Browse Month: November 2013

Commercial Real Estate Industry Weekly Roundup

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Roundin’ Up The News

Patrolling the media for the latest in commercial real estate news, it’s the Commercial Real Estate Industry Weekly Roundup:

General

 

Office Sector

Industrial Sector

Retail Sector

Multifamily Sector

Hotel Sector

Land Sector

Support the Marketplace Fairness Act

Dan Wagner
Dan Wagner 

Our guest blogger today is Dan Wagner, Vice President Government Relations with  The Inland Real Estate Group of Companies, Inc. located in Oak Brook, IL. (And NAR Commercial Sponsor)

Shopping centers hire four employees for every $1 million in incremental sales.  Online retailers add just one!…86% of consumers would prefer the convenience of paying sales tax on  online purchases at the time of sale!…From 2011 to 2012 total retail sales grew by 4.9%, while ecommerce and mail-order sales grew by 14%.  Internet retailers should not be given a competitive advantage over brick-and-mortar retailers that serve as the backbone of our communities.  All retailers deserve to compete on a level playing field through business attributes like product selection, customer service and convenience.  Shipping costs are an attribute that a company can choose to waive; however, sales taxes are mandatory for local retailers to collect.  Local retailers should not be forced to compete on this government-imposed mandate especially when the tax collections for a brick and mortar story is 10 to 15% and internet retailers are not required to collect this tax.   States should have the ability to enforce sales tax laws across all retailers, and only Congress can restore that right.  The Marketplace Fairness Act of 2013 has passed the United States Senate S.743 by a vote of 69-27.  The House version, HR 684 awaits consideration by the Committee on the Judiciary.  Please contact your House of Representative members and urge them to pass the bill out of committee and have a vote on the House floor.

Our guest blogger is Dan Wagner, Vice President Government Relations with  The Inland Real Estate Group of Companies, Inc. located in Oak Brook, IL. Find out more at InlandGroup.com Inland Logo

 

Commercial Connections Podcast: Two 6 O’Clocks With Barry M. Wolfe

ABarry M. Wolfe of Marcus & Milichaplex Ruggieri hosts Barry M. Wolf, VP of Investments with Marcus & Millichap in Ft. Lauderdale, FL.  Barry’s an attorney with a long history in commercial real estate and serves as director of both Marcus & Millichap’s National Retail Group and its Net Leased Properties Group.  His focus on transactional aspects of real estate and active membership in ICSC (International Council of Shopping Centers) gives him in a rare perspective on the intersection of the law, commerce and real estate investment.

The key takeaways of this month’s podcast:

  • Two Six O’Clocks In Every Day: In his youth, a basketball coach imparted to Barry a simple, beautiful idea about how to manage your time at the office.  Check out the podcast for the story.
  • Striving to add value to clients and prospects.  Describing the benefit to clients and justifying fees and commissions is an ongoing process that can even precede the listing of a property.
  • The 5% of the people who are listing properties now are where all the competition is – the 95% who aren’t will remember the help and value you added before they had specific expectations – beyond just placing properties into listing platforms.
  • Being a service provider – market information or market data – being there to bounce idea off the wall.
  • Putting the seller’s interest first, not just pocket listing properties to your own buyers.
  • Qualifying buyers, analyzing the offers understanding the brokers, seeing who is most probable to get to the finish line
  • Avoiding retrades, price negotiations, getting deals to successful closings
  • In reality there are no business secrets – look at what clients are doing successfully and apply it to your own business

 Listen to the latest Commercial Connections Podcast at Realtor.org

FROM SHANGHAI TO YOUR SHELF: ADDED BROKER VALUE TO THE NEW SHIFTING WORLD OF LOGISTICS AND SUPPLY CHAIN

Rob Nahigian, FRICS, SIOR, CRE, MCR

Rob Nahigian, FRICS, SIOR, CRE, MCR
Rob Nahigian, FRICS, SIOR, CRE, MCR

There are potential pending shifts of the logistics and supply chain market in the next two years. How do the shifts impact how a real estate decision is developed including site selection? What are the new metrics besides rent per square foot or occupancy cost per square foot? What new value can an industrial broker bring to clients?
Pending Shift

The pending shift is driven by the completion of a third canal for the Panama Canal to accommodate larger ships that currently cannot make it through the canal due to size. Ships have become longer, wider and deeper in order to carry more containers from Shanghai to your shelf.

