Let me start by stating I’m a commercial real estate broker who has been actively working on the Virginia Peninsula for more than 20 years, and I’ve overseen many new development projects. During that time, the amount of available commercial land has steadily been reduced, and “good” raw land has become tougher to find.
I consider myself fortunate to have assisted many businesses with the decision of whether to purchase land and develop a new building or opt for a pre-existing structure. While both options have their merits, choosing a property with a pre-existing building is easily my preferred route over new construction.
The most significant benefit of purchasing a pre-existing building is avoiding the time-consuming process of new construction. Developing a property from the ground up can take from 12 to 24 months. There are sometimes shortcuts, but depending on the size and complexity of the project, I always say, “It’s a minimum timeline of one year, and that’s if you’re sprinting on fire!” That development time is also precious time that your business could be using a pre-existing structure to generate revenue and/or establish a presence in the community.
In recent years, construction costs have skyrocketed due to various factors, such as tariffs, labor shortages, COVID and rising material prices. Purchasing a pre-existing building allows you to avoid these high costs and take advantage of the seller’s original investment. Additionally, you’ll have a better idea of the building’s total cost upfront, whereas new construction often comes with unexpected expenses and budget overruns. I’ve yet to see a new construction budget stay within its original limits. Why? Because even when you prepare for every plausible scenario, something unforeseen always bubbles to the surface. It’s almost like clockwork.
One of the more daunting tasks with new development is getting a site plan approved by your local government agency. The process can become very complex and drawn-out. Zoning regulations, environmental concerns and community input can and will impact your expected site plan approval timeline. However, when you choose a pre-existing building, you bypass this step entirely. That’s a major consideration since it allows you to focus on other essential aspects, such as growing your business.
As already mentioned, the amount of raw land is being reduced annually and most of the ‘desired’ locations have already been developed. Meaning, many pre-existing buildings are already strategically located in prime business areas throughout Hampton Roads. By choosing a pre-existing building, you’ll likely benefit from the property already having better visibility and access compared with the majority of the available raw land.
Keep in mind, there is a reason certain sites haven’t been developed?—?the property’s location, environmental issues, topography, accessibility, etc. That doesn’t mean all the best sites have already been taken but it does mean those remaining desirable sites will come at a premium. Unlike municipalities further inland that can accommodate sprawl, the Peninsula is finite in overall land availability, let alone commercial land.
Many businesses have elected to retrofit pre-existing buildings because it can generate unique character that can set them apart from their competitors. This is called an “adaptive reuse,” and it can help create a distinctive ‘brand’ often bringing with it a sense of nostalgia resonating with most folks. Additionally, older buildings often have excellent upfit potential. I would wager that most have witnessed a well-done retro-refit and have felt the nostalgia that comes from being in a place that has seen many changes. Nostalgia doesn’t have a price point affixed to it but when it’s done right, it tends to draw a crowd.
There isn’t a one-size-fits-all approach to commercial real estate decisions. Purchasing a pre-existing building in Hampton Roads offers numerous advantages over new development. It can save time, money and resources and allow the business operator to focus on what truly matters: growing the business and achieving success.
So, when considering your options, remember the benefits of pre-existing buildings and make an informed choice to serve your business for years to come. Lastly, when weighing your options, always consult a commercial real estate broker, preferably one with experience in commercial land development.
Vincent A. Campana, III is associate broker with Campana Waltz Commercial Real Estate West. He can be reached at 757-209-2990. Website is www.cwcrew.net.
LINK TO THE ORIGINAL ARTICLE: https://oysterpointer.net/buying-pre-existing-commercial-property/