What Happens to Your Building When You Sell Your Company?

Many family-owned businesses face this reality at some point: you decide to sell your company. 
 
Congratulations! It’s the culmination of years, maybe decades, of hard work. But if your business occupies real estate, whether owned by a related entity or leased from a third party - there’s another big question: what happens to the building?
 
The answer depends largely on whether your company owns the property through a related entity or simply leases space from an unrelated landlord. Each path requires a different strategy.
 
Scenario One: Owned Real Estate
 
If your operating business occupies a building owned by you or a related entity, several options emerge:
 
Sell the real estate before the business sale. You can sell the building to an owner - occupant and arrange to vacate once the company transaction closes. This separates the real estate deal from the business deal, providing clarity for all parties.
 
Lease the building to the buyer of the business. Instead of selling, you might keep the property and sign a lease with the buyer of your company. This allows you (or your family entity) to continue collecting rental income long after the business changes hands.
 
Formalize a lease before the sale of the business. Another option is to establish a lease between the related entity (property owner) and the operating company before selling. This locks in occupancy terms, giving the buyer certainty and making the business sale potentially more attractive.
 
Scenario Two: Leased Real Estate
 
If your company rents from an unrelated, arm’s-length landlord, the conversation is different. In this case, the business buyer will want to know:
          •        How much time is left on the lease?
          •        Are there options to renew or expand?
          •        Is the rental rate market-competitive?
 
A strong lease can be an asset to the sale, while an expiring or above-market lease can become a liability. In many cases, negotiating an extension or adjustment with the landlord before selling the business can smooth the path for a transaction.
 
Why This Matters
 
Buyers aren’t just purchasing your business operations - they’re buying continuity. If the real estate arrangement is murky, the deal becomes more complicated. By addressing how the building fits into the transaction, you eliminate uncertainty, increase buyer confidence, and often enhance the overall value of the sale.
 
Final Thought
 
Selling a business is one of the biggest financial and emotional decisions a family will ever make. Don’t let the real estate piece become an afterthought. Whether you own or lease, work with advisors who can help you consider all potential directions so you can move on to your next chapter with peace of mind.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

When a Three-Letter Acronym Can Make or Break Your Property Deal

Imagine buying a property only to discover that hidden underground tanks are leaking fuel into the soil, or that decades ago a dry cleaner left behind chemicals that still linger beneath the surface. Suddenly, your new investment comes with a multi-million-dollar cleanup bill.
 
That’s the risk posed by a little-known acronym: REC, short for Recognized Environmental Condition. And if you’re buying, selling, financing or potentially leasing commercial real estate, it’s something you need to understand.
 
What is a REC?
 
In the commercial real estate world, a REC means there is the presence or likely presence of hazardous substances or petroleum products on a property. These conditions may come from:
          •        A past or current release of contaminants into the soil, water, or air.
          •        Evidence suggesting a release might have happened, like stained soil or corroded barrels.
          •        Circumstances that pose a material threat of a future release.
 
Think of a REC as a red flag during due diligence. Just like a cracked foundation might derail a home purchase, a REC can bring a commercial deal to a grinding halt.
 
Why Lenders and Buyers Care
 
A REC isn’t just an environmental issue, it’s a financial one.
          •        Financing: Banks typically require a clean environmental report before approving a loan. If a REC is flagged, the deal may be delayed, restructured, or even killed.
          •        Liability: Under federal and state laws, the new property owner could be held responsible for cleanup, even if they didn’t cause the problem.
          •        Value: Properties with RECs often appraise lower and can sit on the market longer.
 
How the Process Works
 
When an industrial or commercial property changes hands, buyers usually commission a Phase I Environmental Site Assessment (ESA). This involves reviewing past records, inspecting the property, and interviewing current or former operators.
 
If the Phase I flags a REC, the next step is a Phase II ESA, which involves testing soil, groundwater, or air to confirm whether contamination exists.
 
Depending on results, options include:
          •        Remediation (removing or treating the contamination).
          •        Seeking regulatory closure if issues have already been addressed.
          •        Purchasing environmental insurance to cover potential risks.
          •        Negotiating price adjustments to reflect the added risk.
 
Historical and Controlled RECs
 
Not all RECs are created equal.
          •        HREC (Historical REC): A past issue that’s been resolved to regulators’ satisfaction and no longer poses a risk.
          •        CREC (Controlled REC): A contamination issue that remains, but with restrictions in place (for example, limiting property use to industrial operations only).
 
While these don’t always kill deals, they do shape how a property can be used and what obligations an owner inherits.
 
How Buyers and Sellers React
 
For buyers, a REC means choices: walk away, renegotiate price, or push the seller to pay for further testing or cleanup. For sellers, a REC can mean offering concessions, securing insurance, or even cleaning up the property in advance to avoid surprises in escrow.
 
The Bottom Line
 
A REC doesn’t always spell disaster for a transaction. But it always changes the dynamics. Buyers, sellers, and brokers who understand how RECs work can work through the challenges, avoid liability and keep deals alive.
 
