The Risks of Hesitation in a Fast-Paced Seller’s Market

He who hesitates is lost

The old saying is ringing true again as it relates to acquiring industrial properties in the Orange County area in the midst of a California seller’s market.

After several years of tough times, the industrial property market came charging back and is surging past the previous market peak. In fact, activity has spiked to the degree that acute shortages, especially those properties offered for sale, are prevalent throughout the region.

Business owners, motivated by the lowest interest rates in 60 years are aggressively purchasing new facilities for their companies through the SBA 504 and 7A fixed-rate loan programs, which require only a 10% down payment.

Occupancy costs can be held flat for up to 25 years with interest rates in the 4% to 5% range. With terms like that, it should come as no surprise that competition is fierce to acquire the best properties.

However, those entering the market are indeed surprised by the aggressiveness of buyers who have learned their lesson by losing out on other opportunities.

Lack of quantity is not the only problem, either.

As one might expect, the highest quality properties move first, making the acquisition challenge even more difficult. In fact, many of the best properties sell before reaching the general market to highly qualified and motivated buyers, represented by knowledgeable brokers.

So, what can you do to mitigate these challenges?

 
First and foremost, give yourself plenty of time to make facilities decisions. Waiting until the last minute and being forced into a property that doesn’t fit your needs could be very costly.

Second, begin the process by engaging the services of a real estate professional who really knows the market. Even then, the search for the right property could require several months of diligent effort, with no guarantee of an optimal result.

Third, give all your options a thorough vetting. Purchasing a property offers many advantages, but it’s not the right decision for everyone. Leasing is still a viable option and it can offer greater flexibility for businesses whose space needs can change quickly.

Whether you buy or lease a new facility or stay in your current location, the Zehner Davenport Industrial Group has the knowledge and the resources to help you make the most informed decision possible. We look forward to serving you soon.