While there is a huge growing trend toward being able to work remotely, it comes as no surprise that the majority of businesses today still operate out of some form of commercial space, whether that be a factory, office, or retail storefront (or some combination of these). If you are in the market to launch a new business, or even if you are just thinking of expanding or altering your existing business, one of the first steps you will need to take is deciding how to finance your commercial real estate.

Most often, this choice comes in the form of either renting or purchasing commercial space. When you purchase commercial real estate, you can either buy it outright or finance it with a loan from a bank or other financial institution. When you lease you simply rent the term for an agreed-upon amount of time; once this time is up, you must renegotiate the lease if you’d like to stay in the property — at the risk of paying more for the same space.

Not surprisingly, there are pros and cons to both buying and leasing commercial real estate. Several factors should go into choosing the right acquisition strategy for you and your business, including business equity, tax implications, cash outflows, property value and more. To help you make a more informed decision, let’s dive deeper into some of the pros and cons of buying and leasing commercial real estate.

Buying Commercial Real Estate: The Pros

• Buying builds equity. If you purchase your property outright, you own 100% of it right away. However, the majority of commercial purchases are financed. Even in this case, your down payment and all of your monthly payments are continuing to build equity in the property — helping to add to the overall value of your business.
• Control. When you own your commercial property, you have complete control over it (for the most part, excluding zoning restrictions). This means that you don’t have to negotiate with a landlord if you want to update or reconfigure the space. You also have greater control over your finances, paying a fixed monthly mortgage that doesn’t fluctuate (unlike rent payments, which can fluctuate every time a lease is renegotiated).

Buying Commercial Real Estate: The Cons

• Upfront spending costs. Typically, in a commercial space, you can expect to pay anywhere from 10% to 40% as a down payment — in addition to closing costs and other fees of due diligence. To put this in perspective, for a $2 million commercial property, you can expect to have to come out of pocket $200,000 to $800,000 — just for the down payment.
• Risk of capital loss. Unfortunately, depending on the market conditions, you are always taking a risk in buying that your property’s value will decrease or decline. If this is the case, you may end up taking a capital loss if or when you decide to sell your commercial real estate.

Leasing Commercial Real Estate: The Pros

• The ability to focus more on your business. Owning and managing a commercial property can be hard. There are a number of things you have to consider — maintenance costs, insurance requirements, and more. Leasing commercial space gives you the freedom to focus on what you do best — managing your business.
• Added flexibility. It’s a simple fact that qualifying for a commercial lease is often easier than qualifying for a commercial mortgage — meaning that you will immediately have more options when choosing your space. You also have the freedom to move at the end of your lease, if you want — without the added stress and headache of having to sell your property first.

Leasing Commercial Real Estate: The Cons

• Rent is costly. It’s no secret — your monthly rental payments will usually cost more than the mortgage payments on the same property. In a typical commercial lease, the tenant is responsible for additional expenses, including monthly insurance costs, property taxes, maintenance costs, monthly utilities, and more. As a result, it can often be more expensive to rent a space that to purchase it.
• Less control over the space. If you don’t own your commercial space, your options are limited when it comes to the control that you have. Your lease may have certain restrictions or clauses built in that hamper your control over the space, you have very limited control over potential rent hikes once your lease is up, and even if you go out of business or close up shop, you may still have to pay off the remainder of your lease — or face stiff penalties.

When shopping in some of the biggest cities in the world, you may be surprised to find out that the architecture of some of the flagship designer shops rivals that of many of the other most well known landmarks or destinations of the city. While this is true of the larger fashion houses and luxury brands, it also stands true for a number of other retailers.

When it comes to the success of flagship stores, it can be argued that the hits — and misses — truly lie in the details. There are plenty of retailers who are getting flagship retail right but, unfortunately, there are just as many who just miss the mark.

For those retailers that are getting it right, their success lies in a unique combination of experience, location, and interaction. Here are 3 reasons why retailers should focus on cultivating beautiful flagship storefronts.

Attracting Destination Shoppers

One of the reasons some of the largest retail brands in the world choose to have such elaborate and luxurious flagship stores is to attract visitors to the destination into their stores. While it’s true that many of these shoppers have a particular brand’s store nearly in their backyard, they are still likely to want to go inside a flagship store and shop. For instance, the vast majority of Americans have a Macy’s store inside their nearest mall — but an estimated 20 million shoppers still visit the brand’s flagship store in NYC’s Herald Square each year.