Wal-Mart ships over 700,000 containers per year while Walgreens might only ship 15-20,000 containers per year. Older ships hold 5,000 containers so multiple trips from Shanghai to your U.S. shelf is expensive. Ships are longer and wider and there lies the problem for the east coast. Long Beach is situated right on the Pacific Ocean. The area has wide turning radius for ships, harbor depth for the bigger ships and no real bridges that ships have to squeak under. The Long Beach port states that it handles 40% of the U.S. imports.

The Panama Canal realized that it was losing business. The Canal decided a few years ago that it had to build a third canal to accommodate larger ships. This third canal is under construction and is planned to be completed by 2015.

This is great news for the east coast if shipping decisions are made to skirt Long Beach and dock somewhere along the east coast. But the east coast ports are as old as the Panama Canal and do not have the depth or bridge clearance to accommodate the larger ships. East Coast ports are spending billions of dollars to dredge harbors and raise bridges with taxpayer’s money. Will the business shift from the West Coast to the East Coast?

The real answer does not lie with the shipping company. People who market their properties or ports to the shipping companies are missing the mark. The customers of the shipping companies that pay for the container deliveries is the key to understanding if any shift will occur. In theory, the industrial market along the east coast (not just ports but inland locations that are 200 miles away from a port) could be robust. It is this anticipation of a renaissance that many distribution developers are planning sites before the Canal and ports are prepared.

The end-user is researching site selection based on its customer base location. For instance, if you are selling 45% of your products in the northeast U.S. then why dock in Miami? The key to understanding site selection has now gone beyond the importance of a building’s rental rate or overall cost. Reliability and timeliness to the market has become a more critical issue for end-users. If a site allows an end-user to deliver goods to its customer base quicker than any other site, then it may be more valuable. In the popular program that has been running with NAR Commercial this year (From Shanghai to Your Shelf), the new real estate modeling has been heavily discussed. Three new models shared by corporate end-users have been exposed to brokers to site selections that are solely beyond real estate costs. New and different metrics are being incorporated in a real estate decision including turn ratios per trip and 16 other metrics.

In conclusion, for the industrial broker, the added value that he/she can bring is the following:

1. Identify areas near ports or main rail
2. Have contacts with rail service
3. Have knowledge about logistical hubs and infrastructure
4. Know about external hubs
5. Support “Intellectual Property”
6. Become certified or involved in the new field of “Logistics property brokerage business”

Rob Nahigian, FRICS, SIOR, CRE, MCR is Principal of Auburndale Realty Co., Newton, Mass. and served as the New England SIOR Chapter President and National Ed Chair. His focus is corporate representation, advisory services and expert testimony in office and industrial real estate. He is a Real Estate Instructor at Boston University, SIOR, NAR Commercial, CoreNet Global and RealtorU. He conducts a program on Logistics and Supply Chain real estate decisions for SIOR Chapters. Rob was awarded the 2012, 2004, 2003, 2002 and 1994 SIOR National Real Estate Instructor of the Year.

ACE Award Winners

Introducing this year’s ACE Award Winners-

 

 

The following Commercial Services Accredited Associations have earned this year’s ACE Award.

ACE award winners have demonstrated that they have gone beyond their accreditation benchmarks to be leaders in engaging their members and the high quality of the services provided.

 

Charlotte Region Commercial Board of REALTORS®

Denver Metro Commercial Association of REALTORS®

Memphis Area Association of REALTORS®

St. Louis Association of REALTORS®

Sarasota Association of REALTORS®

Miami Association of REALTORS®

 

Congratulations!

 

Data Center Heading Underground At Kansas City’s SubTropolis

In the underground commercial real estate market — a genre one might call “natural roof” commercial real estate –  development starts at the ground and proceeds downward instead of upward. Using underground structures — some naturally occurring, some dug or bored — has long been associated with special-purpose building projects including military and scientific uses.  But increasingly, business is joining the rush for subterranean space, drawn by the many unique benefits of going underground.

There is probably no more eye-popping  US example of underground commercial real estate development than Kansas City’s SubTropolis.  Billed as “The World’s Largest Underground Business Complex”, SubTropolis is a mixed industrial-office-warehouse facility sporting a stunning 55 million square feet — and growing.  Dug into an active limestone mine and reaching depths of 160 feet beneath the surface, the property contains almost seven miles of illuminated, paved roads, plus several miles of railroad track.