In commercial real estate, knowledge isn’t just power. It’s protection.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

When Industrial Real Estate Becomes Obsolete

I recently guested on a podcast called The Industrial Real Estate Podcast. You see, its host, Chad Griffiths, is a fellow industrial real estate broker and Society of Industrial and Office Realtor. We share a passion for industrial real estate and authoring books about our craft - his, Industrialize, and mine The SEQUENCE. Our sixty minutes together was not quite Mike Wallace worthy, but for two professionals geeking over truck doors it was close.
 
As I reflected on our conversation, a thought occurred. In the time Chad and I have brokered - Chad over twenty years and I over forty - how many classes of industrial real estate have become obsolete?
 
As the mind dump morphed into a review, I believed it to be column-worthy. So here goes.
 
Concrete Block Structures
 
In the 1960s and 70s, the standard for small to mid-sized warehouses in Southern California was concrete block. At the time, it was inexpensive, durable, and easy to build. Fast forward a few decades and block buildings fell out of favor. Why? They were prone to cracking, offered limited design flexibility, and were far less energy-efficient than tilt-up concrete panels. Today, investors look at a block structure and immediately calculate how much it will cost to either retrofit it for earthquake safety or scrape it altogether.
 
Warehouses with Ceiling Heights Shorter than 24 Feet
 
What was once considered “plenty of clearance” is now laughably short. In the 1980s, 16–20 feet clear worked just fine when distribution was more about floor stacking and hand-moving pallets. Then came the rise of racking systems, e-commerce fulfillment, and the drive for cubic efficiency. A 20-foot clear building today is relegated to mom-and-pop distributors or creative reuses like breweries and gyms. Institutional tenants won’t touch them. Twenty-four feet is the minimum bar now, with 32–36 feet quickly becoming the new normal.
 
Buildings with Insufficient Loading for Large Trucks
 
Dock-high loading once meant a few truck wells tucked into a building’s backside. That was fine when trucks were smaller and supply chains less demanding. Now, tenants expect wide truck courts, multiple dock positions, and a minimum of 130-foot depth for maneuvering 53-footers. A shallow court or limited dock access instantly disqualifies a building from consideration. In fact, I’ve had clients walk away from otherwise functional properties simply because the loading couldn’t accommodate modern logistics.
 
Warehouses Converted to Telecom Hubs in the Late 1990s
 
During the telecom boom, a frenzy of industrial-to-telecom conversions swept across the market. Warehouses were gutted, generators added, and raised floors installed to handle racks of equipment. When the bubble burst, many of these facilities sat dark, expensive, and ill-suited for their original purpose. Few could be economically converted back to warehousing. They became the white elephants of the industrial world, proving how risky it can be to over-specialize a building.
 
Pre-Dot Com Data Centers
 
Much like the telecom conversions, the first wave of data centers built before the dot-com collapse were designed for a world that never fully arrived. Oversized chillers, underutilized floor space, and outdated cabling left them obsolete within a decade. While the need for data centers eventually exploded, it was the next generation - purpose-built, hyper-efficient facilities - that captured the market. The early ones often limped along, trading hands at discounts before being demolished or radically reconfigured.
 
Research and Development (Flex) Buildings
 
Once the darling of the 1980s and 90s, flex R&D buildings were designed with equal parts office, light manufacturing, and lab space. They attracted tech startups, defense contractors, and medical firms. But as industries changed, those needs shrunk or migrated into either pure office towers or specialized industrial campuses. Flex buildings with 50% office and 50% warehouse became hard to lease. The market wanted either full warehouse/distribution or Class A creative office - not the in-between. Today, many flex projects have been scraped, converted to logistics buildings, or repositioned for other uses.
 
Final Thought
 
Obsolescence in industrial real estate is both predictable and instructive. What was “state of the art” in 1985 may be functionally useless today. Brokers, investors, and occupants alike should remember: buildings have life cycles just like everything else. The trick is recognizing when a feature is no longer an asset but a liability - and acting before the market forces your hand.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

Anniversary Lessons for Real Estate (and Life)

As I write this, I’m looking out over the vast blue Pacific Ocean. My wife, Carla, and I decided to splurge for our 46th wedding anniversary. The horizon stretches endlessly, a full moon reflects on the ocean, waves roll in with steady crashing, and I can’t help but reflect on our life together.
 
You may wonder - what does being married since the Carter administration have to do with commercial real estate? 
 
Bear with me. I believe who you love and with whom you choose to spend your life matters foundationally to building a successful career. In my case, Carla’s patience, wisdom, and encouragement have been the bedrock under everything I’ve accomplished in brokerage. And along the way, I’ve learned a few lessons that apply equally well to marriage and to commercial real estate.
 
Commitment Outlasts Market Cycles
 
Marriage requires commitment - not just when things are easy, but through the tough times too. Real estate is no different. Since I began in the early 1980s, I’ve watched interest rates soar, the savings and loan crisis unfold, bubbles inflate, and recessions squeeze the market. Through it all, commitment - whether to a client, a property, or the process - proved more valuable than chasing short-term gains. Just as in marriage, staying the course yields long-term rewards.
 
Communication is Everything
 
After 46 years, Carla and I still occasionally misunderstand each other. But we’ve learned to keep talking, keep listening, and keep clarifying. The same principle applies in commercial real estate. Deals collapse when communication falters. Clients don’t expect perfection; they expect honesty. A simple phone call explaining a setback can preserve trust better than any contract clause.
 
