Office Buildings & Parks Commercial Mortgages

Office Buildings & Parks Commercial Mortgages

An office building mortgage or parks commercial mortgage is a loan that uses your commercial property as collateral to secure a long-term loan for purchasing, development, construction or refinancing purposes. This means if you default on the loan, the lender will recover the cost from your real estate collateral.

 
 

Office Space

Office Space is the most popular type of commercial real estate. Office buildings, which can range from single-tenant offices to skyscrapers, are defined by one of three categories: Class A, B, or C. 

  • Class A commercial real estate properties are typically newly built or extensively renovated buildings in excellent areas with easy access to major amenities. They are typically managed by professional real estate management companies. 

  • Class B commercial real estate properties are often older buildings requiring capital investment. Although they are well-maintained and managed, these properties require minor repairs and upgrades—making them a popular target for investors. 

  • Class C commercial real estate properties are typically used for redevelopment opportunities. They are generally poorly located, require major capital investments to improve out-of-date infrastructure, and their high vacancy rates are much higher than higher-classed buildings. 

Office Building & Office Park Financing 

The past few years have been a roller coaster for many businesses. This has been especially true when it comes to finding, purchasing, renting, and owning office building space.  

That said, in the last couple of months, our business has been covering and monitoring business climate across several states within the US. We have to say that the consensus has been overwhelming  across many states that office building spaces are the top priority amongst business owners.  

Some states are bustling with new office space availability with low rent and financing prices. On the other hand, other state states are currently struggling with limited availability and incredibly high financing rates. The latter situation has been particularly true for business owners operating from heavily populated regions such as New York City and Chicago.  

Overall, the United States has experienced massive improvements in office building rates and availability. This is especially true when it comes to startups and entrepreneurial culture growth. Business startups have been popping up at an incredibly fast rate since the Great Recession of 2008.  

This trend has also led to a significant increase in office building space demand. On the other hand, the Internet of Things (IoT) and the overall evolution of technology also worked as a catalyst to transform the way businesses operate these days.  

In addition, the way millennials have fought for more flexible working schedules and fewer restrictions on working from the actual office premises has caused a lot of impacts. This employee behavior has contributed to forcing business owners into becoming more innovative when it comes to office building spaces within the United States.  

Such dueling conflicts have resulted in a complicated scenario for the business owners. However, in order to fully understand the situation with the office building space sector, you must first look into the construction industry.  

Office Buildings and the Construction Industry 

A few years after the Great Recession in 2008, the construction industry struggled a lot. However, after 2012, the demand for office building space grew. As the number of skilled workforces grew, the business owners had more access to a variety of employees. Ever since, the demand for office building spaces has continued to skyrocket every year.  

In addition, higher consumer spending continues to increase as people across the country continue to recover from the Great Recession. This ultimately helped fuel the entrepreneurial culture and startup growth across the nation.  

As demand for corporate i.e. office buildings continued to rise, the construction industry started to flourish once again. This helped create a stable construction industry, and in the last 2 years alone, the office building spaces sector has seen some of the highest demand in recent times. More promisingly, the vacancy ratios have plundered to their best fiscal value in over a decade.  

Thanks to many high-profile businesses rebounding from major financial hits after 2008's recessions. The office building sector is growing at faster rates than any other construction sector in the United States, with year-over-year growth rates. Overall, the rebounding construction sector as a whole has been a key element when it comes to flourishing office building sector judging the rebounding and climate. 

Why Would a Business Owner Need Financing for Office Buildings? 

There are several reasons why business owners might be interested in the climate of office buildings and the office park sector. To name a few, here are some of the most common reasons why you, as a business owner, would need an office building mortgage or finance an office park complex.

 

Developing Office Buildings for Commercial Use (Owner, Occupant, and/or Investor): 

Some business owners want to invest in various office buildings for commercial use. In other words, business owners can utilize office buildings and office park funding to renovate, expand, or remodel an office building or commercial real estate in order to rent it out to another business owner or to simply utilize it for their own business office space needs. With the help of office building financing, any business owner can own office space and become an owner and an investor.