Part of the appeal is pure curiosity and interest,  but many shoppers are also interested in collections that they simply can’t find at home in their local store.

Building Brand Identity

Another reason brands should focus on their flagship store experience is building their brand identity through taste and great design. There is no denying or arguing that there are a number of products and services that are extremely expensive — and some may even go as far as to say excessive (check out this article on the most marked up consumer goods from MoneyTalksNews). Yet, still, consumers line up to purchase these items en masse… but why?

Simple. The reason consumers are willing to spend so much of their hard earned money on these products is a unique combination of the prestige of the brand, their quality, and the sense that they are getting something unique and special in terms of design and/or status. By having unique and beautiful flagship stores, brands are backing up this notion, helping to sell their products and show even the people who don’t shop there that they truly offer the ultimate in design.

Publicity and Brand Awareness

Think about it… if you are traveling to a new city, its unlikely that you’d share a picture of the local Vinny’s Pizzeria where you grabbed a quick lunch in the nearest strip mall. However, if you come across an incredible or iconic building (think the Chanel store in Zaragoza, Spain or the Tiffany & Co. store in Manhattan), you may be inclined to snap a photo, whether it be to share on social media with your friends and family, or to be kept as a personal memento of your travels.

This type of unique, grassroots publicity helps keep the visible, whether people shop in their stores or not. This provides a number of benefits to brands, regardless of industry. Keep in mind that it is vitally important that there be clear brand alignment and reinforcement between these flagship stores and the other ways in which the brand communicates. Flagship stores should always be in line with the overall look and feel of the brand — yet elevate the experience to a new level for customers and guests.

Have you heard the news? Amazon is stealthily targeting airports, interested in bringing their futuristic format of checkout-free stores to these crowded hubs in order to win business from busy time-crunched and hungry travelers. This strategic move is just another in a series of ways the online retail giant is shifting from their roots as a simple online bookseller into physical brick and mortar retail space, to capture a greater market share and more shoppers’ dollars.

With several of these locations already under the belt of Amazon, including in Chicago, San Francisco, Seattle, and more, let’s take a closer look at ways this move may or may not make sense, and what the future may hold for Amazon in your local airport. Here are 3 things to watch about the expansion of Amazon into airports.

Oslo, Norway – January 2018: Oslo Gardermoen International Airport departure terminal architecture. The Oslo Gardermoen airport has biggest passenger flow in Norway.

Airports may be a natural environment for Amazon. 

While the idea may initially seem novel, airports could actually prove to be the perfect home for this futuristic concept. Neil Saunders, managing director of research firm GlobalData Retail, sums it up best: “One of the biggest problems at airports is that [people] are very busy and often very stressed, and there’s a real restriction on time. Its very interesting Amazon is looking to go there.”

The very setup of an Amazon Go store is a natural fit for travelers, complete with no checkout lines or even cashiers. Shoppers simply scan their phones at a turnstile upon entering, and then cameras and sensors help to keep track of which items shoppers put in their carts — and which they put back on the shelves. Once shoppers have everything they need, simply walk back out of the store, and their phones generate a receipt and a summary of their shopping experience.

There have been some concerns about how shoppers and their data are tracked.

The use of cameras and sensors understandably raised some eyebrows about how closely shoppers and their data would be tracked and used. Certain privacy experts cautioned potential shoppers that they may not even understand exactly how much of their personal information they would be giving away by shopping in these stores, and that Amazon has the ability to track more than just what you buy.

But it’s important to note that Amazon insists that their technology doesn’t use any type of facial recognition. Instead they rely on large codes on certain items that help cameras realize when they’ve been picked up, as well as a sophisticated system of weight sensors installed in shelves.

The future of Amazon in airports is unclear. 

Some experts, including Ramon Lo, publisher of Airport Experience News, agree that the Amazon Go model is the perfect addition to today’s busy airports — especially in large hubs such as Atlanta, Houston, or Dallas — where big numbers of busy travelers are looking for something fast and efficient in between their connecting flights. But does this type of model make sense for smaller hubs with significantly less foot traffic? Maybe not.

