Browse Month: February 2014

Hut Glut: Used To Be A Pizza Hut


A bit of fun on a Friday: the trademark roof hump of the Pizza Hut franchise store exterior is visible all over North America and the world.  With more than 6,000 store locations in the US and nearly that many in 94 countries around the world, the chain’s store look is as familiar to millions as any of the most valuable brands in the world.

But that shape isn’t dedicated to only the pizza and breadsticks. Plenty of other businesses have moved in to Pizza Hut stores once the original franchisee has moved on. It’s a testament to the success of the Pizza Hut brand that the repurposing of Pizza Hut stores — into other restaurants, pawn shops, family practice clinics and many other types of businesses — doesn’t fool us.  The recognition is immediate.

That recognition has spawned an irreverent blog called that I had fun flipping through this morning, and I thought I’d share.  It’s not the most sensitively-written thing in the English language, but when it comes to a unique look at repurposing of familiar commercial real estate, it’s a hoot.

Check out here. Also, take a trip through the Wayback machine here at The Source for the last time we posted about repurposing.

(Photo: UTBAPH)

Is A Farmland Bubble Forming?


The story so far: the Federal Reserve in Kansas City mid-2013 published that irrigated cropland in its district rose 30% in 2012, while the Chicago Fed reported a 16% increase. Last year’s drought in Iowa last year notwithstanding, farmland prices have nearly doubled since 2009 to an average of $8,296 an acre. Prices in Nebraska, says the Fed, have also doubled during the same period.

There’s a complicated set of factors joining together to drive up farmland prices. Drought, institutional buying, ethanol mandates from the federal government, rising food prices and population concerns are all having their say in a steadily rising price for irrigated cropland. Some are saying the trend is unsustainable and shows all the signs of a classic market bubble. Troublingly, different looks at the market come to similar conclusions about a coming price collapse even if there’s disagreement about cause.

Institutional Players

As Reuters reported recently, a report by The Oakland Institute documents a “global land rush of unprecedented scale” and estimates $10 billion in institutional dollars is chasing the fixed amount of US cropland.  Pension giant TIAA-CREF, Hancock Agricultural Investment Group and UBS Agrivest were singled out as key drivers of a surge in farmland prices.  This financialization of food-producing land is identified as “speculative” by the report.

Generational Turnover And Tight Credit For Small Farmers

Another trend feeding the charge toward institutionalized demand for land is the plight of the young farmer. A 2011 survey published by the National Young Farmers Coalition found that 78% of young farmers cited lack of capital as their biggest challenge.  Depending on off-farm income to make ends meet only further sweetens the deal to a young farmer when an institutional player comes calling to pad its asset holdings.

Biofuel Mandates

In 2005, Congress passed the Energy Policy Act of 2005, setting the stage for later mandates by the Environmental Protection Agency to compel an increase in the production of ethanol, the corn-based fuel. The EPA’s RFS and later RFS2 programs sought to almost quadruple ethanol production. The effect of government policy into land prices is highlighted by one analyst at Seeking Alpha when he points to a spike in land prices that occurred in the 2005 quarter the bill passed.

While that price move explanation seems valid, what’s less clear is any similar ongoing related effect of ethanol mandate on corn-producing land prices in the intervening nine years. As per usual, when it comes to explanations of prices from institutional sources, only some actors get attention. The Wall Street spin evident in the above-linked piece focuses only on Washington and ignores totally the fact or any possible effect of $10 billion Wall Street dollars wading into the market, as well as the plight of the farmer strapped for credit and capital.

Prices Stabilizing For Now

The Fed reports that land prices in late 2013 only gained 3%, but also touched on the farmer’s plight, indicating cash rents (and food exports) were in fact up:

Cash rents, another key indicator of farmland value, were also steady to higher as farmers negotiated contracts in the fourth quarter that will cover the 2014 season, according to the St. Louis Fed. Values were buoyed by a gain in farm incomes in the quarter, including crop insurance payments and much larger harvest supplies even at lower prices.


