This is one of the most common scenarios I see. You’ve run your business out of your building for 20 years. Now you’re retiring. The business might be closing or selling separately. And you’ve got this building that’s suddenly not a workplace anymore. It’s an investment you need to figure out.
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Occupancy Status: Are you occupying 100 percent of the building, or is some portion leased to external tenants? -
Relocation Plans: Will you vacate immediately post-sale, or do you need a leaseback period? (Leaseback periods add complications and reduce buyer confidence) -
Building Specialization: Is the building customized for your specific use, or is it flexible enough for multiple tenant types? -
Market Rent Estimate: What would a third-party tenant pay for this space? That’s what the buyer will underwrite at, not your historical occupancy cost.
The common mistake
Most owner-occupants dramatically underestimate how different the market is for their building compared to what it was when they bought it. You bought it to run your business. You weren’t thinking about what the market would pay for it as an investment property. Now that’s exactly the question.
Owner-Occupied Sales Usually Include Complications
Many owner-operators want a leaseback period — staying in the building 6-12 months post-sale while they find new space. That’s a red flag for buyers. It creates transition uncertainty, extends closing, and suggests the buyer may need to deal with a holdover tenant situation. If you’re selling an owner-occupied building, clean exit is more valuable than a leaseback. The buyer will pay more for a fully vacant building they can immediately re-lease to their choice of tenant than a building where they have to wait for you to leave.
The value as an investment property is based on what it can earn from tenants. Not what it’s worth to you operationally. Those are different numbers. Sometimes the investment value is higher than you’d expect (especially if rents have grown). Sometimes it’s lower because the building is customized for your specific use and would need work to attract general tenants.
The good news
If your building is in a decent location with standard industrial features (good ceiling height, loading doors, adequate parking), the market for it is strong. I buy these all the time. An owner retiring out of a 10,000 SF building in Greensboro or Greenville is a straightforward deal for me.
The fact that it’s been well maintained because you used it daily is actually a selling point. Owner-occupied buildings are usually in better shape than investor-owned buildings where the landlord has been deferring maintenance for years.
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Timing the sale with the retirement
The cleanest deals happen when the owner knows their retirement date well in advance. Six months is ideal. It gives me time to underwrite, close, and start marketing the space to tenants while you’re wrapping up your business. If you wait until the day you close your business to start thinking about the real estate, you’re going to have a vacant building generating no income while you figure it out.
Tax considerations
This is where your CPA earns their money. If you’ve been depreciating the building, there’s recapture to deal with. A 1031 exchange might make sense if you want to stay in real estate but passively. Or you might just want to cash out and be done. All valid options but plan ahead.
Seller takeaway
Owner-occupied buildings are trickier to sell because buyers assume re-leasing risk. If you’re planning to exit, call Roth Capital at 704-600-3839. We’ll explain the real value impact and help you structure the sale for maximum proceeds.
If retirement is on the horizon and you own your building, let’s talk. 704-600-3839.
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