Choosing between buying and leasing a commercial property is a big choice many companies must make. Each alternative has its benefits and there is no easy, single-size-fits-all solution.

Buying Commercial Property

Commercial real estate ownership may be lucrative, but it can also be disastrous for individuals who enter without a strategy. At the very least, buying commercial property carries risks for individuals who operate unreasonably. 

Pros of Buying Commercial Property

Appreciating Asset 

The growth in the value of your property over time is an advantage of owning commercial real estate. Variables such as inflation, local supply and demand, interest rates and others affect the appreciation rate.

Rental Income

A majority of companies that purchase a commercial property do so with the intent of occupying at least 51% of the space and renting out the remainder. Rental money is generated, but you are liable for any tenants renting out the area as a landlord.

Increasing Your Net Worth

You immediately own 100% of the property if you pay in cash. If you take out a loan, your down payment and regular payments build equity in the property. If you refinance or sell your property, your equity is the difference between the fair market value and the outstanding loan debt, and it goes toward your overall equity.

Control

You have authority over your property when you own it, so you don’t have to argue with a landlord if you want to rearrange the area. You’ll also have a fixed monthly mortgage payment rather than a rent payment that might fluctuate depending on when your lease ends.

Cons of Buying Commercial Property

Inability To Move Your Business

An important benefit of a lease is that it allows you to opt not to renew it at the end of the term and move into a property better suited to your needs. Owning the property makes it harder to sell and move into a new facility when your business expands or contracts.

Up-Front Spending

A purchase may require up to six times as much money upfront due to down payments, closing charges, and due diligence fees. Most lenders will require at least a 10% down payment, but it can be as much as 40%. This means that your organization will need liquid funds upfront to close.

Liabilities

You will be held liable if someone is injured on your property, which means you will need to get liability insurance coverage to protect yourself against litigation. If you rent out a portion of your property, you’ll be liable as a property manager and that requires additional insurance & upkeep.

Qualifying for Finance Is Difficult

If you or your firm cannot obtain bank financing, you may have difficulty getting a commercial real estate loan with a fair interest rate. While the greatest commercial real estate loans might have interest rates as low as 4%, hard money lenders’ loans can have rates as high as 10%. This situation might make leasing a better alternative.

Leasing Commercial Property

A commercial real estate lease is an arrangement between a business and a landlord that permits the firm to rent commercial property.

Pros of Leasing Commercial Property

Depreciation Risk

A rise in the value of commercial properties has provided building owners with more equity and wealth, but that growth may not be sustainable. Many analysts predict that a real estate market correction will occur within months. Your property will depreciate solely due to market conditions rather than any actions you took to enhance it.

Tax Breaks

In addition to the rent, property insurance, property taxes (depending on the type of lease), utilities, and maintenance are all tax-deductible expenses, unlike a mortgage, where only the interest is deductible.

More Flexibility

Because qualifying for a lease is generally simpler than qualifying for a commercial real estate loan, you have more choices when choosing a location. You don’t have to sell the property if you want to move after your lease expires.

More Liquidity

A lease will require substantially less money upfront than an acquisition. Some funds will likely be required for a security deposit, a pre-lease inspection, legal fees and perhaps a broker’s fee. The total expenditures are much lower than needed for a purchase, so you will use fewer liquid resources to acquire the property.

Fixed Monthly Cost

When you lease a property, you are usually not responsible for any significant maintenance, repairs or upkeep, although minor repairs may be necessary. Instead, you’ll know exactly how much you’ll have to pay each month and won’t have to be concerned about unexpectedly high maintenance costs.

Cons of Leasing Commercial Property

No Control

The lease may include early termination provisions that limit the tenant’s ability to manage the rented space. Rent increases are out of your hands when your lease ends, and if your business closes, you must continue paying rent or face fines.

No Equity or Appreciation

When you lease a commercial property, you don’t build up any equity; however, some leases include a lease-to-own provision that allows you to use a part of the rent you’ve previously paid toward purchasing the property. Equity is necessary for capital appreciation to occur.

No Passive Income

You won’t be able to collect rent from others because you aren’t the landlord. Thus you won’t be able to earn any extra revenue from owning property.