In recent years, both crop and farmland prices have set records as the boom in biofuels and food exports fueled demand. But the sharp drop in second-half 2013 grain prices ahead of the record corn harvest had bankers fretting that farmland prices could also plunge.

With land acting as security on most loans to farmers for equipment, and a persistent credit crunch facing farmers quarter after quarter, signs are piling up that the value of mortgaged food-producing land is headed for a slip. When, as WSJ reports, tractor company John Deere revises its farm equipment sales projections to 5% from the 10% thought a year ago, that’s only one of a set of signals that a land boom driven by Wall Street may be coming to a close.

Downtown Restaurants And Apartments: Looking Up, Building Up

petula clark- downtown

The flight from urban centers to the suburbs that characterized much of the latter half of the 20th century is seeing a reversal. Collar communities across the US are facing rising vacancy rates as a generation of thirtysomethings and younger are breaking the pattern of previous generations by seeking life and work spaces close to each other, without long maddening commutes.

The urbanization trend has a lot of factors driving it. Depending on who you ask, the answers given to explain this shift point to the rise of always-connected technology-enabled life- and  working-styles. Some point to somewhat fanciful ideas about “Generation Y” kids growing up in over-secure, helicopter-parented childhoods looking for the risks of urban life as a way to establish independence at long last.

Whatever the reasons, the shift in urbanization is real. Market research by IBISWorld highlights the trend in terms of hiked multifamily construction starts and other growing measures like rentals in urban centers. Put simply, a city apartment boom is underway, and a lot of industries are going to feel the benefit.

“As the US economy picks up during the next five years, both the rate of urbanization across the country and the per capita income of urban residents are expected to accelerate,” according to the IBISWorld report, titled “Moving on up: Top industries to benefit from urbanization.” Along with apartment construction, these shifts will lead to growing demand for testing and educational support, single location full-service restaurants, apartment rental, street vendors and public transportation.

Although operators in these industries are not anticipated to encounter a lack of demand in the next five years, “they are expected to face more intense competition among peers for market share within the rapidly growing urban markets,” the report states. “The benefits of urbanization, though, will increase the number of workers and establishments operating in these industries.”

Driving the demand apartment boom in part is the rapid growth of companies in the healthcare, technology and finance sectors. “These industries are attracting an increasing number of young professionals and college graduates, a demographic that has boosted the population of urban areas,” according to the report.

Accordingly, IBISWorld expects revenue for the apartment and condominium construction industry to increase at an annualized rate of 3.7% in the five years to ‘19. Profit margins for the rental industry have lagged the 9.1% annualized growth seen by the construction sector since 2009, though, and will continue to lag over the next five years, albeit not quite as dramatically: 2.5% annual growth, compared to 3.7% for builders.

The Takeaway For Multifamily Professionals

Suburban apartments and condominiums can only feel the most disruption from the interruption of the decades-long migration pattern from downtown to the boonies; multifamily markets markets in many collar communities are likely to get tougher to rent, and building starts are likely to become harder to finance.


Aggressive marketing in billboards (as in above, a campaign in Chicago promoting the western suburb of Berwyn)  and on public transportation is likely to pick up in major cities; professionals working suburban markets should be organized into effective Chambers of Commerce to mount such campaigns.  The suburbs can’t count on old migration patterns any more.

REALTOR Magazine Seeks Good Neighbor Nominations

GN_LOGO_2011_vector_flat_4C1 copyDo you know of a REALTOR®  who has an extraordinary commitment to their community?

REALTOR® Magazine needs your help to identify nominees for the 2014 Good Neighbor Awards. The program–celebrating its 15th anniversary–recognizes REALTORS® whose extraordinary commitment to volunteering has helped make their communities better places to live.

