Browse Tag: commercialsearch.com

Get Your Competitive Edge on Pre-Due Diligence 

Today’s guest post is by Leigh Budlong, founder of Zonability. You can connect with her on LinkedIn or email her at [email protected]

The purpose of formal due diligence is well known to all real estate professionals. We’ve all experienced either the first-hand hiring of experts to help mitigate risks or advising clients to do so. It takes time and money with results often bringing up more questions than answers.

In this age of technology, a new approach for gaining insight into important issues that can impact real estate deals quickly and efficiently is now a reality. It means leveraging technology assets to quickly and inexpensively ascertain initial answers to questions that would typically require extensive time and money during a formal due diligence process.

This stage is called pre-due diligence and can help to quickly evaluate a listing you might find on CommercialSearch.  Pre-due diligence sacrifices accuracy in return for speed, but that tradeoff is perfectly acceptable as long as everyone involved is clear about the objectives and capabilities of pre-due diligence vs formal due diligence which involve experts.

 

Consider what it would mean to have your own process around this stage of information gathering and property assessment. How can it be mined to improve your work and business relationships? Can it become your competitive edge?

 

Before going into more detail, my inspiration for this blog post came from a summer read, Phil Knight’s book, “Shoe Dog”. The memoire came recommended by a real estate data executive, and it has all the thrills – and letdowns – that come with building a business and the people you meet along the way.

 

Phil Knight talks about Steve Prefontaine, an American runner from Oregon known from the 1972 Olympics. Known as “Pre”, he was an early endorser of Nike shoes and a real athlete. According to Knight, Pre’s “competitive fire, gutsy race tactics and inherent charisma charmed crowds and inspired up-and-coming runners to stick with the sport and give it their all.” 

 

Who doesn’t like to be inspired, or to inspire others? In reading these words I instantly recognized the traits that make a great athlete also make a successful real estate professional. It takes training, dedication and a positive “can-do” attitude. The training is what pays dividends during a race or match. The same is true for the real estate professional.

 

By being willing to train hard on honing your skills around pre due diligence, you can be better prepared to serve clients and help them succeed. As part of any training, it means approaching the learning curve. In this case, you’ll need to find those technology tools designed for efficiency and use them regularly to get in more reps, to get better in your role.

 

In my role as an inventor of real estate technology called Zonability, I focused on showcasing a method successfully employed when I practiced in real estate as a commercial real estate appraiser and broker (earning both the MAI and CCIM designations).  Rather than spend hours piecing together, our customers instantly assess a property from a pre-due diligence perspective. It employs what I call “the PLE technique”.

 

P stands for physical, L for legal and E for economic. Together, the review of PLE on any property, at the pre due diligence level, provides a solid initial assessment.

  • Physical – property strengths and weaknesses.
  • Legal – find the hidden opportunities and risks.
  • Economic – run numbers to test “what if” scenarios.

At Zonability, our role in pre-due diligence focuses on assessing untapped development potential and uncovering risks associated with zoning regulations which tie to some of the property’s physical attributes, legal and eventually, economic. How do they tie to economics? It is the combination of the land – its size and zoning relative to the existing improvements and what economic benefits they continue to offer in their market.

 

My years of experience as a commercial real estate appraiser and broker helped hone my skills to assess PLE opportunity and risk. I wanted to translate that when I had Zonability developed. Some call it a “highest and best use” starter, others see as a way to hone in on their to-do list – especially those who handle real estate development.

 

Here are highlights:

 

  1. Identify ALL kinds of regulations impacting the parcel. Yes, these fall under the L category (for legal). Our aim is to give these letter/numbers some meaning and include “future land use” plans which really start to touch on E for economics.

zonability current regulations

  1. Make it obvious what is the zoning landscape around the subject and showcase the parcels’ shapes – this gets into the P for physical as well as L for legal.
    Zonability legendQuickly gather intelligence within a 1/4 mile of the property for existing conditions: zoning category distribution, building size and lot size. Use this information to size up the subject and the ideas about how it might be used which leads to point #3.