Poor investing procedures may lead to disastrous consequences and the magnitude of commercial investments further adds to the problem. As a result, having a solid plan in place pays off. You are more likely to avoid the pitfalls of commercial investment and achieve success if you have established systems on your side. Whether buying or leasing a commercial property is ultimately a decision based on your financial situation, company and needs.

Hamptons Commercial Real Estate is a full-service commercial real estate firm that specializes in real estate investment, property management and brokerage. Whether it’s a purchase or lease of a property, we guide our clients through the process.

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Sag Harbor, a charming, ethnically diverse village in the Hamptons, has attracted commercial real estate ventures for decades. However, upwardly climbing real estate prices, combined with the economic pinch of the pandemic, has impacted the growth of commercial businesses in the thriving Sag Harbor area. 

Sag Harbor commercial real estate is known for its “mom and pop” feel to local businesses. There are few corporate chains and the commercial area is filled with independent retailers. However, that could be changing as the community adjusts to a changing economy.

Change is nothing new in Sag Harbor, and commercial real estate agents in the area predict that Sag Harbor will continue to be a high-end market for real estate. 

Why Choose Sag Harbor NY

Located in the middle of the Hamptons, Sag Harbor has an excellent school system and a quaint, rural feel within a reasonable commute to the heart of New York City. Sag Harbor has a low crime rate, gorgeous homes and you are never more than a few minutes from the beach, making this part of the Hamptons a dream for many residents. 

The summer tourist season supports a growing commercial district that provides world-class galleries, shopping and restaurants for residents & tourists alike. The quality of life in the Hamptons draws commercial business owners who want to both work and live in this little piece of paradise an hour from the city.

Things to Do in Sag Harbor

Sag Harbor carries a vibe unique from the rest of the Hamptons. The history of the area is on proud display, with historic buildings dating back to the 1700s. The Old Whalers Church and the lighthouse are two must-see attractions from centuries past. When you are not walking the streets of downtown, taking in the historic sights or soaking in the laid-back vibe, there is still plenty to do in Sag Harbor. 

Sag Harbor Restaurants

From out-of-the-way dives to fine dining, there are plenty of great places to try in Sag Harbor. For delicious, fresh seafood and an excellent dining experience, try Bell & Anchor. If you are out shopping at the Harbor Market and need a quick lunch or delicious cup of coffee, try the Back Page Cafe for a relaxing, inexpensive lunch.

Murf’s Backstreet Tavern is a favorite for locals and tourists in the know. Cold beer, ambiance, a fully-stocked bar and the best grilled cheese in New York are just a few of the reasons everyone loves Murf’s. 

The Dock House, located on the harbor, is an iconic seafood restaurant with chalkboard menus and an excellent clam chowder. The relaxed vibe is perfect for lunch or dinner after spending an afternoon exploring the harbor sites. If you are looking for a quaint place to relax and enjoy the view, the Dock House is a must-try.

Mashashimuet Park

Mashashimuet Park is privately run by the parks and recreation department of Sag Harbor. The trails take a gorgeous, winding route through the park and playgrounds, tennis & basketball courts make it a great place to burn some of the calories you enjoyed in one of the scrumptious dining places. Don’t forget to visit the otter pond!

Art Galleries

The Hamptons are known for their local artisans and the art galleries in Sag Harbor offer something for everyone. The Grenning Gallery showcases contemporary artists who are masters of their craft. They offer different exhibitions throughout the year and no trip to Main Street is complete without stopping by to see some of the most stunning art in the Hamptons.

Visiting The Guild Hall of East Hampton hosts featured events throughout the year. If eclectic and informal is more your style, you will love the Romany Kramoris Gallery. Local artists showcase their talents in everything from glass blowing to world crafts.

Sag Harbor Whaling and Historical Museum

Certified as a national treasure, the Sag Harbor Whaling and Historical Museum is located in a beautiful building and houses New York’s most extensive collection of whaling equipment. Whaling is an important part of the history of New York and spending an afternoon exploring the history of whaling across the region is a must-see for visitors & natives of Sag Harbor. 

Hamptons Commercial Real Estate can help you locate the perfect commercial property for sale or lease in Sag Harbor and surrounding areas. Our team of professionals understand the Hamptons market and work hard to ensure we meet the needs of our commercial real estate clients.

