Commercial Real Estate Could Be in Trouble Says Cassidy Turley

Cassidy Turley's latest economic forecast, as reported by Nevin Batiwalla, posits that the commercial real estate market will suffer as QE2 runs its course. Because the printing of money to buy government backed securities is coming to an end, problems that were pushed under the rug are appearing again.

Those problems include residential and commercial foreclosures to the tune of $500 billion and a soft labor market.

The BLS shows that Savannah's Labor market reflects Cassidy Turley's report. Unemployment has increase four tenths of a point and the unemployment rate increased one tenth of a point. Over the last year, of the 11 job categories profiled, six categories showed a decrease in employment. (These numbers are preliminary and not seasonally adjusted.)

While the Cassidy Turley report projects that the technology sector will provide the jump start the national economy needs, I believe Savannah's economy will weather a potential storm. All the economic indicators the Cassidy Turley report frets about is diminished by Savannah's diverse economic drivers. I'm not going to type the entire Savannah 2011 Economic Trends to support this thesis here, but it is available and consistent with what the local economy is seeing, including slight increases in unemployment. I remain optimistic.

Savannah Recognized As Top 10 U.S. Rail Port

The Railway Industrial Clearance Association (RICA), the organization that specializes in the rail shipment of dimensional cargo, named Savannah as a top 10 rail port.

Savannah was voted this position by transportation and logistics providers. 

There are 42 seaports in the United States according to the United States Maritime Administration.

Is the Next Commercial Bubble Imminent?

I hate to post articles that could scare away the investors I have, but the opinions of the people calling the shots matter. If there is a commercial real estate bubble coming, be smart. If you're planning on buying land- be ready to hold it for 20 years. Are you planning to retire in the next 10 years? Chances are you won't want your retirement tied up in land. An investment in multi-family housing would be better because you'd be getting an immediate return on your investment. In case of a bubble, I advise against investing in retail. Here's why. With all that in mind, read on...

By Jacqueline Hlavenka

Penner, Smith and Buckley

NEW YORK CITY-While the transaction market is expected to continue picking up over the next two years, panelists at yesterday’s “Investment and Finance Strategies for New Acquisitions and Development Today” conceded that enough is enough with the recovery chatter. As part of the Urban Land Institute’s “Real Estate Finance and Investment 2011” conference at the Sheraton New York Hotel & Towers in Midtown Manhattan, participants from CBRE Capital Partners, Prudential Real Estate Investors, Dune Capital and Bank of America Merrill Lynch agreed that investors with money burning a hole in their pockets should cool it, for now, at least.

“We are in the same bubble that led to the last crash,” said Ethan Penner, president of CBRE Capital Partners, explaining that FED is leading the industry down the same troubled path that led to the downturn in the mid-2000s. “It’s incredible to me that we mistakenly believe that pumping untold amounts of liquidity into the market is the answer to the problem to get asset values up.”

Thursday’s discussion was a stark contrast from Wednesday’s “Private Equity Capital” ULI panel, where participants predicted that core assets and CMBS would lead the recovery, as reported by GlobeSt.com. Penner said that investors are taking “massive and imprudent risks” to deploy the capital to get the returns they need. “Most money in the world is retirement savings, and most retirement savings are predicated upon achieving a certain actuary return,” he said. “When the FED does what they are doing, it takes all that hard-earned money that wants, craves and needs lower risk profiles, and all of us will end up paying them back in the form of higher taxes. It’s just a sham.”

While CMBS is coming back, Penner said it is only $14 billion year-to-date, which is “hardly in line” to plug a deep financial hole.” Most of that money, like 90% of it, addresses the top 55% loan-to-value on today’s value,” he said. “When you coming in the market $1.7 trillion of 125% LTV, and the CMBS markets address 55% LTV of that, even if it addressed the whole trillion, you have a big void to fill.”

