Commercial Real Estate Terms - Northern Colorado Commercial Real Estate

Four Types of Property Management

June 6, 2024

Property Management Types

Property management is often a crucial part of owning commercial real estate. Before hiring a property manager to oversee your investment, ensure they have the necessary experience, as each building type requires a unique skill set.

The following are the four most common types of property management to be familiar with before taking the dive into owning investment properties.

Residential Property Management

Residential property management involves overseeing single-family homes, townhomes, and condos. A residential property manager is in charge of single units and up to a quadplex (4 units). Their main focuses are acquiring and retaining qualified tenants, collecting monthly rent, and managing maintenance requests.

Commercial Property Management

Commercial property management relates to apartment complexes (5+ units), retail spaces, and office buildings. Lease management is the primary task of a commercial property manager, as each building type requires a different leasing structure. Commercial property managers also typically take on a larger scope of facility maintenance and need a solid understanding of zoning, building codes, and safety requirements to ensure the property stays compliant.

Industrial Property Management

Industrial property management centers around warehouse space, distribution centers, and manufacturing facilities. A property manager in this field focuses mainly on security and efficiency. Often, industrial facilities manufacture, handle, or store costly goods, making security a top priority. Additionally, the efficiency of these properties can make or break the investment potential, so creating proper systems is vital.

Special-Purpose Property Management

Special-purpose property management involves specialized buildings such as hospitals, education facilities, and recreation centers. Each building requires expertise in specific maintenance and scheduling needs, as well as solid marketing and connections to find the right tenant for that niche.

Have Property Management Questions?

If you have questions about property management or commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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Business Brokering at Northern Colorado Commercial Real Estate

May 8, 2024

What is Business Brokering?

Business brokering is when a third party helps clients buy or sell companies. Like a real estate broker, a business broker represents the buyer or seller throughout the transaction in return for a commission or success fee.

Typically, businesses worth over $1 million will work with a mergers and acquisitions specialist, so business brokers specialize primarily in small businesses.

Why Use a Broker?

There are many reasons why using a business broker might make sense. Buying and selling companies can be a long and tedious process with many complexities. A broker is well-versed in the ins and outs of a transaction to ensure everything goes smoothly.

Additionally, a business broker is experienced in negotiations and will ensure your interests are well-represented. Similar to a real estate broker’s local market knowledge, a business broker is also an expert in business valuations and strategic pricing to guarantee you get top dollar when you sell.

Business brokers guide you through due diligence, licensing and permitting, and contract writing throughout the buying or selling process. As your fiduciary, they will protect your best interest at each step and relieve you of much of the legal liability.

Northern CO Commercial Real Estate

At Northern CO Commercial Real Estate, we are well-equipped to handle both your real estate and business brokering needs. With many years of experience in both types of brokering, we would love to be your one-stop shop for any commercial buying and selling.

Furthermore, when you refer a business to Northern CO Commercial Real Estate, and we end up brokering their transaction, we will pay a $250 referral fee directly to you. If you have questions about business brokering or commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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Referrals with Northern Colorado Commercial Real Estate

April 24, 2024

Northern Colorado Commercial Real Estate

The commercial real estate world is complex. To navigate the ins and outs, Northern Colorado Commercial Real Estate is your go-to source for selling, purchasing, or leasing.

Owner Steve Longenecker has over 30 years of business experience, including almost 20 years in the commercial insurance industry. As a trusted advisor for his commercial clients, he is known for his attention to detail, thorough standard analysis, diligent follow-up, and superior customer service.

If you are looking to venture into commercial real estate, be sure to partner with an experienced broker to guarantee the success of your investment or transaction.

Sending Us Referrals

Real estate is an industry highly dependent on referrals. So, how does it work when you send Northern Colorado Commercial Real Estate a referral? To show our appreciation, the referrer will earn a $250 gift card when the referral becomes our client!

Additionally, as industry experts, we have a variety of other experienced professionals we are happy to refer to you in return. For example, if you need a business broker to help sell or buy a company, we have you covered. Are you in need of specialty contractors for your next development project? We have worked with many and would love to pass along our recommendations.

At Northern Colorado Commercial Real Estate, our service extends beyond the transaction. We are eager to be a resource for any real estate-related needs or questions.

Thank You!

Thank you for trusting us with your business! We are dedicated to serving our clients at the highest level and would love the chance to earn your referrals.

