“Signs that the economy is starting to stabilize along with slowly improving employment figures are prompting landlords to tighten their rent incentives, and are also pointing to higher sales prices in the years ahead,” he says. “This in turn is sparking renewed interest in owner-user purchases by those small businesses that have capital and are starting to see an upturn in their cash flow.”

In 2011, Posthumus reports that office properties saw their average price per square foot increase by $22 to $220-per-square-foot, while industrial stayed relatively flat at $101 per square foot. In 2012, however, he says, prices for both product types are anticipated to rise conservatively by 5%.

“Anticipation of rising prices, record-low interest rates, and more available financing through SBA 504 programs and other small business-directed products offered by a few select banks, will translate into more owner-user transactions in 2012,” he says.

Silvergate Bank, a San Diego-based bank focused on meeting the financing needs of small San Diego businesses, is one of just a few in Southern California that has qualified for a Small Business Lending Fund through the U.S. Treasury. The bank expects to loan approximately $15 million this year through this fund to assist small businesses with their financing needs including owner-user real estate purchases and refinancing.

“This fund enhances our ability to meet the real estate needs of small businesses.” says Derek Eisele, executive vice president and chief lending officer with Silvergate Bank. “This product is ideal for qualifying borrowers pursuing purchases in the $500,000 to $10 million range.”

Posthumus notes that small business-driven banks such as Silvergate understand the position many small businesses are in coming out of the recession. Additionally, he says these banks are also more interested in financing owner-occupied properties because there is less risk than typical for-lease investments.

Eisele adds that “Owners today are looking at the very powerful combination of low building values and low interest rates which gives them tremendous purchasing power—essentially the ability to acquire 41% more building compared to the 20-year average SBA rate of 8.74%.”

Posthumus adds that “Businesses who act now to invest in their company’s location not only will benefit from tremendous value-add potential as prices have nowhere to go but up, but also from the outstanding tax benefits that come with ownership versus leasing.”

Eisele and Posthumus both cite an example of a 16,650-square-foot building that sells for $2 million. Gross monthly debt service of $13,526 and triple net expenses of $8,326 are offset by tax savings of $8,594 and appreciation of $1,708, for effective monthly debt service of $11,549 or 69 cents per square foot. Leasing the same property at 99 cents per square foot, including triple net expenses, results in gross monthly rent of $24,811. After tax savings of $9,925, the effective monthly lease rate is $14,887 or .89 cents per square foot.

“Annually, the business owner in this case saves $40,000, and over a typical seven-year lease term, saves $280,000,” Posthumus says.

According to Eisele, “While some small businesses may not be ready psychologically or financially to commit to a purchase, there is clear opportunity for those who are positioned to buy and understand the tremendous cost savings they can realize.”