Browse Month: February 2012

Grubb & Ellis To Be Acquired By BGC

Commercial real estate service giant Grubb & Ellis has entered into a letter of intent to sell its assets to BGC Partners as part of a Chapter 11 bankruptcy protection filing. Federal Bankruptcy Court documents the firm’s value at about $34.8 million plus additional, undefined amounts.

A broker of securities in wholesale financial markets, BCG entered exclusive talks with Grubb & Ellis in January of this year. The talks, aimed at producing a debt or equity financing agreement or acquisition of the Santa Ana-based firm ended their exclusive period without a deal.  In a February 1 filing,  Grubb & Ellis extended the talks.

Previous attempts at a deal with C-III Capital Partners and Colony Capital LLC ended January 15th without an agreement. Grubb & Ellis was delisted from the New York Stock Exchange on January 6.

BGC is on something of a commercial property firm shopping spree. After its recent acquisition of  Newmark Knight Frank, the New York-based financial brokerage is positioned to become a major player in the CRE market with the new pickup. BGC has holdings around the globe and delivers services, liquidity and contracts to financial markets including hedge funds and energy markets.

Grubb & Ellis’s more than 100 company-owned and affiliate offices employ over 4,000, and completed more than 12,000 sale and lease transactions in 2011.  The firm manages over 250 million square feet of property.  It had been hard-hit by the 2007 recession as well as a 2007 merging with NNN Realty Advisors, which some observers blame for the firm’s decisive weakening.

Grubb & Ellis begain as a single California real estate office in 1958 to become one of the world’s largest real estate brokerage firms.

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NICAR Social Media Event Wrapup

NICAR logoEarlier this week, I had the pleasure and privilege of participating as a panelist on social media at an event held by the Northern Illinois Commercial Association of REALTORS® (NICAR).  Joining me was Brian Basilico from B2b Interactive Marketingwho happens to know a lot about using social and digital media,  AND he is extreme fan of bacon.    Score!   (BTW, you can follow him on Twitter via @bbasilico) With about 35 or so commercial REALTORS® and their guests in the room – Brian and I took questions for the better part of an hour – sharing our thoughts and perspectives on how this segment of the industry can utilize social media to build business.     What I learned is that for many commercial practitioners there is still a lot of apprehension about how to get started, the time involved to manage, and how to leverage social networks.

BUILD YOUR BRAND

Creating a LinkedIn profile, using Twitter to engage in conversation and share knowledge, or whatever other network or digital space you choose – you must remember the content you put out there reflects you and the brand you are building.    Provide relevant content that is meaningful.  But always remember, it is o.k. to let a little of your personality come through.  After all, that too is part of your brand.

LISTEN TO THE COMMUNITY

It’s not all about you.  Plain and simple – listen.  Make connections with people in your small communities, and think beyond geographic boundaries.  For example, if you do industrial, follow the #industrial hashtag.  If your business is in Fargo, ND – you’ll want to make sure you are following or connected to other business leaders, civic organizations and other community groups in Fargo.   Seek out people that you share something in common with your business and connect to them.

BUILD RELATIONSHIPS “IN REAL LIFE

Social networks may create the connection or spark the relationship – but it takes real life experiences and time to build a relationship that may – I say “may” because there are no guarantees – lead to sales, profit or growth for your business.    The technology of social networks enables you to spread word of mouth, and your message faster and to a broader audience than ever before.   It is still up to you – a human being – to create meaningful conversations and develop a long-lasting and mutually beneficial partnership.

If you need help – we’re here for you.    Connect with me and I’ll point you in the right direction or help you take action to get started.    One great resources is NAR’s e-PRO course; while not specific to commercial real estate, it does offer a very strong overview of social media, the basics of getting started and some very helpful tips and tools.

REALTORS® Confidence Index: Apartment Rents Moving Up

A bit of good news comes in the form of a tip for commercial practitioners in the multi-family property market: December 2011 saw the average apartment rents in the US rise year-over-year, according to NAR Research’s REALTORS® Confidence Index.

Apartment rents are a key indicator of multifamily property performance and work as a leading indicator that touches everything from cap rates to REIT projections.

The Index, or RCI, is the result of a random sample taken monthly of thousands of  REALTOR® responses on the state of the housing market. The responses are to three basic questions:

  • How would you describe the current housing market in your region?
  • What are your expectations for the housing market over the next six months in your region?
  • How do you rate the traffic in your region?

The “selected comments” section of the report (download the full report PDF here) announces that rents are up somewhat from this time last year.

 

 

 

 

 

 

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Tips for Beginners from Twitter Commercial Real Estate Influencers

I posed the question of our @commsource followers, “What is your #1 #CRE tip for colleague just starting on Twitter?

Here’s what they had to say..

@BoBarronCCIM:     Follow those with influence and followers and just watch for a month or 2 – then start engaging.

@SB_CRE:     Follow @SB_CRE. 😉 Just kidding. Follow @Michael_MBA, because he posts great links! (My note: DO follow @SB_CRE <- great content!)

