SAN FRANCISCO—As GlobeSt.com previously reported, the owners of DRAKE Gastro Lounge recently acquired a building located in the South of Market area of San Francisco with a 20-year fixed-rate, SBA 504 loan for $4.3 million. According to TMC Financing, DRAKE was able to recoup more than $2,000 a month by purchasing their location, as well as fixing their operating expenses against future lease rate inflation. In an update to that story Barbara Morrison, president and CEO at TMC Financing, tells GlobeSt.com that San Francisco’s current leasing market leads to alternative options.
Barbara Morrison, president and CEO at TMC Financing, says that “While many conventional lenders shy away from financing restaurants, the SBA 504 program is able to provide low, fixed rate financing with as little as 10% down. This makes financing through the SBA a great strategy for restaurateurs looking to retain working capital.”
Morrison tells GlobeSt.com that “The current leasing market for San Francisco’s commercial real estate has increased at a rapid pace. Based on recent CoStar data, over the last three years leasing prices in San Francisco have increased by over 75%. Looking into the near future, we anticipate the market to become more competitive, and prices to continue to rise.”
She explains that that isone main reason many business owners are considering the economics of owning their office or shop over renting. “Through purchasing the property, owners are able to build equity and stabilize on monthly costs in an overly aggressive market.”
In the Bay Area, TMC’s clients are also faced with the challenge of low overall inventory and locating—and winning—property to purchase for business use, she adds. “Investors are also competing and aggressively purchasing properties. Investors are very interested in purchasing available properties due to lack of inventory, reduction in cap rates and an increase in property values.”