Bob – Walt, if I was a commercial tenant in building and my lease is closing in on its expiration date, what are my options?  What should I be thinking about?

Walt – Bob, most tenants don’t anticipate the time it takes to either renew their existing lease of look at other possibilities in the marketplace.

The first option is to do nothing and try to stay in a month to month tenancy with no protection against the owner giving 30 days notice to vacate.  There might also be a “holdover charge” in the lease which the landlord can charge and that additional amount is usually 25% to 100% increase in the lease rate.

Bob – That’s a little scary, what about renegotiating for myself, it can’t’ be that hard, can it?

Walt – It’s like my father in law use to say you don’t know what you don’t know.  If you’re not in the market every day, a tenant might risk paying more than they should in this current market, they might also not be aware of current market incentives offered by landlords, there are some commitments in the fine print of the lease document that, in coordination with an attorney, need to be discovered and addressed to avoid clauses that could be harmful to the tenant in the lease, and most importantly it takes time away from the business to accomplish all this and it take the focus off the primary objective, your business.

Bob – Walt, I take it this is where you tell me how the Tenant Representation process works and how you can help tenants renew or relocate in this market.

Walt – Yes Bob, thanks for the softball. At Sperry Van Ness our brokers have handled thousands of leasing assignments we have the experience in getting the best possible results.  This is done at no costs to the tenant as the landlord pays the commission when the lease is executed.  We provide up to date relevant market information and guide our clients through the process from the initial meeting to move-in and beyond.  And finally the tenant representation process allows us to do what we do best which is the leasing component and allows the business owner do what they do best and that is to keep their focus on running the business.

Bob – How can people contact you today to talk about commercial real estate?

Walt – Thanks Bob, call me, Walt Arnold, on my direct line 505-256-1255 or check us out on the web at waltarnold.com.  Also if you have an issue regarding commercial that you need help with or want to talk to someone about give me a call and we can discuss it.  Talk to you next week, with my prediction for the Super Bowl, what else is there to talk about the next couple of weeks? Have a great week!  Also check out Sperry Van Ness on Facebook become a fan or follow me on Twitter for daily CRE news updates.

Bob – Happy New Year!  Our first commercial report of 2012, what do you have for us to start off the New Year!

Walt – Happy New Year Bob and I hope you had a great time over the Holidays and the New Year.

I know you’re not a big New Year Resolutions advocate, but I wanted to talk about some New Year strategies for commercial properties investors, owners, buyers and tenants of commercial properties.

Bob - New Years Resolutions are difficult to keep and it is difficult for people to keep them.  But I’ll listen, what ideas do you have?

Walt – I think this is a great time for those involved in commercial properties to make some strategies and take some action to move forward on financial goals, which may include real estate.

Some quotes I remember are, “every journey begins with a single step”, or “if you aim at nothing you are bound to hit it”.  A question to ask this time of year is, “what is my exit strategy for the properties I own”, or “what can I do today to start looking at investing in commercial real estate”?

Those answers might not even come this year, but it’s important to start thinking about them now and develop the steps to move forward in that direction.

Bob – I would think this is not a great time to sell properties, but it appears to be a better time to buy properties.  How far in advance do someone need to start thinking about buying, selling or leasing?

Walt – There are many aspects to consider, for example a business that owns it real estate might say, “I need to raise some cash, but my bank won’t lend me any money”, a sale-leaseback might be a way to raise some cash and put cash back in the business to fund operations.

An investor just starting out might have the question,” how do I start investing in this market with all this opportunity to buy properties?”

A company currently leasing might ask, “I want to buy instead of lease, what do I need to know to get started?”

All of these decisions take time and planning.

Bob – So you’re saying there are a lot of things to consider and it might happen quickly or it could take time to develop a plan to decide what to do and how to go about it?

Walt – These aren’t snap decisions like, I need to lose 20 pounds, which by the way I do, these decisions take time and it helps to have people that can help define the strategies and a game plan to work through the issues and come up with solutions to accomplish these goals.

Bob – Walt, how can people get a hold of you to discuss how to make a strategic plan for 2012 and beyond?

Walt – Thanks Bob, my direct line is 256-1255, website waltarnold.com.  Let’s talk about strategy for 2012 and beyond.  You can connect with me on Facebook or Twitter.

Bob – Walt as we approach the end of 2011 and the Holidays are upon us, what are some things commercial property owners should be considering at the end of the year.

Walt - One thing all investment property owners should consider is establishing a budget for the upcoming year and included in the budget should be the amount of distribution or money that you want to make to yourself.  Creating or updating a budget is forward thinking and helps to put money aside for items that will need to be replaced in the coming year and creates a plan for replacing parts of the property that will fail eventually.

Bob – What if someone rents a single-family house or a Four-plex, should they create a budget?

Walt - With larger properties it is a requirement to track income and expenses against the budget and this helps keep the property manager aware of any categories which have a surplus or shortage against the monthly budget.

Spending the time to create a budget for any size or type of investment property is very beneficial to the success or failure of an investment property.  For a single family rental or a Four-plex owner to spend the time to create a budget will be one of the best exercises they can do to preserve the asset and increase cash flow. Don’t neglect working on a budget for 2012.