@StephenHBenoit:     Don’t make your twitter only about self promotion.

@dukelong:     Wear Dark Glasses.  and Listen!

@clamstorm:     Let your tweets reflect your personality, interests, knowledge and expertise. Enjoy.

@ComAdvisors:     Provide relevant content for your followers, not just about yourself but about your industry/market too.

@JohnZiemba:      Follow the #cre (commercial real estate) hashtag, make lists now, follow industry publications & orgs

@cbrememphis:   Use it as a vehicle to learn, share what you’ve learned and truly connect. Saves the sales pitches for face to face.

@MemphisRealtors:        We think it’s all about the shared community. Growing relationships + making new connections.

@cbrememphisDT:     RE is very tied into the community so realize that you are not only selling your co., but your community

 

I’ll continue to add to this list, and if you have something you’d like to add – please leave a comment below!

Chirp! Chirp!

 

 

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Tenant Representation: Getting Educated By the Pros!

Last week, we were on-site at the Keller Williams Family Reunion (#KWFR for those of you on Twitter that want to see more conversation).   Aside from a tremendous crowd – there was plenty of commercial real estate learning going on.   Becky Leebens, CCIM, Managing is Director of KW Commercial Midwest in Eagan, Minnesota – was gracious to provide us with recap of the session  from a panel of tenant representation experts.  Thanks Becky!

Rarely are we able to hear the personal business strategies of successful real estate professionals like those offered at KW Family Reunion (KWFR).   Last week in Orlando, Florida over 9,000 residential  and commercial real estate agents gathered in one spot, the largest real estate gathering in the country.  In a down market, when commissions are scarce, why do agents spend thousands to attend this event?  To network, collaborate, and more importantly, to find out how the industry pros drive their business to the top!

I have been part of the commercial real estate community for over 15 years, but never have I had the opportunity to meet with hundreds of successful commercial real estate brokers in one place to find out where and how they do their business like I have at KWFR.  There were 8-10 breakouts over the 4 day period for commercial  brokers including investment sales, utilizing technology and social media, converting tenants to buyers using SBA 504 just to name a few.  But this event goes beyond that. This is an event where brokers not only share their insights, but they actually reveal the secrets to their success and will even invite you to be part of their team!

As an illustration of this experience, let me give you a peek in to the Tenant Representation breakout session.   This session was presented by Michelle Rich Goode.  Michelle has over 26 years in commercial real estate and was one of the first in her area to create a tenant representation firm in Raleigh, North Carolina.  The panelists included Powell McGill, from Manassas Va, who, early in his career, worked directly with Julien J. Studley, the pioneer of tenant representation; Bill Langley, a Commercial Director with over 20 years of experience out of Atlanta, Georgia;  and myself.  This experienced and diverse panel shared their expertise ranging from how to handle client objections to the details of a lease transaction.   For example, clients often think they don’t need a tenant rep broker because they either have a good relationship with their current landlord or because they think they can’t afford one.  The panel countered these objections by stating they are exclusive tenant rep’s (do not represent Landlord’s at all), offered market knowledge, and by thoroughly explaining how their fee is typically paid by Landlord.  They walked through a 25,000 sf tenant rep case study explaining each step, highlighting key points and discussing the various strategies they take with their client through the process.    The highpoints of the presentation included:  winning the assignment, the process timeline,  space planning, construction costs, lease checklist and analyzing the deal. The room was filled with commercial brokers who were given direct access to experts who gave them a variety of knowledge and tools, which they could now incorporate into their own business models.  The breakout ended with a question and answer session, and an invitation to be part of the International Tenant Representation Practice Group these professionals have created within KW Commercial.   This was not only an hour jam packed with information, but it also included an invitation to be in business with this A-Team!  Wow.

Needless to say, it’s very difficult to briefly describe in words all of the benefits of this high energy, five day experience called the KW Family Reunion.  In short, I’m honored to be in business with these high level professionals and look forward to seeing them again in Dallas next year.

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Commercial Property Software Tools: Which Ones Do You Want Reviewed?

Question mark

Whether for an agent/broker, a property manager/rep or for an association/MLS, the list of software tools made for us only grows every quarter. Naturally, we have value-added nationwide listings at CommercialSource.com. Beyond that, we are inundated with tools to learn about and manage things in the commercial property market. We have prospecting tools, listings managers, property management tools, social media applications, mobile applications, and themed database searches just to name a few.

When it comes to software tools, what we need are professional demos.  We need that all-important chance to see the software do its thing in the hands of a experienced pro, to go beyond the “brochureware” websites and the sales pitches. To demonstrate what it’s like to be a user, to showcase the strengths and spell out any weaknesses of a given software product.  To spotlight what it means to add a particular tool to your arsenal.  To spot ahead of time what the “best practice” is for your user market segment – Agent/Broker, Property Manager, Association/MLS.