Five winners will be announced and recognized at the 2014 REALTORS® Conference & Expo in New Orleans. They will receive a $10,000 grant for their community cause, travel expenses to the convention and extensive publicity to benefit their cause. In addition to the winners, there will be five honorable mentions which will receive $2,500 grants.

This year’s Good Neighbor Award deadline is May 16, 2014.

For more information and to nominate please click here.


Call For Presentations For This Year’s REALTORS® Conference and Expo

Attention commercial speakers:

Have something that needs to be said at this years conference? If you’re looking for a chance to speak at a session this year time is running out to submit the call for presentations form which are due next Friday, the 28th of February.

Proposals are reviewed by a team of industry experts with expertise in real estate topic areas. Reviewers evaluate proposals based on six criteria:

  • Relevance to today’s real estate professional
  • Well-defined topic focus
  • Practical application of material
  • Timeliness of topic
  • Overall program quality
  • Speaker credentials, including references


Each speaker may submit up to 2 sessions.

For more information and to submit please visit the website .


Infographic: The Cautious Real Estate Recovery At A Glance

Speaking generally and in nationwide terms, the commercial real estate market has been undergoing steady, uneven improvement for at least three years. What are the indicators of this recovery?  CIT in association with Forbes Insights has an answer in the form of a handy infographic and report detailing the “cautious recovery” – check it out below. (Click for full-size of the partial graphic, or download the entire report here.)


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Creative Ways To Market Your Property For Success

By Randolph T. Mason, CCIM, SIOR

Randy Mason CCIM, SIOR
Randy Mason CCIM, SIOR

Let’s face it, no one is going to buy or lease your commercial property unless they know about it. So, when there is a plethora of properties and opportunities for tenants and buyers to look at, how do you make your property stand out? Here are a few tips.


A simple and cost effective way to expose your commercial property is to have a video created. Videos can be as simple or as elaborate as you wish. Well-crafted videos, can show the surrounding area, explain features of the property, and dive into specifics such as: what the interior looks like, condition of the roof, office visuals, warehouse and other areas within the building. If the property looks interesting on video, the prospect may want to physically tour it which would allow you to personally sell and close the transaction. In addition, out of town clients appreciate the visual experience and get a good understanding of potential properties to either purchase or lease saving

time and travel.


Websites can show all of the floor plans which then can be printed in a PDF format and other ancillary bits of information. You can then use a QR code placed to place on signs and other marketing materials.
Once all of the other traditional marketing such as adding a property to the multiple listing services, E-blasting the brokerage community, advertising, etc, it’s important to get people through the property. It’s happened more than once, I have scheduled a time to tour a property with a client and told the listing broker needed to be present, and when we arrived at the property the listing broker was nowhere in sight and the building was locked up-too bad for that property. We moved on.
A simple and effective way to get around that problem is to place a lockbox on the property. My recommendation is to use a combination lock box so that when the listing broker is unable to be at the property during showing time, with multiple buildings on a tour timing can be challenging, the combination can be provided so the procuring representative can get into the property and expose it to the client.
Another way to create buzz for your property is to provide broker incentives to the procuring broker. Ideas can include $50 for a property tour or $100 for a bonafied offer. A very motivated landlord once offered $5 a square foot as a leasing incentive provided the lease was signed within 2 months. The reality is that it normally would take longer than 2 months to consummate a transaction so the landlord had little exposure but it created an enormous amount of buzz amongst the brokerage community. The landlord ended up leasing the property outside of that time frame, and compensating the procuring broker $2 a square foot. Money well invested.

Randolph T. Mason, CCIM, SIOR is the Managing Partner for Commercial Realty Specialists.

Will 2014 Be The Year Of The Distribution Center?