Zoning Statistics

  1. Does the property have zotential? Zotential is our way of saying data-driven potential. The reason we opt to use this language is to make it abundantly clear, this is an interpretation, it is not documented in some city file or stamped and ready for approvals. No, it is very much in the early stage – or “pre” – realm where ideas are still being kicked around.


What is your space's Zotential?

  1. Get the numbers running! Zonability also has a one click “pro forma” that generates an Excel using our zotential estimates. You can set the basics like monthly rent and cap rate range then iterate in Excel.
    Pro Forma

Real estate professionals have always had a unique opportunity to differentiate themselves from competitors by discussing untapped property potential with their clients. However, before Zonability, the process of calculating untapped potential was slow, frustrating, and expensive given the complexity of regulations involved.

 

The reality is that most people won’t make the effort to do this work manually. However, we’ve repeatedly found that there’s a direct correlation between the difficulty to obtain important data and the opportunity to deliver value to clients.

 

By having your process in place, quickly and inexpensively:

  • Gauge demand, including current a highest and best use analysis.
  • Develop initial marketing, including ballpark pricing and valuation considerations.
  • Work with the owner/stakeholders to set expectations.

At the root of this process, is being able to decide if the deal is worth pursuing or will terms need to be changed as well as a focus on further evaluation?

In order to remember this concept, think of the long-distance runner, Pre, who had to often “dig deep” to find the energy reserve required for deals that take weeks and months to come together. Building relationships focused on problem-solving and not solely on closing the deal are worth the time. These are the types of deals that people walk away from satisfied and wanting to do again. Who doesn’t appreciate the chance to repeat a win?

In summary, offering fundamental real estate information that can’t easily be “googled” is a great way to establish expertise and build trust with clients. Tech driven pre-due diligence is a way to reduce the time and money required to deliver value to clients. Ultimately this leads to better relationships, which is still the basis for success in real estate.

Do you have success stories about having employed such a technique that saved you and your client time and money? If so, I’d like to hear about it.

 

CRE Brokers’ Ingredients to Success

CRE Brokers’ Ingredients to Success

Today’s guest post is by Dave Morris, CCIM, Sales Executive with Xceligent and former president of St. Louis CCIM, SIOR, Missouri Commercial Realtors, and St. Louis Commercial Realtors chapters. Connect with David on LinkedIn: DavidMorrisCCIM

 

CRE Brokers’ Ingredients to Success

What do top producers do differently than average brokers? They adhere to a discipline of hard work, market knowledge, and relationships.

Aptitude

A broker must be educated enough to know investment real estate theory and why CRE works for investors. They must also keep pace with many industries and know whether a sector is growing or dying and why.

Attitude

Think and act like a winner. (Fake it until you make it if required). Enthusiastically think “team” and “collaboration” to bring about win-win deals. In general, winners want to work with winners…attract winners to your circle. Execute your services with the highest ethical standards.

Work Ethic

Put in the hours. Stretch your comfort zone. Do the things other brokers don’t or aren’t willing to do.

Infrastructure and Support

Take inventory of every resource available to you (software, CRM systems, lease analysis, Xceligent, staff, senior management, etc…). You need an infrastructure of capable support staff with access to the necessary tools to conduct your business effectively and productively.

Brand Recognition

Build your personal brand within your company brand. A positive reputation is everything! You and your company must be seen as a trusted source.

Market Depth

Work in a market niche (by product type or geography) that has a deep enough commission base and that you are able to control a reasonable and sustainable market share. Every year, re-evaluate it and try to expand on it.

Market and Economic Conditions

While somewhat out of your control, whatever the conditions, you must understand how different cycles affect your marketplace, then plan and react accordingly. Top producers know and understand trends which allow them to stay ahead of the curve.

Relationships

CRE brokers are the fabric of the business marketplace. Combine your personal relationships with your business relationships. Educate everyone you know as to what kinds of opportunities you’re specifically seeking. Do the same for people/customers you know. (You will win a client/friend for life if you refer them a prospect!)

