BusinessWest

WFCR’s Move to Springfield Will Enhance Its Visibility and Programming

Martin Miller believes the future of public radio in Western Mass. hinges on its commitment to local content.
“People can go to the Web, and they’re able to have Internet radio in their car, so they’re able to hear all the [national] programs we air without going through any of our stations,” said Miller, CEO and general manager of New England Public Radio (NEPR). “So it’s important that we produce local programming, regional programs; that’s the reason people will come to our station and support it and care about it.”
But that commitment to the local community extends far beyond content. About two years from now, WFCR-FM and WNNZ-AM will take up residence on Main Street in Springfield — a project that Miller and others say is an important piece of the ongoing rebirth of the city’s downtown.
“One of the great things is that this is street-level space, highly visible in the main section of downtown, where there’s lots of foot traffic. People going by will see what we’re doing, and they’ll know we’re there,” Miller told BusinessWest.
“We’ve gotten a fantastic reception from the mayor, the business community, and the economic-development council. People are really looking at this as a boon to the downtown area and part of the revitalization plans for Springfield.”
The move will quadruple the office and studio space for NEPR’s flagship station, WFCR (long located on the UMass Amherst campus) and its recently acquired all-news sister station, WNNZ, with the purchase of the entire first floor of the Fuller Block Building at 1537 Main Street.
“The first floor on Main Street and the basement are over 16,000 square feet,” Miller said. “We also have space at WGBY public television channel 57, where we’re building a 1,200-square-foot news office, and we are going to retain that as well and turn it into a news-talk production facility for a program we will create on WNNZ.”
The move downtown, expected to be completed sometime in 2014, is a major step up in space, visibility, and expansion potential, Miller said.
“WFCR has been in a 1947 cinderblock former dormitory on the UMass campus for at least 45 of its 50-year history, and we’ve been working for some time to try to figure out where we could have a proper, 21st-century broadcast facility,” he said, noting that ongoing efforts to bring a UMass presence to the City of Homes, collectively known as the Greater Springfield-UMass Amherst partnership, made the move to Springfield feasible.
“We were given the opportunity to look at space in Springfield,” Miller said. “We found space on Main Street and, at the same time, will retain a portion of our facilities in Hampshire House at UMass, where we’ll still be able to produce news and have some of our fund drives and have student interns working.”
The station, which currently serves an audience of 180,000 on WFCR and WNNZ, has managed to produce its content from an outdated suite of offices and studios crammed into 4,000 square feet. The pending expansion will allow NEPR to broaden its local programming options and make badly needed technological upgrades — but those changes will take money to go along with Miller’s vision.

