Business NOT as Usual

Is there anything worse for a commercial real estate property and investment than a failing business tenant? Everything about the deal seemed right; so what went wrong?

It may not be good enough anymore to have the basic financials in place with willing investor parties on all sides. Consider adding business-related questions in your study, analysis and due diligence. What is the tenant’s business and plans for growth? And what are the market dynamics for the tenant company’s products and services?

2016 has started with major business changes here in the United States and globally. For example, there are GE’s relocation of its headquarters to Boston, China’s economic woes and Iran’s return to the world market. All events will impact business around the world, and in turn, the demand and supply of commercial real estate properties in specific locations.

As alum of GE Capital, I have personally seen and been a part of GE’s business changes and its subsequent impact on commercial real estate. GE has moved from manufacturing to financing to big construction projects and now digital and business services. And because of its new business strategies, GE decided that its HQ in Boston is a better fit.

So what kind of business-related questions could you consider adding to your process? At Summer Street Advisors, we have added business industry experts as part of our service. I welcome your comments on how you include business factors in your CRE investment process.

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