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2021 saw a significant rise in real estate property prices due to an unexpected and rapid rise in home values during the pandemic. People were forced to work from home and others migrated from the cities to less congested towns like the Hamptons. Some believe this was the beginning of the real estate bubble that investors are still trying to predict its timeline.

Many people are now concerned about an impending housing market collapse looming in 2022. With the uncertainty of how long the pandemic will last, it is difficult to precisely predict the real estate future. But based on the current and past trends, it is unlikely that the property market will crash in 2022 because of:

• Lower foreclosures than in the past
• A strong job market
• Rigorous lending standards
• Rising interest rates
• Lessons learned from the previous recession

As the housing boom continues into 2022, real estate experts believe it is bound to flatten later in the year when mortgage interest rates increase. But the shift in the desired housing type brought about by the pandemic remains and more people will look into places such as the Hamptons to meet their housing needs.

Hamptons Real Estate Market

Buying or selling property in the Hamptons has tremendous benefits for both parties because the area fulfills the current lifestyle choices of full-time or hybrid work from home policies. In addition, Hampton’s commercial properties have the feel of luxury with a natural ambiance and its proximity to New York City makes it a prime place in 2022.

The Hamptons saw a rise in property turnover in the listing as more contracts were signed faster in January 2022 than January 2021. Some properties were also sold at a slightly higher price than the asking price.

The ultra-luxury properties in the Hamptons are performing exceptionally well as the wealthy move to purchase magnificent homes outside the busy, congested cities. There has been consistent trading on & off for the ultra-luxury properties and prospects look strong in 2022, which means the same for businesses looking for commercial real estate in our area.

Potential sellers in the Hamptons are generally concerned about the real estate bubble and are unmotivated to list. 2022 will have an abundance of off-market and unofficial listings, and working with a well-connected Hamptons commercial real estate team will help buyers get the property they desire.

Buyers are also hopeful that the property prices will either stabilize or drop as they wait for life to resemble the pre-pandemic period. Ironically, the market prices are bound to remain strong even if demand slightly reduces. The seller’s apprehension to list their property creates a balance that will sustain a strong market.

The pandemic also saw many long-term rental options being sold to end-users and were permanently off the market. These sales have affected Hampton’s summer rental market inventory. Homeowners who rented their homes for months no longer rent out but use the house themselves. 

While the demand for property will not be as high in 2022 as in 2021, buyers are still looking to own property in the Hamptons. Real estate agents and brokers continue to receive multiple offers from buyers looking to secure their perfect business space.

Some understand that they may not find one by summer 2022, as they are opting to rent one in the meantime. These dynamics look promising for the commercial properties in the Hamptons, with less likelihood of the real estate bubble to burst.

When Will the Real Estate Bubble Burst?

Probably not in 2022. Real estate experts debate whether there is a real estate bubble to burst or the rapid market growth was due to factors that will remain steady in the future. Key metrics that determine if the housing market will crash have also kept the market elevated. For instance:

• The government assistance programs reduced the foreclosure numbers
• The pandemic’s work from anywhere policy prioritized long-term housing plans
• The shortfall of diverse housing demands that emerged in 2021 and will continue in 2022

The impact from the 2007–2008 great recession remains fresh in investors’ minds casting doubt on the validity of the current housing market boom. But according to the National Associations of Home Builders, the housing market has continued to be supported by buyer interest in suburbs, exurbs and small towns such as those on the East End of Long Island.

The Hamptons qualifies as the perfect location for the rising property demands in these uncertain times. For buyers and sellers to get the best deal in the Hamptons, they have to work with experienced local commercial real estate agents who have connections and understand the actual demand and supply outlook. Talk to us today for the real estate deals in the Hamptons.

The post Real Estate Bubble 2022: Has it Burst in the Hamptons? appeared first on Hamptons Commercial Real Estate.

As one of New York’s oldest English communities, Southampton was founded by Massachusetts-born English colonists in the early 1640s. In the mid-19th century, summer visitors from New York City began flocking to the area because of its beautiful scenery and beaches.

The visitors stayed with local farmers and fishermen. In 1870, when the railroad was built, many more people moved to Southampton and they started buying land & building estates.

