Browse Month: November 2011

Google Maps Takes It Indoors, Adds Building Floor Plans, Asks For Yours

Google — we like to call it “The Big G” around here — has announced a terrific new feature that will be of keen interest to everybody in commercial property from leasing to brokerage to management and everywhere in between.  Not content to merely make it ridiculously easy to navigate streets and outdoor spaces to get to your building, airport or mall, Google Maps 6.0 for Android will now take the party indoors and provide floor plans with the same ease of use we’ve come to expect from Google Maps.

I applied the Google Maps 6.0 upgrade and took it for a spin on my HTC Evo. While the office building I was in didn’t have any interior map data, I did appreciate the new layout and look – especially the new drop-down menu, a long-wanted improvement.

The Maps Walkthrough does a great job illustrating the new features and also answers our next question: how can I add my property’s floor plan data into the new Google Maps?

Easy. While the Floor Plans program is still in beta, meaning it’s early and they’re still working out kinks in the system, you can start adding your building data here. Its’ as straightforward as finding your building in Google Maps, then uploading a floor plan in JPG, PNG, BMP, or GIF format, like so:

Google Maps Floor Plan Upload Form
How to upload floor plans into the new Google Maps

Using the new Google Maps is very familiar. Walking is the main means of navigation, but the same features for biking, public trans and driving all remain where you’d expect them. The possibilities for special mapping applications for indoor use are really exciting — real and virtual showings as well as virtual tenant improvements come to mind right away — but we know the industry will come up with even more new uses for this ubiquitous mobile application.

At the bare minimum, the ability to add floor plan data to Google Maps is a very quick and convenient way to add value to any commercial property in any portfolio. The Big G wouldn’t have it any other way.

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Growth In Commercial Real Estate Markets Expected in 2012

Growth

While leasing, construction and vacancy rates appear more or less flat, leading economic indicators are looking up and expected to bring the commercial markets along in 2012. That’s the upshot of NAR’s latest Commercial Real Estate Outlook along with SIOR’s Commercial Real Estate Index.

NAR Chief Economist Lawrence Yun:  “Vacancy rates are expected to trend lower and rents should rise modestly next year. In the multifamily market, which already has the tightest vacancy rates in any commercial sector, apartment rents will be rising at faster rates in most of the country next year. If new multifamily construction doesn’t ramp up, rent growth could potentially approach 7 percent over the next two years.”

Looking at commercial vacancy rates from the fourth quarter of this year to the fourth quarter of 2012, NAR forecasts vacancies to decline 0.6 percentage point in the office sector, 0.4 point in industrial real estate, 0.8 point in the retail sector and 0.7 percentage point in the multifamily rental market.

The Society of Industrial and Office Realtors®, in its SIOR Commercial Real Estate Index, an attitudinal survey of 231 local market experts,1 shows the broad industrial and office markets were relatively flat in the third quarter, in step with macroeconomic trends. The national economy continues to affect the sectors, with 92 percent of respondents reporting the economy is having a negative impact on their local market.

Even so, the SIOR index, measuring the impact of 10 variables, rose 0.6 percentage point to 55.5 in the third quarter, following a decline of 2.6 percentage points in the second quarter. In a split from the recent past, the industrial sector advanced while the office sector declined.

The next commercial real estate forecast and quarterly market report will be released on February 24.

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Happy Thanksgiving!

From everybody at CommercialSource.com and The Source blog: Happy Thanksgiving! Enjoy this hilarious reflection on the holiday from Billy Crystal and Robert DeNiro.

Black Friday Retail Roundup

The Fashion Centre at Pentagon City, in Arling...

The official start of the all-important holiday retail season is almost here.  Conventional wisdom always tells us that as go the shopping centers, so goes the wider economy.  After a nationwide wave of lease restructurings in 2008-2011, has the dust settled and is growth in the (shopping) bag?  A quick check around the country shows mixed signals:

And The Brand Played On  Even though recent trends show big box stores reducing footprints, some brands are building at a fevered pace. Macy’s at Herald Square in NYC has announced plans to invest millions on one of the country’s most expensive streets.

Small Is Beautiful What’s in the cards for those retail tenants who aren’t competing for international tourists in flagship locations and don’t have the deep pockets to swim in those waters?  How about a consumer credit giant sponsoring a whole day of the week — complete with co-op physical and social media advertising — devoted to the small retailer?  That’s American Express’s idea with Small Business Saturday, set for this Saturday, Nov. 26th.

