Tuesday, October 2, 2018

The Hot Property That’s Next on Tech’s Agenda: Real Estate

The Hot Property That’s Next on Tech’s Agenda: Real Estate

SAN FRANCISCO — Opendoor, a start-up that flips homes, attracted attention in June when it announced it had raised $325 million from a long list of venture capitalists. The financing valued the four-year-old company at more than $2 billion.
That was only an appetizer. Three months later, Opendoor has more than doubled its cash pile. On Thursday, the company said it had gotten a $400 million investment from SoftBank’s Vision Fund. The valuation for Opendoor remains the same.
The so-called mega-round for Opendoor was not the Vision Fund’s only major real estate-related deal on Thursday. The firm also co-led a $400 million investment in the high-end brokerage Compass that valued the company at $4.4 billion.
The hauls are part of a race by investors to pour money into technology for real estate, or what Silicon Valley now calls proptech.

Having watched tech start-ups upend old-line industries like taxis and hotels, venture capitalists are casting about for the next area to be infused with software and data. Many have homed in on real estate as a big opportunity because parts of the industry — like pricing, mortgages and building management — have been slow to adopt software that could make business more efficient.
Last year, real estate tech start-ups raised $3.4 billion in funding, a fivefold increase from 2013, according to the start-up data provider CB Insights. One firm, Fifth Wall Ventures, is entirely dedicated to proptech.
“Tech is starting to make inroads to becoming adopted, and it’s opening the eyes of investors,” said Jeffrey Housenbold, a managing director at SoftBank’s Vision Fund.
Until recently, the biggest tech innovations to hit the residential real estate market have come from listing sites like Zillow and Redfin. But the start-ups in the new wave are tackling a wide range of areas — appraisals, building management, financing, co-working, co-living, building amenities and empty retail space.

Friday, September 28, 2018

Things To Know Before You Invest In Commercial Real Estate

Investing in real estate can be a way to earn passive income and increase your wealth. While plenty of investors have success in residential real estate, others make a move to commercial real estate to gain even more money.
As with any investment, commercial real estate has both risks and rewards. It’s not for everyone, as investing in it requires a good deal of work — especially in the early stages of the process. While there’s less risk in some cases, you typically need to put down more money upfront. Commercial real estate investing also usually takes longer than buying residential properties.
This guide to investing in commercial real estate for beginners will help you better understand what commercial real estate is and if it’s a good investment option for you.
                        Guide to Investing in Commercial Real Estate

Ryder Cup Is A Thrilling Sporting Event

Ryder Cup is one of the most thrilling events in golf. I’ve been fortunate to attend the U.S. played matches since 1987, when Europe won for the first time in the U.S.. The change from 1987 to now is astonishing. 

In 1985, almost nobody in golf cared about Ryder Cup except the players on the teams. The reason I know this is that at the PGA Championship in 1985, I attended a press conference that announced the site of the 1991 matches, which at the time were to be PGA West in La Quinta, CA.  I worked for the developer. 

About a dozen people were in the room.  The late Bob Green of the Associated Press, PGA of America officers, the PGA Executive Director, the late Joe Walser, Jr. ( head of the PGA West project for the developer), the late Jim Warters, who was once an editor of PGA Magazine, among other duties at the PGA, a couple additional PGA staffers and me.  That was it.  There was no media interest whatsoever in future Ryder Cup.   

Since my job was golf media relations at the time, I realized I had an uphill battle on this one. 

Now a lot of things happened between the morning of that announcement and 1991 regarding Ryder Cup.  In the fall of 1985, when that year’s Ryder Cup was played in Europe, the European team won. It was a big deal for them, but it created not a ripple here.  Then in 1987, when the Ryder Cup was played at Muirfield Village, the European team won in the U.S. for the first time, and all of a sudden, a few people started noticing.  The U.S. and Europe tied in points in 1989, which meant that Europe got to keep the trophy for another two years.  Then PGA of America appointed Dave Stockton as captain for the 1991 matches.  

