This is an historic time in the Atlanta real estate market. After years of value inflation, prices are readjusting to more reasonable levels for business owners who chose leasing over the past decade. Financing is tougher, but that reduces competition for buyers with solid fundamentals. While asking prices are slow to drop, buyers equiped with financing and market knowledge can negotiate great deals.
Great financing is available for buiness owners who plan to occupy their building. Conventional lending availablity varies greatly between banks. A useful alternative is the SBA program, which has been streamlined in recent years. The government has devoted some resources to here as a part of their stimulus plan. If your businesses occupies over 50% of the property, financing up to 90% of the property value and even some equipment lending is available. I know you “do-it-yourself” guys don’t think any government programs are for you. But this is just a loan program to make the banks do some lending in this crazy economy. The government doesn’t do much to help the small business person, but these programs are for you, so use them.
While industrial prices have declined, we are not seeing the 75% discounts that some buyers are expecting. Atlanta area warehouses and industrial buildings have not had the foreclosure activity seen in residential, office, and retail properties. Perhaps that’s because industrial products were never seen as “sexy” to the many new investors that flooded into real estate in the 2000’s. But we are starting to see more bank-owned opportunities surface, mostly in small buildings owned by hard-hit local contractors. Of course, development land has been repo’d after the halt in building activity. But many business owners have specific building needs that aren’t a fit for available foreclosures, which are many times odd buildings in unpopular locations. That said, it pays to keep an eye on the foreclosure advertising, which our research department does constantly.
Buyers need educate themselves by looking at real asking prices and sales. The reality is that buyers can make tremendous deals by submitting offers, to work down sellers from their asking prices. Most sellers are still thinking of prices from 2006 and 2007, thinking that they can wait until the market comes back. It will come back, but may be much farther away than they think. If their property has been on the market over a year with no offers, your discounted but qualified offer will have a great chance of acceptance. Being a buyer today, you can make sellers compete for your deal. King Industrial can help, because we have tools to show exactlly what sold in your market, other available properties, average prices, months on the market, etc.
Another stratagy for finding a great deal is Grey Marketing. This is basically contacting property owners who’s properties match your criteria and asking if they’ll consider selling. It’s a great way to find deals before they’ve been listed, sometimes with very aggressiveor distressed sellers. We have a database of 600 million square feet of buildings, allowing us to sort them by location, size, construction type, dock and drive-in doors, acreage, etc. So we regualarly contact owners for our client’s specific need, sometimes unearthing a gem.
The first step in your buying process should be talking to an industrial broker to help define your search and talk about the market. Buyer’s brokers are paid their commission by the seller, not you. So it makes sense to take advantage of their knowledge and tools. The next step is pre-qualification by your lender, whether through the SBA program or a conventional loan, so you can search and negotiate with confidence. Then search the market (many buildings for sale), negotiate your contract, conduct a thorough inspection of the property (environmentals, survey, zoning, etc), and enjoy your new location.