Bricks Are Strong Against Clicks Worries about online e-commerce steadily biting into physical retail are overblown, said David Henry, president and chief executive of Kimco Realty Corp, speaking at this year’s National Association of Real Estate Investment Trusts.  “First, everyone thought catalog sales were going to put retailers out of business, then it was the home shopping networks that let you do everything from home,” he said.

However, he added, “unless you’re buying a plain white shirt,” the unique challenges associated with size and fashion make it difficult to shop online. That difficulty, research has found, leads to multiple sales and multiple returns.

“Online, somebody will buy six pair of shoes and return five,” said Sandeep Mathrani, chief executive of General Growth Properties Inc.

When those returns are made at a retail outlet, Mr. Mathrani said, “it’s basically a store coupon,” which ultimately drives more traffic to the physical retail stores.

(It should be noted that when not lobbying to impose sales taxes onto internet retail operations, big players in the REIT marketplace are quick to stand up for their business model.  But the points about online driving store traffic are valid in a world where clicks now accompany bricks in the majority of retailer cases.)

Old strengths, new ideas and changing models; will retail unwrap a strong 2012?   We’ll just have to wait and see.

 

 

 

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Learning To Ask The Tough Questions And Close Deals With Ted Blank At NAR 2011

What is your client’s motivation?

This not-so-simple question is often overlooked in commercial property dealmaking, and it can cost us dearly as brokers. Getting a listing is one thing, but getting a buyer is something else entirely.  How do you know where to look for a buyer if you don’t really know why the owner wants to sell, what the owner would take to make the deal, what terms are on the table and which ones aren’t?

Unless you ask some tough questions and provide your client with some counseling, you won’t find out, and it will cost you both.

In today’s session at NAR 2011, Ted Blank CCIM, SEC, EMS led a group of majority commercial practitioners through the wide range of ways that brokers can maximize client benefits. Client benefit certainly includes the sale of a property, but the risks of focusing on selling, on pursuing a cash deal are great.  Ted says “Bad economic times make counseling more important.  10-15 years ago we controlled the information, so we would get the phone call first.  Now people use the internet.  You can get data and information on the web, but you can’t get knowledge and information, so that means we have to focus on the people side of the business.”

Ted says that counseling means brokers should want to know:

  • Why do you want to sell this great property?
  • What are the benefits of owning it?
  • What’s wrong with owning it?
  • What is your client going through personally?
  • What is your client going through professionally?

 

“A tough question is not a confrontational question,” says Ted.  “It’s not one that upsets them or gets them to reduce the price thanks to our questioning skills. Tough questions are tough because we’re willing to step out there and gather the info.”  Because it’s this knowledge, Ted says, that shows the full range of ways to close a deal.

Is cash king?  Not necessarily.  Ted points out that cash is popular, but not the only way to get a property sold by a long shot – and it can be the most costly.

“You may be looking for a buyer, but what you really want is a taker.  If a cash deal is the only deal we’re considering, then price can only fall as we try to make it happen.”

Among the alternatives to cash deals:

  • Buyers with notes
  • Buyers with property
  • Buyers with property in distant geography
  • Adding cash or notes to equity – even up to the full amount of the price
  • Professional services in exchange

 

All of these are ways of “talking about our clients’ wants, needs and abilities.
Get the details with a copy of Ted’s full course at PlaybackNAR.
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Getting Green Benefits Fast: Advice From Experts On Sustainable CRE At NAR Annual 2011

Money

At yesterday’s NAR 2011 Annual session “Underwriting Sustainable Commercial Properties” an important set of facts came to light about how green building operations affects financial performance.  The bottom-line impact of green and sustainable operations are undeniably huge.  Green isn’t something you’d like to get around to, green is something that makes you lots of money.   But how can stakeholders – owners, brokers, investors, end-users – quickly get benefit? If someone is just waking up to the gigantic savings, heightened NOI, and changing regulatory reality, what’s the first and best thing to address?

“Lighting,” said Bill Conley, the panel’s operations expert.  Bill is CFM, CFMJ, LEED AP, IFMA Fellow, owner/CSO of CFM2, a Facility Management & Sustainability Consulting
company based in Orange County, Calif.  “Even if you’re in a brand new building, review your lighting.    Your contractor might have put [one generation old] lights in.”

Are the changes in green tech coming so fast that one generation of lights makes a huge difference?  Could it really be worth it to update fixtures in a brand new building to fixtures that hit the market just months ago?  Bill says absolutely.