If we haven’t gotten the opportunity to work with you before or if you have questions about commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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Cash Flow vs. Appreciation: Which is More Important?

April 11, 2024

Real Estate Investing

Real estate investing isn’t one size fits all. Each investor has their own goals, typically determined by a specific timeline.

Some investors are looking for quick returns (fix-and-flips), others are looking for long-term investments with no immediate return, and many are somewhere in between.

Appreciation vs. Cash Flow

Often, appreciation and cash flow are the two main ways to analyze a real estate investment.

Appreciation

Appreciation is the growth in property value over a given period. Geographic location, economic conditions, and renovations all factor into a property’s appreciation or depreciation.

If a property isn’t well-maintained and the economy takes a turn right when the owner needs to sell, an investor may face a loss. On the flip side, booming economic conditions, well-done renovations, and other increased property values in the area may cause rapid appreciation.

Cash Flow

Cash flow, on the other hand, is purely determined by owner expenses versus the income received. Typically, we think of this as a landlord-tenant relationship, where the landlord owns a property and manages the associated costs. In return, they receive rental income from the tenant.

This model hinges on the landlord’s ability to keep their expenses under control, rental rates high, and vacancies low. While economic conditions and renovations impact any investment, cash flow may withstand changes in outside factors better than appreciation.

Your Investment Strategy

Talking with an experienced real estate professional about your investment strategy is the best first step. Some real estate types naturally gravitate toward appreciation, while others tend to have a more robust cash flow. It’s crucial to choose the investment that supports your long-term financial goals.

If you have questions about commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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What is a Modified Gross Lease?

March 28, 2024

Commercial Leasing

If you aren’t familiar with commercial leases, they can appear much more complicated than a residential lease. There are various types, each with its own set of rules that the landlord and tenant must follow.

The three most common types are net leases, gross leases, and modified gross leases. Net leases assign the most responsibility to the tenant, while gross leases task the landlord with more duties. Modified gross leases land somewhere in the middle.

In a modified gross lease, the tenant pays a base rent amount and shares some of the other building expenses. Depending on how the lease is written, the tenant can be responsible for a portion of property taxes, insurance, utilities, or maintenance in addition to their general rent payment.

Pros of Modified Gross Leases

The following are some of the pros of using a modified gross lease:

Negotiation: All operating expenses are up for negotiation to determine who will pay what. Unlike gross and net leases, where it’s already predetermined, a modified gross lease gives a landlord negotiating room to offload expenses.
Shared Risk: As taxes, insurance rates, and maintenance costs fluctuate, the tenant and landlord share the risk. Neither party will face a drastic change in expenses on their own.
Clarity: Modified gross leases provide clarity for the tenant. For example, rather than the landlord having to incorporate a fee into the rental amount to account for electricity, the tenant can clearly see their utility usage as a separate bill and budget accordingly.

Cons of Modified Gross Leases

As a property owner, be sure you consider the following cons of modified gross leases:

Less Control: As a landlord, you have more control when you are in charge of all operating expenses. When you leave duties in the hands of others, you can’t be sure your renter will take care of everything to your standards.
Resale: Investors tend to favor net leases as more of the expenses are the tenant’s responsibility. Therefore, selling a commercial property with a modified gross lease in place may be more difficult.
Changing Costs: If the tenant were in charge of all operating expenses, any cost changes would not affect you as the landlord. However, with a modified gross lease, your yearly expenses are subject to change.

Is it Right for You?

As you consider your next property purchase or renting your space to a new tenant, consult an experienced commercial real estate professional to determine the right fit for you.

If you have questions about leasing or purchasing commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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Leasing vs. Buying Commercial Property: Which is Better?

March 14, 2024

Which is better: Leasing or buying commercial property? The short answer is that it depends on your situation.

For a brand-new start-up, taking out a long-term commercial loan might not be the right decision. On the other hand, a well-established business that has been paying rent for several years may be in the perfect place to finally make a purchase.

Owning commercial real estate has pros and cons. A great first step is to connect with an experienced agent to discuss your strategy.

Leasing Commercial Real Estate

Here are some reasons it might make sense to lease commercial real estate space:

No Financing: Qualifying for financing to purchase commercial property can be a pain if your business has other substantial expenses. Leasing avoids any difficulties in acquiring a loan.
Less Responsibility: Depending on the type of lease, your landlord will be in charge of any major issues that arise with the building, leaving you to focus on essential business activities.
Smaller Up-Front Fees: While there may be a deposit at the start of a lease, you won’t have to stress about saving for a substantial down payment.
Flexibility: Although commercial real estate leases are generally longer than residential, you still have significantly more flexibility to move spaces without selling property.