As the complex’s pitch says:

Move to SubTropolis and enjoy these standard benefits: 

  • Low lease rates — 30-50% less than above ground facilities
  • Low utility costs — 50-70% savings in total energy costs
  • Constant temperature and humidity levels — protect your products and make your employees more productive
  • Maximum flexibility — for expansion and seasonal surges
  • On-site services — management, maintenance and 24/7 security so you can run your business, not your building
  • Sustainability — you’re more sustainable without the upfront costs (Check out our green statement.)

 

Data Center Digs In

Sustainability, energy savings, low utility costs — if the benefits list of this unique property seems to you like a good match for data center location, you’re not alone. As reported in NREI Online, SubTropolis’s developer is working with Iowa-based LightEdge Solutions to install a new data center by spring 2014. LightEdge is taking occupancy of 20,000 square feet with a deal to ultimately occupy 60,000 sq. ft of the facility’s monster footprint.

“Masterson says his firm already has agreements to host carriers such as AT&T, Surewest, TW Telecom, Time Warner, Unite and Windstream. The company plans to provide network connectivity up to 10 gigabits per second. Masterson says the underground facility will provide benefits that are just not achievable with above-ground construction.

“The flexibility aspect is amazing, we can expand into new space within 90 days,” he says. “Also, Subtropolis is laid out in grid fashion, we don’t have to work around weird-angled wall space. The best aspect, of course, is how secure the structure is against weather or instability.”

Other underground facilities across the country have been reaching out to start commercial data hosting. Iron Mountain Inc., one of the most well-known data storage firms, has been leasing underground space to the U.S. government for years, and this year decided to open its underground facility in Boyers, Pa. for colocation. The former limestone mine is positioned 220 feet below ground, with ambient temperatures in the mid-50s and geothermal cooling. Marriott already leases 12,500 sq. ft. there for disaster recovery purposes.”

SBA 504: Help For Veterans Seeking Commercial Real Estate Capital

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This Veterans Day, let’s remember that servicepeople in the commercial real estate industry have a few extra benefits when it comes to obtaining capital and credit. In a tight market for capital, that can make all the difference at the deal table — especially for owner-occupiers.

SBA 504

The Small Business Administration (SBA) 504 program offers US military veterans and service disabled veterans commercial financing for purchase of real estate that will house your business, expand, retrofit, renovate or remodel an existing facility. Funds are also applicable  for refinance of an existing commercial loan as part of a business expansion.

Some terms of eligibility: A veteran-owned business is a business where at least 51% is owned by one or more veterans.

Not Limited To 504

You can browse the length and breadth of business advantages offered to veterans at the multi-departmental government business.usa.gov. Under its Resources For Veterans page, you can find a long list of benefits including business outreach, assistance in working with federal agencies, and the Center For Veterans Enterprise.

The list doesn’t stop there.  CVE and other sites provide a wealth of information for vets in business and commercial real estate: an enduring government thank-you for those who answered the call to service.

 

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International Investors Like Miami Multifamily

Brickell Skyline from the Miami River

The county seat of Miami-Dade county is an attractive market for apartment hunters — and for apartment building hunters.   The sun and culture of Miami has always attracted its share of real estate investment, but lately the multifamily property sector is alive with extra development and international investment capital.

Marcus & Millichap’s 4th quarter report Apartment Market Research cited by Globe St. claims a hike in demand for the Miami multifamily market including an absorption of 1,700 units after all was said and done in the quarter.

The job market, the traditional driver of multifamily demand, did not report a leading increase.

“Retail employment has been a bright spot locally, as it has been across the country,” M&M reports. “However, expansions in degreed positions in the professional and business services, and financial services sectors have been lackluster.”

Still, the firm predicts solid demand for multifamily rental housing will generate a 10-basis point drop in vacancy this year to 3%. That’s the lowest rate in the South Florida region. Net absorption of nearly 2,100 units sliced 70 basis points from vacancy last year. Meanwhile, demand for higher-priced new multifamily rentals will underpin a gain in average rents of 4.9% this year to reach $1,191 per month. By way of comparison, average rents grew 2.3% last year.

“Investors are monitoring multifamily construction, which is projected to climb this year and persist into 2014,” M&M reports. “Thus far in the development cycle, the increase in construction has been met by higher demand for rental housing. Despite the inflow of new rentals, transaction velocity and dollar volume continue to rise, fueled by confidence in the country’s long-term prospects for sustained rental housing demand and expanded access to acquisition debt.”

