Tuesday, February 23, 2016
It takes a #CRE VIllage. TUESDAY Traffic Tips
It takes a #CRE VIllage. TUESDAY Traffic Tips. Today I discuss the importance of ALL the parties involved in closing a commercial real estate transaction. This and more on this week's VIDEO tip.
Tuesday, February 16, 2016
COLLABORATE with your #CRE Contacts. TUESDAY Traffic Tips
COLLABORATE with your #CRE Contacts. TUESDAY Traffic Tips. This week I discuss collaboration and ways it can benefit your commercial real estate transactions. This and more on this week's VIDEO tip.
Friday, February 12, 2016
Be PATIENT with your Commercial Real Estate Deals
Patient. A word that rarely describes a commercial real estate broker.
We are doers! Delays bug us. Bureaucracy drives us crazy. Please don't tell us "no that can't be done today".
I believe we lack patience because time is our most valuable commodity. After all, time and knowledge are all we have to sell.
However, a couple of recent transactions have forced me to wait. In both cases, we represented the owners of buildings in their pursuit of a tenant or a buyer. After an exhaustive search, I believe we will conclude both deals next week.
So, why will these deals conclude successfully? Patience! Curiously, we are entrenched in a market where owners have their pick of occupants - unless, there are issues with the building. If the building lacks amenities, is indebted with more than the building is worth, has an unrealistic owner, or a combination of the above - the marketing cycle is exponentially extended. We are forced to be patient. What follows are two stories of patience and the way it benefited both deals.
Case #1. We were engaged to sell a building one year ago Monday. I remember the date because we met with the owner on President's Day last year - a holiday for our office. Since we didn't have staff in the office, my associate and I had to scramble to attend the meeting with some semblance of a marketing package. We got the assignment and scurried back to the office to wordsmith an agreement - once again without staff. The owner is a delightful chap. His need to sell was not terribly delightful, however. A business mishap had forced the liquidation of his real estate. We struggled through environmental concerns, three failed escrows, many low ball offers, a building that was constructed in two phases and showed poorly, the building's lack of a couple of key features and a touring protocol that required discretion. We could not use the building's prominent location for marketing signage because the employees were un-aware of the building's disposition. Patience and determination prevailed as we secured a buyer that checked all the boxes for our seller - a good price, quick close, and a leaseback of some of the building.
Case #2. I wrote recently about the difficulty in leasing research and development buildings. You can read the post here if you wish. Typically, these buildings come equipped with too much office, too few parking spaces, and an industrial shop with inadequate power, loading, or warehouse clearance. If you combine these intrinsic difficulties with an occupant pool that is shrinking and an unrealistic owner, you have defined the situation contained in Case #2. We conducted over 40 tours in the past year and have generated fifteen offers - none seemed to gel. Last week an occupant divinely appeared, offered to lease the building with no tenant improvements, pay close to our asking rate, and move in immediately! Yes, miracles do happen. We are expecting to sign leases next week.
We are doers! Delays bug us. Bureaucracy drives us crazy. Please don't tell us "no that can't be done today".
I believe we lack patience because time is our most valuable commodity. After all, time and knowledge are all we have to sell.
However, a couple of recent transactions have forced me to wait. In both cases, we represented the owners of buildings in their pursuit of a tenant or a buyer. After an exhaustive search, I believe we will conclude both deals next week.
So, why will these deals conclude successfully? Patience! Curiously, we are entrenched in a market where owners have their pick of occupants - unless, there are issues with the building. If the building lacks amenities, is indebted with more than the building is worth, has an unrealistic owner, or a combination of the above - the marketing cycle is exponentially extended. We are forced to be patient. What follows are two stories of patience and the way it benefited both deals.
Case #1. We were engaged to sell a building one year ago Monday. I remember the date because we met with the owner on President's Day last year - a holiday for our office. Since we didn't have staff in the office, my associate and I had to scramble to attend the meeting with some semblance of a marketing package. We got the assignment and scurried back to the office to wordsmith an agreement - once again without staff. The owner is a delightful chap. His need to sell was not terribly delightful, however. A business mishap had forced the liquidation of his real estate. We struggled through environmental concerns, three failed escrows, many low ball offers, a building that was constructed in two phases and showed poorly, the building's lack of a couple of key features and a touring protocol that required discretion. We could not use the building's prominent location for marketing signage because the employees were un-aware of the building's disposition. Patience and determination prevailed as we secured a buyer that checked all the boxes for our seller - a good price, quick close, and a leaseback of some of the building.
Case #2. I wrote recently about the difficulty in leasing research and development buildings. You can read the post here if you wish. Typically, these buildings come equipped with too much office, too few parking spaces, and an industrial shop with inadequate power, loading, or warehouse clearance. If you combine these intrinsic difficulties with an occupant pool that is shrinking and an unrealistic owner, you have defined the situation contained in Case #2. We conducted over 40 tours in the past year and have generated fifteen offers - none seemed to gel. Last week an occupant divinely appeared, offered to lease the building with no tenant improvements, pay close to our asking rate, and move in immediately! Yes, miracles do happen. We are expecting to sign leases next week.
Tuesday, February 9, 2016
Let's PLAY the #CRE Game, shall we? TUESDAY Traffic Tips.
Let's PLAY the #CRE Game, shall we? TUESDAY Traffic Tips. How many times in your commercial real estate career has an outcome surprised you? Exactly. That's why we play the game. I discuss this and so much more on this week's VIDEO tip.
