A tough economy and real estate market are not the best ingredients for commercial real estate.
Jeff Quintin, a salesman with Prudential Fox & Roach in Ocean City, said that when working in commercial real estate, there are many factors that have to be dealt with to make the right match for the client.
Quintin said it is harder to get loans for commercial properties than residential properties. The loans are often for shorter terms, require more money down and have higher interest rates, he said.
“If a residential loan is for 30 years at 4 percent and 10 percent down, the commercial loan would be 20 years at 6 (percent) or 7 percent and 30 percent down,” he said.
Unlike residential sales, for which there are government programs from the Federal Housing Authority or the U.S. Department of Agriculture that can offer loans with little down payment, there are no such programs for commercial properties, said Quintin, who added that about 10 percent of his sales are commercial properties.
One of Quintin’s listings is the Casa Del Dolce restaurant on Asbury Avenue in Ocean City.
The property, which includes apartments on the top floor, is listed at $749,900, but Quintin said it can be hard to put a value on a successful business. It’s easier to place a value on the land and structure, but it can be hard to determine the potential profits from an active business, he said.
“You have to look at the real numbers,” he said. “With the business itself, it’s always a challenge to see what the income will be.”
Casa Del Dolce is still in business as the owners seek to sell it. Quintin said it’s harder to get people interested if a store is unoccupied.
“So many first-time businesses fail that it’s imperative to show it as successful as you can,” he said.
Another issue with commercial listings is finding the right type of building to host the business, and vice-versa. Because of the difficulty in securing enough financing to build a new structure or change an existing building substantially, usually a business and use must be found to fit the location, Quintin said.
For example, if a building was made for a fast-food restaurant, it could be hard to use that building for another type of business, he said.
Rich Baerhle, broker sales associate for Prudential Fox & Roach in Northfield, said many companies are discussing the possibility of upgrading their office space.
His clients have been a mix of new businesses starting up and existing businesses looking to expand.
Baerhle said prices for office space are down about 15 percent from last year, as there is a large amount of inventory available.
“Some businesses are taking advantage of the prices,” he said. “That’s a big factor in staying a success.”
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