By updating the fixture models “you can save 15% of your energy.   You should also review your hallway lighting – you  often  remove lamps in corridor fixtures without harming light coverage.

Bill continued into the automation and occupancy sensor technologies now easily available and installable.  They apply to lighting, but also to wall power. “Are lights turning off when you leave a room?  Offices are occupied 35% of the time on average, make sure that’s reflecting in your operations schedules. Also,  wall plug load is pulling more energy, 27% of energy used in a  building on average.  So HVAC, lighting and plug load are about even.  You can address plug load by installing  smart power strips that have occupancy sensors.  The strip  will turn everything  — except a computer CPU – off after 15 minutes of absence.”

In order of bang for the buck: 1. lighting  2. review the building operations schedule  3. are people leaving things on all night?  These are the easiest fixes delivering the most savings the fastest.

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Underwriting Sustainable Commercial Properties: Financing: NAR Annual 2011 Session

Solar Panel Array

A blue-ribbon (green-ribbon?) panel led today by Peter L. Mosca, GREEN, SFR at NAR Annual 2011 went a long way in exploring how to properly value green and sustainable commercial property from a range of angles, including appraisal, regulatory compliance, policy and operations. The panel included:

Theddi Wright Chappell, CRE,  Senior Managing Director and the National Practice Leader of the Green Advisory Practice at Cushman Wakefield

Bill Conley, Bill Conley CFM, CFMJ, LEED AP, IFMA Fellow, owner/CSO of CFM2, a facility management & Sustainability Consulting company based in Orange County, Calif.

John Ellis, CRE, MAI, FRICS,  Managing Director of Integra Realty Resources – Los  Angeles

Mike Merrifield, CCIM, Independent Investment

“Cost effective,  structured and designed sustainable properties that focus on health and productivity benefits will continue to make money,”  said Mosca, leading off a free-wheeling conversation between the panel and the audience on a range of topics that I couldn’t hope to put in a single post to The Source, so rest assured there’s more coverage coming.

On the topic of finances, Mosca cited a new study by the Royal Institution of Chartered Surveyors that “showed new evidence on the financial performance of green office buildings in the United States.  Green buildings performed better than nongreen (the term “brown building” came up; use at your own risk) commanding rental rates substantially higher than those of competing buildings.”

John Ellis responded by citing a recent study by CoStar’s CEO Andy Florance that “analyzed the real value of LEED certification, finding that these building got 10-15% premium at time of resale…It is becoming clear to the tenants what the economic impact is of having an energy efficient building.  They are migrating toward the LEED certified buildings and seeing higher occupancy, higher property values and sale prices.”

Later, Bill Conley raised the interesting effect of green on office property: “It’s been said you take a brown class C building and turn it into a class A building”.

Watch for more posts at The Source about the best practices in green and sustainable building valuations and management.

Get a full copy of the panel discussion led by Peter Mosca at PlaybackNAR. 

 

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Tomorrow’s Office Workers And Their Spaces: Patricia Lynne At NAR Annual 2011

What’s coming tomorrow?  Wouldn’t we all like to know?  That was the message at the jammed  NAR 2011 Annual session “Views From The Frontier Of Commercial Real Estate.”  What will we be doing in our offices?

Well, never mind traditional offices.

“Hold up your smart phones,” said Patricia Lynn CCIM, speaker and principal of consulting firm Lynnk.  “These are the office of the future.”

In a presentation long on thoughtful asides about the state of office utilization patterns and demographic changes, Lynn spelled out the four principles of the future office worker profile:  Talent, Technology, Transportation and Tolerance.  Creative talent, high technology, high mobility, and social tolerance.

Tomorrow’s office worker, culled from a US population growth that appears on pace to hit 450 million in 2050, will be of the creative class, saud Lynn.  “These are the knowledge workers, who think, and use technology creatively and who want to be near other knowledge workers.”  Today, 30% of the workforce is in the creative class – but Lynn says the number will climb to 50% in just a few years. The more she spoke, the farther away the traditional conception of the office cubicle farm faded into the mists of history.

The millenials (that generation sometimes dubbed “generation Y”) working habits and office needs are radically different from what the industry is used to providing.  They tend toward “fun, multitasking, collaboration, and no boundaries between work/home/family”.  This translates into office space with fewer fulltime employes per square foot, or as  author Jim Heid put it: “The office of the future is no office.”

