – product type, geographical area, square footage or business genre – you can achieve this level of competence. If you learn to master your data and manage your time, you can enjoy a long successful career!

Goal setting

I invested in professional coaching in 2018 and have continued. The results have been transformational! As I write this column, I’m also completing a comprehensive look at 2020. What worked, what didn’t and why. This reflection will morph into three to five SMART goals for 2021. If you’re unfamiliar with these goals – as you know, I love acronyms – the letters stand for: specific, measurable, actionable, realistic and timetable. Thank you Michael Hyatt! I generally mix in a benchmark as well. After all, you must understand where you are today.

Let’s make 2021 our best year yet! Shall we?

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104.


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6 non-starters for commercial real estate deals

Commercial real estate transactions, akin to a dance, take two to tango.

In the case of a lease, the tenant and landlord are often called lessee and lessor. When a building purchase is considered, a buyer and seller square off. Customary in both is a negotiation that precedes an agreement – a lease document or purchase and sale contract.

Outlined in most negotiations is a set of deal points – price, term, concessions and the like. Generally, both sides of the aisle have representation – a commercial real estate professional or a real estate attorney.

Depending on the dollar consideration, both vocations may be employed. Frequently, a general outline is submitted by brokers and agreed to by both parties, then attorneys fine tune the language. When a deal takes flight it’s a beautiful thing. But, there are some requests that prevent liftoff.

A few of these “Houston, we have a problem” moments are listed below.

Termination clauses. Occasionally in a lease arrangement – especially with major corporations – an “opt-out” provision is requested. Simply, these give a tenant the right to terminate their lease prior to expiration. Flexibility – in case the space is outgrown or exceeds capacity – generally is the reason. But these wreak havoc on the back and forth. You see, an owner expects a flow of income for several years. Rate, concessions, and motivation are reflected. If this stream can be interrupted, landlords view the worst case and react accordingly. A five-year lease with a termination after three really is a three-year commitment.

Options to buy. Options benefit the occupant. Period. Terribly one-sided and limiting, many owners simply refuse to consider them. You see, if the titleholder grants an option to buy, he’s locked in. Sure, he can sell to someone else, but the new buyer must honor the option. It’s murky. Softer solutions exist. Rights of First Refusal or Rights of First Offer are examples.

Special purpose tenant improvements. If you’re looking for a landlord to fund your freezer cooler space, add a clean room, or double the number of private offices – expect some reluctance. Typically, dollars invested to modify a building are viewed for their reuse. An owner considers how valuable the adds will be to future residents and responds accordingly.

No financing contingency. We sold a property earlier this year for the income it produced. Our buyer was a well-heeled investor with ready cash to deploy. He will not occupy the building but will own it and reap the returns. His offer did not require a loan – therefore his performance was not conditioned on a lender nod. However, most buyers who plan to house their business within the premises need some time to get funding. A seller unwilling to allow this contingency may force a buyer to look elsewhere.

Closing extensions. A seller planning to re-invest the proceeds through a tax-deferred exchange has strict timeframes to follow once the sale consummates – 45 days to identify within a 180-day completion. Therefore, we occasionally see extension requests. If closing is delayed, the clock remains at zero until the deal is done – thus giving the seller “free time” to find a replacement property. Buyers are in peril, however, as loan commitments or operational needs dictate their timing.

Lengthy contingency periods. Sellers seek the certainty of a close. Extended uncertainty will kill most transactions. A great example occurs when a buyer contemplates a use change – like converting industrial to residential. Municipalities have something to say and they say things quite deliberately. It’s not uncommon for the rezoning – if needed – to eclipse 18 months. An awful lot can change in that period. Consequently, few sellers are willing to “tie up” their property on a maybe.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104.

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Strangers touring your house listing? How to keep things safe, secure

We’ve had to find new ways to do many things this year – including washing our hands almost incessantly, wearing a mask, and if you have ventured out to patronize a local restaurant when outdoor dining has been allowed, you’ve most likely been eating in a repurposed parking place under an EasyUp in a folding chair.

You may want to consider some new ways to keep your things safe and secure if you are selling your house. Here are few tips for prepping the house for showings, in addition to all the coronavirus protection measures.

Make sure your home office and home classrooms are impervious to unwanted intrusion.