Stationary Target
To be precise, the station needs $7 million.
“Last May, we kicked off the 50th anniversary of WFCR and kicked off our 50th-anniversary campaign at the same time,” Miller said. “We’re still in what’s technically the quiet phase of the campaign.”
Some $4.1 million of that comprises the facilities portion of the campaign, including the purchase-and-sale agreement with Tom Dennis, who owns the Fuller Block Building. “We are converting the first floor and a portion of the basement to a condominium arrangement, and we should be closing in the next few weeks,” Miller said. Overall, NEPR has raised $2.67 million; of that, just over $2 million is earmarked for the facilities piece.
Other campaign funds will go toward new programming and upgraded technology both in Springfield and Amherst, Miller explained.
Last year’s campaign launch and announced move to Springfield came in the wake of a significant growth pattern for the station. In 2007, WFCR began leasing 640 AM, WNNZ’s powerful frequency, giving its listeners access to regional, national, and international news and talk programming. WFCR then purchased WNNZ outright late in 2010.
Around the same time, the WFCR Foundation also acquired 91.7 FM to broadcast WNNZ in Franklin County. The ongoing capital campaign will support the purchase and construction of another brand-new frequency in Adams, 98.9 FM, serving Northern Berkshire County as another piece of the all-news WNNZ network.
“Another thing we did last year was, we took a look at where we’ve been the past 50 years and where we are today in terms of expansions we’ve done and programming for different audiences. We rebranded ourselves as New England Public Radio because we do have a very large reach, a very large geographical area. And we wanted to be able to better market what we do as a public-radio organization, which includes an online presence at nepr.net.”
New England Public Radio will continue to expand its programming as well, in several ways:
• Youth Radio, an initiative first undertaken in California that has taken off with public radio stations across the country, is dedicated to promoting the intellectual, creative, and professional growth of young people through education and access to media. The program taps into young local talent to create and produce original media, giving them a voice in the community while developing marketable skills.
• A new cultural program will be known as Street Level Sounds. Each month, NEPR will partner with arts venues and organizations to present music performances and spoken-word programs to the community. These presentations could take many forms, including Web casts, podcasts, recordings posted on the Website, and broadcast use. Street Level Sounds will also include news-interview programs done before a live audience and live performances where WFCR music hosts engage with musicians and the audience.
• NEPR will also develop a range of new talk and news programs, with daily content devoted to topics of local and regional interest, including an hour-long news/talk program for all-news WNNZ and more news content for WFCR and nepr.net. The program will be a talk-radio program, where listeners can call in and participate. The local program content within NPR’s All Things Considered will likely feature straight reporting as well as interviews.
Miller said local offerings in both news and cultural programming are important to the community.
“We see what’s happening in the newspaper world; we know about the cuts in reporting budgets,” he said. “We believe we’ll be able to bring more news for people looking for information about what’s happening in their communities — whether at a cultural or news level. Developing new programming, and being hyperlocal in that programming, is extremely important. Having the facility in Springfield is really a means to get to that end.”

Downtown Trained
Miller repeatedly came back to WFCR’s long history at UMass, and how the college’s enthusiasm to be a part of Springfield’s revitalization played a major role in the station’s move.
Beyond the station’s relocation, other examples of the university’s growing presence include the relocation of the school’s Design Center into one of the buildings in Springfield’s Court Square and participation in several arts-related initiatives, including the Art & Soles project that brought a few dozen six-foot-high sneakers to the downtown area.
“I think that, while we value our partnership with the university, they really opened the door for this to happen,” Miller said. “The university wants to have a presence in Springfield, and this would not be happening without the university’s involvement. Here on campus, we’re kind of tucked away; people don’t really know that we’re here, so I think being in Springfield will make a huge difference in terms of that community connection. It’s already opening doors in terms of connections we’ve never had before.”
Students, he stressed, will still have on-campus access to completely renovated and updated WFCR facilities, while being able to intern at the new Springfield station as well.
After closing on the Main Street property, Miller said, demolition inside the building will begin by the end of the year, followed by the extensive construction phase. “We expect to be able to move the majority of our staff, which means the majority of our operations, sometime in 2014, so 24-30 months from now.”
By then, downtown Springfield might have several more economic-development stories to tell — and perhaps New England Public Radio can be a part of telling them, directly from the scene.
“We’ve heard an incredible amount of good things from people here about how much is happening in downtown Springfield,” Miller told BusinessWest. “I think people are very concerned about Springfield and want to see the city make a comeback. It’s coming — and we see ourselves as part of that.”

Joseph Bednar can be reached at bednar@businesswest.com

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Area’s Commercial Builders Still Awaiting Better Days

Carol Campbell thought she was seeing some good news. Turns out it was just a mirage.
“We saw indicators in the fourth quarter of last year, and especially in November and December, of very much an uptick — a lot of phone calls, a lot of projects,” said Campbell, president of Chicopee Industrial Contractors in Chicopee, which specializes in rigging, millwrighting, relocations, and other services for the industrial and manufacturing sector. “But in January, when I looked back, I think it had more to do with getting production machinery on the plant floor for December, for tax purposes.
“I suppose that’s a good indicator, that people were spending,” she continued, “but they were waiting until the last moment, which put a lot of pressure on us and people in our industry.”
In reality, she said, the start of 2012 has brought much the same story she saw in the past several years. “It’s kind of a sluggish start for us. We’ve got a lot of projects on the books, but a lot are pushed off until April, so the lack of snow this winter hasn’t changed anything for us, indoors or outdoors. That’s what we’re seeing.”
BusinessWest heard this account more than once, of contractors unable to take advantage of a mild, dry winter as they might in a busier year.
“We’re not seasonal, but I think people work on a certain calendar,” Campbell said. “And just because we’ve had a mild winter, the contractors aren’t starting up earlier or getting projects any earlier. That’s just what I hear from my peers.”

