SJP Commercial | SJP Commercial Campbell | SJP Commercial California

2470 S. Winchester Blvd, Suite E, Campbell, CA 95008

speck@sjpcommercial.com | 408-307-9785

SILICON VALLEY PROPERTY REPORT

Leasing activity in Silicon Valley is trending to more movement in spaces that are 10,000 square feet or less. Many tenants are leasing space for terms that are 3 years or less, and are obtaining lower rents, as well. Businesses are considering space outside of their long term places of business to move to areas where rents are substantially less, for more space. Class A properties, or newer, higher end properties, are falling out of favor with tenants who are moving to Class B, or older buildings with lower rental rates, where image is not needed.

Commercial Real Estate Smart Guys

To get more information about commercial real estate get in touch with ‘Commercial Real Estate Smart Guys’. They are located in Silicon Valley, California and provide a full range of commercial real estate services for tenants and property owners. Their email id is speck@cresmartguys.com and Ph: 408-307-9785. Visit their website http://www.siliconvalleycommercialrealestate.biz/ for more information.

Top 5 Mistakes to Avoid Investing in Commercial Real Estate

Anyone who invests in real estate is at risk to make a blunder sooner or later. In almost every case the cause is traceable to a lack of knowledge about a few simple guidelines that form the ground rules of successful commercial investments. These are the basic practices that when used correctly will eliminate the most common causes of a bad deal.

Here are the 5 steps to avoid:

Ignoring local market conditions
There are two levels of due diligence required to evaluate a real estate investment-the market and the property. The local market conditions prevail between the two. Analyzing the demographic trends of population growth, income, and employment in the local market will tell you where opportunity lies, or not, and will help you know which property types are in demand, or oversupply. Investing in an area with declining demographic trends is destined for trouble. So learn your market.
Insufficient property due diligence
The second level of due diligence is the property condition, including physical items such as building systems, environmental matters and structural components. Just as important are the intangible items, such as title, survey, and zoning and land-use regulations. Knowledge of contract law, insurance, finance, accounting, and tax law is also critical to doing things right at the beginning to insure success at the end. Get accurate estimates from professionals of what it will cost to fix what is wrong.
Misunderstand the math calculations
Real estate is a numbers game. Value is dependent on net operating income-gross revenue minus operating expenses. That's why it is so important to get the real operating numbers, not projections Confirm and verify every element of income and expense. Value the property based only on present income only.
Borrowing Too Much Money
Highly leveraged deals do happen, but unless it's backed up by a solid plan with sufficient capital, it can be disastrous. For evaluation purposes, it is conservative to use 45% of gross income for expenses and vacancy.
Failure to have a property management plan prior to investment
Your plan should answer the questions of how the property will be managed; what improvements are needed and their cost; how money might be made (or lost); how long it will take; how to get out if things go wrong; and how to access the profits when it goes right.

Note: Please consult with your real estate professionals for further analysis and more information. Investors should always use professional tax and legal experts prior to investing in real estate.

Commercial Real Estate Smart Guys

SUBLEASING SPACE

Subleasing (or subletting) commercial real estate has become rather popular over the past few years for a number of reasons. It is the act of a third-party partaking in the lease transaction; the sublessee takes over a tenant's rights and obligations for a certain space until the master lease expires. Though the third-party becomes a new lessee, the primary tenant is liable (to the landlord) for damages caused by the sublessee. The original lease must contain provisions allowing subleasing, in order for one to pursue such a venture.

Commercial Real Estate Smart Guys

Renewing/Extending a Lease

A renewal clause within a lease would permit a tenant to continue the agreement after the original contract has expired. Remember that lease renewal is a simplistic task, if done correctly. Extending a CRE lease isn't just beneficial to the tenant; the landlord saves time, money, and perhaps stress from looking for a new lessee.

Oftentimes, a renewal clause paves way for a term rent increase. To avoid an unexpected and burdensome rise, attempt to negotiate a prearranged rise in the rental rate. Before signing a lease, it would be wise to research renewal options and agreement extension possibilities.

Commercial Real Estate Smart Guys

HOW SPACE IS MEASURED FOR OFFICE PROPERTY

Office buildings use substantially different calculations. The actual square footage that an office user may occupy is typically less than the amount upon which the rent is based. The square footage that you use exclusively is termed "usable square feet" and the amount upon which the rent is based is called "rentable square feet". This is because office tenants pay their proportionate share for their use of building common areas. Common areas include lobbies, hallways, rest rooms, and service areas. The differential is expressed as a percentage known as a load or loss factor. When comparing properties, it's a good idea to ask, "What is the load factor?" The higher the load factor the more of your space will be in the common areas and less inside the suite for your exclusive use. Occasionally, one may find a building that bases the rent upon the usable square footage. Since load factors can run 17 to 22 percent, this may represent real savings.