CRE Report 10.10.11
October 13, 2011 at 9:52 am | Posted in Radio Show Reports | Leave a commentTags: 2007 property values, Christopher Columbus, Columbus day, Commercial Real Estate News, CRE, Investing, investing in commercial real estate, investment, investment options, property values, real estate advice, Real Estate Investing, real estate values, retirement, sperry van ness, walt arnold
Columbus Day Investing Advice
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.
Albuquerque Commercial Real Estate Report 7.26.10: Hiring A CRE Broker
August 19, 2010 at 10:07 am | Posted in Radio Show Reports | Leave a commentTags: albuquerque, broker's opinion of value, commercial, CRE, economy, for lease, for sale, industrial, investments, leased space, listings, New Mexico, office, office market, opportunities, property, property management, property values, radio show, real estate, retail, sperry van ness, tenant representation, walt arnold
Click HERE to listen to the Commercial Real Estate Report for 7-26-10!
Bob Clark, News Radio 770 KKOB: Walt, if I needed to hire a commercial real estate broker, what skills and abilities would I look for in that person?
Good morning. Commercial real estate is so different from residential real estate and there are just so many more moving parts to the commercial business which includes office, industrial, retail, hospitality, self storage and apartments. There is the investment side; the owner user and also the leasing end of the business and each have their own intricacies. So first off you would want to make sure the broker is an expert in the field of commercial real estate you need. That is the first criteria.
Bob Clark: What else is important in selecting a commercial broker?
Having a level of experience which might include membership in either the CCIM Institute, which requires years to complete the certification process or an SIOR, a select group of 2,800 commercial brokers worldwide is an important component in selecting a broker to work with.
At Sperry Van Ness we talk about having encyclopedic market area knowledge and stress being the recognized expert in the market area. Someone looking for a broker wants to make sure they understand the market and have strong knowledge of it.
Another important trait is a broker that listens to your needs and assesses those needs and then works diligently to complete the transaction and keeps everyone apprised of the progress as it moves toward the completion
Bob Clark: Walt you have talked before about all the parts of the commercial transaction, how can a broker help put it all together?
There are many parts to the puzzle of a commercial transaction and making sure your Broker understands those pieces, like the ALTA survey, Phase One environmental report, space planning, financing, the lease document, the Tenant Improvement process including TI drawings dealing with architects, contractors, attorneys, owners and tenants requires someone with many skills to help analyze the commercial transaction from start to finish and beyond. Continue Reading Albuquerque Commercial Real Estate Report 7.26.10: Hiring A CRE Broker…
Whitepaper: Getting Your Property Financed
August 12, 2010 at 9:30 am | Posted in Whitepapers | 2 CommentsTags: acquisitions, asset, banks, capital, commercial, CRE, demand, economy, equity, financing, investment, investments, investors, liquidity, listings, market, opportunities, property, property values, real estate, recession, walt arnold, white paper
I rarely have a conversation these days where the topic of financing doesn’t arise as a serious concern for my clients. When the economy is robust, and the capital markets are frothy, financing a commercial real estate transaction is a relatively simple matter. However during today’s recessionary times, the commercial capital markets are severely constrained. Not only is the supply of capital tight, but the demand may be near all time highs as well. Depending on which industry source you quote there is between $150 and $200 billion dollars of CMBS debt maturing in 2009 alone. This figure doesn’t include maturing loans from insurance companies, banks and other lenders, which means that many borrowers will be forced to secure financing in a market that presently offers little liquidity.
Given the current lack of liquidity and financing options described above, only the savviest of sponsors with solid projects will be receiving attention from lenders and investors. In the text that follows I’ll provide you with an overview of the information you need to possess in order to speak fluent finance and to increase the odds of getting your project financed.
The first thing to keep in mind is that financing serves multiple purposes beyond rate and term considerations. The proper financing strategy can allow you to increase project velocity, improve operating efficiency, conserve internal capital, increase leverage, and lower the overall cost of capital. Good sponsors focus on developing an integrated capital formation strategy
Continue Reading Whitepaper: Getting Your Property Financed…
Whitepaper: The Benefits of Professional Property Management
July 19, 2010 at 6:16 am | Posted in Whitepapers | 3 CommentsTags: albuquerque, asset, asset management, commercial, CRE, for lease, investment, investors, leased space, net operating income, office, operations, portfolio, property, property management, property values, real estate, retail, tenant, valuation, walt arnold, white paper
*see below for printable version.
The reality is that commercial real estate properties and portfolios that are actively managed not only perform better on an operating basis, but in most cases, they yield more on disposition as well. That said, my question is this: Why is it that so many commercial real estate principals still attempt to manage their own portfolio? While the answers clearly vary on a case-by-case basis, the most common reason usually boils down to the perception that money can be saved by not paying third party management fees. Indeed, the age old dispute between “do it yourself” and “do it for you” business models is alive and well in the commercial real estate industry. In the text that follows I’ll make the case for professional management as a value added service that is accretive to overall property returns.
Let’s begin our discussion with discussing the difference between property management and asset management. It was not too long ago that there were very distinct differences between these two disciplines. Property managers were deemed to be tactical in nature, focusing on day-to-day operating issues such as routine maintenance, minimizing vacancy, collection of rent/lease payments, and first tier communication with tenants. Asset Managers on the other hand were strategic in nature focusing on adding value to the property by making positioning decisions that would increase net operating income (NOI) and valuation. While these distinctions still exist among some firms, the increased sophistication of professional management firms over the past few years have caused the lines to be blurred to the extent that many firms now provide both disciplines in an integrated service offering.
