Commercial Real Estate Advice with Claire Smith, Asset Manager Specialist, Kilbourne

A: I think more folks are headed back to the office but with a hybrid work style, therefore office spaces with additional value and amenities for workers will find success. As for retail, I think it will continue to grow in momentum at high-demand locations with walkability and high foot traffic to offer a business. There are so many fun food and beverage conversations going on-I’m looking forward to seeing how it grows in the Fargo market.

Q: Are there emerging areas or types of properties that you think will be particularly important in the near future?

A: Multifamily has often shown economic resilience and as the need for a workforce grows, it will become even more important. From short-term rentals to furnished units for traveling healthcare workers, contracted employees, and new residents to the Fargo market, I envision it remaining an important part of the future for real estate development.

Q: What legal or regulatory issues should business owners be aware of?

A: Once a lease is signed, it is a legally binding document. Make sure you look into all city codes and regulations before signing. If your vision and plans do not fit what the city code requires, you are still on the hook for the lease.

Q: What are the top three things a business owner should look for in a commercial property?

A: Location, price, and what is included in the CAM versus what is paid directly/negotiated.

Q: How can a business assess whether a property aligns with its operational needs?

A: First, talk with an architect and get an idea if a space can be fit up to what your business needs-they also can help with a cost estimate for construction. Determine what your goals are for your space and look at spaces similar to get a feel for what it will actually feel like once you fill it.

Q: What negotiation strategies do you recommend for first- time commercial property buyers?

A: Always work with a REALTOR! The entire process, from start to finish, will have many moving parts, and they know this market best. They’ll be your guide and best friend through this big decision in your life.

Q. How can business owners ensure they get the best terms in a lease or purchase agreement?

A: Always work with a REALTOR and have a real estate attorney review a purchase agreement or lease prior to signing. The REALTOR® can explain terms but cannot give legal advice.

Q. What are some common cost pitfalls in commercial real estate transactions and how can they be avoided?

A: Make sure you know what you are paying for—if you are signing a lease, be sure to verify that the CAM expense is accurate and up to date.

Q. Are there lesser-known expenses that business owners frequently overlook when budgeting for real estate?

A: CAM is always tricky—it is the actual operating expenses for the building. So for example, some winters in the Midwest we get hit with a bad winter, and snow removal costs are above what is budgeted that can hit the tenant at the end of the year.