On the REIT side, Ron Sturzenegger, managing director and global head of real estate, gaming and lodging, Bank of America Merrill Lynch, said due to opportunistic lending, he saw several mortgage REITs go public due to initial IPOs. “Many of these REITs raised equity in 2009, share prices went way up and then those REITs went on a buying spree,” Sturzenegger said, explaining that the biggest investors over the last 24 months have bought core assets with low leverage. “They want returns of high single-digits or low teens, and that was available in the marketplace,” he said. “Again, what has been surprising is how quickly those REITs rebounded, how quickly their share prices came up.”

And with a “monstrous” wall of volume expected from the fallout of the Bank of Ireland and Anglo Irish Bank Corp., several investors are hanging out on the sidelines, like J. Allen Smith, chief executive officer of Prudential Real Estate and Cia Buckley, senior partner of Dune Capital. Buckley explained that Dune’s strategy involves a strict equity focus. “We are not really spending time on those deals that might have these multiple assets, where your upside is to restructure,” she said. “Worst case scenario would be a foreclosure. We have found that capital markets have become much more liquid for some of that. The hedge funds fall into that market.  We are focusing much more on purely the equity."

Smith said despite having a large open-ended core fund, the company is more focused on delivering as opposed to buying at the market today, concentrating on apartment development and niche-sectors like senior housing. “There’s no reason for us to be pushing to levels we are uncomfortable with, so we are backing off,” he said.

Crime Affects Commercial Property As Well As Residential

Yesterday my co-worker Kim Iler asked me to ride with her to one of her commercial property listings to meet a customer there. She was smart to ask me because the property, on Ogeechee Road, is vacant and set back from the street.

She wanted my company because she didn't know the person/people she was meeting and mace can't prevent all criminal attempts.

When we pulled up we saw the front door to one of the buildings was forced open and the door on another building were swaying in the breeze. So she called the Chatham County Sheriff's Office to report the incident.

We sat in the car upon the advice of the dispatcher, which was just as well considering it started to rain. Officer Bena arrived, got our story and then called for back-up. Officer Marshall (no relation) quickly arrived. As they searched the first building Kim's customer pulled up.

It can't be a good thought that crosses a customer's mind when he makes an appointment to walk a property and arrives to find two cops yelling "Police!" from inside it.

Kim explained the nature of their visit and he volunteered that the doors had not been busted open when he drove by the property at 7p.m. the night before. So now the officers could narrow the time the crime occurred. After they cleared each building Kim walked around explaining the virtues of this investment to the customer.

While I'm not looking at any statistics right now, I think it is safe to say break-ins are on the rise. The community recently saw the theft of A/C units from just empty churches on Isle of Hope and the Boy Scouts Coastal Center. So what can a property owner do to protect her property? (In this case, the owner lives in Florida.) You can use an alarm system (most practical), file paperwork with the Sheriff's Office to permit them to patrol the property and arrest anyone on it (practical) and alert the neighbors (generally effective).

Fortunately for me and Kim, it isn't our job to protect your property in your absence, but we can help out when something goes wrong.

This particular property owner is lucky- nothing was stolen (A/C units, appliances, wiring, etc...) and there was no extensive damage from smoke or graffiti. All the trespassers left were a broken door and empty Twinkie wrappers.

A Recovering Economy with Falling Commercial Real Estate Prices?

What's going on in the marketplace? I'm asked this at least once a day.

On a local level, I'm stirring several pots, but having difficulty getting those pots to boil. Until lending is freed up (see yesterday's post), the job market picks up and investors are confident it looks like they're just going to simmer a while longer.

Why are we optimistic that the market is recovering?

First, we see that solid assets in all markets are selling close to where they were in 2006. This is a good thing for the markets in general and we've seen a few examples of that in Savannah (think the old Backus Building, 516 Drayton, 1326 Eisenhower, 27 Bull Street). Second, activity around U.S. ports is increasing and ports are considered to be bellweathers of the economy.