Paul Ugolini, president of Western Builders in Granby, is equally concerned about the sluggish pace of growth in his industry.
“It hasn’t been good,” he said. “Basically, there’s not enough work and too many general contractors. It’s supply and demand: no supply and big demand.”
That’s not a new story, but one that has emerged as status quo in construction since around the start of the Great Recession — as has the dramatically heightened competition for available jobs as builders based in New York, Connecticut, and Greater Boston continue to move aggressively into Western Mass.
“General contractors are coming from all over the place. We just bid a job in Wilbraham, a fire station; there were 13 bidders,” Ugolini noted, adding that, 10 years ago, that number would typically have been three or four. “They come from all over.”
Joe Marois, president of Marois Construction in South Hadley, has been lamenting that same development for some time.
“This year seems to be a lot more encouraging from the perspective that there are more projects to bid,” he noted. “However, the abundance of contractors that are bidding for these jobs has not diminished substantially; we’re still seeing between eight and 15 bidders on various projects, not just from Massachusetts, but from outside the state — and some of the quotes are unusually low. From our persective, at least, it’s hard to understand that whole phenomenon.”
In short, the mood in construction, while marginally better than in, say, 2009 and 2010, remains pensive at best, but more often anxious, as area builders wonder whether this year will be the one in which the floodgates of projects finally open. Nobody dares to make that assumption — but there may be some positive signs on the horizon.

Hammer Down
Mark Erlich, executive secretary-treasurer of the New England Regional Council of Carpenters, recently expressed optimism about his industry in New England Carpenter. “The new year brings reason for careful optimism and hope,” he writes. “After three years of chronic and long-term unemployment, the construction industry is trending slightly upward. We look for more and better opportunities in 2012.”
Nationwide, the construction industry lost 13,000 jobs between January and February, according to the Associated General Contractors of America, but the organization noted that was probably a natural adjustment following a better-than-usual early-winter period.
“Since many firms were able to either get an early start, or a late finish, to construction activity in December and January because of mild conditions, this job decline is probably more of a seasonal correction than the start of a new trend,” said Ken Simonson, the association’s chief economist.

In fact, total construction employment in the U.S. in February stood at 5,554,000, or 1.2% higher than in February 2011. However, the construction unemployment rate in February was 17.1%, approximately double the national rate, while Massachusetts actually shed construction jobs over that period, from 108,600 in February to 106,800 last month, a drop of 1.7%.
The recent improvements nationwide are “lamentably small,” Simonson cautioned, but he added that a half-year of steady improvement, on average, across the country shows that “the worst has passed.”
Campbell welcomes the optimism, but understands the ways in which it collides with reality locally.
“I hear what all the experts and advisers are saying, but I can’t say I’m feeling much of a recovery yet,” she said, noting, however, that business has slowly improved since 2009, the year her company got hit the hardest by the economic downturn. “We started picking up in 2010, and 2011 was an OK year, but OK by what standards? It’s not what it was six years ago, that’s for sure; it’s kind of the new norm.”
By that, she explained that recovery for the construction trades might not mean a rebound to the levels of business seen in the years immediately preceding the Great Recession.
“I’ve used all these catchphrases before, like ‘cautious optimism,’ but I just feel like it’s a different world now, a different way of doing business,” Campbell told BusinessWest. “It’s a different marketplace and a different environment. People have been asking me about 2011, and we’re strong; we’re fine. It’s just a new norm, and not the norm of 2004, 5, 6, 7.”
Industry forecasts are all well and good, but the clearest sign is always what projects are available to bid on, and progress on that front has been frustrating at best, Ugolini said.
“There hasn’t been much work, and it’s been that way since 2008,” he noted. “The last few years, work around here has been contracting, and it doesn’t seem like it’s turning around.”
Private-sector projects have dried up considerably over the past several years, he noted. “The only work right now of the size we do is in the public market. We’ve had jobs at UMass, fire stations, libraries, stuff like that. There’s very little private work. It seems it may pick up, but we always feel that way at the beginning of years.”
Marois agreed. “At this point, public work seems to be on the rise,” he told BusinessWest. “Schools are up, mostly; state projects are up. Talking to architects, they have a lot of stuff on their boards right now, and that will start manifesting itself this summer — at least, we hope so.”

