Wednesday, April 11, 2018

The Starbucks View of Retail Real Estate

Howard Schultz reportedly told Starbucks employees
that the retail sector was reaching a point where
landlords of even prime centers would need to lower
rents.        Article

Wednesday, February 28, 2018

The importance of nice restrooms

Retailers benefit from nice restrooms, according to this study by Bradley Corp. If you own a retail investment property, you might want to consider upgrading your facilities!

For nine years, a Wisconsin-based company that manufactures plumbing fixtures has been doing an annual survey about the way people use commercial toilets and wash their hands afterward (or, uh, don't). It is amazing what a CRE pro can learn from this little exercise by Bradley Corp. 

Bradley’s 2018 Healthy Hand Washing Survey polled 1,035 adults and found that 60% visit specific businesses because they have nice restrooms. Almost half of the respondents said they would "definitely" or "probably" spend more money at businesses with clean, well-maintained restrooms. 

The converse is also true: More than half of respondents said they would be unlikely to return to a business that had a poorly maintained restroom. Bradley last year found that people older than 55 would not return, while millennials might also post their disgust on social media. Bathroom condition is particularly important for restaurants, as 82% of respondents believe that a restaurant with dirty restrooms is “extremely” or “fairly” likely to have a dirty kitchen. 

“The inherent correlation between restroom conditions, businesses and customers extends even deeper than we realized,” Bradley Corp.'s director of strategy and corporate development, Jon Dommisse, said in a statement. "Our survey has previously highlighted how well-maintained restrooms increase patronage; learning that people also reward these businesses with their spending power was further confirmation of how consumers respond positively to clean restrooms.” 

This year, the flu was on the mind of many respondents: 34% of people polled in Southern states were "extremely concerned" about it, compared to 23% in other regions. But sadly, according to the survey, only two-thirds of people "always" wash their hands after using a public restroom, and 38% of respondents said they "frequently" see other people leaving public restrooms without washing.  

This is exactly why 47% of people operate the toilet flusher using their feet, 45% use paper towels to grasp door handles and 38% hover over the toilet seat. To prevent the spread of germs and also save water, Bradley has recommended that commercial restroom design include touchless fixtures, sensored soap dispensers, and automated paper towel machines and hand dryers. 

To prevent the spread of germs and also save water, Bradley has recommended that commercial restroom design include touchless fixtures, sensored soap dispensers, and automated paper towel machines and hand dryers.  

Friday, February 16, 2018

More than $2.5 billion in commercial real estate transactions in Northeast Florida in 2017

 – Reporter, Jacksonville Business Journal
Investment in Jacksonville commercial real estate came in 29 percent higher in 2017 than in 2016 with $2.57 billion in transactions, according to Colliers International of Northeast Florida.
The year end investment report broke down the major sectors of commercial real estate by office, industrial, hotels, retail and multifamily.
In Northeast Florida, as in most major markets across the country, the lion's share — 61 percent — of investment has landed in multifamily properties, with $1.56 billion of real estate transactions recorded in 2017.
There was $315 million of warehouse/industrial properties change hands in Northeast Florida in 2017, representing 12 percent of the total. However, the Colliers report noted that 85 percent of the $315 million came in five portfolio deals involving institutional investors.
Retail sales represented 9 percent of commercial real estate transactions, with $239 million of property being sold in 2017.
The office sector had $228 million worth of transactions in 2017 with 12 properties trading, representing 1.82 million square feet of office space. Just over half of the $228 figure came in a single transaction as Gramercy Property Trust sold part of Bank of America's corporate campus at 9000 Southside Blvd. for $115 million.
There were $231 million worth of hotel transactions in 2017, with the sale of the Hyatt in downtown at $115 million.
While sales volume was up 29 percent compared to 2016, Jacksonville's record year for transaction volume came in 2014 with $2.9 billion in commercial real estate sales.
"In 2018, we expect stronger interest in hard assets as interest rates stay low and tenant demand remains robust, and as Jacksonville continues to have strong job and population growth," said Scott Rogers, Colliers International's vice president of investment sales.

Thursday, February 15, 2018

Avoid These Four Common Commercial Real Estate Investing Mistakes

Buying and managing investment property — be it houses, multifamily units or commercial real estate — is hard work. Owners must choose between paying to outsource and handling everything themselves. The latter can range from finding financing and performing maintenance to resolving emergencies and legal problems. All these tasks extract a price in terms of time, aggravation and mistakes for owners who lack expertise in all of these areas.
Complicating matters further, finding properties with potential is a big challenge facing investors today. High property prices in top markets are driving investors into secondary markets and new types of properties, notes National Real Estate Investor. But these are assets that require deep industry knowledge and experience and challenges I faced as an active individual real estate investor that inspired me to co-found Origin Investments to help individual investors address these obstacles.
Many of our investing clients have gone the direct route, only to realize how complex and difficult it is to succeed in real estate. For example, one doctor pooled his resources with four other Chicago physicians to build a real estate portfolio. Initially, they hired a realtor to help them find, manage and renovate their assets. But once they transitioned from single-family homes to multifamily buildings, they found it harder to find and manage properties. For years, a client in California bought multifamily buildings and commercial real estate in several cities and only realized he needed the kind of deeper market knowledge that comes with “boots on the ground" when one of his major investments — a retail property — went south.

