News about sky-high industrial rents and record sales in metro Phoenix is great if you’re a landlord – and tough if you’re a small business owner renting commercial space. Rather than worry about rising rents (or whether your business will have to relocate), take control of your future: Buy your commercial property with a U.S. Small Business Administration (SBA) 504 loan. It’s more affordable than you may realize and by doing so, you secure your occupancy costs while building long-term, generational wealth.
Phoenix’s industrial-rent increases outpace much of the country
Did you know that the best strategy to beat rent increases and gain additional benefits is to become your own landlord?
Here’s why you need to consider it: Metro Phoenix is primed to experience continuous industrial-rent increases, with no slowdown in sight. Like many desirable areas in the southwestern U.S., Phoenix (and other growing Arizona cities including Tucson, Flagstaff, and Scottsdale) continues to attract people and businesses. That keeps real estate at a premium and, according to data by market-research firm CommercialEdge:
“Phoenix had the highest rent growth among markets without a port, with in-place rents growing 7.2% over the last 12 months. Phoenix has been attractive to both occupiers and investors for a while now due to a lack of geographic constraints and strong population growth.
Additionally, some of the tightness in Southern California has overflowed into Phoenix, a six-hour drive from the ports of Los Angeles and Long Beach. Despite an abundance of new stock being delivered and more in the pipeline, space is still in high demand. In Phoenix, the vacancy rate in August was 3.8% and the average rate of a new lease signed over the previous 12 months was 96 cents higher than the market average for in-place rents.”Benefits of the SBA 504 loan program for industrial and other commercial properties
The SBA 504 loan program is the SBA’s leading option for commercial real estate. In addition to securing your business’s long-term occupancy costs, building financial security, and gaining tax and other financial advantages, here are some key benefits of the SBA 504 loan program:
- You can buy your business’s commercial real estate at below-market, long-term, fixed interest rates, with payments fully amortized over 25 years and no balloon payment.
- In addition to acquiring an existing property, you can use loan proceeds to construct a new facility, upgrade an existing building, purchase equipment(with at least a 10-year life expectancy) or convert facilities for energy efficiency.
- Most SBA 504 loans only require 10% down, so you can keep more cash to grow your business. (Single-purpose facilitiesor start-up businesses may require a slightly higher down payment.)
- When you purchase, renovate or construct commercial real estate using the SBA 504 loan program, there’s no additional collateral required.
Compare payments for owning versus leasing
As the leading SBA 504 lender in the U.S., one thing that we often hear is that small business owners don’t realize how affordable owning their commercial properties can be – that’s why we encourage you to use our SBA 504 loan payment calculator. In many cases, monthly payments for ownership are on par with lease payments – and when you own with a fixed-rate SBA 504 loan, you have the security of knowing that your monthly payment won’t change, which is never the case when you lease from someone else.
Even as interest rates have risen in response to inflation, the SBA 504 loan program continues to offer great rates to make it easier for small business owners to purchase your property. And if rates decrease during the life of your loan, there’s always the option to refinance with another SBA 504 loan.
TMC Financing is the nation’s #1 SBA 504 Lender
If your small business is located in Arizona, California, Nevada, or Oregon and you’d like to explore commercial real estate financing that fits your needs, TMC Financing’s SBA 504 loan program is a great place to start. Most small businesses in our service area are eligible and we have an SBA 504 loan approval success rate of 96%.