For any local business owner, purchasing your first brick-and-mortar store is an exciting time filled with many possibilities. This milestone not only represents a significant achievement but also a significant step towards long-term stability and growth.
Today’s competitive commercial real estate market can make purchasing strata retail spaces a challenging endeavor for business owners. However, with the expertise of Essence Properties and Commercial Properties Group, you can access a wealth of knowledge and experience to help you navigate this complex market.
Here are the five top benefits of owning your own retail space as a local business:
Building equity can be an important financial goal for any business. Equity is the difference the market value of a property and the amount owed on any mortgages or loans secured against it. Building equity in a property typically involves making mortgage payments over time, as well as making improvements that increase the property’s value. Building equity in a property can provide several benefits such as: increasing your net worth, increased borrowing power and greater financial flexibility and security.
If you decide to buy a property, you’ll be making regular mortgage payments on your retail space as opposed to monthly rent and will be building equity on the property in the process. This can be an asset for your business, as equity can be further used as collateral in securing loans. Additionally, certain groups of owner-occupiers are eligible for 100% financing options from lenders, which maintains access to capital.
Buying your retail property gives you as a business owner increased control on how the property is used. You have the freedom to make modifications, improvements, and upgrades to the space as needed within your municipality’s guidelines and bylaws, without seeking the approval or permission from a landlord.
Ownership also provides more predictable costs over the long term, as you can avoid annual rent escalations while also managing your business’ operating expenses. Furthermore, owning your own space, in contrast to leasing allows you the independence to choose when to relocate – as landlords typically have the right to terminate a lease agreement at the end of its term, and in some cases, even before the expiry of the term.
Canadian business owners may be eligible for certain tax benefits if they choose to buy their property. For example: Business owners who purchase a property can claim a tax deduction for the cost of the property over a period of several years, through a process called capital cost allowance (CCA). CCA allows businesses to recover the cost of certain types of capital assets over time. Further, business owners may be eligible to both mortgage interest and property tax deductions, in addition to refinancing tax benefits.
It is important to note that the tax benefits of buying a property will depend on the specific circumstances of the business owner and the property in question. It is always a good idea to consult with a tax professional to ensure that you are maximizing your tax benefits and complying with all relevant tax laws and regulations.
Capital appreciation refers to the increase in the value of an asset over time. While never guaranteed, historically, real estate in Metro Vancouver and the Fraser Valley have outperformed almost any other alternative investment asset (such as stocks, bonds, and mutual funds) over the past 50 years.
The gain in value can occur for a variety of reasons, such as an increase in demand, improvements to the property, or changes in market conditions. Capital appreciation is often a key consideration when deciding where to allocate your capital. By investing in property that has the potential for capital appreciation, you can increase your overall wealth and build long-term financial security for both you and your business.
Owning your retail property can offer several advantages, including the ability to make the most of your investment by purchasing more space than you initially require. This extra space can be put to good use by leasing it out to tenants, generating additional income to supplement your mortgage payments or other expenses. By earning extra income from your property, you can offset some of the costs associated with owning a property and build long-term financial stability. For any local business owner, buying their own retail property is a significant decision. However, armed with a good understanding of the commercial real estate market, your business requirements, and the advantages at hand, you can create the ideal space that’s uniquely yours and help your business flourish.
If you’re a local business owner and would like to learn more about your commercial real estate options, please reach out to George Richmond or Rebecca MacLeod of Commercial Properties Group.