Beyond Price Per Square Foot: Making Strategic Real Estate Decisions in a World Ruled by Emotion
At Helm Ventures, one of the questions we get asked most often, by business owners and investors, is deceptively simple: How much should I be spending on real estate?
Whether it’s a company leasing office space or a restaurateur eyeing a new location, real estate decisions are often made emotionally without a clear framework to evaluate true value and long-term viability.
And we get it. Real estate is personal. But it’s also one of the most significant financial decisions you’ll ever make, and it deserves to be approached strategically.
Let’s explore how to move from emotional to strategic real estate decision-making, and why simply having a budget isn’t enough.
Start With What You Can Afford—Then Do the Math
Let’s say your company generates $10 million in annual revenue. A common rule of thumb is that occupancy costs (your total cost to occupy and operate in a space) shouldn’t exceed 10% of that, so $1 million annually, or about $83,000 per month.
If you’re buying instead of leasing, you can reverse-engineer what a purchase price would need to be to match that cost, based on market capitalization rates (cap rates). In a 5% cap rate market, $1M in NOI supports a $20M valuation. Your “affordable” budget may need to stretch well beyond an arbitrary number like $5M.
What we often find is that companies (and people) throw out a number, $5 million, $10,000 a month, etc.without anchoring that figure to performance metrics or market norms. The result is a misaligned expectation that can lead to overpayment, underutilization, or missed opportunities.
Factors That Add Weight to Every Real Estate Decision
Here’s the truth: value is rarely about the sticker price. It’s about what the space does for you, today and over time. That means looking beyond price per square foot to evaluate total strategic fit. Some key factors to consider include:
1. Opportunity Cost
Every dollar tied up in real estate is a dollar not invested elsewhere. Could that same capital drive better returns in marketing, hiring, equipment, or other growth initiatives?
2. Liquidity and Exit Options
Real estate is illiquid—period. Especially in tertiary markets or highly specialized properties. Always ask: What’s my exit strategy? What if I need to relocate, pivot, or cash out?
3. Total Cost of Occupancy
Mortgage or rent is only one line item. Add taxes, insurance, maintenance, utilities, security, CAM charges—and now you’re looking at the real number. Make sure you’re not buying a cheap space with expensive baggage.
4. Market Volatility and Rate Risk
Locking into a high-interest loan during a volatile market can distort the economics of a deal. Will your business still thrive if inflation rises, rates spike, or the economy contracts?
5. Flexibility and Scalability
Can your business grow in this space, or will it outgrow it in two years? Flexibility in real estate is often more valuable than upfront cost savings.
6. Zoning and Entitlements
Development potential is often constrained by local regulations. What you can do is more important than what you want to do. Strategic investors study zoning like a second language.
7. Neighborhood Trajectory
Infrastructure, transit, school district quality, co-tenancy, and economic development incentives all shape future value. You’re not just buying space, you’re buying into a community’s trajectory.
8. Rental Value Comparison
If the cost to own far exceeds what the asset could rent for, you may be overpaying, or betting on speculative growth. This simple test can uncover inflated valuations in both commercial and residential markets.
9. Brand and User Experience
Some spaces deliver intangible ROI. Think: a flagship location that validates your brand, attracts top talent, or immerses customers in your mission. It may not pencil out, but it might still be the right move.
10. Tax Strategy and Structuring
Smart tax planning can enhance value but should never be the sole justification for a deal. If the numbers don’t work without the write-off, they don’t work.
Strategy > Emotion: Across All Asset Classes
These principles don’t just apply to commercial spaces or development projects.
Businesses that “fall in love” with a storefront because it’s near a favorite coffee shop, or pay above-market rents to be near other premium brands. If that brand adjacency doesn’t deliver measurable returns, foot traffic, conversions, brand halo, then it’s just a marketing expense wearing a real estate costume.
Our Advice: Buy or Lease with Eyes Open, Not Just Heart Full
Real estate is where emotion and economics collide. But the best decisions are made with a clear framework that combines both.
At Helm, we help clients think beyond the deal itself. Whether you’re an investor oroperator, we’ll help you answer the right questions:
What can I really afford?
What’s my ROI target?
What risks am I assuming?
What levers can I pull to add value?
And when is it better to walk away?
Because sometimes the best deals are the ones you don’t do.
Need help evaluating your next move?
We’re here to talk—whether you’re opening your fifth location or your first.