Certainly don’t leave the list of passwords on your desk, pinned to a bulletin board, written on a whiteboard, on a sticky note on your computer screen, or in your pencil drawer. When it is possible and practical, pack up your laptops and take them with you when you go sit in your car while buyers are in your house. If you have a traditional “tower” computer, shut it down completely before the buyers arrive. In addition, put away your phones, tablets and chargers and any other small electronics, if you are not taking them with you.

Stash away your prescription medicine.

Regardless of the dosage, purpose or number of pills in the bottle, either take your meds with you or lock them up somewhere safe while buyers are in your house. These items are so small, they are easy to quickly pop into a pocket or purse. Put them away in advance of a showing so they are impossible to find for anyone other than the person for whom they were prescribed.

Without question, put all jewelry in a safe place that is inaccessible and undetectable.

This may be a great time to invest in an actual, physical safe that can be both locked and secured. Depending on the size, many such safes can be secured to a wall, preventing them from being scooped up for breaking into at another time. You might also consider storing your meds in the safe!

If you keep firearms in your home and don’t already have a gun safe, now’s the time to bite the bullet.

You must secure your guns and ammo, especially when inviting strangers into your home. Just like loose change, there’s currently a shortage of ammunition, making it a likely target for theft. Make it impossible for anyone to access your guns and ammo. And if you keep a loaded weapon in your home for your personal protection, you must rethink this when buyers are visiting. If your gun safe is large enough, you may also be able to secure all of the other valuable items there as well.

We’ve all witnessed creative solutions to these unusual circumstances, do not underestimate the measures desperate people will use to survive, potentially at your expense.

Leslie Sargent Eskildsen is an agent with Realty One Group West. She can be reached at 949-678-3373 or

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As industrial space booms, expect more subleases in 2021

My thoughts this month continue to ponder 2021 and what might be ahead for us in commercial real estate.

I suspect a tremendous amount of “shadow space,” better known as subleases, will fill the landscape of office and retail availabilities next year as occupants adjust to the realities of the pandemic economy.

Sure, we could also see industrial overruns but for very different reasons.

A bit of context to begin. Commercial real estate is occupied by the building’s owner, also known as an owner-occupant or by a tenant. In the case of the latter, a contract exists. Leases or rental agreements state the terms of the relationship — monthly rent, number of years, responsibility for maintenance and who pays the property taxes and building insurance. When a change occurs during the term of the lease, one result is sublease space.

So, with that general background, allow me to explain excess square footage and specifically what causes it with office spaces, retail storefronts and industrial boxes.

In our first example, let’s take your local attorney’s office. Generally, these counselors lease their spaces. Some take advantage of the benefits of owning their locations. But, play along with me …

Assume at the beginning of 2021 that three years remain on a five-year lease the law firm signed in 2019. Once “stay at home” orders took effect in mid-March, the firm found itself with most of its practitioners working from home – and loving it! Now, that marble floor and mahogany paneled boardroom is rarely used.

The plethora of private offices — which are typical — now lay fallow. However, rent payments are still owed. It’s decision time. Is the under-utilization permanent – meaning a need for a smaller footprint? Or, will full staffing exist soon? In the former, you have the classic need to find an occupant willing to morph into the vacant seats and fulfill the law firm’s remaining obligation — a sublease.

Another situation that often floods the sublease market is seen at many regional malls, power centers, strip, and freestanding big-box retailers in SoCal. Pier One, Steinmart, Bed Bath & Beyond, JC Penney, Brooks Brothers, Forever 21 and other name brand outlets all took their lumps this year. Many shut their doors for good. Others are surviving but just barely.

In every business failure, leases must be considered. Some are abandoned through bankruptcy courts. Select ones leave vast, vacant dark holes where vitality previously existed. Bargain retailers such as Tuesday Morning take over. Although, for how long? Creative solutions emerge such as the Union Marketplace in Tustin’s District Legacy – a former Border’s book store. There, the larger space was chopped into smaller experiential retailers. But suffice it to say, leases must be consumed.

Finally, industrial buildings. You know, those concrete behemoths that house a variety of manufacturing, warehousing and service concerns. A very different dynamic will create vacancy in 2021 as companies outgrow their spaces.

With the spate of online shopping, e-commerce providers cannot keep enough stock on hand. Food producers are slammed. Any company manufacturing repair and replacement parts is thriving. Try getting a plumber out to fix a leaky toilet at your home or business — good luck!

