How Real Estate Impacts Business Value & Deal Structure | A Conversation with Garrett Monroe of Calder Capital

 

When it comes to preparing for a business sale or planning your next strategic move, your real estate holdings matter sometimes more than you realize. Whether you own, lease, or are considering a sale-leaseback, your property decisions can reshape buyer appetite, deal structure, and final value.

We’ve guided owners across Grand Rapids, Kalamazoo, and the broader West/Southwest Michigan region to treat real estate as a strategic asset, not simply a cost center.

 

Ownership vs. Leasing: Two Paths, Different Impacts

Owning your facility gives you control, visibility, and often tax advantages. But as Jack Garrett points out, when a buyer evaluates your business, zero rent or below-market rent occupancy becomes a negotiation point. If your business owns the building and pays little or no rent, a buyer will often treat occupancy as a new cost and the valuation may be reduced accordingly.

On the flip side, leasing can simplify the transaction for the buyer. A clean lease ideally long-term and at market rent signals predictability, which broadens your buyer pool. In West Michigan’s industrial, retail and office markets we’re seeing this dynamic play out. Jack noted that, “when you own your real estate, the acquirer must determine what the market rental rate is and back that out of EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization).” 

The bottom line: Align your real-estate structure with your exit or growth objective rather than defaulting to the familiar.

 

Sale-Leaseback: A Strategic Tool

If your business owns its facility but you’d prefer to unlock capital, a sale-leaseback may make sense. You sell the property to an investor and lease it back and the business stays where it is. Jack emphasized that in markets like West Michigan, the real-estate component may carry more value than the operating business itself.

By separating the real estate from the operating company, you could enhance value, reduce risk for the buyer, and make your business more attractive from a deal-structure standpoint.

 

Industry-Specific Real Estate Considerations

Different sectors call for different real-estate strategies. Jack and Garrett highlighted these key issues:

• Manufacturing/Distribution: Large footprints, clear height, specialized infrastructure or zoning. If the property is too specialized, the buyer may see relocation risk or limited alternative use.
• Retail: Location and accessibility are critical. In West Michigan, being in a high-traffic corridor or near major infrastructure sets you apart.
• Services/Office: Flexibility and lease term matter. Buyers want to see long leases or evidence of stable occupancy, especially in an office market where uncertainty is higher.

In each case, the real-estate component isn’t a side note, it’s a material value lever.

 

What Changing Markets Mean for You

The 2025 deal-landscape looks different than what many are used to. Rising interest rates and shifting cap rates mean buyers and investors are more cautious, as they are analyzing occupancy costs, lease terms, and asset liquidity more thoroughly than ever. Jack noted that, “we’re seeing the premium for best-location, best-condition space in West Michigan continue to rise, even while national office headlines get all the attention.”

For owners in Grand Rapids, Kalamazoo or the Lakeshore region, this means your real-estate decisions can have outsized influence on your final transaction outcome.

 

Your Checklist for Real Estate Readiness

Preparing your company for growth or exit? Here’s a quick checklist informed by Jack’s commentary, aligned for the West Michigan owner:

• Review your property ownership vs. lease arrangement. Ask: How transparent are your real-estate costs to a buyer?
• If you own: Are the location, flexibility and alternative-use features aligned with buyer expectations? Would a buyer discount your asset because of limited adaptability?
• If leasing: Is your lease term market-based, and is your rent visible and predictable?
• Consider whether a sale-leaseback could unlock value while keeping operations stable.
• Evaluate your lease terms (if rented) or cap-rate assumptions (if owned) in light of current market conditions, especially given today’s interest-rate environment.
• Think regionally. Buyers evaluating a business in Grand Rapids or Kalamazoo will assess local talent supply, logistics access and how West Michigan stacks up versus national markets.