Read Article Here

Friday, February 2, 2018

CAM Reconciliation Time!

Now that all budgets have been finalized and prior year financials are complete, it's time to work on Common Area Maintenance reconciliation. Most commercial lease agreements allow for a yearly reconciliation of all common area maintenance costs. Without a knowledgeable property manager skilled in this particular task, it can surely be daunting to take on as a property owner. 

Here are 6 tips from the Real Estate Drill Down


1. Have all the CAM Costs been captured or received?

Be sure to verify all payments have been made and invoices have been received for all expenses related to CAM costs. Sometimes we cannot avoid the one or two invoices that slip through the cracks within the year. Follow up with the vendors to ensure the payment was accounted for and make sure your financial reporting reflects.

2.  Have the non-recoverable expenses been separated from CAM?

Once your financials are complete and accurate, you must be for sure all expenses are true CAM cost and not landlord expenses. In most cases, the leasing agreement will specifically define what is included in CAM for each tenant. The best situation is where the form lease used by the landlord clearly defines CAM and other costs to be included in the formula. If not otherwise directed by the lease provisions, did the repair/activity benefit all the tenants as part of maintenance OR is it a situation where the landlord unilaterally decided to make changes to the property that benefit a particular tenant or constitute deferred maintenance (i.e. replacement of 20-year old common roof or additional amenities requested by one tenant).

3. Have you made the proper calculations?

The next big task is to correctly determine the amount of costs and the percentage allocation to each tenant based on their rented % of Gross Leasable Area (GLA) – or other formula if the lease requires a different approach.  Beyond checking and re-checking the pure math, a quick review of the proper percentages owed by all tenants is critical to this process.  An hour reviewing and confirming these figures can pay off in time spent and $$ disputes at a future time. Also, use this time to complete your estimated CAM for the current year. 

Helpful tip: make sure the proper GLA is calculated – especially if there has been a change in the center, park or building during the past year. 

4. Have payments been made or credits noted?

Did the tenant pay too little based on the past year’s monthly CAM estimates?  If so, notice and request for payment of the deficiency should be sent out sooner rather than later.  Did the tenant overpay the estimated CAM charges?  If so, properly credit tenants with the overage or refund the amount to the tenants. If done in the right amount of time, the notices can be sent with the monthly rent statement.

5. Have all the deadlines been met?

Experience shows that often dates are overlooked. The date for submission of CAM reconciliations should be clearly defined and complied with according to the lease agreement. The results for missing the deadline can be costly. Make sure your CAM reconciliation notices are in the mail in a sufficient amount of time for the tenant to receive them prior to any deadlines.

6. Audit Rights invoked?

Most large retail, industrial and office tenants will reserve the right to inspect, review or even require an audit of landlord’s CAM reconciliation reports in their leases.  If invoked, this will require owners  to maintain sufficient records of costs, calculations and allocations, as well as allow tenants to view overall operations related to the property. A solid plan of record keeping is the best protection against any extended disputes between the parties here.

Tip: Beat tenants to the punch by providing this information in a document included with their CAM reconciliation notices as backup to prevent any potential disputes.

Let Benchmark complete your cam reconciliations for you. We complete all of the accounting, notices, and even provide the estimated cost for the current year expected expenses for all of our clients. BAS can do the same for you!

Tuesday, January 30, 2018

Apartment Demand Still High

Jacksonville Powers Through

A relatively limited amount of new multifamily construction in Northeast Florida has kept the occupancy rate above its historical average, leaving room for above-trend rent growth.

Jacksonville rent evolution, click to enlarge
Jacksonville rent evolution, click to enlarge
Apartment demand continues to outweigh supply in Jacksonville. A relatively limited amount of new construction in Northeast Florida has kept the occupancy rate above its historical average—at 95.3 percent as of September 2017 and up 200 basis points since 2013—leaving room for above-trend rent hikes.
Despite the metro losing jobs in September due to Hurricane Irma, Jacksonville continues to outpace the U.S.’ average employment growth. Job creation by logistics and health-related companies reduced the area’s unemployment rate to a 10-year low. Advancement in the local medical community, as well as other high-paying professional industries, contributed to a rapid absorption of newly developed apartments. This trend is likely to continue, as more projects are coming online, such as a new heart and vascular pavilion at St. Vincent’s Medical Center Riverside and the upcoming urgent-care facility within the Wildlight master-planned community in Nassau County, which is set to include 1,000 homes across 260 acres in its initial phase.
Continued market strength has generated increased investment demand, pushing property values to a post-recession high. Sales, which reached nearly $1.4 billion in 2017, also reached a cycle peak. As a wave of new deliveries is scheduled to come online over the next few months, we expect demand to remain strong, sustained by employment growth, favorable demographics and lifestyle preferences.
Read the full Yardi Matrix report.

Monday, January 29, 2018

Nassau Co Florida Continues Expansion

Raydient Places + Properties, a subsidiary of Rayonier Inc. and the developer of Wildlight, announced that Florida Public Utilities will build an 18,000-square-foot building next to Rayonier's 55,000-square-foot headquarters. Rayonier's headquarters was built last year.
Eddie Segars, VP
Land & Investment Specialist
4348 Southpoint Blvd Suite 310
Jacksonville, Florida 32216
Direct 904.421.8559

Florida Broker Lic# BK3205623