Why Choose Southampton NY?

On Long Island’s South Fork, the town of Southampton offers a breathtaking landscape for any type of business. Its population surges significantly during the summer when the township in southeast Suffolk County is busiest. Southampton commercial real estate is suited for a wide range of businesses including high-end restaurants and surf shops.

Southampton, a town in the Hamptons, is home to many waterfront communities including Weston Hard Woolston Beach. Southampton retail space for lease is available on commercial real estate sites around the township’s seven villages and 16 hamlets which attract crowds of affluent, vacationing customers throughout the summer.

Southampton is about 300 square miles and has just over 50,000 year-round residents. At the height of the summer season, Southampton’s population doubles. And that means good things for the businesses in town.

Besides sand and surf, there is much more to it. Whether you are a history buff, a lover of art or a food & wine enthusiast, Southampton NY has something for you. The Southampton Cultural Center and Museum are among the many attractions that have transformed Southampton into a cultural hub.

Things to Do in Southampton NY

A Shopping Day in Southampton

There are many retail outlets in Southampton all year round, making Southampton commercial real estate a thriving industry. There are antiques, cigar stores and clothing stores abound in Southampton.

Hampton Soaptique manufactures unique soap flavors for any occasion, which visitors and residents enjoy. A high-quality selection of clothing and souvenirs can be found at Hildreth’s Home Goods in Southampton Village.

Restaurants in Southampton NY

Southampton’s eateries are highly regarded by both locals and visitors alike. Delicious food is served in a comfortable ambiance at restaurants like Sant Ambroeus on Main Street. Lunch and dinner meetings at Silver’s Famous Restaurant are a great idea. 

Located just next to Silver’s, Southampton Publick House offers a more relaxed environment for sharing appetizers and beverages. On County Road 39A, you’ll find a large selection of excellent espresso and cappuccino at Hampton Coffee Company.

Weston Hard Woolston Beach

Southampton’s west coast is home to Weston Hard Beach, a modest marina located near the Itchen Bridge near the mouth of the Itchen River. A pebble beach in Southampton attracts dog walkers and people looking for a quiet picnic. In the summertime, visitors flock here to watch the crabs hiding among the rocks.

Weston Beach has a parking lot, and if that lot is full, you can park on Victoria Road or in Southampton City Parking. Since there is a playground nearby, Southampton Beach dog owners can bring their four-legged friends to Southampton Beach.

Southampton Transport

Southampton’s commercial real estate is accessible by train, bus, and major highways. Long Island Railroad Montauk Branch serves Southampton. Norfolk County Transit provides bus routes to help customers reach their destinations. The Hampton Jitney is used by many people visiting New York City during the summer months.

Museums

In 1898, the Southampton History Museum was founded and was incorporated in 1910. The Rogers Mansion Museum Complex includes a dozen historic nineteenth-century structures, including a barn built in 1825 and a one-room schoolhouse built in 1830. It also houses Titanic-related displays, including artifacts and recordings of survivors’ stories.

The Parrish Art Museum brings people and art together through exhibitions, artists-in-residence, educational programs, and collections and interpretations. The grounds of the Parrish Art Museum are open every day from 11:00 a.m. to 5:00 p.m. However, the museum’s galleries are only open on Friday through Monday. 

Duck Walk Vineyards

Duck Walk Vineyards is one of Long Island’s most famous wineries located near Water Mill, outside Southampton, and one of the most prominent wineries in the world that covers over 100 acres and produces 5,000 cases of wine per year. The Duck Walk Vineyards brews a variety of blueberry-based wines, such as Vidal Ice Wine and Blueberry Port.

Shinnecock Museum and Cultural Center

Thousands of years ago, the Shinnecock Tribe inhabited Long Island, New York. The Shinnecock Museum and Cultural Center is a modest museum with tribal artifacts. Explore the history of this tribe while you’re here. Throughout the summer, visitors can explore the hamlet and the museum’s 5,500 square foot exhibit space, which is open from 11:00 a.m. to 4:00 p.m.

The Thomas Halsey Homestead

The Thomas Halsey Homestead is located less than a mile away, situated on South Main Street, and dates back to 1648. The two-story frame house is one of Southampton’s earliest surviving houses. It was built with furnishings from the 17th and 18th centuries by Thomas Halsey Jr., an original settler. A historic herb garden surrounds the building.

