Friday, April 27, 2012

A mobile app that will change your world!

I provide location advice to owners and to occupants of industrial buildings in Southern California. Last year I attended a broker appreciation trip hosted by one of my clients, Kilroy Realty Corporation. One of the gifts for our "appreciation" was a shiny new IPad 2!...the wow factor was amazing. For those of you out there who have embraced Apple mobile technology, this post will "change your world". One of my frustrations with the IPad...until now...was the inability to manage pdfs while away from the office...and away from a desktop or laptop computer. When a cooperating broker requested a flyer or a client requested a copy of a lease or an LOI, we had only VERY clunky solutions to this dilemma...forward an old email, access a remote server through Pocket Cloud or another similar remote access server, phone or email an office bound assistant (tough if after hours), wait until you return to the office (well, you get the idea). Enter IAnnotate PDF! This app can be downloaded for $9.99...expensive by app standards, but WORTH every penny! Once you down load IAnnotate PDF to your IPad, you are ready to rock and roll.

Here is a "how to" step by step of the way in which IAnnotate will change your world:

Someone emails to you a pdf...assistant, another broker, a client. In this case a client of mine sent me a lease. I have highlighted the email and the pdf appears in the reading pane.

Once I hold on the pdf, I am asked where I would like to open the pdf. I use the "Open In" button

I  have asked that the pdf be opened in IAnnotate PDF

The pdf is then opened in IAnnotate and ready for manipulation or saving. I this case I want to save the pdf for future use. You can see the pdf I opened in the lower right.

I have clicked the button at the top right which allows me to create a new file and name it. In this case I have named the file Allied Exhaust Idaho.

You can now see the new file that was created directly above the lease. I now have the ability to drag the pdf into the file for future access.

The lease is now safely "filed" and available for future access.

Now I get a request for a file that I have saved in a folder. This frequently occurs with listing brochures and I will demonstrate how to use the app for this purpose.

I have used the previous steps to save my brochure pdfs into their own folder entitled "Imported Documents. I simply touch the folder and the contents are opened.

I now have a screen of my saved brochure pdfs. I can touch and hold the one that I want to this case 500 S. State College

When I touch and hold the brochure that I want to forward, a task bar is revealed which gives me the option to e-mail. I tap the e-mail button and the next screen appears

I choose the original format button since I have not annotated the pdf (added comments). The pdf is attached to the screen below. I can then use the screen below and start typing the e-mail recipient which brings up my Outlook contacts. If I receive a request from someone not in my contacts, I need to save the contact in my address book before proceeding. Once the recipient is entered, the e-mail is ready to send.

Voila...start to finish, this takes about two minutes!

Steps in Locating a Commercial Building

I provide location advice to owners and to occupants of industrial buildings in Southern California. Throughout my career, I have enjoyed assisting many businesses in evaluating their real estate options and am proud to share with you the process that I use in locating the "right alternative" for my clients.

Before we jump to the process, I would like to dispel a commonly held misconception..."the more the merrier". Some occupants believe that if they engage multiple service providers to accomplish the same task, a greater result will occur. I frequently hear "the more brokers that I have searching, the more alternatives I will see." Actually, the opposite is true because there is no alliance formed, no commitment is created on either side, and there is no accountability for the results.

For a commissioned sales person who is paid only on closed transactions, a minimum amount of time will be expended without a commitment and only the "natural" solutions will be presented. If the requirement takes a different turn or doesn't fit into the "natural category", the "right alternative" will not be presented. As an occupant, your time is valuable. If you will see more alternatives, spend your time more efficiently, and pay the broker nothing (the fee is paid by the owner)...doesn't it make sense to work exclusively with one broker?

We have employed a systematic strategy in locating commercial buildings for tenants and buyers of all shapes and sizes.

We are engaged by the client through a one page exclusive engagement agreement which authorizes us to search but does not authorize us to bind the client to a lease or purchase. The client is not obligated to move or to pay us for our services. We seek compensation from the owner of the property and/or operate as a sub agent under a listing agreement with another broker if the property is listed. Our experience indicates that this strategy produces the "best" economic deal for the client and provides an efficient means of searching the market because we are your advocate.

We define the requirement, notify the market, qualify the submittals, tour the alternatives, request proposals, negotiate the economic points, work with counsel to negotiate and execute the lease agreement, oversee the tenant improvement construction and celebrate the move-in.

We have successfully employed this strategy recently with Western Air Limbach, KLS Doors, Drake Controls, Raymond Handling Solutions, Orkin, Direct List Technology, Advantage Adhesives, and many others. The steps we employ are detailed below.

