Business Buzz
By Rich Baehrle
For almost 40 years I have been putting the puzzle pieces together to make real estate transactions come to fruition. In commercial and land, there are dozens of issues that must be resolved to transfer or sell a property.
Let’s start with land.
People ask me, “How much is my land worth?” The first step is to research the zoning. We need to look at the permissible uses. Are there any wetlands? If there are any wetlands, they must be mapped and delineated. You must isolate them and establish the setback area. Once this exercise is completed, you will have the building area of what the property can yield.
The next step is to confirm if there are utilities accessible in the area. The last issue is to conduct a study to assure that there are no adverse environmental conditions.
Once all the preliminary work is completed, you need to meet with an engineer who will create a draft of preliminary plans. They will incorporate lots and roads that conform with the appropriate zone, whether residential or commercial.
Now the work really begins with the approval process. Sometimes you will deal only with local approvals. However, the process often includes lengthy state approvals such as Pinelands and CAFRA. That’s why the development team you choose, including an attorney, planner, engineer, Realtor etc., is paramount.
Once all of the physical aspects are analyzed, you can now conduct the price comparable process. The process to purchase land for commercial buildings is like the residential land process. The developer must look at the zoning, review percentage lot coverage, height restrictions, setbacks for side, rear, and front.
In addition to the process mentioned above, they often need to conduct a traffic impact study and obtain DOT permits. There are approximately 10 to 12 permits that must be obtained.
The process of deciding to acquire a commercial building is somewhat like the land process. You have heard of location, location; well, that is only the beginning.
Once you determine what is most important to meet your needs, you must analyze the zoning to make sure it permits your use. If it is not permitted, you can always inquire if the town would consider a variance. Here the team you choose including the attorney, Realtor and engineer, is once again important.
When you have selected a location that meets your needs, you are now ready to place the property under agreement. It is critical that you use a letter of intent, which will establish the general criteria for the buyer and seller to proceed to an actual agreement of sale.
You will incorporate a due diligence period to allow yourself time to study all of the mentioned issues including financing. You do not want to obligate yourself to buy a property or building that you cannot use or that you cannot get financed. Financing can take much longer than the residential home process.
Lastly, to those of you who want to lease space, you will need to go through a similar decision process.
First, set your location needs. Is it necessary to pay a premium to locate in the best, most visible building, or can you save money and meet your needs in a less pricey space?
Is image on the top of your list? How much space do you need? You must avoid taking too much space, but you don’t want to lock yourself into a space that you will outgrow, either. When you are negotiating the terms and conditions of the lease, be careful to commit to a long enough term that establishes stability, but does not over commit.
The current trend in office/professional, and retail indicates that smaller is sometimes better. Companies are rethinking their needs, which poses a challenge for landlords. It appears that the Atlantic-Cape region is fortunate to only be experiencing a slight vacancy factor.
Rich Baehrle of Berkshire Hathaway Fox and Roach. Can be reached at 609-226-6680 or 609-641-0011 richardbaehrle@gmail.com
www.getrichinrealestateSJ.com