Patience Produces Fruit
 
No one celebrates 46 years without patience. There were times when raising kids, building careers, and paying bills felt overwhelming. But patience - trusting that small investments of time and effort compound - got us through. Commercial real estate rewards patience as well. Transactions can drag on, negotiations can stall, and entitlement processes can feel endless. Yet patience, paired with persistence, is often the difference between a failed deal and a successful close.
 
Shared Values Create Alignment
 
Carla and I built our life on shared values: faith, family, and integrity. Those values guided decisions on where to live, how to raise children, and even how to face hardship. In brokerage, I’ve found that values alignment with clients is equally important. Not every prospect is a fit. When you align with those who share your values - fairness, transparency, long-term thinking - the relationship flows, and the work is more rewarding.
 
Adaptability is Survival
 
Marriage is a constant process of adaptation. People grow, circumstances shift, and unexpected challenges arise. Carla and I had to adapt when careers changed, when children left home, and when new seasons of life arrived. In real estate, adaptability is equally critical. A strategy that worked in one market cycle may not work in another. Brokers who survive are those who adjust without abandoning their foundation.
 
Closing Reflection
 
Looking out at the Pacific, I’m struck by how steady and timeless it feels. Yet even the ocean is always in motion, waves constantly breaking and reforming. That’s marriage. That’s commercial real estate. Both require a balance of commitment and flexibility, patience and action, values and adaptability.
 
As I celebrate 46 years with Carla, I’m reminded that no career is built in isolation. The relationships that anchor us at home often provide the resilience and perspective we need in business. Success, in life and in real estate, rests not only on the deals we make but on the people who walk with us through the journey.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

From Kitchen Table to Generational Wealth – The Real Estate Journey of Family-Owned Businesses

Every thriving Southern California manufacturing or logistics company started somewhere—often at a kitchen table or in a garage. What happens between that first spark of an idea and the eventual decision to sell the company is a fascinating—and often overlooked—journey. The throughline? Real estate.
 
The Stages of Business Growth and Real Estate Decisions
 
The Idea Stage. Home-Based Operation. Most businesses start small. At this stage, real estate decisions are limited—but the dream of expansion is already forming.
 
Lease vs. Buy. The First Big Decision
As soon as a company outgrows the home, it’s time to lease or buy space. Leasing provides flexibility, but ownership plants the first seeds of wealth building.
 
Owning Your Building. Many family operators eventually buy the building they occupy. This decision transforms monthly rent payments into an appreciating asset that can outlast the business itself.
 
Growth Through Expansion or Acquisition. Success brings complexity—hiring more people, adding machinery, opening new locations, or acquiring competitors. Each move requires thoughtful real estate strategy.
 
Exit Planning and the Role of Real Estate. Eventually, founders face succession or sale. If selling to a strategic operator, the real estate may be carved out of the deal. If selling to private equity, the real estate is often critical to their investment thesis.
 
The Hidden Lesson
 
In many cases, I’ve seen the real estate owned by the business worth far more than the operation itself. That building becomes not just a workplace but a long-term family asset, a hedge against business cycles, and a powerful vehicle for generational wealth.
 
Closing Thought
 
The journey of a family-owned business in Southern California is never just about products, people, or profits—it’s also about property. Whether starting in a garage or exiting through a private equity sale, real estate is the silent partner that can shape the legacy of a business for generations.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.

Consistency, Authenticity, and Relevance: Why I Post Commercial Real Estate Content

In 2009, I tried something new. While many of my colleagues were still marketing with postcards and cold calls, I started a blog called Location Advice. It was not common at the time for commercial real estate brokers to share insights publicly, but I wanted a way to connect with owners, occupants, and other brokers beyond the usual handshake or phone call.

That experiment led to 2013, when I launched TUESDAY Traffic Tips, short YouTube videos on the nuts and bolts of brokerage. I posted every week. No studio. No script. Just a consistent commitment. Looking back, I was one of the first commercial real estate brokers in the country to post content this way. That consistency opened doors, including this very column. I can thank Twitter, now X, for the introduction that connected me to the Southern California News Group.

Why I Did It

The reason was not followers, likes, or clicks. I believed that visibility builds credibility, and credibility leads to trust. By showing up online with useful ideas, I could create value for my audiences of owners, occupants, and brokers before we ever sat across a table together.

What Makes Content Memorable

Fifteen years later, I have learned that memorable content comes down to three qualities:
• Consistency — Show up regularly. People may not read every post or watch every video, but they notice if you keep showing up.
• Authenticity — Be yourself. Clients connect with real stories and honest observations, not polished perfection.
• Relevance — Speak to the audience you serve. Commercial real estate is not about abstract theories. It is about space, timing, and decisions that affect real businesses and families.

The Payoff

Social media has never been about shouting into the void. It is about building trust at scale. Over the years, people who first discovered me through a blog post or video have become clients, colleagues, or referral sources. Others simply shared an article that resonated. Either way, the ripple effect continues.
Here is the takeaway. If you want your content to stand out in commercial real estate, or in any field, focus less on going viral and more on showing up. Be consistent. Be authentic. Be relevant. Over time, those three qualities create a brand people trust.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.