One of our clients distributes mufflers. With the number of folks staying home and extra $$ piling up because they can’t go to Disneyland or the movies, car repairs are soaring. This company is facing a building conversation next year. They’ve eclipsed their capacity. Another is also an automotive distributor. Recently, their demand was so great they opted to double their square footage and find someone to sublease the building they vacated.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104.

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Is your building still vacant? Ask MR BOB for answers!

You may have seen my recent column on going “NUCLEAR.” You see, I channeled Pat Sajak, creating my own Wheel of Fortune. The end result was a foolproof way to analyze the viability of a commercial real estate requirement. I’ll buy a vowel, indeed!

NUCLEAR: Need, Urgency, Catalyst, Loyalty, Expectation, Authority, and Resources – if reasonable considered – all allow buyers, sellers, tenants and commercial real estate professionals to “qualify” their need and proceed to a successful conclusion.

Many contacted me with their own acronyms. One actually from our neighbor, Rudy! I thought them column-worthy. So here it goes!

Our friends own several properties and the rent fuels their livelihood. When considering a buy, he and his wife use the acronym CLIP: Condition, Location, Income and Potential. This simple four-part system touches all the bases.

Condition: The current state of necessary improvements is a very important consideration. Many look at the roof and air conditioning as key components that can require significant investment in the future. However, things such as the parking lot, exterior appearance, plumbing, electrical and the nature of a property’s office improvements are also key.

Location: There are three things that matter in real estate, as we so often hear: Location, location and location. Yes! Even if a parcel is the “ugly duckling” of a premier neighborhood, can it one day be the “black swan”?

Income: Unfortunately, this element falls third in line – it really belongs first but then the letters would spell ICLP, which is not as compelling or easy to remember. But suffice it to say, income is critical!

Where is the rent compared with similar buildings? How sustainable is the stream? Sure, you may be looking at a multi-year lease, but if the tenant is gasping for air, you may have to replace the rent sooner than planned.

Few properly bake-in the true cost to replace a tenancy. Downtime, concessions, commissions and improvements all can diminish your future take and should be considered. Remember the condition? Yeah. You’re now competing with other options in the market. Best be spic and span!

Potential: In addition to the present income, where can you take the property in the future? I refer to this as the exit strategy. Will your family hold on and pass the holding along to your grandkids? Or is the idea to fix it and flip it? Can rents be raised? Will a freshening cause the occupant to renew? Is there excess land from which additional square footage can be added? Maybe the resident is your exit and is a prime candidate to buy. Be quite candid with yourself on this point.

Another really good mnemonic came my way last week. This five-letter assemblage can explain why your building remains vacant. Want to silence the crickets with the sound of commerce? Run through this list.

Market: If you own a vacant suite of offices, you’re faced with the uncertainty of a pandemic economy. Virtual work and stay-at-home orders have created a real dilemma for office occupants. Few know exactly how many square feet they need.

Case in point: Our operation in Orange is tooled for 50 in-house practitioners and staff. We own it, and we don’t want to relocate into a smaller suite. But, the reality is, we don’t presently use all of our space. So, what to do? This conversation is happening in boardrooms throughout the country. So with an office vacancy, the market is not your friend.

Rate: Does the rental rate or purchase price you’re seeking have any resemblance to the current comps? In an up-trending market, you can be bullish yet realistic. If things are going the other way, you easily can “chase the market down” by holding firm.

Building: Is your construction a warehouse with insufficient ceiling height? How about the corresponding loading? An abundance of office space within a building sans the appurtenant employee parking spots or windows to the outside world is not desirable. Finally, an address meant for manufacturing but without proper electricity will be quickly discounted.

Owner: Take a look in the mirror. Are you a good owner – fair dealer, concerned about the repair and maintenance of your properties, a “big picture” proponent who eschews the little stuff, and avoids extracting the last penny in favor of keeping your parcels rented? If you answered no to any – YOU may be the reason your structure is fallow.

Broker: How is your vacancy being marketed? Does your representative play nicely with others or is she egocentric and uncooperative? The commercial real estate community is a small one. We all know each other! Snakes are avoided. Fortunately, they are few! But, the reputation of the person whose sign advertises your offering is paramount.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104. 

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Did you recently move from L.A. to the Inland Empire?

Apartments are filling up in Riverside and San Bernardino counties, driving up rents. At the same time, rents are dropping in Los Angeles County and vacancies are up.

If you recently moved from L.A. County to the Inland Empire, we want to talk to you to find out why you left L.A. and what drew you to the I.E.

