Annandale REAL ESTATE
Let's Take a Look at Commercial
By: Scott Pearson, Pearson Realty
January 2017, ENDEAVOR News Magazine
In previous articles I have addressed the status of residential property in and around Annandale. Then it dawned on me. I’m writing for the Chamber of Commerce so maybe I should address commercial property and readers’ need to have an appreciation of some commercial aspects of real estate in our town.
Commercial property in Annandale falls into three categories, lease, buy and with business. The easiest comparable category is office leases. Depending on the specific qualities and location of the office space, you can expect rental rates in the $15-30 per square foot range, with most offerings falling in the low $20 range. All such rates are subject to negotiation regarding a number of factors including build-out budgets, triple net charges, etc.
If you want to buy commercial real property for your small business in one of the numerous local office condominiums, you are looking at average pricing in the $300,000-$400,000 range. Stand alone commercial property is usually much more expensive because it will include parking and is typically larger.
If you are considering buying a business that includes a real estate asset (lease or ownership) the value of the total packages of assets will vary greatly and must be examined based on profit and loss statements from the operation of the business. Typically one is trying to determine earnings before interest, taxes, depreciation and amortization, also known as EBITDA. The real property may require an adjustment in the application of EBITDA, particularly valuable parcels.
Whatever kind of commercial deal you are contemplating, be it lease or purchase, I strongly suggest that you have the assistance of a professional. Unlike residential property where the State and the Federal Government have instituted numerous laws to protect consumers, commercial transactions have no such protection. It comes down to whatever deal is struck and that’s it.
Virginia is a caveat emptor state (buyer beware) and this is particularly true in commercial transactions. The representations and warranties of buyers and seller, or tenants and landlords will be largely controlled by the language of the deal. Simply said, what is in the contract will likely be upheld by a court if the matter comes before a judge.
Since many commercial transactions involve hundreds of thousands of dollars and stretch over a decade, it is important you know what the other side is proposing, what needs to be included in the contract, what you want omitted from the contract, and what makes the contract a good or bad deal for you. You should also be prepared to walk away from a bad deal and take advantage of a good deal since it may make the difference between operating successfully or struggling to keep up payments.
Annandale is a great place to start and maintain a business. Rents are reasonable and logistically Annandale is so centrally located it provides ideal access for you and your customers. We represent commercial clients as well as residential clients and experience shows that when it’s time to make a deal; best not go it alone. Most of us don’t speak “contractize” and do not have the tools to assess the quality of a given deal. And this time the law won’t shield you.
Median Sales Price of Annandale Homes
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(Copyright © 2011 Annandale Chamber of Commerce. All rights reserved.)