The Great Space Recalibration

Commercial real estate in Southern California has always reflected the ebbs and flows of business confidence.
 
Today, across industrial buildings , office suites, and everything in between, we are in the middle of what I call “The Great Space Recalibration.” Companies are rethinking how much space they need, what kind of space they want, and how to make their real estate align with a changed economic landscape.
 
Industrial: From Expansion to Efficiency. For the past decade, industrial tenants in the Inland Empire and Orange County raced to secure more square footage. E-commerce boomed, imports through the ports surged, and vacancy rates fell to record lows. But the story has shifted.
 
Instead of expanding, many manufacturers and distributors are now optimizing. Automation, robotics, and better inventory management allow them to do more with less. A tenant that once needed 200,000 square feet may be comfortable in 150,000 if it’s more efficient space. Landlords, who grew accustomed to quick leases and rising rents, are now negotiating harder and offering concessions that were unthinkable just two years ago.
 
Office: The Hybrid Question. The office market has undergone an even more dramatic recalibration. Remote and hybrid work are here to stay, and companies continue to evaluate their footprints. In Orange County, for example, tenants are renewing—but often for less space. A law firm that once leased three full floors may decide two is sufficient, with one floor redesigned into collaborative areas and hot-desking stations.
 
This trend isn’t simply about cost savings. It reflects a cultural shift: offices are no longer just places to house employees, but tools to attract talent and foster collaboration. The most in-demand spaces are those that are flexible, amenity-rich, and located in environments employees actually want to come to.
 
Retail: Leaner but Smarter. Retail has been recalibrating for years. E-commerce forced many stores to shrink their footprints and focus on experiential elements that can’t be replicated online. The winners are not necessarily the ones with the largest boxes but the ones who integrate online and in-person sales seamlessly. Think of a 5,000-square-foot store doubling as a distribution hub, pickup center, and brand experience all at once.
 
Why This Matters. The Great Space Recalibration has implications for everyone involved in commercial real estate:
• Occupants must carefully assess their true needs. More space is not always better if it is underutilized or expensive to operate.
• Owners must adapt to slower leasing cycles, more tenant scrutiny, and a greater demand for flexibility.
• Investors must look beyond raw square footage and ask: how usable, adaptable, and future-proof is this space?
 
Looking Ahead. If the past decade was defined by expansion, the next may be defined by efficiency. Companies are not retreating from real estate—they are right-sizing. They are using space as a strategic tool rather than just an overhead expense.
 
In Southern California, where land is scarce, costs are high, and innovation is constant, this recalibration may ultimately lead to a healthier balance. Tenants will get the space they truly need. Owners will invest in making buildings more flexible, sustainable, and tech-enabled. And communities will benefit from properties that serve the market more intelligently.
 
The Great Space Recalibration is not a crisis. It’s an adjustment. And like all adjustments in real estate, it will reward those who recognize the shift early and adapt accordingly.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 

What the Iowa State Fair Can Teach Us About Commercial Real Estate

Every August, more than a million people descend on Des Moines, Iowa, for one of the most iconic celebrations of agriculture, tradition, and Americana: the Iowa State Fair.
 
You’ll find butter cows. Deep-fried Snickers. Prize-winning pigs. And yes - this year, you’ll find us there too. 
 
You may be wondering, we have a fair in Orange County, why Iowa? Well, we’re trying to see all fifty states. What better way to visit Iowa, than the state fair we reasoned. 
 
Now, I’ll admit - on the surface, the Iowa State Fair has very little to do with commercial real estate. But after years in this business, I’ve learned that the best lessons don’t always come from lease negotiations or cap rate spreadsheets. Sometimes, they come from places you least expect - like from livestock barns and lemonade stands.
 
As I ponder our attendance, I anticipate five surprisingly relevant lessons the Iowa State Fair has to offer CRE professionals, property owners, and business leaders alike:
 
Visibility Is Power. At the fair, everyone shows up. Presidential candidates. Local farmers. Funnel cake vendors. It’s a stage - and the people who stand out are the ones who lean into the spotlight.
 
The same applies to commercial real estate. If you want the business, you have to be visible. Post on LinkedIn. Return your calls. Walk the industrial park. Knock on the neighbor’s door. You never know which conversation leads to your next transaction.
 
Show up often enough, and eventually you’re the broker they think of first.
 
Specialization Wins Blue Ribbons. The fair isn’t about generalists. It’s about champions - best in breed, best in show, best in pie crust.
 
In commercial real estate, the same holds true. If you’re trying to represent office tenants, retail developers, and industrial buildings owners all at once, you’ll get lost in the crowd. But if you’re the go-to broker for aerospace facilities or cold storage occupants? Now you’re speaking the judge’s language.
 
Specialists don’t just compete - they win.
 
Know Your Audience - and Entertain Them. The Iowa State Fair majors in audience engagement. Every booth, every announcer, every exhibitor is tuned into one question: “How do I draw them in?”
 
In our business, whether you’re giving a tour or sending a proposal, you need to ask the same thing. Are you connecting with your audience? Are you using stories, analogies, visuals — or just burying them in data?
 