Private Concerns
As for the work that is available, Campbell said, customers are in the drivers’ seat in what is decidedly a buyer’s market. She said she’s spoken to manufacturing clients who are starting to invest in new machinery, reflecting growing optimism in that field, but builders — particularly those seeking private-sector work — are still waiting for that activity to ramp up and trickle down as new construction opportunities.
And, as others reported, the mild winter was really not much benefit to an industry where projects are planned well in advance.
“It would have been a benefit if there was inside work going on — savings on heating bills — but [the weather] didn’t seem like it pushed any projects,” Ugolini said. “It wasn’t like, ‘let’s take advantage of the mild weather.’ Work still takes months to get going.”
Like the rest of his peers, Marois is hoping for an industry turnaround as that dry winter gives way to spring. But, like Campbell, he worries that the challenging developments of the last several years — specifically, more competition from afar and shrinking margins — might be closer to the new norm than contractors would like.
“When we go outside the area, it’s where we have clients. Other than that, we’re not doing that,” he said, lamenting the fact that so many builders not based in Western Mass. have been so aggressive here. “We’re just hoping that people start having an abundance of projects. Then we can all enjoy a bigger profit margin than we have the past three or four years.
“A lot has changed,” Marois continued, citing government regulations and insurance requirements as two other areas that have become more burdensome. “I’m not sure we’re going back to what we would consider the way things were. It’s just getting harder to do business.”

Joseph Bednar can be reached at bednar@businesswest.com

Commercial Real Estate Market Shows Signs of Progress

Bill Low says he started noticing an uptick in phone-call volume, or ‘activity,’ as they call it in his business, toward the end of last year.
At first, he didn’t make much of it, because there had been several similar bursts of movement over the past few years, or since the Great Recession threw the local commercial real estate market into something approaching cold storage. But none of them had any real staying power.
“We’d seen a lot of fits and starts,” said Low, vice president of Springfield-based NAI Plotkin. “You’d be busy for a week, and then it would be dead for a month or two.”
But this time, the phone kept ringing. And for the most part, it hasn’t really slowed down, said Low, who remains cautious, but is nonetheless optimistic that what he and others are seeing across the region amounts to something approaching real and significant improvement — and permanence.
“The first quarter of this year started slowly, but it’s been gaining momentum,” said Low, noting that, if this recovery is in fact real, it is coming at least a year to 15 months behind a significant revival in primary markets like New York and Boston. “Now, it’s sustained activity, and most all the brokers I’ve talked with are much busier than they had been.”
Kevin Jennings, president of Jennings Real Estate, is in agreement. And he, like Low and others, said the current market surge, if it can be called that, takes many forms. They include closings on properties that constitute a small yet significant portion of the vast inventory of industrial buildings on the market. Many of these sales have featured closing prices that could not have been imagined five or even three years ago (that’s the not-so-good news, at least for the sellers), but together, they constitute progress in reducing that glut of inventory and at least moving the needle the other way on prices and overall market stability.
It can also be seen within the office market, said Jennings, where conditions still clearly favor tenants, but the pendulum may be at least starting to swing the other way, as vacancy rates continue to fall, especially in the Class A realm, in both the downtown Springfield market and the suburbs.
“I like the activity level I see right now,” said Jennings, who is the latest area broker to earn the assignment of handling Harrison Place and other properties along Main Street owned by New York-based investor Glenn Edwards (more on that challenge later). “And I hear and see a different attitude in people; there’s a good deal of optimism.”
Mitch Bolotin, a principal with Colebrook Realty Corp. in Springfield, said his firm has been relatively busy for the past few years, despite the recession and its impact, and is now even more so.
Indeed, he said he’s witnessed a recent increase in activity across the office, retail, and industrial sectors, which he attributes to a combination of pent-up demand, the prevailing tenants’ market (a condition favoring both those looking for space and tenants that landlords are trying to retain), and the fact that companies and organizations have space needs that must be met.
Such was the case with the United Way of Pioneer Valley, he told BusinessWest, noting that the nonprofit agency was looking for more-efficient space than its now-former headquarters in a large home on Mill Street, and also a downtown Springfield mailing address and, preferably, visibility on Main Street. All those needs were met with 6,500 square feet assembled on the ground floor of the TD Bank building, including offices fronting Main Street that had been occupied by the Greater Springfield Convention & Visitors Bureau, which was moved around the corner.
It was also with case with Fallon Community Health Care, which recently signed on to become the first tenant in a new, 45,000-square-foot medical-office project soon to take shape in Springfield’s North End, he said, and with a deal brokered with CVS to convert the former Bernie’s in Holyoke into its latest regional location, among other deals brokered by Colebrook recently.
“We have been busy, and things have picked up even more over the past several months,” Bolotin explained. “It’s a good trend; let’s hope it continues.”