Defining the Requirement


We team with Raymond Handling Solutions to help our client clearly define the requirement. Raymond’s services are free of charge and can be invaluable in evaluating warehouse, manufacturing, racking, operational flow, etc. An initial determination of the size of the location is deduced. Our starting point is that the relocation will require approximately "x" square feet of building square footage and approximately "x" amount of office square footage. If a significant change in the operation is considered…larger to smaller of smaller to larger, we believe it is imperative to insure that we are searching for the correct square footage and that the square footage considered will adequately house the operation. After the requirement is clearly defined, we prepare an outline of the requirement which provides the market notification discussed in the following section.
Notifying the Market


The requirement letter is converted into a “constant contact” email document and the email document is e-blasted to approximately 1500 Southern California brokers via our AIR mail database. We e-blast the requirement once a week for the first four weeks and then once a week for four weeks two months later. In this way we capture any new availabilities that surface after our search has begun. We couple the market notification with a deep search of all of the available multiple listing services; AIR, ILS, CoStar, Loopnet, Rofo, Smith Guide.

Qualifying the Submittals


The submittals are received and reviewed. The submittals are received from cooperating brokers who have a suitable alternative listed or are aware of an alternative that will soon be available. An example of this is the facility presently occupied today by the company. If the company relocates as anticipated, the building on that the company occupies will be available for lease or for sale. Brokers are aware of the these “unlisted” opportunities and will make us aware of such unlisted alternatives. Additionally, submittals are reviewed from the multiple listing services…both currently available and alternatives that become available during the search process. We will track ALL new properties that hit the market via the AIR and ILS Hot Sheet and through the Loopnet filters that we design. Probably the most important aspect of qualifying the submittals is to get a complete understanding of the ownership and the ownership’s motivation and financial capabilities. If a significant Tenant Improvements allowance is needed, we need to insure the ownership’s ability to provide the dollars necessary to construct the Tenant Improvements AND to support the underlying debt for the term of the lease. We will suggest that the ownership provide us with a Non Disturbance, Subordination and Attornment Agreement which will insure that the tenant's leasehold interests will be protected in the event of an ownership default on the underlying debt. We will preview all potential tour alternatives prior to the client touring.

Touring the Alternatives:


Once the submittals have been received and qualified, we will assemble a tour package with a summary, brochures on each property, floor plans of each property, and a locator map. All of the alternatives to be toured will have been previewed by the team and a tour route established which maximizes the tenant's time. The tour package will contain COMPLETE information on each alternative so that accurate consideration of each alternative can be made. We will involve our construction partner at this phase of the process. Prior to narrowing the alternatives, we make a determination as to the viability and expense of modifying and/or adding to the office layout. This includes a “test fit”, space plan and cost estimate.

Requesting Proposals:


Once all of the alternatives have been toured and a few of the best choices have been “test fit”, space planned and cost estimated, we present Requests for Proposals to four to six alternatives.

Negotiating Economic Points:


The team prepares a comprehensive analysis of all proposals received. One to two of the best alternatives are selected, chosen and negotiations commence to refine the economic points. A non-binding Letter of Intent is executed and forms the basis of the lease negotiations.

Lease Review and Execution:


The team works with local or corporate counsel to negotiate a lease in conformity with the Letter of Intent. The negotiated lease is executed by all parties.
Construct Tenant Improvement:


The team works closely with the contractor, owner, and the tenant to insure that the work is progressing satisfactorily.

Three Factors that Motivate the Deal

I provide location advice to owners and occupants of industrial buildings in Southern California. I have thought about factors that motivate a transaction. I believe the three factors that motivate the deal are: Attitude, Inventory, and Interest Rates. All can influence the decision but in my opinion, only one factor can cause the decision to be changed...a change in motivation!

I have broadly lumped issues such as uncertainty, timing of a lease expiration, business forecast, market conditions, time of year, age of the business, age of the business owners, etc. into the category of attitude. As CRE practitioners, uncertainty is the attitude that causes the most pain. If a business owner is uncertain about the future, a buying decision will be postponed or a buying decision could morph into a leasing decision or your ten year lease could become a two year lease or your new lease could become a renewal at the businesses present location. In Southern California, the end of 2008 and the beginning of 2009 were particularly painful! We now are told that the worst recession since the great depression began in December 2007 and ended in June of 2009. While we can debate the end of the recession, none of us will argue the beginning. Many of us in the business sensed a "change" was coming at the beginning of 2008. Financing was becoming more difficult to originate, values were at an all time high, the market was feeding off an exuberance that many of us believed was unsustainable. Our worst fears became reality in the fall of 2008 as the financial industry imploded, values plummeted, and many real estate deals cratered. The uncertainty that resulted carried into the early part of 2009 until after the Obama inauguration.

The market's supply of suitable alternatives can affect the timing, and viability of the transaction. We have all experienced "seller's" markets. In these times, the demand for space far out strips supply. As a result, a seller can afford to be bullish and often is. You must carefully review the inventory each day and put your buyer or tenant in the best position to make a deal. Currently, the market is changing from a  "buyer's" market to a "seller's" market. Because the number of suitable alternatives is quickly dwindling, there is a continuing firming of prices in the market. A location advisor must employ creative strategies to find enough alternatives to make a "market" for an occupant requirement. Specifically, the advisor must convince the occupant to expand the geographical search area, building square footage, transaction structure (lease rather than buy or vice versa), etc.