The best brokers aren’t just experts. They’re entertainers, educators, and translators.
 
Process Beats Flash. Behind the corn dogs and concerts is a finely tuned operation. The fair doesn’t happen by accident - it’s a system of logistics, preparation, and process.
 
The same is true of great brokerage. A successful transaction isn’t the result of charisma alone. It comes from structured follow-up, solid documentation, strategic planning, and diligent execution.
 
Flash may get attention. Process gets results.
 
Success Is Grown, Not Grabbed. At the fair, everything takes time. Blue ribbon hogs aren’t raised in a week. The best corn isn’t grown overnight. These results are the end of a long, consistent season of effort.
 
Likewise, in commercial real estate, the big wins come from relationships planted and nurtured over time — referrals, repeat clients, neighbors who saw the sign and remembered your name.
 
If you’re in it for the long haul, you’ll build something worth exhibiting.
 
Final Thoughts From Des Moines. 
So yes — I’m heading to the Iowa State Fair this week. I’ll enjoy the food, the spectacle, and hopefully the butter cow. But I’ll also be paying attention — because success leaves clues, whether you’re watching a 4H goat show or leading a facility tour in Anaheim.
 
If you’re in commercial real estate - or any people-driven business - maybe the fair has something to teach you, too.
 
And if not… well, there are always the corndogs.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

The Hidden Cost of Owning vs. Leasing: What Most Business Owners Miss

For years, I’ve helped business owners wrestle with one of the biggest decisions they’ll ever face about their real estate: Should we buy our building or lease it? 
 
At first glance, ownership might seem like the obvious winner—build equity, control your destiny, no landlord breathing down your neck. But like most things in commercial real estate, the decision isn’t black and white.
 
What many people don’t see right away are the hidden costs—financial, operational, and emotional—that come with each option. Here’s what I’ve learned over the past four decades.
 
Opportunity Cost: Where Is Your Capital Working Hardest?
 
Buying a building—even through an SBA loan with just 10% down—still requires capital that could be deployed elsewhere. That down payment, along with closing costs, reserves, and possible improvements, can total hundreds of thousands of dollars even on a modest acquisition.
 
Takeaway: The money you tie up in real estate could be your most expensive investment if it limits your flexibility elsewhere.
 
Monthly Cost: Lease vs. Mortgage Isn’t Apples to Apples
 
Many business owners compare lease rates to monthly mortgage payments and assume that ownership is the better deal—especially if mortgage payments appear lower than quoted lease rates. But that comparison misses critical details.
 
In today’s market—where interest rates remain elevated and property values are still adjusting—the cost of ownership is often more expensive than leasing. And the difference is even more pronounced when you factor in all the additional expenses:
               •             Debt service (principal and interest)
               •             Property taxes
               •             Insurance
               •             Repairs, maintenance, and capital reserves (think roof, HVAC, plumbing, parking lots)
 
Even with SBA financing—which only requires 10% down—these costs add up quickly and can exceed comparable lease obligations.
 
And let’s not forget: most industrial leases today are structured as triple net (NNN) leases, meaning tenants pay base rent plus property taxes, insurance, and maintenance. 
 
So if you’re comparing a lease rate to ownership, you must also account for the fact that those same costs will be your responsibility as an owner—on top of your mortgage.
 
Finally, SBA loans often come with variable interest rates after a fixed period, introducing future financial risk. And rising insurance premiums and unpredictable tax assessments only add more volatility.
 
Lease Flexibility Can Be Strategic
 
Leasing doesn’t mean “wasting money”—it means buying flexibility. If your company is growing, shrinking, or evolving, locking yourself into ownership may actually become a constraint.
 
Leases allow you to pivot: to sublease, renew, relocate, or negotiate tenant improvements. And in many cases, those improvements are paid for by the landlord, not out of your own pocket.
 
Takeaway: In a rapidly changing market, the ability to adapt might be worth more than a locked-in mortgage rate.
 
Asset Appreciation Is Not Guaranteed
 
Many people view real estate ownership as a no-brainer because of “appreciation.” But just like with any asset class, there are cycles. Industrial property in Southern California may have doubled in value over the past decade—but not all markets or building types are created equal.
 
If your business is relying on future appreciation to justify the purchase, you’re speculating, not just investing.
 
Takeaway: A good business decision should pencil out even if the building never appreciates.
 
Final Thoughts: The Right Answer Depends on the Right Questions
 
I’m not here to argue for or against ownership. I’ve advised clients to buy when it made sense—and advised others to lease when that fit. But too often, the decision is made emotionally or simplistically: “I hate my landlord” or “I want to build equity.” That’s not enough.
 
What’s your growth trajectory? How much capital do you need to keep liquid? How long will this facility serve your needs? What are your exit plans?
 
Owning vs. leasing isn’t just a real estate decision—it’s a business strategy. One that deserves more than a gut feeling.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

10 Things I Learned While Writing a Book

After over four decades in commercial real estate brokerage and ten years writing this column, I thought I knew how to tell a story. Then I decided to write a book.
 
And I’m pleased to say it’s published and available on Amazon in paperback or Kindle. 
 