"On the whole, despite the uneven nature of the recovery, surveys seem to indicate that commercial real estate investors remain optimistic about the recovery despite ongoing issues with the economy[2]. In fact, a “lack of new supply and low interest rates” are actually driving up investor interest in the sector, reported PriceWaterhouseCoopers LLP. The fact that there will likely be “very few additions” to the commercial property market supply in the short term is also contributing to the absorption of space, PwC reported, adding that tenant demand would likely increase in the coming months." This quote comes from a Bryan Ellis commentary that explains the two-tiered commercial marketplace.

Third, commercial real estate brokers and investors are excited about the innovations they're seeing in the marketplace. Because there isn't demand for new construction, investors, developers and businesses are doing more with less, reinventing current spaces, making buildings "green" and using technology to better the business.

Gary Shapiro writes for Forbes that, "...innovation can – and does – occur in every industry of our economy, from consumer electronics to health care. Commercial real estate is no exception. With millions of Americans employed at retail or working in office buildings, this once sleepy industry is smartly innovating and benefiting from new markets and technology."

"At last week’s RealComm technology real estate conference in Orlando, Fla., I enjoyed the vision shared by Bill Hankowsky, President and CEO of Liberty Property Trust, who, among other ventures, recently completed Comcast’s new Philadelphia headquarters. He noted that with rising energy prices and companies cutting back on space, the commercial real estate market must start innovating. He mentioned how GlaxoSmithKline’s office-space needs at their headquarters have shrunk from 600,000 square feet to 205,000 square feet, but not because of a fall-off in business. Rather, technology, innovation and changing human behavior have reduced the amount of required office space. Companies and employees are able to do more with less space – the very heart of innovation." You can read the rest of Shapiro's article here.

The L.A. Times reports that big box retailers like Best Buy and Sears are actively seeking tenants for up to 20% of their retail space. Online sales and online rivals are driving the decrease in demand for building space. The Best Buy here in Savannah hasn't announced that it seeks a tenant for relinquished space, but the downsizing experiment works well in California, I wouldn't be surprised to it happen across the country.
Lastly, you have to examine how and where commercial real estate prices fell. The declining prices are happening across the country, true. However, these prices come from distressed properties- a lot of them. Large numbers of distressed properties selling for rock bottom prices simply drive down overall industry numbers.

"The Moody’s/REAL Commercial Property Price Index dropped 3.7 percent from March and 13 percent from a year earlier. It’s now 49 percent below the peak of October 2007 and at its lowest point in data going back to December 2000, the company said in a report today. The index, which measures broad national price trends, has fallen for five straight months as sales of distressed properties undermined real estate values." This market snapshot reported by Bloomberg is a very close look at very big picture.

PricewaterhouseCoopers offers a comprehensive explanation of the big picture. "Buyers are pursuing deals as the market improves, and concern that that the economic recovery will falter has deterred “very few” investors from acquiring assets, PwC said. The Standard & Poor’s 500 Index has fallen 5 percent from this year’s high on April 29 after signs of slower U.S. growth, including data showing that employers in May added the fewest jobs in eight months.

“The lack of oversupply, strong corporate earnings and a pattern of job creation, not just one bad report -- that’s what is fueling cautious optimism that the economy will recover and rents will rise,” Mitch Roschelle, partner at PwC’s U.S. real estate division, said in a telephone interview yesterday."

The agents here at Coldwell Banker Commercial Platinum Partners agree with the latter report. Commercial vacancy rates may be high, but they are decreasing. We've all seen an increase in leasing activity. Investors are curious, new investors and businesses are leasing, and investors with money are buying. There is definite excitement around considering the two new VA hospitals that are to be built, the expansion at Mitsubishi, the eventual harbor deepening and the Gulfstream expansion.

Retail Space Expansion Lowest in 40 Years

From Bloomberg on 6/22/11. To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net; Alex Tanzi in Washington at atanzi@bloomberg.net.



“There is no incentive to add more retail space,” said Sohn, who is also vice chairman of Forever 21 Inc., a Los Angeles-based closely held clothing chain. “The probability of getting financing for a mall is still low. Shoppers have become more price-conscious and they’re looking more than buying.”

