The Benefits of Industrial Strata Ownership

A strata warehouse or stratified complex, it is referring to a building or complex that may only have one or two actual structures on site but has many different owners. In other words, different owners own a separate portion of each structure much like the comparison of owning a residential condo versus a single family home, it creates an affordable, low maintenance option.

Industrial strata warehouse is a product that has seen a tremendous increase in demand and transaction volume over the past 24 months. The growing trend in the Fraser Valley industrial real estate market is for a business owner to pursue the goal of owning their own property where they can grow their business. Low interest rates and high leverage financing are making it attractive for many businesses to make the move from leasing, into purchasing their own strata warehouses.

Comparing ownership versus leasing, there are two main advantages:

  • Financial Gain. Financial gain is created by owning an appreciating asset for a price that is very comparable to a monthly lease payment, essentially instead of paying someone else’s mortgage you will be paying your own mortgage towards an asset.
  • Control of your own future. When you own your own unit you don’t risk being tied into a long term lease when you need to expand your space, downsize your space or change your current layout. Given that Industrial strata units have a high turnover percentage relative to other asset classes, there is likely a market for your unit down the road as businesses grow and expand constantly.

Case Study

Looking at one example of leasing versus owning a strata unit, we can see how ownership can be a retirement plan for a business owner.

Mr. Industrial had the opportunity to move from his 10,000 square foot lease premise and purchase a 10,000 square foot strata unit. The total costs which included strata fees, mortgage payment and property taxes were only $1,000 a month more than his previous lease situation – although this is a small increase from his lease payment, it is an appreciating investment Mr. Industrial can sell down the road. After operating his business in his units for two years, Mr. Industrial sold his business and signed a long term lease with the new business owners so they could continue conducting business in the same location, Mr. Industrial’s strata unit. The unit now

Mr. Industrial had the opportunity to move from his 10,000 square foot lease premise and purchase a 10,000 square foot strata unit. The total costs which included strata fees, mortgage payment and property taxes were only $1,000 a month more than his previous lease situation – although this is a small increase from his lease payment, it is an appreciating investment Mr. Industrial can sell down the road. After operating his business in his units for two years, Mr. Industrial sold his business and signed a long term lease with the new business owners so they could continue conducting business in the same location, Mr. Industrial’s strata unit. The unit now nets Mr. Industrial $2,000 profit a month. Currently, the value of Mr Industrial’s unit has gone up approximately 20% since he purchased it and Mr. Industrial has created himself another pension plan.

This is just one example that demonstrates the benefits of strata ownership. Strata has proved to be a great stepping stone for a business to grow as well as a long term solution for anyone that doesn’t have the time or finances to maintain their own freestanding property.

To learn more current industrial strata opportunities in the Fraser Valle feel free to reach out.

Todd Bohn

Personal Real Estate Corporation

Partner
Industrial
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