Not quite.  It turns out that there’s office space in the future, it’s that the millenials are using three distinct places: the traditional corporate HQ about 30% of the time, the home office another 30% of the time, leaving a giant opportunity in what Lynn called “the third place – a kind of Starbucks on steroids.  Slides followed showing new working spaces based not on lease occupancy but on membership – anywhere from $150-$425 a slot – where the millenials stop to connect, collaborate and create.

Get a full copy of Lynn’s presentation at PlaybackNAR.

 

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A Look At The Future Of Warehousing: Sam Fisher At NAR Annual 2011

Of  the many Views From The Frontier Of Commercial Real Estate at today’s session of the same name at NAR Annual 2011, it was Sam Foster‘s that presented a definitive roadmap.  That’s because Sam,  head of industrial practice at Jones Lang LaSalle, took a long look at the transportation and warehousing industries and the likely impacts on CRE.

In a fascinating session, Sam brought to light the role of ports, transportation, and inventory in the forecasting of tomorrow’s hottest CRE markets.  Playing on NAR 2011’s theme of carpe diem (sieze the day), Sam quipped “The theme should really be carpe crastinum diem – sieze tomorrow.  We should be looking for future opportunities.

In industrial property, CRE pros don’t make a lot of money on manufacturing space – typically corporations build and own their own – so most industrial CRE deals are in distribution space – warehousing.  Where are the warehouses going to be in the future?  That’s kind of a long story with more questions than definitive answers.  Sam set about showing what the right questions are.

In the 1980s, Sam says, the largest cost component in warehousing was inventory – e.g. the cost to carry goods.  And in the 1980s, management techniques such as JIT (Just In Time) appeared on the scene to allow reductions in inventory – big ones.  JIT succeeded in knocking over $400 billion yearly out of inventories, but the real estate implication is this: today, the largest cost component is fuel costs.

The general flow of goods from Asia to North America shows no signs of stopping.  To the contrary, it has turned places like Shenzen, China from a fishing village in 1990 to the world’s third largest port today.  Shipping’s flow to the west coast is only the first stop, since the overwhelming majority of consumers of goods live in points east.  But the rise in fuel costs are forcing changes in routing patterns.  Altered rhythms of goods flowing through Los Angeles and Vancouver mean that new shipping and warehousing centers in the interior will have and will come online.

Sam specified Columbus, OH as a “new intermodal inland port”.  He also pointed out Prince Rupert, BC and central Ohio generally before closing with a slide of Richard Ziman’s famous quote”  “The first three rules in the real estate business: timing, timing, timing.”

I liked carpe crastinum diem better, but the message is the same.

Get a copy of Sam’s full presentation at PlaybackNAR.

 

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Pieces Of Leases: Tip For Overcoming Paperwork Intimidation From NAR Annual 2011

Yesterday’s presentation from Bob McComb on getting your start in commercial real estate had plenty of great ideas, but one that stuck out to me this morning was about commercial leases.

Bob noted that a major barrier to entry to commercial dealmaking is the dreaded lease form. The legalese on a boilerplate form can make your eyes cross, and customizations from companies or owners or tenant reps only make it harder to display the expertise that you need to in order to give your client the feeling of certainty that they will get what they want by working with you.

The one thing not to do with a lease is avoid reading it. When you have a prospect on the phone, you need to know what’s in the lease – because the quickest way to pour cold water on a deal is to shut down conversation because you don’t know what’s in the lease agreement. If a broker tells someone “I don’t know what’s in the lease, so I sent it to the lawyer,” that’s a great way to not get called back.

So leases are necessary to understand, and it will make you money to understand them well enough to discuss them on your own. But they’re a mile long, they’re intimidating, and you need a magnifying glass to get through one. How can you meet the challenge?

Break it into pieces.

Bob’s solution: “Get a lease form. Don’t read it all at once. Start with the first paragraph. Read it as many times as it takes for you to understand it.  Pick time on the train, or at home. Once you understand it, move on to the next paragraph the next day. Do this every day with a new paragraph, make it part of your self-education program. It will take you months, but when you’re done, you will know what’s in that form, and you can have the conversations you need to have without shutting down the discussion. It will get you to the point where you never have to say ‘I don’t know, but I can get back to you on that.'”

If an idea breaks down intimidation, increases understanding, and makes you money — that’s simply one great idea.

Get a full copy of Bob McComb’s presentation to NAR 2011 at PlaybackNAR.

 

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