New Lease on Life
As he talked with BusinessWest about the state of the local market — something he’s been doing on a regular basis for more than 20 years and through several economic cycles — Low said the region still has a long way to go before conditions resemble what they were a decade ago or even in the years just preceding the precipitous decline of 2008.
But many indicators are at least trending in the right direction — some more profoundly than others — starting with that huge factor of confidence among business owners and managers.
“Before, you’d get a little bit of good news from somewhere, maybe the stock market, and people who had been putting off expansion or a move would think about going ahead — but then they’d realize that what they were seeing wasn’t real,” he explained, referring to those aforementioned fits and starts. “But now, I see a lot of pent-up demand, and people are saying, ‘well, it’s not great out there, but it’s not getting worse, and it looks like things are getting better, so I’m comfortable with moving forward.’”
This comfort level is one of the factors creating greater activity with the huge inventory of industrial property, said Low, noting that, not too long ago, there were perhaps 8 million square feet of industrial space in the region’s portfolio, and most of it wasn’t moving.
There were several factors contributing to this stagnancy, he went on, noting that the price tags on many of these properties were still considered too high given the state of the economy, Meanwhile, a lack of confidence continued to plague many business owners.
In recent months, prices have started to come down — in many cases, significantly, perhaps 50% or more; “prices I never thought I’d see,” said Low— while confidence levels have crossed that threshold necessary to spark deals.
Jennings agreed. Like Low, he noted that, while the going prices for some of these properties are not a particularly healthy sign, the recent closings are helping to at least put a dent in the glut of inventory, which will yield benefits moving forward.
“While the prices are compressing, some of that inventory is being taken off the shelf,” he explained. “And that’s certainly healthy for the market.”
Indeed, looking long term, he said the basic laws of supply and demand — assuming that demand increases and the supply continues to diminish — will bring prices back up. And in the meantime, the current conditions make this an attractive buyer’s market.
“Right now, you get those compressed prices with interest rates that are still historically low,” Jennings explained. “And these are compelling reasons for a user to say, ‘now is the time.’”
Jennings said he recently brokered a deal for a 93,000-square-foot property in the Agawam Industrial Park (one of many across the region that had been on the market for some time) that was acquired by Diana’s Bakery for expansion purposes. There have been several similar deals in recent months, he went on, and strong potential for more, if buildings are are properly priced.
“If a property comes on the market with realistic pricing, it should get the attention of the users,” he explained. “The wrong thing to do in today’s market is to put something on the market that’s overpriced, with the thinking that you can always come down. I think you need to price it right from the get-go.”
Such advice is sometimes hard to accept, he said, especially for people who have owned property or a building for many years and have high expections for what it’s worth — and often accompanying need, such as retirement income. “But it’s reality, and the people who realize that, it’s their properties that are going to sell.”