Owning Commercial Real Estate

If you are ready to purchase commercial property for your business, here are some benefits you will enjoy:

Equity: When you own commercial real estate, your payments come back to you in the form of equity over time rather than going straight into your landlord’s pocket.
Appreciation: Desirable commercial property in great areas tends to appreciate over time. Not only will you be paying down your loan, but you will also get the added return of higher property values when it comes time to sell.
Control: Rather than being tethered to rules outlined in a lease, you have complete control over the property and other tenants.
Steady Payments: Lease amounts tend to increase over time. If you own commercial property, however, you can secure a loan with fixed payments over the term.
Income Potential: Besides having space for your business to operate, there is also income potential in renting out unused portions of the building.
Tax Benefits: When you own commercial property, strategies such as depreciation and interest deductions can be used to reduce your tax liability.

Your Business, Your Choice

Ultimately, it is your business, and you have to make the right choice for your situation. If you have questions about leasing or purchasing commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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Zoning in Commercial Real Estate

February 29, 2024

States and local governments use zoning to determine how various parcels of land are developed. Each zone has specific rules and regulations that municipalities implement to create a desirable layout for their community.

For instance, zoning laws would ensure that a developer couldn’t build a large factory in the middle of a residential neighborhood. Consequently, when done well, the process aids significantly in strong property values.

Changing a parcel’s zoning is possible; however, it’s a long and challenging process that requires proving to the public that the new zoning is beneficial. Therefore, prior to purchasing any piece of real estate, it’s essential to understand any restrictions on its future use.

Types of Zoning

Here are the five most common zones to consider as an investor or developer:

Commercial: Commercial zoning is reserved for businesses. Office buildings, retail spaces, and restaurants would all require commercial-zoned property.
Residential: Residential zoning determines the type and density of housing in a given neighborhood. Some zoning only allows for single-family residences, while others may include multifamily developments.
Industrial: Industrial zones include facilities like factories and warehouses. These developments are often further from the city center, where noise, pollution, and other environmental factors are less of a concern.
Agricultural: Agricultural zoning reserves specific parcels for farming-related activities. Various subcategories determine the types of animals and crops allowed on each property.
Mixed-Use: Mixed-use zones continue to gain popularity and often combine commercial and residential spaces. Building a handful of restaurants and stores within a neighborhood is an excellent example of mixed-use zoning.

Commercial Zoning

Commercial zoning guidelines determine how large a building can be compared to the property size (floor area ratio and lot coverage), how much parking needs to be onsite (parking ratio), and general safety features like the number of exits and fire escapes. A property’s zone also dictates other factors, such as building height, architectural features, and noise levels.

Zoning laws dramatically impact a property’s use and development, so knowing the details is crucial before investing. If you have any zoning questions or commercial real estate needs, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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How to Choose the Right Commercial Real Estate Broker

February 14, 2024

Should You Hire a Commercial Real Estate Broker?

If you haven’t purchased or leased commercial real estate before, you might ask, “Should I hire a broker?”. There are many intricacies to a commercial property transaction, and a broker’s job is to keep your interests protected throughout the process.

Having someone, who is experienced in real estate contracts and negotiations, working as your fiduciary is worth its weight in gold. So, how do you choose the right agent? Let’s look at a few things you should consider as you decide.

How to Choose the Right Broker

Look for the following to make sure you choose the right commercial real estate broker:

Experience: Experience is not always determined by the length of time someone has been in the industry. Look for a broker who has a solid transaction history and is in touch with current trends and practices.
Market Knowledge: Each real estate market across the country functions differently, even down to the hyper-local level. Knowing that your commercial agent has extensive market knowledge in the areas you are considering is crucial.
Understanding of Zoning: The zoning of a property determines how it may be used and, therefore, has a significant impact on its investment potential. Your commercial real estate broker should be well-versed in zoning laws and their implications to best protect your investment.
Communication: High-level communication is a must. Commercial property transactions are not always straightforward, so you’ll need clear communication and quick response times from your agent.
Client Testimonials: When looking for a great commercial broker, dig into their client testimonials. Nothing sheds more light on a professional’s qualifications than their past customers’ words.