While retail sales have rebounded and exceeded pre- recession levels, new shopping space may “continue to be minimal,” said Chris Macke, senior real estate strategist at Washington-based CoStar. A drop in vacancy rates at malls and a rise in rental prices will depend on how quickly hiring picks up, he said. Credit is “still difficult,” and “there just isn’t a lot of demand to justify” store expansions.

Atlanta mayor expects 'significant' funds for port .

Note: Mayor Reed was representing the Building America's Future coalition (which is an educational fund) and his speech topic was "Successfully Promoting the Infrastructure Investment Agenda".

Associated Press

SAVANNAH, Ga. — Just back from visiting the White House, Atlanta's mayor said Tuesday he expects Georgia will win "significant" funding from the federal government to begin a $600 million deepening of the Savannah harbor — an economic priority for the state that's been threatened by the federal budget crisis.

Atlanta Mayor Kasim Reed's ties to the Obama administration have made the Democrat one of the top pitchmen in Georgia's efforts to expand the Port of Savannah. Officials want to deepen the Savannah River shipping channel by 6 feet to accommodate supersized cargo ships expected via an expanded Panama Canal by the end of 2014.

"I believe that we are going to be successful in obtaining a significant appropriation before the budget process concludes," Reed told reporters Tuesday after speaking in Savannah to a seminar of the American Association of Port Authorities.

Reed declined to discuss specifics of why he's so optimistic. But it's one of the most positive statements made by any supporter of the port expansion all year.

The Georgia Ports Authority is counting on federal permits being approved in time for construction to begin in 2012. Securing money from the federal government has proven extremely tough, with the president and Congress focused on cutting the deficit.

Also Republican members of Congress have sworn off so-called "earmarks" — line-item projects inserted into budgets by individual lawmakers, which are typically how port projects get funded — and President Barack Obama has pledged to reject them also.

Curtis Foltz, Georgia's port chief, said the soonest the project will be permitted by regulators is next spring. If the federal funds don't get included in the 2012 budget, but do get approved in 2013, that would only set construction back a few months because of the government's fiscal calendar, he said.

"It's clearly not the end of the world," Foltz said. "It just means it's another three months away."

Though he's mayor of a city 250 miles away, Reed has been aggressively pushing the Savannah port expansion in Washington. He made sure to mention it Monday at the White House, where Obama invited Reed and other mayors to discuss the economy.

Reed said his pitch to the White House and others in Washington has been simple, consistent and persistent: "The deepening of the Savannah port is consistent with the priorities of the nation. It is exactly in line with the president's focus on increasing the export capability for the U.S."

Monday was the Atlanta mayor's second Washington trip this month. Three weeks ago he joined Republican Gov. Nathan Deal for a bipartisan trip to Capitol Hill to strategize on the port expansion with Georgia's members of Congress.

After that meeting June 1, Deal said Georgia might have a chance at getting about $70 million — less than the $105 million port officials had wanted. The governor said he was "hopeful," but far from certain Congress would approve the port money.

Reed said work has continued behind the scenes in Washington. One reason he's keeping mum on specifics, the mayor said, is that other East Coast ports from New York to Miami are also seeking federal funds to deepen their harbors.

"I don't believe we should show our roadmap to people who are competing for the same dollars and for the same purpose," Reed said.
—Copyright 2011 Associated Press.

SCMPD issues Ardsley Park Advisory

Editorial from Billy Keyserling. Diversify Beaufort's Economic Base.

The following is an email sent to me from Billy Keyserling. It can also be read here.

Will we let go of a promise for better opportunities for the next generation? 

Despite the fact that Beaufort County currently celebrates the fifth highest per capita concentration of millionaires in the US and the highest per capita concentration of college graduates of SC's 46 counties, more than half our students are eligible for free or assisted lunches. 

This doesn't make sense. We need leadership and commitment to turn this around.  Can we disappoint future generations when we know we can do better?    Not on my watch!  

Since I was a child, growing up in Beaufort, I've heard "grownups" give lip service to economic diversification.  We heard frequent warnings that we should not be overly reliant on farming and shrimping (now almost extinct), tourism, the military, government jobs and more recently the construction trades.