It’s a big software universe out there.  What’s got you curious?  What’s at the top of your list?  Let us know what kind of commercial property market software tool you’re interested in reviewing and we’ll make it happen, right here at The Source.

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Market Survey: 70% Of Commercial REALTORS® Closed A Deal In 4Q 2011

NAR Commercial’s Quarterly Market Survey for 4th quarter 2011 contains quite a few compelling data points.  Illustrations of an improving market are mixed with more flat indicators, meaning the Great Recession has bottomed, yet struggles for growth remain.  Some highlights:

Seven out of ten commercial REALTORS® completed a sales transaction 4Q 2011

The majority of our members did business last quarter.  46% of transactions came in at dollar amounts exceeding $500K with 28% of transactions $250,000 or lower, 26% between $250-$500K.  The estimated average transaction rose from $1.1M to $1.2 M in the previous quarter. On the down side, sales volume declined 1% from this time a year ago, and sales prices declines 10% on a year-over-year basis.

Reductions and renewals in rental

Leasing activity rose 2% from 3Q 2011 while rental rates declined 4% from the same time. Office vacancy rates stood at 18.8% while average rental space demand (in office, industrial, retail, multifamily and hotel) for over-5,000 sq. ft. rose to nearly 30% of transactions, up from the mid-20s in 3Q.

Financing: Still very tight, banks not doing what they could

They may have been too big to fail in 2009, but banks are still failing the commercial real estate market today by helping to keep financing as the number one challenge to survey respondents for the second quarter in a row.  Some respondents also reported that a surplus of bank-owned property is keeping prices low and causing a “chain reaction of short-sales” while banks “take an inordinate amount of time to make a decision”.  (If only they had dragged their feet like this back when they all rushed to package and deal all those residential MBS…)

Cap rates: retail leads the pack

At 9.3%, retail property cap rates top the list, with development next at 9.2%, then multifamily at 8.9%, industrial at 8.7%, hotel at 8.6% and office at 8.2%.

New construction state leaders not population leaders

While inventory and vacancy rates are high, new construction (based on the overall level of commercial transactions or 4Q)  is few and far between.  The leading states show this: they’re not exactly a roll call of primary markets: Montana, Massachusetts, New Mexico and Maryland.

Download the entire report here. 

Even The Cloud Needs A Roof: Some Numbers On Datacenters

(Above: A peek inside Facebook’s Prineville, OR server room.)

A great piece in Chicago Real Estate Daily focuses on the issue of datacenters; how they’re leased, bought, valued and provisioned.  Jim Kerighan, who spent three years with Grubb & Ellis as head of datacenters befiore moving to Avison Young this week, says the market for datacenter space is unique and growing.

Why would a tenant want to be in Elk Grove Village versus North Carolina? What would be the factors that would make one better than the other? 

It depends on the client. They will look at their power needs, the cost per kilowatt hour, they’ll look at the various tax incentives that are provided by a municipality whether it be by the state or locally. The larger companies, the Googles, the Yahoos, what is driving their decisions is vastly different than what might be driving a smaller user. 

The bigger companies often have multiple data center sites so they are less sensitive to anything that might be a natural disaster or other type of disaster because they are backed up by other properties around the country. But they are driven by things like the cost of power. Illinois doesn’t charge personal property tax on servers, so that’s a pretty big, important key factor, while other states may provide a discount on the tax on the electrical power and then there are other states that are going to charge less money for power. 

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NAR’s Commercial Real Estate Market Survey Is Out

I’ll be digging into this more later, but for now, it’s time for everybody to check out the first publication in NAR Commercial’s new quarterly research project.  We surveyed Commercial REALTORS® “from Maine to Baja and the Cascades to the Everglades” to provide an overview of sales and rental transactions, market performance, current challenges and the ever-popular look into the future expectations. Download the report PDF here.

(Spoiler alert:  The Great Recession is over.  Hooray!)

The Storeless Pop-Up Store

We tend to take for granted that the leasing of space is the one constant in our business, our one set of assumptions that are safe from change.  Change seems to encroach but not actually threaten —   traditional commercial real estate models have opened up to flexible and temporary arrangements such as pop-up stores, but this is still a development concerning the leasing of physical space.  Can technology possibly remove even that baseline retail requirement?

The answer is yes.

The rise of mobile technology in point of sale support – systems such as The Square that turn any smart phone into full POS systems taking credit cards – has enabled retail business to take place whenever and wherever social media can get the word out.

The ramifications for retail can be huge, and need to be tallied up.  First, the equation of finding and valuing retail space – even as a flexible or temporary sublet – now has to accommodate the options of foregoing rooftop cover altogether.  What was inconceivable just months ago is now a viable option for a prospective tenant.

Leases, too, need to catch up with this new reality – exclusives or other clauses relating to a tenant’s business or hours have not been written with today’s market in mind and need a review.

Finding ways to ride technological waves to profitability is our industry’s eternal challenge. Adding value to space, to research, to branding and to prospects only deserves more stress as the days pass and the old models fade.