Was it because of the pandemic? Are you seeking lower rents while working from home? Have the on-and-off closures of restaurants, bars and other amenities killed the attraction of urban living? Or did you move for the usual reasons that have nothing to do with the pandemic: A new job, to be closer to friends or family, better schools, bigger homes or simply to save money?

Whatever the reason, we’d like to hear from you.

Please fill out our short survey. A reporter from the Southern California News Group may contact you later for more information.

To take the survey, CLICK HERE.

Read more about Did you recently move from L.A. to the Inland Empire? This post was shared via Orange County Register’s RSS Feed

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Relocation advice for transitioning companies

In various columns, I’ve described several changes that occur during the life of a family operated business – specifically, manufacturing and logistics interests. These outfits are owned by your neighbors next door and employ millions around the United States.

Business transitions include acquiring a competitor, the death of a matriarch, exponential growth, loss of a key customer, sale of the operating unit via stock or asset purchase, or a move out-of-state. Sadly, it could also be the end of the road because of a changing market.

Last week, I met with three such companies all of which were experiencing a change. Below is the commercial real estate advice I gave them. You see, whenever a transition occurs, a commercial real estate requirement soon follows.

Better returns out-of-state

In 2014, a family-owned aerospace tooling entity was sold and the real estate that housed the company retained. A couple of years later, it was time to sell the buildings. Of concern was the new business owner ran the day-to-day differently. Could the rent be replaced if the group bolted?

The real estate was quickly sold and three investments were bought through a tax-deferred exchange. Then, as 2020 dawned, a decision to sell was made on one of three 2016 buys. After all, activity was robust, pricing was at an all-time high, and the going belief was higher returns and reduced taxes could be garnered out of California. Meanwhile, all of the partners had vacated the Golden State.

In addition, there was uncertainty with near-term rollover of half the tenancy. And if that wasn’t enough, after launching in February and just in time to receive a great offer, the novel coronavirus ravaged the national economy! The buyer paused and then canceled.

After the buyer exited due to all of the uncertainty, guidance was sought on which direction was best. We were able to provide clarity, create best in class collateral and re-launch the offering. The closing happened on time! The net proceeds of the sale allowed a 1031 tax-deferred exchange into properties in tax-friendly states and with a greater overall return and reduction of risk. The last of the four upleg purchases closed this week.

Structuring for the future

Maybe one of my favorite stories of owner-occupied commercial real estate enjoyed a new chapter this week.

Two of my dear manufacturing clients bought their business property in 1995. In the ensuing 25 years, exponential appreciation had occurred. By their admission, the address was worth three times the value of the business it housed.

Finally, a suitor for the company had gained favor, and a sale of the assets may occur soon. The terms and conditions of the leaseback are critical. Potential investors for their real estate holdings will look at the lease rate in comparison to the market, the length of the lease, and the maintenance expected of the owner.

Even if there is no interest in spinning the parcel today, these issues need discussion.

Everyone is agreeable – until they aren’t

One of my clients was approached by his neighbor. They struck a handshake deal. Unfortunately, the agreed-upon rate, term of lease, and extension rights don’t provide my client with a lot of latitude. He’s bound to dealing with the expanding neighbor if he wants or has to sell – at a pre-determined price and time.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104.

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5 ways your offer can stand out in a hot industrial market

Industrial real estate — those buildings geared for manufacturing and logistics warehouse providers — is on fire in Orange County!

These are typically constructed out of concrete, located on little known city streets such as Blue Gum, Coronado, Carnegie, and Capricorn, and house companies that make and ship things. But, as the term “on fire” means different things to different folks not related to our industry, I believe it’s important to offer some context.

2020 – the year of the pandemic is now nearly 80% complete. Costco has Christmas decorations in stock, and socially distanced Halloween isn’t yet a memory. What? You’ve not yet strung your lights? But, I digress.

Since January, we’ve seen 15 sales for industrial buildings greater than 50,000 square feet within the Orange County’s 34 cities. These from approximately 868 existing units in this size. Excluded from these statistics are lease transactions – another conversation. But, in 2020, suffice it to say, 15 sales, 868 buildings 50,000 sf and larger – 1.7% of the base inventory sold.

Now, how many 50,000+ sale availabilities are there? Care to hazard a guess? If you guessed five, you’d be spot on. Viewed another way – only a bit more than 1/2 of a percent (five available out of 868 existing structures) is ready to receive your offer to buy.