Retail Store Closures Pick Up Speed, Says Report

chart showing fung global numbers of retail store closures in 2017

The preeminent trend in the national retail sector is a wave of bad news coming in harder and faster than before. Store closures, according to a recent report by the Fung Global Retail and Technology Tracker, have seen an eye-popping 218% increase over the previous year.

The Fung Global Retail & Technology Tracker watches store openings and closures “for a select group of retailers.” The most recent report cited losses

Payless and Radio Shack top a long list of closures

As reported in NREIOnline, specialty stores are among the hardest-hit of the recent uptick of closures:

Department and specialty stores accounted for most of the pullback, according to Fung Global. The retail research firm tracks store openings and closings for a select group of companies on a weekly basis.

Specifically, RadioShack, the Fort Worth, Texas-based electronics retailer, and Payless Inc., the value-priced shoe retailer based in Topeka, Ks., led the store closing tally with 1,000 and 512 respectively. RadioShack is in the final stages of liquidating and winding down its stores for good, after the company filed for bankruptcy for the second time in two years. The two companies have exemplified the troubles of retailers vying with Internet sales channels to win over consumers and remain profitable.

News Not All Bad: Dollar Stores Are Opening

The same report also found that announced store openings were at 2,573, up 20 percent from the previous year:

The retail sector is used to seeing store openings from off-price sellers like Burlington and the Framingham, Mass.-based TJX Inc. chains, as well as value-oriented retailers including Dollar Tree, Aldi and Lidl.

With 111 scheduled openings, TJX accounts for the third largest number of planned new stores in the United States. The company operates the brands T.J.Maxx, Marshalls, HomeGoods and the forthcoming HomeSense. It was behind Aldi, with 130 planned new stores, and Dollar Tree, with 650 new stores.

Photo source: Fung Global

 

Amazon’s Acquisition Of Whole Foods Has A Rival: Walmart

Photo of Whole Foods store

Is it time to put a halt on the recent wave of think pieces all across the web concerning the recent announcement that Amazon will acquire upscale grocer Whole Foods? Two research analysts at JPMorgan have identified a potential rival bidder: Walmart.

The potential bidding war comes with the stock price of the grocery chain edging higher than Amazon’s offer of $42 per share. The following CNBC video spells out the details that might arise with a competition for the 431-location, 91,000-employee grocery brand. Click below to view:

Becoming A Whole Foods Landlord

While the market (and regulators) decide the fate of Whole Foods deal, what does it take to become a landlord for a Whole Foods outlet?  As it turns out, the chain has thoughtfully provided a partial specifications list as well as a downloadable spreadsheet containing a Master Broker List, including contact information and territories for over 70 brokers across the US and Canada.  Also available: a list of Whole Foods stores currently under development.  Brokers and owners can propose a store site at this online form at WF’s site.

 

 

Six Amazing Takeaways From ICSC RECon

English: Vector image of the Las Vegas sign. P...

“What goes on in Las Vegas stays in Las Vegas,” goes the familiar TV commercial. But for three days last week the town played host to ICSC RECon, the top retail real estate conference of the year, and the news is too good to keep quiet.

The commercial RE industry’s retail property market professionals met to share knowledge and stay on top of the latest offerings in technology, data, business intelligence and every other facet of retail property market making. CommercialSearch was there, and here’s the top six notable exhibits we saw during the show:

  • BuildOut – The journey from plain vanilla property listing data to customized, branded collateral can be an ugly and time-consuming one, but BuildOut makes it a breeze to generate property listing websites, customized presentation output, documents and trackable emails including head-turning graphics and design.
  • CompStak – Is there anything tougher in the retail property sales cycle than getting accurate lease comps for retail transactions?  CompStak allows you to access actual deal terms by participating in a crowdsourced comp exchange.
  • CommissionTrac – Custom commission accounting solutions for brokerages, because one size absolutely does not fit all. Ledgers and reports that are tailored to customer workflows is what CommissionTrac delivers.
  • IdealSpot – With a tag line of “demand-driven site selection”, IdealSpot knits together exciting demographic data, location based analytics and social demand to help retailers and property owners identify product and service gaps along with the proper co-tenancy for retail projects nationwide.
  • RealConnex – A social media platform play customized for the commercial real estate ecosystem, RealConnex brings together capital markets, advisors, developers, brokers, investors, designers and everybody in between for networking, engagement and collaboration.
  • RPR – NAR’s Realtor Property Resource (RPR) continues to impress with its historical depth of data on properties as well as its rich palette data sources and representation tools that make deep, consultative service to clients easier than ever.