Setting Sale
While the industrial segment of the market has seen marked improvement, there has been progress as well on the retail and office sides of the ledger, said Bolotin, citing encouraging market needs in both realms.
As examples, he noted several recent deals Colebrook has brokered, including the United Way’s move downtown; Fallon’s expanded presence in the area (a 15,000-square-foot facility); a property acquired just off the turnpike in Chicopee for a new Aldi’s supermarket; a lease signing involving title insurance company Catic, leaving only one small vacancy in the PeoplesBank building in Holyoke; and the sale of the former Ready Credit auto-sales facility on State Street in Springfield as home to a Family Dollar location.
Summing them all up, Bolotin said they’re indicative of the heightened level of activity in the local market, a trend that started gaining steam late last year, and that he attributes to improved confidence and pent-up demand.
These are among the many factors shaping what most described as decent but not spectacular growth in the office market. Another, said Low, is absorption of some of the vacant space through deals like the one involving Thing5, which which will create a large call center on one floor of 1350 Main St. (aka One Financial Plaza), with the potential to take more, and employ upwards of 500 people in the coming months.
Such deals could potentially impact lease rates and, in the meantime, might influence some decision-making, said Low. “People coming out of Class B space might be thinking, ‘these deals in the towers might be over soon,’ and you might see a rush to lease space, although we haven’t seen that yet.”
Still another factor is what several brokers described as a movement — the depth of which can obviously be debated — among companies and organizations to embrace downtown Springfield mailing addresses.
They’re not as necessary as they were years ago, thanks to technology, which, for example, allows lawyers to file many documents electronically instead of physically in the court clerk’s office, said Jennings, but they are becoming more popular for reasons ranging from the availability of space to the attractiveness of deals, to a desire among some to be part of ongoing revitalization efforts.
The most visible example of all this, of course, is Thing5. That deal came together due to a combination of availability, price, parking accommodations, and the fact that there are few viable alternatives, said Low, adding that there have been other, less-visible signs of this pattern, which, taken together, bode well for downtown Springfield and the region as a whole.
“I think there’s a trend toward people coming back downtown, and the primary reason is that they want to be around other people,” he said. “They don’t have to drive to get a cup of coffee, they can walk out the front door and go shopping — just like it was 30 years ago downtown.”
Bolotin said the United Way’s relocation to downtown is another manifestation of this movement. The agency, which launched a comprehensive search for new quarters more than a year ago, listed a downtown presence, and especially visibility along Main Street, as a priority.
“That was a win-win for both the United Way and the TD Bank Center,” he said. “It brings them downtown and gives them exposure — they have a nice presence. We looked through a number of scenarios trying to find the best match for their requirements; they decided that they wanted to have a presence downtown and wanted street visibility as opposed to being up in a tower, and they wanted to be connected.”
Jennings said he also perceives greater interest in downtown, and points to a number of recent lease signings — Thing5, Cambridge College (which is moving into Tower Square), and the Hampden County District Attorney’s office — as evidence of the trend and creation of additional momentum.
“These are all feet on the street; there are now a lot of people who are going to be in this two-block radius,” he said, referring to the heart of downtown. “That’s great for the central business district, and it should attract more businesses to the area.”
This bodes well for Harrison Place, now almost 50% vacant, and some of the other properties on Main Street owned by Edwards, said Jennings, adding that a lack of inventory in the Class A towers downtown will also help. “The next couple of deals we’re going to sign in Harrison Place are going to be very attractive to tenants.”

Bottom Line
Assessing the broad spectrum of the commercial real-estate market, Low said it will likely take at least another year for things to fully stabilize and for conditions to approach what they were before the downturn began.
But there is significant movement, he told BusinessWest, and it’s certainly in the right direction. “It starts with the phone calls and people actually wanting to do something, which we haven’t seen in a while,” Low noted, “and I think any broker would be happy just to be doing that right now, because eventually these people are going to pull the trigger and buy or lease something.”
As he said, the current surge, unlike those blips that came before, has some discernable sustainability and permanence.
In other words, it’s the real deal, in more ways than one.