In addition, sometime between the 1988 PGA, which was held at Oak Tree GC, another property owned at the time by this same developer, and 1990, the PGA wanted to redo the contract for the Ryder Cup.  They were also concerned about having an event in the desert in September, when it was not impossible for temperatures to be 100 degrees and the TV window back to Europe from the west coast.  And there were some monetary concerns deep in the contract details. 

The arrangement they worked out moved the Ryder Cup to an as yet unbuilt golf course in South Carolina. People thought it was crazy to do that. But it was Pete Dye who would be building the course, and the developer had a long-standing relationship with the PGA of America.  They all trusted that the project could be completed in time for the event. It was, despite hurricane Hugo.

However, when Golf Magazine dubbed the 1991 Ryder Cup the War by the Shore, and it became pandemonium at Ryder Cup.  That has continued ever since.      


Monday, September 10, 2018

3 Ways the Industrial Market is Being Impacted by Retail

Retail trends have had a huge impact on the industrial market for the last few years. Amazon shifted the entire e-commerce industry to lightning-fast shipping, which means that industrial centers and warehouses are being moved to closer-to-the-city locations to handle the load.
On top of that, the trend toward reduced store size means that there’s more need for off-site storage and warehousing for retail products than ever before. Here are 3 other ways that the industrial market is being impacted by retail.
#1: Massive Closures of Big Retailers
#2: Rethinking of Industrial Space Use
#3: Global Consumption Increases due to E-Commerce

Thursday, September 6, 2018


CBC Benchmark successfully closed a transaction between Paradigm Holdings of NE FL, LLC based in Jacksonville and JOFOST Co on the sale of 5.29 acre industrial property on Salisbury Road. Future use is not disclosed at this time by purchaser.
Glenn Palmer- EVP and Eddie Segars-VP Land/ Henry Rogers- all with CBC Benchmark handled this transaction. 

Tuesday, August 28, 2018

Cap Rates Simplified - Market Value of Income Producing Properties

Do you know how to value income producing property? Let’s say you have a small office condo that you want to sell, and need to determine the value.  If there are recent sales of comparable condos, then it’s fairly easy to figure out.  But what about a ground lease of vacant commercial land?  

You’ll hear a lot about the “cap” rate and you will need a fairly good understanding of what the cap rate means to arrive at the market value of your land.  First, you’ll need to make sure there really is some demand for the land.  This usually happens in densely populated areas where most vacant parcels are already developed and land prices are very high.  For example, in a big city along a high traffic roadway.  Alternatively, large vacant parcels outside the densely populated areas may be suitable for a ground lease when the cost to buy and build is beyond a user’s budget.

Remember, a new ground lease is when the owner leases vacant land and the lessee (tenant) constructs their own building on the land.  The lessee controls the building and the land, and pays rent to the landowner for the entire term of the ground lease.  The tenant usually also pays the real estate taxes on the land and improvements. 

Even after the tenant constructs their building, the landowner can still sell the land, it’s just encumbered by a lease - which adds value to that land because it’s income producing property that requires virtually no maintenance or management.  The tenant owns and operates the building and the grounds.  The only management required is making sure the real estate taxes are paid, which is usually the tenant’s obligation but should be verified annually by the landowner.

So, to value this ground lease, you would apply a capitalization rate “cap” rate to the annual net operating income generated by the ground lease.  So, let’s assume the rental income is $2,000 monthly for the next 50 years (long term ground leases are common).  The annual income is $24,000 if the ground lease has a triple net structure (NNN).  So which cap rate to apply?  Let’s start with basic math here.  Say you heard a buyer was looking to pay for property with cap rates of 7 to 8 percent.  You could determine what price to charge that buyer based on his requirement by dividing 24,000 by 7 or 8 percent.  The sale price would be about $343,000 if the cap rate is 7% and $300,000 if the cap rate is 8%.  So, from a buyer’s perspective, the higher the cap rate, the lower the purchase price.  That’s why you’ll see sellers advertising well located income producing property with high quality tenants on long term leases at cap rates of 4% to 6% in a strong market.  And you’ll see buyers asking to buy properties at cap rates of 6% to 8%.  

Up next, how to determine the cap rate for your property from recent sales.

For more information, contact Sally Marks at 904-349-5192.