While this wasn’t the list of everything memorable, it’s for sure the don’t-miss list. We’ll see you there next year!

(Photo credit: Wikipedia)

Abandoned Construction: A Leading Indicator For Economic Change?

4th lock on the canal, abandoned in constructi...

The commercial real estate data ecosystem is an exciting place where study of routine market phenomena promises to expose new knowledge and improve our perception of market trends. When it comes to routine phenomena in the CRE industry, construction permitting and construction abandonment are great examples. Abandoned construction can follow permit issuance, even though issuing a permit reflects a milestone in a commercial property development where forward-looking diligence, commitment and optimism on the part of the underwriters, the developer and local government are all at high enough volume to actually break ground on a project.  What can the data on construction permitting and abandoned construction show us about that area?

Of course, getting past an important milestone does not ensure a completed project. When construction is permitted and begins, but does not complete, it’s a sign that something went wrong in the typical arenas: financial (scheduled funding does not materialize), legal (neighbors, competitors or government catch up to the plans), collaborative (partnerships/joint ventures stress and fracture),  insurance, construction — you name it, it can go south.

Beyond being bad news for individual development and developers, abandoned construction also projects ills onto the surrounding area, effectively serving as a highly visible advertisement for the area’s potential for uncertainty and failure. Is it possible that counting and analyzing an area’s abandoned construction projects can produce a leading economic indicator?

That’s the premise behind the report at BuildFax.com, a real estate data analytics team based who looked at the linkage between construction project abandonment and wider economic change in the related areas. The findings are fascinating and the relationships might surprise you.

You can download a free copy of the BuildFax report “Is Abandoned Construction An Early Signal For Economic Change?” at this link.   The study finds a tight association among its sample between abandoned construction and wider economic bad news for sample areas. The study blends fifteen years of construction data with current data, so the model isn’t fit for prediction today. But without a doubt, the study can make an impact on the thinking around abandoned construction and the full range of what failed projects can add up to for communities, businesses, and all stakeholders.

Photo credit: Wikipedia

Marijuana Real Estate: The Business Impact Of Legalization

English: Discount Medical Marijuana cannabis s...

Today’s guest post is by Steve Golin, SVP, Strategic Accounts at Xceligent.

The 2016 election season bought another crop of nine states joining Colorado, Washington, Oregon, Alaska and Washington DC in approving recreational and medicinal marijuana sales at the retail level. While the growth and occupancy of storefront retail establishments is the most conspicuous sign of a burgeoning industry, the behind-the-scenes marijuana real estate uses of cultivation, manufacture and processing have proven to be the most impactful on the supply of industrial real estate in markets where cannabis has been legalized.

Legalized cannabis generates huge cultural and social impact plus wealth generation, with commercial real estate a key benefactor. The marijuana real estate impact for each market’s industrial property base will vary by state based on product growing climate and existing real property base inventory. Let’s notice the historical trends in Denver, one of the earliest civic adopters of medical and retail marijuana.

In 2012 Colorado voters passed Amendment 64 legalizing recreational use of marijuana. By mid-year 2016, 62 of Colorado’s 271 municipalities and 22 of the state’s counties had created rules and regulations governing recreational marijuana use. With interstate distribution of a controlled substance still prohibited at the Federal level, each state and the associated market forces were compelled to create the environment necessary to manufacture, distribute and regulate product.