Foreign Capital Flowing Again After Housing Crash

Cash-rich Latin American investors are gravitating to the Miami multifamily scene looking to create returns through rentals and by spreading their attention afield of traditional property strongholds such as South Beach.  A recent Reuters report claimed developers from Brazil, Venezuela, Mexico have heightened presence in the city.

Also potentially driving the rush to the center of Miami metro from points south: currency volatility in home countries.  Brazil’s currency has undergone gyrations in the past year and Venezuela’s petro-economy is facing increased production from North America.

The international flavor of the development culture in Miami is unmistakeable, according to Reuters’ Kevin Gray:

Several of the new Latin American projects rank among Miami’s most ambitious.

Argentine developer and hotelier Alan Faena is leading a $550 million project in Miami Beach to build what is being billed as the Faena District.

Faena helped transform the Puerto Madero riverfront neighborhood in his native Buenos Aires, converting a series of rundown buildings, including an old mill, into a luxury enclave of fine dining anchored by a five-star hotel, an arts center and apartment buildings.

Backed by Russian-born billionaire investor Len Blavatnik, Faena’s Miami beachfront development involves renovating an iconic Miami Beach hotel, the Saxony, and building a cultural center and theater.

Commercial Happenings at REALTORS® Conference and Expo

It’s time for REALTORS® Conference and Expo we wanted to share where you, the commercial practitioner, can find all the information you need to make the most out of your stay in San Francisco November 8-12. If you think the convention and expo does not have much available for commercial professionals-think again. With over a dozen commercial related sessions, the Commercial Block at the Expo, commercial  speed networking session, a caffeinated networking breakfast and  the Commercial Reception, you will wonder if you can fit it in your schedule. To view the schedule of events at the 2013 REALTORS® Conference and Expo click on the link below.

http://www.realtor.org/commercial-meetings-and-events-at-2013-conference-expo

Keep up to date by following our twitter handle @commsource as well as @narannual for up-to-the-minute updates.

Your journey to NAR Annual would not be complete without stopping by the NAR Commercial booth #829 in the Commercial Block to meet the staff and drop your business card for a chance to win a CCIM Course.

Last but definitely not least NAR Commercial would also like to give a BIG THANK YOU to our 2013 sponsors for helping make these events possible. Find out who they are and what they have to offer you below. Click on their logo to visit their site.

Inland Private Capital Corporation (IPCC) was established in 2001 to provide replacement properties for accredited investors wishing to complete an IRS Section 1031 real estate exchange, as well as investors seeking a quality, multiple-owner real estate investment. Currently, IPCC has offered more than 131 private placements, including 257 properties, collecting more than $1.427 billion in equity leveraged by approximately $1.434 billion in debt for a total offering price of approximately $2.861 billion. IPCC is a part of the Inland Real Estate Group of Companies, Inc.

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NAR is pleased to announce NAR’s REALTOR Benefits® Program partner, will provide a suite of commercial real estate information services and preferred pricing exclusively for NAR members at CommercialSearch.com.  This national listing platform for commercial real estate properties will offer a basic broker loaded and research platform as well as a premium service.

FinanceSolutionsCafe_logo_NAR

The NADCO Finance Solutions Café presents the best-kept secret in small business finance, the Real Estate Advantage (504) Loan or REAL. At 10% down, this 20-year or 10-year fixed rate financing is perfect for owner-occupied real estate or equipment. Think you can beat this deal? Get REAL! Please visit www.nadco.org for more information.

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Now more than ever, it is critical for REALTORS® across America to come together and speak with one voice about the stability a sound and dynamic real estate market brings to our communities. From city hall to the state house to the U.S. Capitol, our elected officials are making decisions that have a huge impact on the bottom line of REALTORS® and their customers. Through the support of REALTORS® like you, the REALTOR® Party represents your interests.

CCP: Reaching the Investors of Tomorrow with Bo Barron,CCIM

 

Bo Barron
Bo Barron, CCIM

When is the best time to plant a tree?

Bo Barron, VP of Organizational Development for Sperry Van Ness International and blogging superstar, is Alex Ruggieri’s guest on this Commercial Connections Podcast. Along with answering the question above, Bo and Alex discuss how and why he got started, and how he got over his hesitation in developing his widely-read blog about life and commercial real estate.

A Marine, 3rd generation commercial real estate practitioner and family man, Bo’s experience and perspective is shown as he goes around the country talking to brokers and other professionals about digital engagement and how to use it to reach the investors of tomorrow.

 

Listen or download the podcast by visiting  www.REALTOR.org/CCP and learn more about Bo Barron at www.BoBarron.com.