Friday, February 5, 2016
Should you "Stage" your Commercial Real Estate?
One of my favorite television channels is HGTV. I love the Property Brothers, Love it or List it, Design on a Dime, and Flip or Flop.
Given my vocation, this is predictable as I do a similar thing for a living - although not residentially.
One thing universal in all of the HGTV offerings - the condition of a house during showing is critical. If the house shows poorly with outdated colors, visible repair needs, over sized furniture or evidence of residents - your purchase price will suffer as potential buyers will discount their offers to deal with the shortcomings.
OK, I get it! But, is there a parallel in commercial real estate?
My answer is a resounding YES! Staging your commercial real estate is not as easy as a few v-dinted pillows and strategically placed sofas, however. Staging commercial real estate involves the condition of the building and how it shows to prospective tenants and buyers.
If the condition of your commercial real estate is tantamount to achieving maximum value, what improvements should you consider before selling or leasing?
Leasing improvements: If your goal is to lease your commercial real estate quickly and for an above market lease rate, you must invest some dollars placing the property in "rent ready" condition. The carpeting in the office should be replaced or at a minimum removed so that a prospective tenant knows that new flooring is in the plans. A fresh coat of paint throughout the office and warehouse brightens things and adds an air of new. All of the systems - plumbing, heating, ventilating, air conditioning, roof, sprinkler system, loading doors, electrical panels, fire alarm system should be checked and certified. The outside of the building is important as well. Remember, if your commercial real estate lacks curb appeal, the tour might hop-scotch your building for one that looks good. Paving, landscaping, and truck loading areas should be shored up and maintained during the vacancy. Most potential tenants have a limited imagination or patience for the way "things could be". Therefore, delaying the above could cause an occupant to bypass your building for another that is move-in ready.
Sale improvements: If your goal is to sell your commercial real estate for top dollar, you want to plan your refurbishment wisely. If you cannot justify a 100% return or greater - question the investment. Said simply, if you repaint the building at a cost of $20,000, that investment should translate into a $20,000 increase in value. In my experience, the items in a building purchase that give buyers the greatest heartburn are the condition of the roof and air conditioning. I generally advise my clients to perform an inspection of these systems. We then know if any issues exist and can plan accordingly.
Biggest mistake: Some owners will adopt the attitude of "waiting until the occupant appears before investing in any building refurbishment." Certainly, there are reasons for this position - no available funds for investment is the most common - but the downside is steep. If a prospective occupant perceives the owner is not "open for business", he will scatter like ashes in a Santa Ana wind.
Showing condition: If the property is vacant during showings - and your broker is not present during showings - complete literature should be available to prospective occupants.
Given my vocation, this is predictable as I do a similar thing for a living - although not residentially.
One thing universal in all of the HGTV offerings - the condition of a house during showing is critical. If the house shows poorly with outdated colors, visible repair needs, over sized furniture or evidence of residents - your purchase price will suffer as potential buyers will discount their offers to deal with the shortcomings.
OK, I get it! But, is there a parallel in commercial real estate?
My answer is a resounding YES! Staging your commercial real estate is not as easy as a few v-dinted pillows and strategically placed sofas, however. Staging commercial real estate involves the condition of the building and how it shows to prospective tenants and buyers.
If the condition of your commercial real estate is tantamount to achieving maximum value, what improvements should you consider before selling or leasing?
Leasing improvements: If your goal is to lease your commercial real estate quickly and for an above market lease rate, you must invest some dollars placing the property in "rent ready" condition. The carpeting in the office should be replaced or at a minimum removed so that a prospective tenant knows that new flooring is in the plans. A fresh coat of paint throughout the office and warehouse brightens things and adds an air of new. All of the systems - plumbing, heating, ventilating, air conditioning, roof, sprinkler system, loading doors, electrical panels, fire alarm system should be checked and certified. The outside of the building is important as well. Remember, if your commercial real estate lacks curb appeal, the tour might hop-scotch your building for one that looks good. Paving, landscaping, and truck loading areas should be shored up and maintained during the vacancy. Most potential tenants have a limited imagination or patience for the way "things could be". Therefore, delaying the above could cause an occupant to bypass your building for another that is move-in ready.
Sale improvements: If your goal is to sell your commercial real estate for top dollar, you want to plan your refurbishment wisely. If you cannot justify a 100% return or greater - question the investment. Said simply, if you repaint the building at a cost of $20,000, that investment should translate into a $20,000 increase in value. In my experience, the items in a building purchase that give buyers the greatest heartburn are the condition of the roof and air conditioning. I generally advise my clients to perform an inspection of these systems. We then know if any issues exist and can plan accordingly.
Biggest mistake: Some owners will adopt the attitude of "waiting until the occupant appears before investing in any building refurbishment." Certainly, there are reasons for this position - no available funds for investment is the most common - but the downside is steep. If a prospective occupant perceives the owner is not "open for business", he will scatter like ashes in a Santa Ana wind.
Showing condition: If the property is vacant during showings - and your broker is not present during showings - complete literature should be available to prospective occupants.
Tuesday, February 2, 2016
"Weaning" your #CRE Clients. TUESDAY Traffic Tips
"Weaning" your #CRE Clients. TUESDAY Traffic Tips. At what point during a commercial real estate transaction should you allow the owner and the occupant to deal directly? I discuss this and much more on this week's VIDEO tip.
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