At a state level, regulations now provide for licensing of cultivation facilities, product manufacturing facilities, testing facilities, and retail stores. Local governments were put in the position of allowing or prohibiting related facilities at the whim of their voters. Many cities and counties opted to not allow for either retail dispensaries and grow operations, leaving the City and County of Denver controlling the lion’s share of the market. Translating this opportunity for a commercial real estate industry suffering through the 2009 financial crisis reveals a staggering result. Absorption of older Class C industrial properties skyrocketed through the recession of 2010 – 2014 to the tune of 4 million SF. Since 2014, according to Xceligent Market Trends Reports, Denver added another 2 million square feet in industrial absorption. In 2016, occupancy numbers for cannabis related grow and distribution activity now totals 8 million SF statewide plus another 1.5 million in greenhouse operations.

“Colorado’s marijuana industry is a mature business having already been through 2-3 business cycles with significant inflection points”, according to Jason Thomas of Avalon Realty Advisors, a leading industry professional services firm. “While each state is building its own machine to adapt to the new industry dynamic, Colorado is the model and leader of regulation for the industry” adds Mr. Thomas*.

Colorado’s dramatic absorption of light industrial real estate from 2010 through 2016 can be directly attributed to State regulatory oversight of “seed to sale”. How will this develop in other states? The depth of development will correlate directly to the regulatory, business and geographic climate in each state. Certain economically troubled cities and towns will look to grow operations as business reality for their functionally obsolete industrial and land base.  Adelanto, CA, for example has taken a leap of faith and tied itself to the industry. Dozens of land deals there potentially aggregating over 100 acres of development rights are whispered to have occurred. This could portend California experiencing staggering absorption in outdated industrial inventory and land once the transition from Medical to Retail is regulated. 

For the CRE investor, owner and developer valuing and trading properties with cannabis related occupancy is rife with conflicts even as the industry matures. Class C properties that once sold for $20.00 or 30.00 dollars per square foot, now have $200.00 in new improvements and may be leasing for $12.00-$16.00 NNN. Valuations must take into consideration rent, improvements, function, tax, legal concerns (federal forfeiture, etc.). Given these considerations, cap rate values based on income generally range from 11% to 13% according to some industry professionals.

The risk to landlords from existing federal statutes may still control investment decisions. Marijuana is still illegal and classified as a Schedule I Controlled Substance. Federal marijuana charges still pose risks including the risks of being charged with maintaining drug-involved premises, racketeering/RICO, money laundering, significant fines, forfeiture of property and/or jail time.  

Regardless of inherent risks, I think future investment and development of marijuana industry infrastructure and logistics is here to stay. Market conditions for related commercial real estate activity rest with each state’s independent climates for regulation, licensing, cultivation, processing and growing. For instance: the Bay Area in California has little developable land, so marijuana real estate investment there will be in warehousing. Riverside / San Bernardino has a huge industrial base, but it is significantly institutional, so the majority of warehousing will be through private ownership.

Once the initial tranche of investment takes place, the industry will look to alternative regional areas, like Adelanto in California or Pueblo in Colorado. Any supply-and-demand dynamic creates absorption of a certain class of real estate that will put upward pressure on rents and property valuations as the industry develops and matures. The commercial real estate industry gained enormous experience in Colorado over the past 7 years and will use that insight to evaluate opportunities for each market in the coming wave. Hold on tight,

Special thanks to James R. Thompson, Esq. Of Counsel, Miller & Law, P.C., Littleton, CO for his contribution on statutes impacting landlords.

(Photo credit: Wikipedia)

Browse Properties Near The New Las Vegas Raiders Stadium Site

A screenshot showing CommercialSearch.com's listed commercial properties surrounding the site of the proposed Las Vegas Raiders stadium site
Quickly search a walkable zone around the new Las Vegas Raiders stadium site.

The Las Vegas Raiders stadium land deal has crossed a major milestone. On May 2, 2017, the Associated Press was the first to report the activation of a sale deed for a 60+acre site near the Strip in Las Vegas for the construction of a stadium to house the NFL franchise Oakland Raiders when the team completes its move to Las Vegas in 2020.

The land deal, which includes two vacant parcels, came in at $77 million, significantly below the $100 million price tag that had been assigned by a public board overseeing the $1.9 billion stadium project. The NFL team owners voted one month ago to approve the move from Oakland to Las Vegas for the storied football franchise, and AP reports that the team has taken 40,000 $100.00 refundable deposits on “personal seat licenses” from fans.