Interest Rates:
A wide swing up or down can motivate a deal. We saw double digit interest rates in the early eighties and have experienced record low interest rates for the past couple of years. If our interest rates were to spike by even a point or two, my belief is that you would see a spate of buying activity like no other.

Any combination of the above can cause a change in motivation. In my experience, this is the one thing that can cause a real estate transaction to collapse. Let's hope for good attitudes, a balanced inventory, and affordable interest rates!!

Monday, April 16, 2012 - Six Questions for Lee & Associates’ Edward Indvik - Daily News Article

I provide location advice to owners and occupants of industrial buildings in Southern California. I have had the pleasure of working in this great organization, Lee and Associates, for over 28 years.

Our CEO, Ed Indvik, includes in his experience Union Bank (where he met Bill Lee our founder), CB Commercial, O’Donnell Brigham, JA Stewart…Lee and Associates! Wow, that is quite a resume. I have often joked to Ed Indvik that his real estate related background reads like that of George Herbert Walker Bush's (Bush 41) government related background before he became President of the US. Both were (and are) incredibly qualified for the positions they held (hold). The great thing about Ed is that he is still the same approachable guy that I met some 26 years ago when he was Blair Armstrong’s (ODB) lieutenant and acquisition guy. Ed was a client once he made the move to Stewart in the late 80s as we developed and leased a few hundred thousand feet of space in Chino with the help of Doug Earnhart and Dick Rhodes. The shocking news of Stewart’s bankruptcy…and subsequently Ed’s unemployment…became the start of Ed’s tenure at Lee and Associates…definitely our gain.

Ed was recently interviewed by Globe Street on six questions about Lee and Associates. I thought that the article was particularly informative and hope that you will take the time to read about our company.

You can read the entire article by clicking on the link below: - Six Questions for Lee & Associates’ Edward Indvik - Daily News Article

Thursday, April 5, 2012

Manufacturing in O.C. best in 8 years - Handling Hard Times : The Orange County Register

I provide location advice to owners and occupants of industrial buildings in southern California. These industrial buildings appeal to manufacturers and distributors. The OC Register article below highlights some good news on manufacturing in Orange county.

According to the article by Mary Ann Milbourn, "Orange County factories are revving up with local manufacturers expecting business to be the best since the first quarter of 2004, according to Chapman University’s quarterly survey of purchasing managers. Manufacturing statewide is also expected to jump."...
You can read the entire article by clicking on the link: Manufacturing in O.C. best in 8 years - Handling Hard Times : The Orange County Register

According to Jonathan Lasner of the Orange County Register, "Orange County's factories -- the long-suffering hubs of fabricating tangible things -- are enjoying the relatively best times in a decade or so.
Despite what many think, Orange County is not just for a place for careers in pencil pushing, theme-park running, product selling, real estate trading -- and medicine. We may not have the high smokestacks or the glow of old-school mill production, but manufacturing in Orange County is still a significant economic force...

You can read the entire article by clicking on the link:
We have noticed the pace of activity increase within our office as well. The challenge in this part of the cycle is the availability of alternatives...vacant buildings. Every day we battle the shortage of manufacturing buildings that are suitable for the needs of today's manufacturing companies...power, sufficient office, loading, owner motivation, etc. While our inventory has experienced "net absorption" over the last year...fewer on the market..., the demand for "quality" options has increased. We expect to see rent growth at the end of this year...some size ranges have already seen this occur.

Monday, April 2, 2012

Bob Sattler, President of Lee Orange on property taxes

Bob Sattler joined Lee and Associates in 1998 after a very successful career at CB Commercial in Anaheim. Bob specialized in the Brea, Fullerton office and industrial market and counts among his clientele Suzuki Motors and the ECCU.

Bob became the President of Lee and Associates, Orange in 2007 and has steered our office through a physical move in locations, the 2008 financial meltdown, and the daily grind of managing 34 entrepreneurs who all "have a say"...all while managing to broker real estate deals simultaneously.

I believe Bob's take on Jerry Brown's plan to increase state taxes is especially important in this fragile California economy.

According to Bob: "It is ironic that on the day the LA Times has a front page article revealing that 64% support Governor Brown's proposed tax hike,0,7626225 story, the Wall Street Journal has an editorial that states "the tax increase is simply about the political power to deliver money to the interests that live off government.”

"California has the fourth highest income tax in the nation. In the '70s when Delaware cut their rate from 19.8% to 10.3% and later to 5.95% after 5 years the state's revenues nearly doubled. The Journal goes on to say "California voters will have to decide whether to ratify this welfare-state redistribution one more time, or finally force the state to confront the limits of tax and spend politics." For the health of the state and of the commercial real estate market we need lower taxes not an increase."