Bob - Any other year-end tips for property owners?

Although we have already had some cold weather and more on the way, continue to winterize any water outlets or exposed water sources on the property, check gutters and canales for leaves so they don’t make a leaf dam at the drain creating ponding of water on the roof, and one last idea is to buy snow melt and snow shovels ahead of time because when it snows and you need it, everyone else will also need it and those items will be difficult to find when you need it the most.

Bob - Since there won’t be a Real Estate report next week, any year-end thoughts or New Year predictions today?

Walt - First, I would like to say thanks for talking to me almost every Monday morning this year; I appreciate you having me on the show, and Jen also thanks to you.  Sometimes this time of year is more hectic and stressful than it should be, I hope everyone has a great holiday season and New Year with an over emphasis of grace this Christmas season.

Next year will be a better than this year, a little, as we head on a slow gradual climb out a very tough market and one of the worst recessions in history.  I know that at Sperry Van Ness we are looking forward to 2012.

My number is 256-1255, website waltarnold.com.

Bob, the best to you, your family, the KKOB staff and your listeners. I will talk to you next year.

Bob – Walt, there has been some good news in the job market, unemployment is moving lower, now nationally 8.6% and even lower here.  Sounds like good news for commercial real estate?

Walt - It is definitely a good sign!  Unemployment is at the lowest levels in 32 months, 120,000 jobs added in November, with strong growth in hospitality and retail, but also gains in manufacturing, auto sales and even an uptick in housing.  Consumer confidence is improving and business investment is up. Unfortunately about half of the improvement in the unemployment rate was due to workers dropping out of the workforce.

But, if the trend continues for a while, it will be great news for all types of commercial real estate. As we have talked about before we need jobs to improve the commercial real estate market. Hopefully those jobs numbers will keep going up.

Bob – Speaking of going up, the REDW building in the Journal Center is looking close to completion.  What is going on with that construction project?

Walt - I was talking with Bill Smith of Reid & Associates last week and that building is a great story for the Design Build process.  In the Design/Build process the client selects the builder based on their qualifications and their ability to make the project a successful one. The building was initially coming in at costs that were jeopardizing the project.  Reid & Associates stepped in and the property is coming in where it needs to be costs wise and also on time for a December 2011 move in for the accounting firm.

REDW building is located at Jefferson and Masthead in the Journal Center,  a 45,000 square foot LEED Certified building in the heart of the Journal Center.

Bob – Walt, what else do you have for us today?

Walt - Since it’s December, I thought I would give an update on the Albuquerque Retail Market. After record setting Black Friday sales have raised the hopes for a great holiday season.  Maybe this will be the start of stronger retail sales moving forward.

The current overall retail market vacancy is 9.4%, with about 80,000 square feet under construction.  Retail asking rates average about $14.25 per square foot per year for neighborhood centers and around $20 per square foot per year for Power centers.  Rates have come down roughly 13% from a year ago.   Moving forward vacancies will be decreasing slightly, asking rates trending lower and landlords of older centers doing whatever they can to get and keep tenants.

Bob – How can people contact you to talk about commercial real estate?

Walt - Thanks Bob, call Walt Arnold at Sperry Van Ness, 256-1255, website is waltarnold.com. Hey Bob, it looks like it might be time to get those skis and snowboards waxed up and ready to go.  I might have to call a “Special Company Board Meeting” in Taos this week! Hey Bob, have a great week.

For daily CRE news updates follow me on Twitter or find me on Facebook.

Bob – Walt, what do you have for us today?

Walt – Well, I went to the Society of Industrial and Office Realtors (SIOR) market review and outlook at the NAIOP meeting on Monday and the Urban Land Institute meeting on Friday so I got some great info last week and wanted to pass some of it along.

The key factor at both meetings appears to be the need for jobs to start to get us back on a road to recovery.  New Mexico could see more job losses in government sectors as all levels of government are feeling the pinch of cutbacks.

Another topic was the office market vacancy which is 18.3% and one of the reasons is emerging technologies, as workers are working more effectively with technology.  Workers are able to connect to the internet wirelessly almost anywhere.  This trend will continue to have an effect on the office market.

Bob – Walt, that trend of working from home has been around for some time, but hasn’t really caught on.  What’s different this time around?

Walt – This time it also involves all those 20 and 30 year olds that multitask and can work from anywhere at any time.  So working from wherever will continue to grow stronger and will have some negative impacts on office space.

Bob – You also mentioned the Urban Land Institute, what was the discussion at that meeting?

Walt – One interesting point from Mark Lautman  was that all the states around New Mexico are winning the site selection battle for new companies and are gaining jobs; unfortunately, New Mexico is not really in the game at this time. So we need to do something to get out of this scenario and start making New Mexico “the place” to relocate.

Todd Clarke also spoke about the strength of the apartment market and the need for at least 4,600 more apartments in Rio Rancho and 1,300 more apartments needed in Albuquerque.  There was also discussion on how the youngest of the adult population, the millineals,  they have a desire for less space and less things and that will affect  how apartments will be built in the future and also where.  There is a much greater demand for housing to be on transportation corridors and in developments that minimize driving.