Expanding a Work Space: 

Many business owners, particularly small business owners or startup business owners, are excited when business profits start rolling in, and it is time to expand business operations. One of the first steps of expanding a small business includes hiring new employees, which in turn means expanding a workspace. Typically, many small business owners or startup business owners start working out of their homes, but once a business starts to pick up and it is decided that hiring new employees would be beneficial to help expand business profits, then finding commercial office building space is the next step. Unfortunately, office buildings are incredibly expensive upfront, and many business owners do not have that type of money just lying around to purchase or refinance commercial property! This is when office building financing comes into play. Through office building funding, many business owners can experience expanding their business!

 

Office Buildings - Best Sources of Financing  

The office building space sector continues to experience increased profitability and promising forecast that the demand from business owners will continue to grow in years to come. This rapid spike in demand for commercial office building space has led to higher rents.  

Class A rents are already up by 3.5%.  Therefore, whether you rent it or own it, an office space is an inevitable requirement for almost all business owners, especially if you are looking to expand. That is one reason you must understand various office building space mortgages and loans available in the U.S. market. 

While you can access various financing options, here are some of the most common financing loans when it comes to office park and building loan options. These include:

  • Small Business Administration (SBA) Loans: Real property SBA loans typically come in two types – 504 or 7a SBA loans. SBA 504 loans are a 50 percent loan from the bank, coupled with a 50 percent loan from the government. In comparison, an SBA 7a loan is a 90 percent government-backed bank loan. Overall, both loans tend to have small down payments, fixed interest rates, and the ability to finance building improvements. While these SBA financing options, just like other types of loans, come with disadvantages, these are still some of the best options for office space financing. 

  • Traditional Financing: Conventional bank financing is always a great option for any business owner looking to expand operations through office buildings. Traditional financing is simply utilizing a loan from a conventional bank; however, it can be difficult for many small businesses because banks view them as too much of a risk. But if you are able to obtain a loan from a conventional lender, you will get the lower rates, longest terms and amortization and least amount of points to close your loan or mortgage. 

  • Private Business Lenders: Non-bank business lenders are able to offer financing to commercial real estate owners that banks and conventional lenders may not. Private lenders are a great financing option for office building owners seeking financing that doesn’t require lots of paperwork (low doc commercial real estate loans) and loans to property owners who have bad credit. 

 

Types of Office Building Loans: 

  • Mortgage: an office building mortgage is the use of your commercial real estate as collateral to obtain long-term financing to purchase, refinance, or build-out the commercial property. Nearly all commercial real estate lenders offer some sort of mortgage ranging from 2-30 years in term and amortization. 

  • Refinance: Getting rid of your existing mortgage and replacing it with a brand-new mortgage. Usually refinancing a commercial mortgage is done to obtain a lower rate, to obtain a longer term (to reduce monthly debt payments), or to tap into some of the office building’s equity to use for improvement or working capital uses. 

  • Cash-out Refinancing: This type of refinancing is used by commercial property and office buildings that have substantial equity in their real estate. If you have substantial equity, you can buy-out your current mortgage with a new, larger financing amount, and take the balance and cash-it-out to use for other purposes (improvements, build-outs, working capital). 

  • Bridge Loan: Short term financing used temporarily until permanent office building financing is completed. Generally, a bridge loan for an office building has a term that is less than two years, and has higher rates than most. 

 

Conclusion 

Now that you are aware of the numerous financing options available for the companies owning commercial real estate, office parks, building and complexes. Therefore, it is imperative for you to understand all available options. This may sound like a daunting idea but educating yourself about the loan options at your disposal may help you save an exponential sum of money. 

Are you looking for an office building mortgage, or other form of commercial real estate and need help understanding the financing options? Then please feel free to contact one of our commercial real estate loan experts. We will be more than happy to assist you in navigating through the entire loan process.  

Office Building Interest Rates                            

  • 5 Year Fixed Rates                                        Up to 75%

  • 7 Year Fixed Rates                                        Up to 75%

  • 10 Year Fixed Rates                                        Up to 75%

Our Office Building Loan Benefits

• No upfront application or processing fees 

• Simplified application process 

• Up to 75% LTV on office building loans (90% on owner/user office buildings) 

• Terms and amortizations up to 25 years 

• Loans for purchase and refinance, including cash-out 

• 24 hour written pre-approvals with no cost and no obligation