When Buying Makes Sense

Trade show exhibit maker Punch Visual Concepts made the switch from leasing to owning its own facilities on South Marina Boulevard, near the junction of Interstates 8 and 5.

The 10-year-old company started small and relocated to an 8,000-square-foot facility in 2010, as business grew. When that wasn’t enough, it leased another warehouse and when it began to outgrow that space, Steve Phillips, one of the partners, realized lease rates were going up and were more expensive than what they wanted to spend on rent.

Their realtor, Rex Huffman with Voit Real Estate Services, suggested they buy their own space. The 20,000-square-foot building he suggested was bigger than what they were looking for, but Phillips found that it made sense.

“As it turns out, the rent we’re paying now and the amount we will pay on the mortgage is pretty close, and we’ll wind up with more usable space,” Phillips said. “With a yard which will be helpful, we’ll probably actually wind up with 30,000 square feet of space.”

Punch will move into its new building this fall.

Kurt Chilcott, CEO of CDC, thinks the uptick in purchases by small businesses is driven by a combination of factors: businesses have weathered the storm and are emerging stronger as revenues bounce back; they recognize that with current interest rates, their loan payments are not going to be much more than their rents; they are comfortable getting back in the market.

“We’re never going to see interest rates like this again. I think they’ll be around a lot longer, but it’s doubtful that we’d see real estate rates so low,” Chilcott said.

“Things have stabilized and people are feeling better about things not getting worse. They may be sitting on cash that they saved for downturns and did not use,” he said. “Supply is tight in San Diego and if you can get in, now’s a good time to do so.”

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