Those who grow up here, and find career opportunities elsewhere, leave hoping to one day be able to afford to retire here.  And those who don't have these opportunities, stay and struggle without hope of giving their children more opportunity than they had. A huge demographic imbalance ... and we all pay the price.  

We expect our school teachers to give hope to students who see little reason to study because they don't believe that staying in school is going to lead to a better future.

On a positive note... together, the people of Beaufort County have scaled many mountains.  We've brought potable drinking water, indoor plumbing, comprehensive healthcare and other services to rural areas that did not have them.  We've more than doubled our population by becoming a desirable retirement destination.  We've invested hundreds of millions of taxpayers' dollars on bridges and road improvements to ensure safe evacuation and to avoid gridlock, one of the unintended consequences of the real estate boom.  We've provided urban level fire and emergency services to outlying areas.  We've built libraries and schools and recreation centers to accommodate growth.   And, we've invested millions of dollars to preserve open space, to protect our natural beauty and to steer growth.  

Who says we cannot do what we "choose" to do?

It's time to raise the level of commitment so we can fulfill long- awaited promises for a diverse economic base and more economic sustainability.  

Heated discussions about the financial failure of the Beaufort Commerce Park, and whether the Lowcountry Economic Network has done what was expected, as well as the benefits of regional versus local economic development were quieted by handing  the challenge to consultants.  The Lowcountry Economic Alliance committed $125,000 for a study and soon after Beaufort County committed $50,000 for its own study. Yet, I haven't seen one editorial or news report asking . . . Aren't people talking with each other?  Aren't we wasting public resources though duplication?  Are we paying attention?  Are we content to see a system failing?

And, regardless of what consultants tell us, if we don't   have the commitment to make change, our money is wasted. 

So, I ask ... when will someone have the courage to say the emperor wears no clothes?  That leadership is avoiding hard decisions, tough choices and investing little if anything toward this long-standing challenge?

Some wax eloquent that we have too much government in our lives; that the challenge is for the private sector.   Well, where were they when we voted to raise taxes to pay hundreds of millions of dollars for more bridges and roads to accommodate the retirement boom that brought them here?  

Economic development, however, requires partnerships between willing governments that embrace the private sector while also establishing predictable and timely regulatory processes. 

Regrettably, our county is perceived by economic developers as unfriendly to business. Perhaps this is because our regulatory processes are punitive rather than incentive-based and we have yet to encourage bureaucrats to collaborate.  (I don't mean a laissez fair approach where total control is yielded to few at the expense of many. I mean a collaboration to do what is right for ALL.)    

I am, however, saying it shouldn't take longer than 30 days to issue a development permit for a simple industrial building in an established business park.  And, we shouldn't cause delays for businesses locating to a business park because they didn't select appropriately colored awnings or their landscaping wasn't completely installed. 

In good conscience, I can't wait for someone else to do the heavy lifting so I am calling on you, my colleagues across the region, to bite the bullet, work together, dig deeper into our pockets if necessary and engage the private sector to walk the walk.  

We must fulfill our outstanding promise!  IF WE DON'T WHO WILL?

Billy Keyserling, Mayor of Beaufort, SC.

Whom to Call for a Termite Letter

Call Robert Wilson with Arrow Exterminators. He just drove to Statesboro (and was on time) to inspect a house and complete all the forms for closing. He's even dropping the forms off to the attorney's office! And all for $35!!

His office is 912-748-5413 and cell is 843-368-0516.

The Coastal Bank gets FDIC order commentary

This morning's news that the Coastal Bank agreed to a consent order with the FDIC rattled commercial real estate agents.

This news usually means a bank has six months to live, and The Coastal Bank is where some borrowers took their business when First National Bank and Darby Bank and Trust closed.

 

In a meeting I attended with agents from three CRE offices, the general feeling was concern that this news would help create a chilling effect among potential local investors. It’s no secret that I prefer to work with local lenders. Everyone knows that lending is already constrained. But when a bank fails because it’s not making an adequate profit, it appears that there is little to no chance for an investor to obtain a loan for a project that makes good sound financial sense.

