Friday, November 24, 2023

Finding the Right Commercial Real Estate Professional for You

Owning commercial property often means facing vacancies at some point. When that happens, consider the opportunity to rescue the occupancy. Take, for example, one of our long-term clients who recently renewed their lease with our guidance. We took an unconventional approach by advising them not to exercise their option to renew. Why, you ask? Because we believed we could secure a better deal from the owner outside the confines of the standard lease terms. Our hunch paid off; our client renewed at a remarkable 8% below the lowest market rate. The owner also avoided the costs associated with vacancy, potential refurbishment, tenant improvements, and increased brokerage fees. It was a win-win for everyone involved.
But let's face it, not every vacancy can be saved. When you can't salvage the occupancy, you'll likely need to engage a commercial real estate professional to find a tenant or buyer who can represent your interests in the market. The question is, how do you find the absolute best professional for the job?
Here's a simple guide to help you find the perfect match:

Define Your Reality

  • Is your property vacant or occupied, and if occupied, will it become vacant during marketing?
  • Are significant improvements needed, like office refurbishments, equipment removal, or major repairs?
  • Are you a seller or a landlord? What's the debt against the property?
  • How long can you afford to keep the building vacant?
  • If you're the occupant, where will you relocate, and what's your showing protocol?
Seek Specialty
  • Successful commercial real estate professionals often specialize in a particular location or building category.
  • Consider the type of property you have - office, industrial, or retail, and its sub-category.
  • For example, if you have a manufacturing building in Anaheim, California, look for a specialist in selling or leasing manufacturing buildings within a specific radius.
Comparable Inventory
  • Ask specialists for a list of comparable transactions they've completed and currently available properties.
  • However, remember that competence matters as much as quantity. Ensure the specialist is a reliable representative for your property.
Evaluate Competition
  • Assess the competition in the market. A knowledgeable specialist should provide insights into available competing properties.
  • Request a tour to understand how your property compares and to gauge the specialist's market expertise.
Cooperating Brokers
  • Check with the specialist's main competitors for their take on the specialist's reputation and competence.
  • Keep in mind that their competitors might have potential tenants or buyers for your property.
Creativity
  • Look for a specialist who can offer unique marketing strategies tailored to your property.
  • Beyond the standard tactics, seek someone who thinks creatively and can make your property stand out.
Remember, lost revenue from vacancies cannot be recovered. Choosing the right commercial real estate professional can significantly impact your property's leasing or selling timeline, minimizing the loss. Make an informed decision to safeguard your investment.
 
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 

Friday, November 17, 2023

Happy Thanksgiving!

"Giving Thanks for a Bountiful Year in Commercial Real Estate"
 
To all my readers, Happy Thanksgiving! As we gather to celebrate this cherished holiday, I can't help but reflect on the many reasons we have in the world of commercial real estate to be grateful for in 2023. The fall season has always held a special place in my heart, with its crisp air and vibrant foliage. It's a season that culminates in Thanksgiving, a day dedicated to indulging in the company of loved ones, feasting on delicious food, and, of course, watching some football. Wherever you are, I extend my heartfelt best wishes for a wonderful Thanksgiving day filled with joy, gratitude, and togetherness.
 
As we approach the end of 2023, with only six more weeks until we bid farewell to the year and sing "Auld Lang Syne," let's take a moment to count our blessings in the commercial real estate industry.
 
Booming Market. Demand for Class-A industrial has been a bit tepid as we’ve delivered a slug of new inventory and the market adjusts to higher rents. However, within the last two weeks we’ve seen two large deals transact - one in Fullerton and the other in Brea. I still believe we have some softening ahead, but the green shoots of tenant demand appear to be growing. 
 
Technological Advancements. Artificial intelligence, also known as AI has significantly changed the ways content creation happens. You know those flowery descriptions of your dream home that appear on websites or brochures? Chances are - those were written by bots. Commercial agents generally lag our residential counterparts by years. However, targeted marketing campaigns, with letters, emails, texts, and collateral will all go twin some generative content soon. Quick responses on listing inquiries will follow. Clauses for letters of intent or contracts could be next. 
 
Sustainable Practices. Sustainability has taken center stage, and it's heartening to see the industry's commitment to green building practices and environmentally conscious development. It's not just about reducing carbon footprints; it's about creating healthier, more sustainable communities.
 
Adaptability. Commercial real estate professionals have shown incredible adaptability and resilience in navigating the last three years. Industrial in hyper mode throughout 2021 and early 22, the office market cratering and then coming back to life in a different form as hybrid work became a thing, and finally retail that placed a premium on experience. The ability to pivot and embrace new ways of doing business has been instrumental in overcoming challenges.
 
This Thanksgiving, while we remember our blessings, we do have some signs of uncertainty for the year to come - decades high interest rates, global uncertainty, wars in Ukraine and Israel, an upcoming presidential election, and a potential recession. 
 
As you gather around the Thanksgiving table, whether with colleagues, friends, or family, take a moment to reflect on the collective blessings of the commercial real estate industry in 2023. Let's express our gratitude for the opportunities we've had and our determination to overcome challenges in the coming year.
 
So, as the aroma of a Thanksgiving feast fills the air and the excitement of a football game captivates our attention, let's give thanks for the thriving commercial real estate industry and the promising future it holds. 
 
Happy Thanksgiving! 
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.