What started as a compilation of anecdotes turned into a deep dive into the systems, habits, and turning points that shaped my career. I titled the book The SEQUENCE – A Personal Journey and Proven Framework for Commercial Real Estate Brokerage Success, and along the way, I learned a lot more than I expected. About writing. About business. And about myself.
 
Here are ten lessons from the journey:
 
1. Writing a book is different than writing a column. A column is a sprint. A book is a marathon. In a column, you land your point quickly. A book requires structure, pacing, and a deeper connection with your reader.
 
2. Structure matters more than you think. You can’t just throw stories on a page and hope they stick. My book follows a framework I call SEQUENCE—a step-by-step system I’ve used to manage deals. That structure kept me on track and helped readers follow along.
 
3. Your voice gets clearer the longer you write. At first, I tried to sound like an “author.” Eventually, I realized my own voice—the same one I use in this column—is what people want. 
 
4. The best stories are the real ones. Readers remember the deal that almost fell apart, the client who became a friend, or the early mistake that became a turning point. Vulnerability beats polish every time.
 
5. Time is the biggest hurdle.
Writing a book while managing a full-time career isn’t easy. But I treated it like a client appointment: scheduled, protected, and consistent.
 
6. Good editing is worth its weight in gold. My first draft was… fine. My final draft? Clearer, tighter, and much more readable—thanks to a professional edit and some tough love from early readers.
 
7. Legacy is a powerful motivator.
I wrote the book to help other brokers, yes—but I also wrote it for my grandkids. Every chapter is addressed to them. That perspective changed everything.
 
8. Publishing is easier—and harder—than ever. Technology makes it simple to self-publish. But standing out? That’s another story. Writing the book is just the beginning of sharing it.
 
9. Your network matters more than your launch plan. Colleagues, clients, friends, and family became my first readers, reviewers, and cheerleaders. A strong community beats clever marketing.
 
10. We all have a book in us. Whether it’s business lessons, life stories, or personal insight—everyone has something worth writing down. If you’ve been thinking about it, start. Even a page a day adds up.
 
Writing a book forced me to slow down and reflect. It reminded me why I love what I do—and how much I still want to share. 
 
If you’re on a similar journey, I’m cheering you on. It’s hard. It’s worth it. And you’ll learn more than you ever imagined.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

Leverage: A Friend That Can Turn on You

Leverage is one of those concepts we throw around a lot in commercial real estate. It sounds sophisticated—like something whispered in back rooms by finance guys wearing French cuffs. But really, it’s simple: leverage means using someone else’s money to buy something you couldn’t afford on your own.
 
That “someone else” is usually a lender, and the “something” is typically real estate. Whether you’re buying an industrial building, an office condo, or a strip center, leverage is the reason you don’t need a million bucks in the bank to make it happen.
 
Let’s walk through it—and then I’ll explain why it’s both powerful and dangerous.
 
How Leverage Works
 
Say you find a building you want to buy. It’s priced at $2 million. You could write a check—if you happen to have a spare $2 million lying around. But most investors don’t.
 
So you approach a lender. The lender agrees to loan you 65% of the purchase price, or $1,300,000. That means you need to bring $700,000 to the table. With that $700,000, you now control a $2,000,000 asset. That’s leverage.
 
Why is this useful? Because you get all the benefits of owning the building—rental income, appreciation, tax advantages—without tying up your full net worth in a single deal. But, you’ve borrowed $1,300,000 which must be repaid. 
 
The Power of Cash-on-Cash Return
 
Now here’s where leverage starts to flex its muscles: cash-on-cash return.
 
Cash-on-cash is a fancy way of asking, “What am I earning on the actual money I invested?”
 
If that $2 million building brings in $100,000 in income after expenses and debt payments, and you only put in $700,000 to acquire it, you’re earning roughly 14% annually on your cash. (That’s $100,000 /$700,000.) Not bad.
 
But if you bought the building all-cash and still brought in $100,000 a year, your return would only be 5%. See the difference? ($100,000 / $2,000,000.
 
That’s why experienced investors love leverage. It makes the return on yourmoney better because you’re using someone else’s money to own more.
 
What Happens When the Math Goes Backwards?
 
There’s a flip side to this, and it’s become more common lately: negative leverage.
 
Negative leverage happens when the cost of borrowing exceeds the return you’re getting on the property—specifically, when your interest rate is higher than the property’s capitalization (cap)rate. Imagine paying 7% interest on a loan to buy a building that only returns 5.5% annually. That’s a losing equation from day one.
 
Unless you’re banking on major rent growth, redevelopment, or some other value-creation, you’re effectively paying to hold the asset. Your cash-on-cash return goes down, not up. And in that scenario, leverage isn’t helping you—it’s hurting you.
 
We saw the opposite for years when money was cheap. Investors could borrow at 3% and buy properties at 5%–6% cap rates all day long. But today’s reality is different. Many deals that penciled before don’t anymore—not because the buildings changed, but because the cost of capital did.
 
The Pitfalls of Leverage
 
Leverage works great when things go well—when tenants pay rent, when rates stay low, and when property values rise.
 
But if vacancy creeps in, or interest rates rise, or your building needs unexpected repairs, that monthly loan payment doesn’t go away. It still shows up—every month, like clockwork.
 