The combined parcels are bordered on the east by I-15 with a view of the Las Vegas strip, on the north by Hacienda Ave., on the west by Polaris Ave. and on the south by Russell Road.

Browse Properties Walkable To The Proposed Las Vegas Raiders Stadium

There’s an easy way for site selection professionals and analysts who are interested in getting in on the economic impact of the Las Vegas $1.9 billion stadium project to get a quick sense of nearby commercial property availability. Click to find dozens of  properties near the proposed Las Vegas Raiders stadium at CommercialSearch.com.  The search query draws a walkable rectangle around the stadium site and includes retail, land, office, industrial and multifamily properties for sale or lease in that rectangle.

Get A Free Copy Of The Latest Las Vegas Market Report from Xceligent

If you need more Las Vegas market background from the city’s top commercial real estate professionals, you can get it for free. Click to request copies of the latest (1Q2017) free Las Vegas Market Reports (specify Retail, Office or Industrial) from Xceligent.

 

How To Find A Food Desert

Grocery store preventing the existence of a food desert

The food desert is that stretch of town or region where no grocery stores are operating, forcing residents into leaving the area to shop for basics, or worse, subsist on junk food for lack of better choices.  In social and health terms, food deserts are a serious problem, but in economic terms they can represent commercial real estate opportunity.  CRE investors seeking to profit from filling local needs can do much worse than finding highly populated areas that are underserved by grocery stores. These areas cry out for the development of food stores to fill the gap.  Tools to find these areas are very helpful for acquisition and site selection – but where can one find these tools?

As it turns out, the federal government is one place to look.  Enter the Food Desert Locator, a website run by the US Department of Agriculture.  It’s an interactive web application that takes reams of real estate, economic and demographic data and provides an easy-to-use mapping interface to cut through the clutter to get to the sites that really cry out for grocery stores.

The mapping application allows you to select areas based on income and access to grocery stores, as well as compare trends across years to find areas that have seen changes in access. Subpopulations are also selectable, allowing a range of site selection criteria.

Of course the final step in conducting this research is to use CommercialSearch.com to browse the retail property and land listings that lay in the areas you define with the Food Desert Locator.

With this one-two punch, site selection can be easy, quickly bringing you one step closer to a high-foot-traffic, only-game-in-town investment play in grocery store development.

Cincinnati Warehouse Property in 2017

English: Cincinatti, OH.

Earlier this year, we looked at Cincinnati’s new Amazon air hub. One quarter on from that Cincinnati warehouse announcement, what is the wider economic picture for logistics and warehouse property in “Blue Chip City”?

According to Xceligent’s 1st Quarter Industrial Market Report for Cincinnati, unemployment fell to 5% in January of this year. Coming along for the ride on the wave of economic good news are two markets: Cincy’s industrial and office property markets. When people go to work, you generally have to put them somewhere, and that’s where Cincinnati’s expanding options in industrial and office property come in.

Florence/Richwood Submarket Hot

Of the largest positive industrial transactions in town 1Q2017, the metro’s southern sections of Florence and Richwood claimed the lion’s share of square footage. Warehouse projects in the submarket included over 670KSF of space sold to grocery giant Kroger.That deal came with a sale price of over $33 million. Other large Florence transactions 440KSF leased to shipper UPS and 275KSF of leased space at 10600 Toebben Drive.

Cincinnati Warehouse Leasing Trends: On The Uptick

Higher transactions and lowered vacancy is the trend in the Cincinnati warehouse market.  From the latest Xceligent Cincinnati Industrial Market Report (1Q2017):

Cincinnati warehouse leasing trends 1Q2017

Check out Cincinnati’s industrial, office and multifamily properties for sale or lease

Want a wide and fast analysis of Cincinnati’s commercial real estate markets?

Start by dropping us a line to request free copies of Xceligent’s 1Q2017 Market reports in Industrial, Office and Retail property. 

Next, browse the market live: click onto these live queries of listed properties:

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