English: Pantos Logistics - Warehouse

Exploding demand for online shopping is the driver behind a Jones Lang LaSalle finding that sophisticated warehousing and logistics space will see a big bump in 2014 according to today’s Craig Meyer piece in REJournals: 


“2014 is starting off with high demand from e-commerce and other users who are in the market for large, sophisticated space, and lots of it,” said Craig Meyer, president of industrial brokerage at JLL. “This will make 2014 the ‘year of the distribution center.’  Modern space with proximity to population centers and a robust logistics infrastructure will dominate the industrial real estate sector in 2014.” JLL anticipates the overall national vacancy rate will settle at a cyclical low of 7.5 percent in 2014. 


3PL Set To Take Off


Increasingly, traditional warehouse space and portfolios of owned facilities don’t offer what e-commerce needs: build-to-suit of third-party logistics (3PL) facilities are springing up in secondary and tertiary markets stronger than ever, locations hugging rail lines to avoid the rising costs of trucking.  In a new report from CapGemini, the revenues for 3PL across the entire US market are shown at $170 billion in 2012, up 6.7% from the previous year. Outsourcing is a major driver of the trend.  Cost reductions for inventory and logistics are reshaping the warehousing start picture across the US as facilities are suiting an outsourced operations profile.


Collaborating With Competition


How much outsourcing is sought might be explained by one alarming trend identified by CapGemini: in the hunt for efficiencies and savings, shippers are collaborating with competitors to improve service and cut costs in logistics.


Interest in collaborating with other companies, even competitors, to achieve
logistics cost and service improvements:  Slightly more shippers (48% compared
with 41% last year) express interest in  collaborating with other companies, even
competitors, to achieve logistics cost and  service improvements. Substantially more
3PLs (70%) indicate they are engaging in this  type of collaboration. As with gainsharing, it
is likely that this approach is more suitable  in certain types of shipper-3PL relationships
than in others.


Read the entire CapGemini report on 3PLs here.

Photo Credit: Wikipedia


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Does Facebook Provide Business Networking, Or Does It Give You The Business?

If you or your commercial real estate firm or brand runs a Facebook page, and you read The Source, then you probably know that the reach of your page – that is to say the sum total of the visibility and engagement your page delivers – has been on the decline.

Some of this is acknowledged by Facebook.  New posts today get less attention than before, and that’s on purpose, according to Facebook itself. The “organic reach” of your posts, a measure once determined by the number of “likes” your page has – aka the number of people who want your content – has been falling because Facebook wants it to.  Facebook’s purpose is to generate revenue through advertising, and if 1,000 people ask to see your content, Facebook thinks it’s good business to show that content to fewer than those 1,000 people, and to thereby lead people toward the purchasing of advertising on Facebook.

Buying Your Way Out Of The Problem Might Not Work

A new wrinkle to the problem has been that even the advertising terms and outcomes are now thrown into suspicion.  A video blogger has found through experimentation that even after he paid Facebook for advertising, the “likes” he got back from the process were from accounts that didn’t look like the accounts of real people.  And when clicks that come from sketchy-looking accounts pile up, it’s almost always the result of click fraud, using click farms.

The videoblogger’s “Virtual Bagel” and “Virtual Cat” experiments in Facebook exposure are easily understood, well-controlled, compelling and in the end, pretty damning stuff.  It makes you wonder how is it possible that Facebook, a social media platform with over a billion people on it could take such wild success at connecting people and think it was a good business model to keep actual people away from each other.

A tip of the hat to Agent Genius who posted about this recently.


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Property Management: Tools, Approaches And Representation

Along with David Meit of Maryland’s Oculus Realty, web-based course provider Grace Hill, web-based property management software vendor Appfolio, and, representing the property management industry, NAR partner IREM all got together recently for an online webinar presentation covering the hows, wheres and whys of successful property management.

The hour-long video is worth a look for a few reasons.  First, it’s not a vendor pitch dressed up as a business conversation.  The topic of property management is looked at from the points of view of the presenters, certainly, but also the live polling questions and interactivity in the session make it a special look into the thorny fundamental problem of property management: how do people who sell for a living get their arms around the problem of property operations? 


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