I’ve seen more than a few deals that looked great on paper fall apart in practice because the borrower didn’t leave enough breathing room. That extra margin of return? It can vanish quickly when costs go up or income goes down.
 
And over-leverage can lead to overconfidence. I’ve watched folks stretch into larger deals just because the bank said “yes.” And when the market turned? That yes turned into a painful lesson.
 
Using Leverage Wisely
 
Leverage is neither good nor bad—it’s neutral. It’s how you use it that matters.
 
Here are a few guiding principles I share with clients:
               •             Be conservative. Just because a lender will loan you 80% of the purchase price doesn’t mean you should take it.
               •             Understand your debt. Know your payments, your interest rate, your amortization period, and what happens if rates change.
               •             Stress-test your deal. If rents drop by 10%, can you still pay the mortgage?
               •             Watch for negative leverage. If you’re borrowing at 7% to buy at a 5% return, you need a very clear reason for doing so.
               •             Keep reserves. Surprises happen. Don’t let one roof repair or a missed rent payment jeopardize your investment. 
 
Bottom line? Leverage can be your best friend—or your worst enemy. Used with discipline, it can multiply your wealth. Used carelessly, it can multiply your mistakes.
 
Choose wisely.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

Seven Things Owners or Occupants of Commercial Real Estate Should Do Before the End of 2025

With the Big, Beautiful Bill now signed into law—and with interest rates, tax incentives, and construction dynamics shifting in real time—2025 is shaping up to be one of the most pivotal years in recent memory for commercial real estate decision-makers.
 
Whether you own the building, lease the space, or advise someone who does, here are seven smart moves to make before the year ends:
 
Conduct a Cost Segregation Study
 
Why?
The new law reinstates 100% bonus depreciation on qualifying plant and equipment—but to access that benefit, you need to know which assets qualify.
 
What to do:
If you’ve invested in improvements or own industrial real estate, get a qualified cost segregation firm involved. It could unlock hundreds of thousands in immediate tax savings—legally.
 
Reevaluate Lease vs. Own with Fresh Eyes
 
Why?
Interest rates are still high—but so are lease rates. And with bonus depreciation back, the ownership equation may now tilt in favor of buying for some occupants.
 
What to do:
Run side-by-side comparisons again. Don’t assume yesterday’s numbers still apply. Small Business Administration (SBA) financing, ownership clauses, and creative structures may make buying feasible—even now.
 
Talk to Your CPA About the New Law
 
Why?
Too many owners and tenants assume their tax preparer will catch the benefits automatically. But the OBBB changed the rules—and proactive planning is essential.
 
What to do:
Schedule a strategic call with your CPA before year’s end. Ask specifically about:
          •        Bonus depreciation eligibility
          •        Section 179 limits
          •        Impact on capital improvement planning
          •        Energy-efficient upgrade credits
 
Consider Energy Improvements While They’re Incentivized
 
Why?
Solar, lighting, heating and cooling upgrades, and even electric vehicle charging installations are eligible for new federal tax credits. These incentives may phase out or tighten in 2026.
 
What to do:
If you’ve been postponing efficiency upgrades, now may be the ideal time. Look into financing programs that pair well with the new federal credits.
 
Review Your Long-Term Control Over the Property
 
Why?
Whether you’re an occupant or investor, control is more important than ever in a volatile market. Do you have extension options? Purchase rights? Favorable assignability terms?
 
What to do:
Pull out your lease or operating agreement. Confirm whether you have:
          •        Renewal rights with clear timelines
          •        Right of First Refusal (ROFR) or First Offer (ROFO) clauses
          •        Protection against unwanted sale or transfer
 
If not, now may be the time to negotiate them in.
 
Prepare for Estate or Ownership Transition
 
Why?
With billions of dollars in commercial real estate wealth set to change hands this decade, 2025 is the right time to get ahead of who owns what and who will inherit what.
 
What to do:
If you’re an aging owner, review your trust, LLC structure, and succession plan. If you’re an heir or partner, ask questions now—before you’re suddenly managing a building you didn’t expect to own. 
 
Line Up a Deal Team Before the Rush
 
Why?
As more buyers, sellers, and tenants look to capitalize on 2025’s tax environment, the demand for lenders, inspectors, brokers, CPAs, and attorneys will intensify.
 
What to do:
Build your team now. That includes your:
          •        Commercial broker
          •        Real estate attorney
          •        CPA or tax strategist
          •        Cost segregation firm
          •        Lender or SBA contact
 
Deals that close smoothly in December started planning in August.
 
Bottom Line: Be the Active One
 
You don’t need to be the biggest player in the market to win in 2025—you just need to be the one who’s paying attention.
 
The best opportunities this year will go to those who prepare early, ask the right questions, and surround themselves with people who know where the landmines—and the leverage points—are buried.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

The Big, the Beautiful, and the Bill: What It Means for Commercial Real Estate

I’ve seen a lot of legislation in my decades as a commercial real estate broker—but few come with a name as audacious as the “One Big Beautiful Bill.” It sounds like something you’d hear shouted over the din of a campaign rally or stitched onto a souvenir T-shirt. But behind the marketing glitz lies a bill that, if passed, could reshape the commercial property business—particularly for those of us who live and work in the golden state of California.
 