We've all seen an increase in CRE activity- investors looking for good cash deals, interest in leasing property, and multi-family housing, for example-  and there is concern that local lending is getting tighter. I have three lenders I work with on my deals and only one (Workmen's Circle Credit Union) assures me the vaults are open.

I spoke with Mike Lee, past president of Savannah’s United Community Bank, who now works with the FDIC in Knoxville. He told me that this information about The Coastal Bank should not be extrapolated. He said there are too many banks in Georgia to begin with, which is the fault of the Georgia Department of Banking and Finance. When there’s an economic crunch in a crowded field only the economically fit will survive. He said there are more banks will fail, but the worst is behind us.

There’ve been 46 bank failures in 2011 so far and four recently in Georgia (Bartow County Bank, First Georgia, Atlantic Southern and New Horizon Bank). Atlantic Bank and Trust, a small South Carolina Bank which has an office on East York Street, was closed on June 3^rd and reopened as First Citizens. The government and lenders can both say that the economy is picking up, but then again, they have to give loans on real estate, not rhetoric, to convince people otherwise.

You read it here first! Savannah man punches burglar through window

Beating the Savannah Morning News to the punch yet again!

Check out today's article and then read yesterday's blog post  for the first person account of this criminal attempt.

The window through which the attempted burglary took place.

Ardsley Park Crime Alert

<The following is an email sent to Ardsley Park residents from a homeowner on 51st Street. I'm leaving his name out to protect his privacy.>

"Early Saturday a.m. (12:45 to be exact) as I was lying in my bed watching TV, I heard a noise outside on my deck (the deck is attached to the house outside of bedroom). I thought it was a neighborhood cat jumping on the deck furniture.

Imagine my surprise and sheer terror when in the next moment a loud crash - the storm window broke in my bedroom. And not just a plain single pane window, but a storm window! Within seconds I was up, and as I used my right hand to glance thru the blinds and see a guy trying to cut through the screen, I used my left hand as payback. I slammed my fist through the window, grabbing at the thug with everything I could. I screamed, he screamed and he was gone, jumping over the fence and took off running down the lane.

I immediately called 911. The police and medics (lots of blood but only a few small cuts from the glass on my hand) were there in moments. About 1/2 dozen cops combed the area. They found 2 bikes, a yard blower and all gates opened on all houses within the surrounding area. Basically the thug that came to my house had already hit up one place and got the blower (and probably the bike) and were getting ready to have a free-for-all on my block. Thank goodness I was awake and was able to put a stop to his "shopping" spree.

I am happy to report that the POS showed up within the hour at Memorial with cuts on his hands/arms. Memorial alerted the cops and he was eventually arrested. His name is Samuel Green, III and wonder of wonders....he was on probation! Sadly and even more so, INFURIATING, he will be out jail within a couple of months and be right back on the streets to steal from us again!
It’s vital that if you see anyone you do not recognize in your alley or on your street to call the cops – and let them sort it out because next time the only tax payer dollars to be used will be for the paperwork and the coroner."

A Quick Primer on Mortgage Discount Points

I’m working with a commercial investor who is weighing the loans he qualifies for. And typically by the time anyone asks me about loans they’re about ready to pull their hair out. This particular question concerned origination points. What are they? A point is a fee paid to the lender for working the loan. Typically you are charged one point for each percent of the loan. ($150,000 loan is 1.5 points which costs you $2,250.)

Let’s say my investor’s loan was a low $150,000 and he is considering two different loans. Both are for $150,000, and both are 30 year amortization.

DEAL #1 is 7.5% interest with 0 points for origination.

DEAL # 2 is 7% interest, but he wants two points to originate the loan.

       

What’s the ONE factor that will determine which loan is better? How long he plans to keep this loan! Here’s how he determines which deal is better…

1. Take the difference in monthly payments (principal and interest only) of EACH loan.

2. Multiply that amount by 12 months to get the annual amount of difference.

3. DIVIDE that amount into the $$ amount of points you pay to determine the number of years at which you recover the points paid up front. 