George O’Brien can be reached at obrien@businesswest.com

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Many Factors Determine Whether It’s Best to Lease or Buy Space

Buy or lease? When it comes to commercial property, this is a question almost every health care-related business will face. And, as with any decision, business owners should look at the pros and cons of each option.
There is no one answer to this question, and the resolution varies with the circumstances of each individual case. However, there are certainly criteria to help you decide.
There are even ‘buy vs. lease’ software programs that can help with the analysis of this decision. These programs look at a number of factors, including purchase price, appreciation, insurance, interest, taxes, and rent cost, and compares them to each other. These programs give you the present values of what the future costs are going to be.
With the details of each decision, the business owner can come up with multiple analyses that show an optimistic, realistic, and pessimistic view of each scenario. These analyses can provide relatively accurate numbers to help the business owner or manager make the appropriate decision.
You will need to analyze a number of factors that are not all addressed by these programs. These include:
• Cash Outlay. Oftentimes, when a business is considering the purchase of a building, it must provide an initial cash outlay of 10% to 20% of the purchase price (depending on the lender and credit), plus closing costs. When the business leases office space, it doesn’t need to put down nearly as much. Most often, the only up-front costs are the first and last months’ rent. Usually this amount is a small fraction of the cash outlay of purchasing a building, and since cash flow can be a concern for new businesses, this can be an appealing option.
• Opportunity Cost. The opportunity cost of a significant cash outlay should also be considered.  Could the money that is tied up in a building be better invested in the business or other opportunities?
• Long-term Cost. When a business purchases property, the long-term cost of a fixed mortgage can be predicted up front. When it rents, the monthly cost could change over time due to market fluctuation.
• Growth Considerations. Where is the business in its growth phase? If the business is new or expanding, leasing may be the way to go. In addition to costing less up front, a lease also provides flexibility for expansion. If the business is well-established and stable, then investing in real estate may be a good way to meet its needs while building equity.
• Responsibilities of Ownership. If the business owns the property, then it is responsible for the upkeep and management of the property.  It will have to spend time on these activities or pay someone to do it. If it leases space, then the landlord or property-management company is often responsible for upkeep.
• A Good Investment? Owning property when the market is on an up cycle is always nice.  The business benefits from the appreciation of the property and as an asset that gains value. Recently, however, the real-estate market has produced an unfavorable appreciation rate. If the business has the funds, this could be a good time to acquire property at a good price.
Another advantage is that the property can be a source of financing; banks are more likely to lend to a business that utilizes its property as collateral. This is almost always more effective than utilizing equipment or machinery as collateral, for example.
• Taxes. Lease payments are fully deductible as a tax deduction for the business. When a business owns a building, the interest cost on the mortgage is fully deductible. It can also take yearly depreciation on the building as a tax deduction. Commercial real estate is depreciated over 39 years for tax, so there is a longer time to recoup the initial building cost.
The good news is that any improvements or work done to the building can be depreciated over a shorter life span.
• Other Factors. If the business is leasing property and decides to move to a new location, then it doesn’t have to worry about selling the property that it already owns if the lease hasn’t expired.  Usually the business could sublet some of the space if it is not needed by the business. The improvements that a business adds to the rented space are usually lost once the lease is up.
Meanwhile, if a landlord decides not to renew when the lease expires, the business will have to move. If you own the property, the possibility of subletting exists. The business can stay at the location as long as it pleases. The property is an asset that has value and can be sold.
As you can see, there are many factors involved in choosing whether to buy or lease. However, the decision is ultimately up to you. Best practices suggest gathering as much information as possible and seeking the advice of professionals who deal with these transactions on a regular basis.
Armed with knowledge and professional guidance, your business will have the resources it needs to make the best-possible decision.

Sean Wandrei is a manager in the Tax Division of Holyoke-based Meyers Brothers Kalicka, P.C., a certified public accounting firm.