The team at Hampton Commercial Real Estate is focused on connecting commercial real estate firms and investors to the Hampton market. In every property transaction that involves your Southampton retail space for sale, our company seeks to maximize the value for you.

Check out our current commercial real estate listings in Long Island NY including multiple properties in this illustrious town.

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The COVID-19 pandemic drastically altered the real estate landscape throughout the Hamptons, leaving a lasting impact that has seen scores of New Yorkers take permanent residence in the iconic getaway towns. Commercial real estate trends in the Hamptons followed suit, with dozens of retailers making the move that’s seemingly long term.

Nearly two years into the pandemic, the trend is showing no signs of slowing & the Hamptons real estate boom looks poised to continue into the new year.

Residential Housing Boom in the Hamptons

Since the onset of the COVID-19 pandemic in March 2020, the residential real estate market in the Hamptons has been rife with competition. Amid the shuttering of businesses and stay-at-home orders, many flocked to the Hamptons to take up temporary refuge from the throes of the pandemic. Consequently, home sales & rentals in the Hamptons soared with some homes renting for up to three times their original price.

As the pandemic dragged along, many opted to buy the homes outright rather than continue to pay the hefty summer rental price tags. Since, bidding wars for residential properties have reached unprecedented levels, with homes selling well over asking prices due to low inventory and a surge in demand.

Home sales in the Hamptons rose 48% in the first quarter of 2021 & the median sales price increased 31% to $1.3 million. All of this occurred while available inventory plunged by over 40%. With properties trading over the listing price, bidding wars occurred in nearly a quarter of sales.

Since then, the Hamptons have been made over into a bustling year-round community, transforming from the summer rental hotspot of former days. New houses in the area are selling before construction has been completed, which has never before been the case.

With work from home orders facilitating moves to the Hamptons and new residents enrolling their children in local public & private schools — in 2020, the Ross School in East Hampton had 101 new students enrolled, compared to 16 new students enrolled in 2019 — things don’t look to be changing any time soon.

Impact on Commercial Real Estate in East Hampton NY

Much like it affected the residential housing market in the Hamptons, the COVID-19 pandemic had heavy implications for commercial real estate in East Hampton and the rest of Long Island. Although commercial real estate prices didn’t spike as early as residential prices given the uncertainty of what the global crisis might have in store for restaurants and retail businesses, they were quick to follow.

Shortly after the residential real estate boom in the Hamptons, the region saw an influx of businesses setting up shop permanently including fine art galleries Pace, Van de Weghe, Sotheby’s, Skarstedt & Michael Werner Gallery in East Hampton, who opted to relocate to the East End.

Before this point, commercial real estate in East Hampton mainly accommodated pop-up stores and temporary businesses. Now, the market is saturated with restaurants and retail businesses there to stay.

East Hampton’s newfound publicity from the exploding commercial real estate market also attracted buyers from outside New York City and Connecticut, expanding the pool of East Hampton buyers and driving up demand despite low inventory. Also driving up cost is the limited opportunity for development in the region, given the minimal land available.

With companies now realizing they don’t have to stay in the city to run their businesses, commercial real estate vacancies in East Hampton continue to be scarce, and bidding wars are plentiful, even continuing into the slower fall and winter months.

Commercial Real Estate Outlook in East Hampton NY

With the pandemic dragging its heels, it’s likely the residential and commercial real estate booms in the Hamptons will continue for at least another few years. Expect to continue seeing very few East Hampton vacancies into summer 2022.

That said, not all of the changes are likely to be permanent. The future of the East Hampton real estate market hinges on the outcomes of the global pandemic over the next few years, with the potential for the region to return to its natural state as a resort town when international travel reopens for good.

However, the mindset in the Hamptons is shifting & many are adopting the escape to the Hamptons as a lifestyle rather than a temporary vacation. With the pandemic’s timeline still uncertain and stay-at-home orders facilitating remote work, many are planning to stay in East Hampton for the time being, seeing it as a comfortable place to isolate safely for the foreseeable future.

As a result, the Hamptons will remain a coveted space in both residential and commercial real estate markets. 

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