Bob – Anything else for today and how can people contact you to talk about commercial real estate?

Walt – There were a couple of quotes that came out of the meetings, one that I would like to quote was regarding how Landlords need to make vacant space as appealing to tenants as possible.  Debbie Harms,SIOR, quote was,” You aren’t going to have to buy a prom dress for that pig yet, but you are going to have to put some more lipstick on it.”  So get those vacant spaces ready to lease, it will help!

If you want to talk about commercial real estate. Give me a call, Walt Arnold, 256-1255, website waltarnold.com you can also follow me on Twitter of find me on Facebook for up to date news on all things CRE.  Talk to you next week.

For more information on SIOR check them out on the web here.  For all topics CRE follow me on Twitter or find me on Facebook today.

Follow me on Twitter or Facebook for more CRE news and information.

Bob – Walt, I wanted to ask you a question, how should a Tenant deal with their lease as it approaches the expiration date.  In this market should they begin to have some discussions with their landlords prior to the lease expiring or just wait until the lease comes to an end and then try to negotiate?

Walt – Good morning Bob! Yes the lease is expiring soon, what are your options?  One thing to do is to do nothing.  When the lease expires it usually goes to a month to month agreement and that leaves the tenant with no protection, the landlord can give the tenant 30 days’ notice to move out.

Another thing that happens at the end of the lease is if a tenant stays past the expiration date, there might be “hold over” provision that could be 125% to 200% of the current lease and that is a big increase in monthly expenses especially in this environment.

Both of these scenarios allow the owners to dictate the terms, if they so choose.

Bob – Say I’m a tenant, and my lease is expiring, and I’m thinking I want to handle this lease negotiation thing by myself, what are some of those issues?

Walt - I know you’re a sharp guy, even though you did go to NMSU, there are some things you need to be aware of: you might risk overpaying your rent if you don’t  know everything that is happening in the market and also you need to be aware of market incentives are currently being offered.  There’s also the potential to make some harmful commitments within the lease document that might cause some financial issues and, it takes time to do  all this lease negotiation stuff and that is going to take you away from focusing on your business, which is the top priority.

Bob – Ok Walt, tell me what I need to do so I get the right space, at the right price and terms.

Walt – First I would say hire a Broker that understands the Tenant Representation process fully, for example, Sperry Van Ness.  We have handled thousands of real estate transactions and have the valuable experience to get the best results.  Tenant Rep services are usually at no charge to the tenant, the cost for leasing the space is paid by the Landlord, you can know that you are getting relevant, up to date information to make the best decision, we will explain the process so you know where you stand throughout the transaction, and you can then focus on your business, which is what you do best, and we can focus on all the details, which is what we do best.

Bob – All right, I feel better already, how can people get a hold of you today?

Walt -  Thanks Bob call Walt Arnold @ Sperry Van Ness my direct line is 256-1255, website waltarnold.com. I’m glad I could help you today, have a great week

Bob – Walt what is going on in the commercial real estate world?

Walt – Good morning Bob!  Happy Columbus Day!  Christopher Columbus was born in a middle class family in Genoa, Italy.  He had a passion for navigation and sailing as a young man and traveled extensively visiting Africa and the Mediterranean.  Columbus spotted land on October 12th, 1492, which became the discovery of the New World.    He also continued to sail to the Americas and eventually made four trips to the Americas ending with his final voyage in 1502.

That is just a little Columbus Day trivia, Bob.   It is interesting to note Columbus’s perseverance in talking to the right people and trying to put together the right deal to help him accomplish his vision.

Which is a lot like real estate investing.  You have to have a plan, you need to be committed to the plan and you have to see it through.  There will be some rough times but if you execute the objectives carefully the rewards could be great.

Bob – Walt, but Columbus had some failures.  He had a hard time selling his plan to Kings, Queens and countries until Spain said yes to him, he had to abandon the Santa Maria when it ran aground, he had a tough time as a governor in the New World and he spent a year in Jamaica after his ships rotted.

Walt – You know your history and yes he did have some failures but he was in the right place at the right time. And that brings me back to commercial real estate.  The discovery of America would certainly have taken place within a short time span from 1492.  It’s all about timing!

With investments in commercial real estate it is so much about timing, and now is the time to consider investing in commercial real estate.  Values are down significantly from the 2007-2008 highs.  There is an opportunity in this market to acquire outstanding values in real estate, but you have to have a plan. It is similar to Columbus, he had a vision for what he wanted to happen and he pursued it with great passion.  Did he have some up and downs, sure he did but he kept his focus and today we celebrate his day, Columbus day.

Bob – Walt hat else do you have for us and how can people get a hold of you today?

Walt – Thanks Bob, call Walt Arnold at 256-1255 or check us out on the web at waltarnold.com.  At Sperry Van Ness we have the experience and resources to help you navigate these difficult Commercial real estate waters to help people find great values in today’s commercial market.  Give us a call and we can set up an appointment to show you how.  Thanks for the time today Bob, have a great week.

Follow me on Twitter and Facebook or visit my website waltarnold.com for more info.