Northern Colorado Commercial Real Estate

Northern Colorado Commercial Real Estate prides itself on commercial real estate expertise and serving clients at the highest level. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Gross Leases: Are They the Right Fit for Your Property?

February 2, 2024

What is a Gross Lease?

A gross lease is a type of lease that requires the tenant to pay one flat fee to the landlord to rent a given space.

Rather than the tenant paying additional fees, the owner designs the rental amount to cover all operating expenses. These expenses generally include property taxes, insurance, and utilities, but the tenant could negotiate to have additional services such as cleaning included.

In commercial real estate, there are several types of leases to choose from, depending on the property you own. Each variety of lease affects how your tenant-landlord relationship functions, so it’s best to consider all your options before making a choice.

Types of Gross Leases

While all gross leases are similar, they fall into two general categories: modified gross and full service.

A full service lease, as described above, includes all operating expenses in a flat rental amount. The tenant is not responsible for additional charges outside of their weekly, monthly, or yearly fee.

Alternatively, a modified gross lease is tailored to the landlord’s needs. In this scenario, the rental amount may include property taxes and insurance but not utilities. A modified gross lease combines a gross lease and a net lease (where the tenant is responsible for operating expenses).

Pros and Cons

Before deciding on a gross lease, it’s essential to understand the pros and cons. On the upside, a gross lease allows the landlord to collect a higher rental amount and pass along operating expenses to the tenant, especially as costs increase over time.

On the other hand, a gross lease requires more attention from the property owner as they are in charge of ensuring maintenance is taken care of, and bills are paid.

Be sure to partner with a real estate professional to help you decipher which type of lease is best for you and your property. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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2024 Commercial Real Estate Outlook by Sector

January 4, 2024

2024 Commercial Real Estate Outlook by Sector

2024 will be a truly unique year for commercial real estate. Booming e-commerce, a possible recession, and remote work will impact each sector differently.

Office

This year, the office sector will continue to battle the work-from-home trend. Some businesses have already started calling employees back to the office, while others have decided that remote work is sustainable for the foreseeable future.

Less demand means much of the office space across the country remains vacant. Investors with a vision to reimagine the use of office spaces should keep an eye out for bargain deals in 2024.

Multi-Family

With real estate becoming increasingly more expensive in most metro areas, many would-be homebuyers are considering multi-family rentals as their solution. Strong demand for multi-family properties means developers will race to be first to market to maximize profits.

Industrial

Continued reliance on online retailers is keeping demand high in the industrial sector. Consumers are desperate for faster shipping times, forcing retail giants to bring substantial storage facilities closer to home.

Owners of storage and warehouse facilities, or land that can be developed into such, will benefit from solid appreciation and rental growth.

Retail

The retail sector will be heavily dependent on other economic factors in 2024. Increasing inflation or a recession could significantly impact growth in this market. However, if consumer sentiment and the economy remain resilient, the value of retail space will stay stable.

Technology

2023 was a breakthrough year for technology, specifically artificial intelligence. As technology continues to permeate all aspects of society, specific infrastructure is required. The need for data centers, solar farms, and additional cell towers will drive demand for real estate to house technology.

A Close Eye

No matter the year, keeping a close eye on each real estate sector and monitoring macroeconomic conditions are the best ways to succeed in commercial real estate.

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Four Types of Property Management

Property Management Types

Residential Property Management

Commercial Property Management

Industrial Property Management

Special-Purpose Property Management

Have Property Management Questions?

What is Business Brokering?

Why Use a Broker?

Northern CO Commercial Real Estate

Northern Colorado Commercial Real Estate

Sending Us Referrals

Thank You!

Real Estate Investing

Appreciation vs. Cash Flow

Appreciation

Cash Flow

Commercial Leasing

Pros of Modified Gross Leases

Cons of Modified Gross Leases

Is it Right for You?

Leasing Commercial Real Estate

Owning Commercial Real Estate

Your Business, Your Choice

Types of Zoning

Commercial Zoning

Should You Hire a Commercial Real Estate Broker?

How to Choose the Right Broker

Northern Colorado Commercial Real Estate

What is a Gross Lease?

Types of Gross Leases

Pros and Cons

2024 Commercial Real Estate Outlook by Sector

Office

Multi-Family

Industrial

Retail

Technology

A Close Eye

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