To add some historical perspective, during the last pause in the action – 2008-2009 – there were 22 buildings for sale (50,000+) along La Palma Avenue in East Anaheim — ALONE! My, my. Look what 10 years of robust growth have done to our stable of sale availabilities!

You may be thinking, so what? What’s caused this and how does this affect my plans to purchase in 2021?

The causes are two-fold: increased demand and the lowest borrowing rates in decades — maybe ever! If your plans include testing the sale market in 2021, please be prepared for pitiful supply, intense competition, multiple offers and lenders that scrutinize every debit.

Please don’t enter the fray unprepared for the environment that exists in today’s sales market. Sure, you can consult with your banker and get pre-qualified, which, by the way, is a MUST. Maybe now is the time to wait. After all, can this overheated frenzy last for years? Leasing for a period of time until the fever ends might work out well. If you’re adamant about buying – have you considered these things?

Your representative

Recently, we found ourselves in competition for a site. Our buyers were well qualified and motivated. But, akin to straight A+ students competing for limited grad school spots, ALL of the buyers were well qualified and motivated. We won the deal based upon a 25-year relationship we had with the seller’s broker. He knew us, trusted our word and advocated for our buyer with his seller.

Your story

In today’s sales arena, the back story is critical. We came in second last week. Second is the first loser and doesn’t pay very well in commercial real estate brokerage. Why, you may ask? We got “out-storied.” Sure, I crafted the reasoning for pursuing the building along with our track record of successful purchases with this buyer. What won the day? The neighbor. It seems he’s been trying to buy the building forever. Tough to compete.

Your differentiator

We were honored to represent a family last month in their purchase of an income property. They didn’t need financing. Proceeds were in the bank awaiting the right deal. Short due diligence and a quick close could be accomplished. Also, we were prepared to offer the asking price and no one could touch us.


In the previous examples – intangible factors existed – a 25-year relationship, the neighbor as the buyer and tax-deferred exchange motivated capital. If you dig deeply into why one buyer was chosen over another, in many cases an intangible is a reason. Sometimes it boils down to a gut feel. Trust those!

Other directions

What alternatives are available with a lease? Maybe a short term with an option to buy can be structured. How about adjacent states of Nevada, Arizona or Oregon? We’ve witnessed several occupants exit California in favor of a tax friendlier area. Buildings are cheaper in some of our inland markets such as Riverside and San Bernardino counties – although the gap is narrowing.

Could you shorten a contingency period? How about paying cash today and refinancing later? Factors like these can give you an advantage.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104. 

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Got a vacancy? Here’s what to expect in a commercial real estate marketing report

Some of you reading this column own a company that occupies a building you also own. Others are involved in some facet of the commercial real estate profession – a broker, lender, architect, escrow holder, title officer, or contractor.

Still others might own a strip center, office building, or small industrial condo from which you derive monthly rent to supplement your income. (Hi, Rudy.)

Regardless of your angle – you’ve been on the receiving end – or have prepared – a marketing report. You see, when a vacancy occurs, a broker is hired to find a tenant or buyer for said vacancy. That is, of course, unless you choose to go it alone, which I strongly discourage — but I digress.

What information should expect from your broker in the report? I generally like to update three specific areas. Akin to a microscope zooming in – my reports start with the overall market conditions and zero in on specific recommendations for the assignment.

Market activity

The market in which your vacancy competes should be constantly reviewed by your commercial real estate professional. Let’s say you own an industrial building of 100,000 square feet that is 10 years old. How many spaces are available? What are the most recent comps? Speaking of comps, are they mainly sales or leases? What active requirements are circling?

Based on all of these data points, market conditions emerge from which decisions can be made. As an example: If you’re attempting to attract a tenant and the vast majority of recent activity is from buyers, you might consider altering your plan.

Conversely, if your asking price eclipses the market sales, you better have some staying power to allow the pricing to catch up. But if you find yourself in a downward trending time, you may wait a very long time.

Active interest

Who has inquired? Are they kicking tires or is there some motivation for their search? I try very hard to find out specifically which company is represented, what else they are considering, and why our building may or may not work.

Next steps

Fresh coat of paint? Add an office or two? Freshen the landscape? Lower the pricing? Offer some owner-carried financing? Offer something that others can’t — an option to buy as an example. All could appear in the recommendations to an owner of commercial real estate.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at or 714.564.7104.

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