Let’s break it down.
 
At its core, the bill proposes a return to 100% bonus depreciation. In plain English: property owners and developers would once again be able to expense the entire cost of certain building improvements in the year those costs are incurred. Think HVAC upgrades, lighting retrofits, or a full-blown tenant improvement package. For owners sitting on aging assets or brokers like me helping clients reposition their properties, this is a game-changer. It’s fuel for reinvestment—and it arrives just when many buildings need a refresh to stay competitive in a post-pandemic world.
 
But wait, there’s more. The bill also boosts the Qualified Business Income (QBI) deduction for pass-through entities—including many real estate partnerships—and raises the cap on the SALT deduction for individuals earning less than $500,000. For Californians, who have long borne the brunt of SALT limitations, that’s more than a footnote. It’s meaningful tax relief that could free up capital for additional investment.
 
Of course, every rose has its thorn. And this one comes in the form of Section 899—a “revenge tax” aimed at foreign investors from countries with so-called discriminatory tax laws. The details are still fuzzy, but the risk is clear: if foreign capital dries up, so too may some of the momentum behind major commercial developments, especially in coastal markets.
 
And then there’s the rollback of green energy incentives. As someone who’s witnessed the growing appetite for ESG (Environmental, Social, Governance)-friendly buildings, this move feels like a step backward. Cutting 179D deductions and other sustainability carrots might please certain constituencies, but it runs the risk of dulling progress just when tenants and investors are demanding greener spaces.
 
As of this writing, the bill has passed the House and is under active consideration in the Senate. With several provisions drawing bipartisan attention—both supportive and critical—the coming days will determine whether this sweeping legislation becomes law, gets trimmed down, or stalls altogether. CRE stakeholders are watching closely.
 
So, is this bill truly beautiful? That depends on where you stand. For investors, developers, and brokers who appreciate certainty, tax relief, and pro-growth measures—it’s attractive. For those relying on foreign capital or green incentives—it’s a mixed bag.
 
Like any piece of sweeping legislation, the devil is in the details. But if you work in commercial real estate—or if you occupy a building, own one, or hope to invest in one—this bill deserves your attention.
 
Because love it or hate it, “beautiful” bills don’t come around every day.

My Legacy Project. A Commercial Real Estate Journey

They say everyone has a book in them. Mine has been rattling around for over a decade, occasionally tapping on the inside of my skull and whispering, “It’s time.” Well, that time has finally arrived.
 
Yes, folks, I’ve embarked on a project that more than a few of you have encouraged for years: I’m writing a book. There. I said it.
 
Some of my peers have chuckled knowingly and offered congratulations. Others have asked, “What took you so long?” And a few have raised eyebrows and muttered, “After all, that’s what old guys do.” I’ll admit, I resemble that remark.
 
But this isn’t a memoir filled with nostalgic tales of the ‘good old days’ (although there might be a few of those, because let’s face it—some of them are just too good not to share). Nor is it a textbook of dry theory or recycled motivational fluff. This book will be part personal, part tactical. A blueprint of sorts—for those interested in understanding how one broker carved out a successful commercial real estate practice by focusing on fundamentals, relationships, and a few contrarian bets.
 
The tentative title? SEQUENCE: A Commercial Real Estate Success Formula – How I Became a Successful Producer and How You Can Too!Yes, it’s a mouthful. But I’m not writing this for literary awards. I’m writing it to help people in our business—especially those who are just starting out or struggling to find their stride—shortcut a few of the lessons I had to learn the hard way.
 
At its core, the book is built around a framework I’ve developed over 40 years in the trenches: SEQUENCE. Each letter stands for a key stage in the commercial real estate transaction cycle, from sourcing opportunities to expanding your practice. I’ve also included another acronym, QUALIFY, to help readers better assess the viability of a deal and the motivation of a client. (Yes, I like acronyms. No, I’m not sorry.)
 
The book will be peppered with real-life anecdotes—some triumphant, some humbling—all intended to reinforce the lessons I’ve taught in seminars, shared in columns like this one, and practiced day-in and day-out with my clients. It will also spotlight the tools and mindsets that helped me break through ceilings, bounce back from setbacks, and build a sustainable, scalable career in this wonderful and maddening business we call commercial real estate brokerage. 
 
Now, before you start placing Amazon pre-orders, I should level with you: This will take time. My goal is to finish by the end of 2025. I’ve learned that writing a book is a lot like a commercial lease negotiation—there are drafts, redlines, delays, and the occasional moment where you question everything. But there’s also joy in the process, especially when you know the outcome will serve others.
 
So, why now?
 
Because I believe we don’t just owe our clients our best—we owe it to the next generation of brokers, entrepreneurs, and business owners to pass along what we’ve learned. This book is my attempt to do just that. A legacy project, maybe. But also a practical toolkit that I hope will help someone—maybe you—get from where they are to where they want to be.
 
Stay tuned. I’ll keep you posted on the progress. In the meantime, if you’ve ever considered writing a book of your own, I have one word for you: start.
 
After all, that’s what old guys do

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.