Ryan Hamilton, a professor at Emory University’s Goizueta Business School, points out that Amazon Go stores need to factor in the hefty price tag of installing this type of sophisticated camera and sensor system — and then weigh it against the potential return from shoppers. And, while not hiring cashiers does take away a large portion of the traditional operating costs, this model may not always be a good fit where the number of travelers simply doesn’t warrant this type of investment.

There has been a buzz about new markets and where Amazon Go may go next, but the company has remained tight-lipped about the future plans for these types of shops. Still, don’t write off this savvy retailer anytime soon. Keep an eye out the next time you’re running through the airport — you might just be surprised at what you see.

Life science is not just that high school class you took in 10th grade. In fact, it is a flourishing industry and it has caught the attention of many prominent and budding CRE investors recently. The life and bio science industry has been steadily surging for some time now due to increased knowledge, funding and research in the scientific and medical fields. In fact studies show 79% of adults say “science has made life easier for most people and a majority is positive about science’s impact on the quality of healthcare, food and the environment.” So why are investors eyeing these properties? Let’s take a look.

Female and Male Scientists Working on their Computers In Big Modern Laboratory. Various Shelves with Beakers, Chemicals and Different Technical Equipment is Visible.

1. Life Science Jobs are Increasing

Life science and biotech jobs are increasing at a steady rate. In recent years much of society has shifted into caring about scientific advancements in various fields such as, medical, nutritional, environmental and more. It has been recorded that “science holds an esteemed place among citizens and professionals. Americans recognize the accomplishments of scientists in key fields and, despite considerable dispute about the role of government in other realms, there is broad public support for government investment in scientific research.”

With this mindset, from now to 2026,  jobs are predicted to increase by 10%, a faster than average rate, and medical research will increase demand for workers. When investors see that an industry is steadily rising with no indication of plateauing anytime soon. it is normally a good industry to invest in early.

2. The Demand is High

Considering new innovations and jobs are opening incredibly frequently in this field, it is no surprise the demand is high. Growth has occurred in some of the most prominent cities including Boston, San Diego, Chicago, New York City and more. Vacancy rates for life science properties are remaining low. How low? It can fluctuate between 2-4% range, but in some cities like Cambridge, Massachusetts, for example, vacancies are virtually 0%.

In fact, rents in this city for scientific properties are on average $75/SF as per recent research. This is good news for developers and the investors who back them. Increasing supply in the slightest when demand is high can be a great move financially.

3. Advancements in Biotechnology

With the population of seniors growing, many diseases like cancer, HIV, and diabetes making headway in new medical advancements the need for lab spaces is critical in cities all over the country. One of the biggest reasons lab space has increased recently is the mapping of the complete human genome, and the specific advancements that have accompanied it. The price of mapping these genomes once cost millions of dollars, but with recent advancements, has dropped to around $1,000. This has resulted in expansive DNA research as well as medical and scientific advancements across multiple fronts.

The great thing about scientific advancements is that they build on each other, and one discover leads to the discovery of new things, which keep the market constantly evolving — a great thing for investors.

The industrial market has long been a favorite amongst CRE investors and occupiers for a variety of reasons. In the United States, there is normally a need for industrial properties at any given time. This makes the industrial sector especially hot for future real estate endeavors due to its resilience.

By using NAI Global’s expert local research, along with the input of their region-specific team members — which produces intelligence that conveys future predictions in quarterly reports — we have put together a list of 5 hot industrial real estate markets and why you should be watching them now.

1. Northern New Jersey

Northern New Jersey has always been a hotbed for industrial activity. New Jersey has the appeal to many investors and major corporations, especially in the warehouse, manufacturing and distribution sectors. The market has remained incredibly strong for a number of years and continues to grow. Due to the proximity to New York City, the valuable space in the Meadowlands, Wayne, and Totowa often results in incredibly high demand from buyers.

Overall, at the end of 2018, Northern New Jersey had an average asking rate of $8.16 and vacancy of only 2.9%. Asking rates have almost doubled since 2015, and vacancies have plummeted creating incredible demand. “Leasing of new construction has lead the charge, being absorbed before or upon delivery. Overall, this sector’s vacancy rate has further declined to leave little availability. This pressure has pushed rates to record heights with NNN deals in the $14 range,” says Russell Verducci, Vice President of NAI Hanson.