If the number of years is LESS than his anticipated time in the property, he’ll be better off paying the points and getting the lower rate.  If it’s higher than he plans to spend in the property, he should opt for the lower points.

I don’t have the space to show my work, but this is answer. The difference in monthly payments is $51 a month ($1049 - $998 = $51). $51 X 12 months is a savings on (approximate) interest of $612 per year. Total Cost Of Points divided by $612 is 6.13 years ($3,750/$612 = 6.13). 

My client (and you know who you are) needs to stay in the property for at least 6 years to recoup the cost of the origination points. If he wants to be there for only 5 years, the best bet is Deal # 1.

Savannah Police Say That A/C Unit Theft Increasing Again

Savannah Chatham Metropolitan Police Department advises that A/C unit theft from vacant "for sale" or "for rent" properties is on the rise again.  This goes for both commercial and residential properties.

I wrote about this in March and I mentioned this was occurring mainly in Southside and West Chatham.  See for yourself at http://www.raidsonline.com/.

The latest thefts don't just involve vacant buildings, but empty ones. A/C units were stolen from Skidaway Island United Methodist church, Isle of Hope Baptist and the Coastal Empire Council of Boy Scouts when no one was there.
Be vigilant! I have heard these criminals are bold. They show up with a truck or van, walk straight to the A/C, say they are doing repairs or an inspection if questioned and then carry it away.

I'm not suggesting you intervene, but talk to the neighbors of your vacant properties and ask them to call the police if they see anything suspicious.

Savannah's Permitting Process to Be Refined, Streamlined.

At the last Savannah/Hilton Head Realtor Commercial Alliance meeting a few weeks ago, city manager Rochelle Small-Toney was the main speaker. Instead of giving a presentation, she turned the meeting into a laid-back round table discussion. When asked about changes in the usually hectic permitting process, Ms. Small-Toney offered some hope for those in the process now or the near future.

She first acknowledged a decrease in inspections and permitting in Savannah due to a recovering economy. This has caused layoffs for many county inspectors who will be rehired when the number of permits increases. She replied to a comment that “the permitting process is crazy,” by explaining that the problem was mainly poor customer service. This created the appearance of chaos and a lack of information within the system. She said this was being addressed and that “we do know what’s going on.”

Another problem area that is being corrected concerns the permitting ombudsmen. Previously, they would visit a site, make a decision and then refer to someone else for approval. Now the ombudsmen “have the authority to make the call on site. They didn’t know that before,” she said.

To streamline the permitting process, the city is exploring the use of software to track a permitting project in real time. If implemented, permit seekers will track the project’s status, view comments, understand problems and find solutions immediately. This will eliminate dozens of phone calls permit seekers usually make to the city to try to find out where their permit is. This will be in addition to the Virtual Inspections and Permitting Systems already in place.

Savannah also offers free semi-annual workshops on the permitting process at the civic center. The next one will be in the autumn. Visit www.savannahga.gov/developmentservices for more information.

AVAILABLE: 115 Charlotte Road, Ste. C

Ste. C on 2nd floor.

642sf, $750 per month plus electricity.

Convenient to Publix, Walmart, restaurants, schools, Longpoint, The Marshes, Island Expressway, Johnny Mercer Blvd.

Other tenants include Whitemarsh Island Chiropractic and Islands Dance Academy.

Ideal location for educational, internet, computer, start-up enterprise.

Call 912-352-1222 and ask for me, Joseph Marshall.

Coldwell Banker Commercial Platinum Partners
912-352-1222
Connie F. Ray, Broker

OPEN HOUSE Tomorrow June 5th, 2-5 pm at 7 Garmany Lane

Come by and check out 7 Garmany Lane tomorrow in Isle of Hope! Four bedrooms 3.5 baths. Beautiful hardwood floors and a fantastic rec room with bar. Formal living and dining rooms, office and master suite on the main floor. An Isle of Hope Beauty offered at $575,000! Come by and check it out!

