We started looking at commercial office buildings shortly after the financial crisis of 2008. I viewed buying a building during down times as an opportunity to make up for heavy investment losses during the tech crash earlier that decade. Owning our own building would support our rapid growth and make clear our commitment to serving clients as an independent firm.
Through the seven-year process, I learned how much discipline it takes to stay focused on business strategy first and foremost—rather than something that looks like “a deal.” We almost bought a building at the far reaches of the metro area. If that transaction had gone through, even at an attractive valuation, our business operations would have suffered.
For financing the purchase, I initially presumed we wanted a long-term, fixed-rate loan, so we started down a path toward an SBA-backed loan. But along the way we learned that for our particular situation, the fees associated with an SBA loan didn’t make sense. Instead, we selected a commercial mortgage with a 10-year guaranteed interest rate and that fit together with our construction loan in a savvy way.
We discovered that local and regional banks may be able to offer creative solutions tuned to a particular business. We were also able to maintain our excellent existing banking relationships while building new ones, too. Over time, we’ve come to see that it’s the banker—even more than the specific bank—that’s the main relationship asset.
That makes sense given what I’ve learned in the technology industry about specialization: the way to avoid problems and move forward strategically is to obtain truly expert local advice. When choosing a broker, banker, architect, general contractor and designer, we sought client-focused firms with deep local experience who had specific expertise relevant to our project size of 32,000 square feet.
Also like the technology industry, we found value in paying upfront for design work that gave us a roadmap to success. Here, that meant paying an architect for a plan that we could then shop to general contractors. In this way, and by seeking bids from three of each type of vendor, we saved in the long run.
-James Savage is founder and president of Concurrency Inc. in Brookfield.