2. San Diego California

San Diego and the surrounding areas are commonly associated with success in the multifamily sector, and while that is true — the industrial sector is also thriving. Unlike the aforementioned area in New Jersey, San Diego mainly appeals to the defense, biotech, and life science industries. “Torrey Pines is home to world-renowned research institutions performing groundbreaking work,” research shows. Innovative current tenants looking to expand increases demand and pushes flex vacancies to an extremely desirable rate. Additionally, with new construction on the rise, and the enthusiasm shown by investors NAI San Diego’s regional experts predict high sales volume by the end of 2019.

3. Central North Carolina

North Carolina also has a positive outlook in the current and future industrial market making it one to keep an eye on. According to Colin Rockson, industrial division broker for NAI Piedmont Triad, vacancy is predicted to stay low in the regional market, which will encourage increased rental rates. Not to mention, the high demand in the area has sparked interest amongst developers — thus prompting new properties to be developed, especially ones with larger footprints.

4. Western Michigan

Western Michigan has some great stats for industrial development. With a low unemployment rate of only 3.3% and 130+ international companies in the immediate area, jobs flourish and so do industrial needs to support those jobs and companies. Pair this with a limited supply which has prompted new construction, giving even more opportunities to investors, corporations, developers, and brokers. This area of Michigan is especially proficient in the manufacturing sector, and predictions for the remainder of 2019 are looking especially strong so ensure you keep an eye on the industrial market here.

Be sure to keep an eye out for NAI’s market research for 2019 as the year progresses, for more facts and stats about regionally specific industrial markets.

When it comes to attracting and retaining the best talent, savvy companies know that they need to be competitive with more than just salaries and the standard perks, such as company-sponsored healthcare plans and paid vacation time. In fact, modern companies such a Google, Facebook, Pixar and more — commonly known as being among the very best places to work — are famous for providing their employees with workspaces that promote not only creativity and innovation, but also collaboration and morale.

And for good reason, too. The architect of Google’s Silicon Valley headquarters, Clive Wilkinson, said it best when he noted that “75 to 80 percent of America is cubicle land. Cubicles are the worst — like chicken farming. They are humiliating, disenfranchising, and isolating. So many American corporations still have them.” Harsh words, yes — but not entirely untrue. By comparison, today’s modern and employee-centric office designs are the very opposite. Rather than closed off walls, spaces and cubicles with bad lighting, they focus on open concept spaces with natural light and a casual, comfortable feel.

What’s more, in addition to a sleek and modern design aesthetic that promotes creative thinking, smart companies are also enticing their employees with attractive office perks, such as free food, drinks, and even recreation and entertainment. But is one better than the other? Does one seem to resonate more soundly with tenants?

The short answer is that if depends on who you ask. Many companies feel that making physical spaces more comfortable and flexible are most important, bringing in movable and comfortable furniture, lots of natural light, and inspired designs. Read on to find out more.

The Case for Physical Space

One of the people in this camp is Christa Tilley, Creative Producer at Glossier. She reports that working in Glossier’s open and airy offices with plenty of natural light actually makes her feel healthier every day — not to mention the benefits the physical space brings to her workflow. “In the closed door office I used to work in, I didn’t know who was in charge of things and where to find people. Now, we all sit together on comfortable couches that feel like we’re in a home and we’re really able to get down to it,” she says.

Of course, while this type of environment is great for collaboration, Tilley admits that sometimes quiet places are necessary, in order to get certain jobs or tasks done. “Sometimes there’s menial administration stuff I just need to get done but when I’m in the office, we’re so hands-on and communicating so much, I don’t have time to sit down and pay invoices, look at contracts and do more menial, less time-sensitive tasks even though they’re just as important to do,” she admits.

But What About the Perks?

And then there are those who feel that office perks are most important and that all perks are not created equal. In fact, they would go so far as to purport that offering perks has become a competitive sport among the top corporations and organizations, with each one fighting it out to see who can offer the best and newest perks.

While some perks might not always lead to improved productivity, nearly all of them help to build and foster community – and genuine familiarity always allows for greater and better collaboration. Experts agree that there are four characteristics of office perks that are genuinely effective:

• They inspire curiosity
• They help you see why your work matters
• They help you blaze a trail forward
• They help you stay sane, stable, and satisfied

By being deliberate with both the office perks and physical space design you offer your employees, you’ll see job performance, and morale, increase drastically.