Coldwell Banker CEO to Case-Schiller: It’s Not the End of the Real Estate World

Posted by jim_gillespie in Market Report

So many of us giggled nervously as we thankfully avoided the end of the world a couple of weeks ago. But judging by the continued “end of the world” type coverage the Case-Schiller housing study got this week, maybe we are nearing the end.

Yes. I am joking, but I am amazed at the attention this report gets. It covers 20 markets, yes only 20, and that is just one of its many flaws. Yet many consider it “the be-all-and-end-all” economic indicator that defines our entire national housing picture. As we know, all real estate is local, and it is unfortunate that the reporting on a 20-city “national” index can have such a jarring impact on otherwise rational people.

Look at some of the headlines the other day:

“Home prices at lowest point since 2006 bust”
“Home values continue downward churn”
“No relief in sight’ for falling home prices”

And even in paradise – Maui- the front page headline in the paper screamed “Crash Spreads.”   And Maui isn’t one of the 20 markets. In fact the nearest market covered is San Diego, a mere 2500 miles away!

Shawn Daly, an agent with Coldwell Banker Residential Brokerage in Evanston, Illinois, had to calm down two skittish buyers this week.

One, who is currently working in Iraq, had initially placed on offer of $450,000 on a lakefront Chicago condo. The sellers countered with a price of $525,000. But after seeing Case-Schiller inspired headlines on the web, Shawn’s client emailed him to ask that he lower his offering price by $50,000. Shawn explained that the sellers did not agree with his first offer so if he went lower he wouldn’t get the home. The buyer calmed down and agreed.

Shawn correctly pointed that the Case-Schiller Home Price Indices are meaningless to individual buyers who are looking at specific houses, on specific streets, in specific neighborhoods.

Then yesterday, Shawn met another client for a tour of potential homes. They hardly said hello without telling Shawn they were more nervous than ever after seeing the report on the news.

You have a right to be nervous, but I can’t say this enough. Now is the smartest time in my 36 years in real estate to buy a home if you have the lifestyle reason, financial stability and viability to do so.

And it’s all about “Triple I…P”. Inventory, Interest rates, Incentives and Pricing. Start with inventory, because most communities have seen a rise in the amount of homes on the market, you have more choices. Interest rates for mortgages remain at near-historic lows and have actually trended down over the last 7 weeks, with Freddie Mac reporting 30-year fixed rates now averaging 4.55%. Incentives are the tax advantages to home ownership. And of course, there are prices. Prices are down from mid-decade highs, but in many, many markets are showing stability, slight declines or even increases. Home affordability remains near record levels and the price-to-value proposition in most markets is extremely compelling.

If you are interested in buying a home, you owe it to yourself to contact a real estate agent in the community you are interested in. Look at homes, do a rent vs. buy analysis, explore what is available in your price range.

Don’t just take my word for it. Do your homework.

You might just be surprised that the end of the world isn’t here yet … at least until next month’s report.

What do I need to know about liability protection when I hire a mover?

Under federal law, interstate movers must provide liability information outlined in the “Your Rights and Responsibilities When You Move” booklet.  The two options to protect your belongings (called valuation coverage) are:

Full Value Protection. Your mover is liable for the replacement value of lost or damaged goods in your shipment. They are permitted to limit their liability for loss or damage to articles of extraordinary value (items whose value exceeds $100 per pound), unless you list these items on the shipping documents.  Ask your mover for a written explanation of this limitation.

Released Value.  This option assumes liability for no more than 60 cents per pound per article and is offered at no additional charge. You’ll be compensated according to the weight of the item, not its actual value. If you don’t select Released Value, your shipment will automatically be transported at the Full Value Protection level and you will be charged appropriately.

If you pick Released Value, some movers may offer to sell or obtain for you separate liability insurance. This insurance is regulated by state law. You also may choose to purchase insurance from a third-party insurance company.

If you have any questions, or need capable and trustworthy representation, please call me at 912-352-1222.