Another Common Pitfall: Market Fluctuations
Anyone in the real estate business - novice or expert can tell you that changes in property values and other market fluctuations can wreck havoc on operations. For example, rents can go up or down quite frequently and/or tenancy rates can increase and decrease in a very short period of time.
Any type of business that owns property is often effected by changes in property values and market fluctuations. Take the leasing of retail space…A company that’s experiences a shift in their customer base may decide its time to move to a new location that would better serve their customer base. Unfortunately, they quickly find out that they can’t afford to move because property values having dropped to the point that their business premises can’t be sold at the price they need. This isn’t to say that leasing is a bad thing because leasing can provide flexibility. How? At the end of the term, that particular company can simply pack up and move without worrying about having to sell the property.