As an owner of commercial real estate, unless you’re a very large and sophisticated commercial enterprise, attempting to do it yourself or hiring internal staff, it is not only inefficient and very expensive, but in this author’s humble opinion it’s very short sighted. You see, the right question to ask is not can you manage your own portfolio, but should you? Let me provide an analogy for illustrative purposes…I could do my own taxes, I have the financial acumen to do so, and who knows my financial position better than I do? Why should I pay a CPA to do something that I could clearly do myself? Following is how I viewed the decision to outsource Continue Reading Whitepaper: The Benefits of Professional Property Management…
Albuquerque Commercial Real Estate Report 5.24.10: Property Prescriptions
May 27, 2010 at 6:46 am | Posted in Radio Show Reports | Leave a commentTags: asset, broker's opinion of value, commercial, CRE, economy, for lease, investment, investors, leased space, listings, market, office, opportunities, property, property management, property values, radio show, real estate, retail, taxes, tenant
>>> Click here to listen to the Commercial Real Estate Report for 5-24-10 <<<
Bob Clark, News Radio 770 KKOB: Walt, you’ve talked before about the difficulties investment property owners are facing these days, what can property owners do to get through these tough times?
Good Morning Bob. Owners need to check their properties vital signs, possibly look at some preventative measures, call in a specialist or even perform cosmetic surgery if a property looks weathered or needs a boost. Wherever the property is in its life cycle the goal is to avoid emergencies and create strategies against plummeting values.
Bob: Are there some specific strategies owners can implement?
Yes Bob there are. First is to examine the income and expenses. This will reveal if the property’s lease rates are competitive with other nearby investments and check to see if all potential sources of income are being collected. The expense side will reveal any expenses that are out of line. Make sure there is a budget in place and review it monthly and be realistic and diligent to anticipate any potential surprises.
Next, look at the tenants. Are they right ones for the property? Maybe local tenants would be a better choice instead of spending a lot of time chasing national tenants. Analyze the tenant use and determine if certain types of tenants are missing.
3rd: a little stucco or paint can go a long way. Add some new doors, maybe a loading dock, these types of things will make the most impact for the money. Tenants love to see the owner investing in the property and in them.
Finally, taxes make sure to protest Continue Reading Albuquerque Commercial Real Estate Report 5.24.10: Property Prescriptions…
Albuquerque Commercial Real Estate Report 5.10.10: 3 Approaches to Valuing CRE
May 24, 2010 at 7:32 am | Posted in Radio Show Reports | Leave a commentTags: acquisitions, albuquerque, asset, broker's opinion of value, cap rate, capital, commercial, cost analysis, cost approach valuation, CRE, income approach valuation, investments, investors, leased space, market comparison, opportunities, price analysis, property values, radio show, real estate, sperry van ness, valuation, walt arnold
>>> Click here to listen to the Commercial Real Estate Report for 5-10-10 <<<
Bob Clark, News Radio 770 KKOB: Walt you wanted to discuss how commercial real estate is valued and the different approaches to valuing commercial real estate.
Good morning Bob. Residential properties are usually valued in one way and that is by comparison approach or analyzing comparable properties. The market comparison approach is also used in commercial real estate. The comparison approach is analyzing similar properties in similar areas and adjusting values for any differences both positive and negative versus the subject property.
The second approach is the cost approach. The value of the land is first figured separately from the improvements. An estimate is made to the replacement cost of all improvements, as if new, on the property and then deducting depreciation from the improvements. This requires an excellent knowledge of building costs. Again, the Cost approach is value of land plus costs of improvements as if new minus depreciation.
The third approach, the income approach, analyses the income and expenses of the investment and then assigns a capitalization rate or a cap rate to analyze the investment.
Bob: Walt, we hear the term “cap rate” a lot in commercial real estate. I know there are several parts to the term Cap Rate, can you elaborate on it?
Sure, I’ll give the “Cliff Notes” version. Investment property is analyzed by looking at the total income of the property, Continue Reading Albuquerque Commercial Real Estate Report 5.10.10: 3 Approaches to Valuing CRE…
Albuquerque Commercial Real Estate Report 3.15.10: Property Taxes & Seniors Housing
March 24, 2010 at 11:39 am | Posted in Radio Show Reports | Leave a commentTags: albuquerque, commercial, demand, demographics, financing, investors, listings, market report, population, property, property taxes, property values, radio show, real estate, recession, seniors housing, sperry van ness, walt arnold
>>>Click HERE to listen to the Commercial Real Estate Report 3.15.10<<<
Terrie Q: Walt, you wanted to talk about property taxes and Seniors Housing today. What do you have for us?
Thanks Terrie, yes, the Bernalillo County Assessor will soon be mailing out notices of values for property taxes. The scheduled mailing date is April 1, 2010.
The time frame to file a protest to the value is only 30 days from the date they are mailed. Once the notice of value is received and if the taxpayer feels the values are incorrect, they need to decide if they want to protest the value and then the protest must be filed within 30 days from the date of the letter. That is not a lot of time to analyze the value and if you have any questions about this, call me at (505) 256-1255. If you do nothing then the notice of value will automatically turn into a property tax bill.
Terrie Q: You also wanted to talk about Seniors Housing. What is going on in the Seniors Housing market?
You don’t hear much about Seniors Housing in the commercial real estate circles but it is definitely on the radar screen. In the 2000 Census there were 34 million Americans, 65 and older, which was 13% of the population. By 2030, that number is projected grow to 70 million which is 20% of the total population. And one of the fastest growing sections within seniors is the over 85 age bracket. Continue Reading Albuquerque Commercial Real Estate Report 3.15.10: Property Taxes & Seniors Housing…
Walt Arnold, SIOR, CCIM
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