In 2013, several commercial real estate market sectors have seen increased movement and new investment in expansion. The surplus of empty storefronts is dwindling—a welcome sight for both consumers and business owners. The diverse nature of commercial real estate in the Central Valley makes accurate and comprehensive market information often difficult to come by. Many ongoing projects, though, evidence the commercial market’s trending growth.
In Visalia, the Sequoia Medical Center is still set for completion on July 1, 2014. In Tulare, a second Dollar General is slated to be finished in 2014 to compliment the company’s existing Tulare location. Further north, Fresno’s Marketplace at El Paseo is scheduled to open in March of 2014. This large-scale retail development, if successful, could spur similar developments in other Central Valley cities.
Multiple Listing Service indicators show commercial property sales increased modestly from 2011 to 2012. This year is on pace to continue that growth. The number of available commercial listings has proportionally matched, and in some cities exceeded, the number of sold commercial properties. Inventory is still robust throughout Tulare County and the entire Central Valley. The sudden shift from a buyer’s market to a seller’s market, as recently seen in residential sales, is not likely to occur on the commercial side.
Each commercial property transaction is highly dependent on a variety of factors. Cost comparison of leasing versus buying, potential renovation/construction expenses, capital improvement calculations, environmental issues and location considerations are all part of the commercial purchasing agenda. Many of these aforementioned items slow the commercial property acquisition process. One newly emerging topic on the minds of prospective small business owners entering the commercial real estate market is the Affordable Care Act (ACA). Many buyers are hesitant to invest in a business/property without a confident understanding of how this new law’s provisions might impact their employment practices.
The biggest hurdle for the purchase of commercial property remains financing. Government entities like the U. S. Small Business Administration offer specialized small business loans and grants that are accessible to businesses that meet certain operational standards or individuals who possess specific background qualifications. Options like Certified Development Company/504 Loans and the California Small Business Loan Guarantee Program provide non-traditional financing strategies that can help businesses acquire commercial property. As with the residential market, interest rates—though rising—are still at low levels.
William Menke is a Realtor with the Guarantee Real Estate Flex Office. He can be reached at [email protected]