11:23 PM, Dec. 21, 2011
By Aki & Jim Palmer who are commercial real estate brokers with Cassidy Turley Fuller Real Estate. Contact them at apalmer@ctfuller.com or jpalmer@ctfuller.com.
Summary: Capitalization rates help a commercial real estate buyer determine the relative worth of an income producing property. To calculate a gross cap rate, divide the property's net operating income by the sale price. Usually, the lower the cap rate, the lower the interest rate to purchase the property.
Key Quotes:
...Most investors value commercial real estate investment properties using a capitalization (cap) rate.
A cap rate is a ratio used to estimate the value of an income-producing property. In simple terms, a cap rate is the net operating income divided by the sales price or value of a property expressed as a percentage.
Investors, lenders, commercial brokers and appraisers use cap rates to estimate the purchase price for different types of income producing properties. Cap rates are determined by evaluating comparable financial data of similar properties, which have recently sold in a specific market.
Other factors used to determine cap rates include location, credit worthiness of the tenant(s), age of the building, length and type of lease(s) and building classification.
Read the full article at Cap rates key in valuing commercial real estate.
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Thursday, December 22, 2011
Monday, December 19, 2011
New distribution center to open in January
December 18, 2011 - 12:37am
By
Summary: The Judge Organization opens a 266,700 square-foot warehouse and distribution center in the CenterPoint Intermodal Center in mid January.
Key Quotes:
“Savannah is really an attractive port because of the export business, and the ports and the Savannah Economic Development Authority provide a good climate for business. And Savannah has always had the connections to the Far East more so than other southern ports,” said the company’s executive vice president, Patrick Wynne.
Judge’s increased traffic through the port will create a ripple effect in terms of creating indirect jobs, SEDA President Steve Weathers told his board of directors in November.
Read the full article at New distribution center to open in January
Judge’s increased traffic through the port will create a ripple effect in terms of creating indirect jobs, SEDA President Steve Weathers told his board of directors in November.
Read the full article at New distribution center to open in January
Thursday, December 15, 2011
CRE Price Index Sees First Year-Over-Year Gain Since 2008
December 14, 2011
Summary: Commercial RE prices are up 2.2% since last October. First time prices are up year-over-year since 2008. 2012 will still be a bumpy ride.
Key Quotes:
CoStar’s monthly National Composite Index of commercial real estate prices increased 2.2% in October from the same period a year ago, the first year-over-year improvement since the economy took a sharp downward turn in 2008.
The year-over-year and monthly increases in October reflected long-awaited positive momentum in the composite index, which has now achieved a steady 1.3% average monthly growth rate over the six-month period between May and October 2011, according to this month's CoStar Commercial Repeat Sale Index (CCRSI),...
Read the full article at CRE Price Index Sees First Year-Over-Year Gain Since 2008
Mitsubishi Heavy plans Savannah, Ga., rotor plant
Dec. 14, 2011, 4:54 a.m. EST
By Mari Iwata
TOKYO (MarketWatch) -- Mitsubishi Heavy Industries Ltd. said Wednesday it will build a plant to produce rotors, a core component of gas turbines, at its facility near Savannah, Georgia, to take advantage of rising demand for gas-fired power plants in the U.S. and to dodge the impact of the strong yen. The company will begin construction of the new facility in the second quarter of 2012. With the completion of the rotor production facility, slated for the third quarter of 2013, Mitsubishi Heavy will able to produce 12 units a year of gas turbine combined-cycle power generation systems at the Savannah plant without importing any major parts from Japan, a company spokesman said.
Mitsubishi Heavy expects rising demand for gas turbine combined-cycle power generation systems in the U.S. as a large number of coal-fired power plants are reaching the end of their operational lives, while advancements in extraction technology have lowered prices of natural gas to levels that can compete with coal.
Read the original article at Mitsubishi Heavy plans Savannah, Ga., rotor plant
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Due diligence applies in commercial leasing, too
By Jeff Geoghan
Summary: In a commercial leases due diligence and disclosure provisions are frequently overlooked, if brought up at all. Solve this problem by asking for a commercial property disclosure and make sure experts do the inspections, etc during a due diligence or "free look" period.
Key Quotes:
There is a commercial property disclosure form available, but it is rarely used for lease situations. Often the owners of large commercial buildings avoid completing the form due to its level of detail and because they -simply don’t know — it’s not like they lived there, as in a residential situation.
Keep in mind that most commercial leases require the tenant to pay for the cost of maintenance and repair of the property unless otherwise stipulated — so why wouldn’t a tenant want know as much as possible about the property before entering into a long-term lease?
Read the full article at Due diligence applies in commercial leasing, too.
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Summary: In a commercial leases due diligence and disclosure provisions are frequently overlooked, if brought up at all. Solve this problem by asking for a commercial property disclosure and make sure experts do the inspections, etc during a due diligence or "free look" period.
Key Quotes:
There is a commercial property disclosure form available, but it is rarely used for lease situations. Often the owners of large commercial buildings avoid completing the form due to its level of detail and because they -simply don’t know — it’s not like they lived there, as in a residential situation.
Keep in mind that most commercial leases require the tenant to pay for the cost of maintenance and repair of the property unless otherwise stipulated — so why wouldn’t a tenant want know as much as possible about the property before entering into a long-term lease?
Read the full article at Due diligence applies in commercial leasing, too.
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Should a Business Buy Its Own Building?
Summary: You should consider purchasing a property for your business if it means you still have a diversified portfolio. Purchasing a building and then working harder to pay it off means you've put all your assets into your business, which is unbalanced and not advised by most investment professionals.
Key Quotes:
Since [January], vacancy rates have dropped a little in most markets and rents have stabilized. However, very little new construction has been completed, and what has been built is almost all owner-occupied or build-to-suit. Almost no speculative real estate has been constructed this past year. Thus when the economy improves, rents will rise immediately. Normally developers see this coming and put up new buildings in anticipation of better conditions, but that isn’t happening.
That’s the argument for our small business owner buying his own building, but there’s another side to consider. This fellow has almost his entire net worth tied up in his company. Like many other entrepreneurs, he’s thinking about buying a building as a personal asset or through a separate company. Then his business would sign a long-term lease for the property.
Many business owners have succeeded with this approach, but there’s a large risk. This owner is thinking about retiring in a few years, selling his business at that time. Many small businesses are sold with seller financing, meaning he would get a portion of the price up front, and then the buyer would pay the rest of the purchase price from company earnings over the next few years. Now suppose that the buyer fails at running the business. The original owner gets a double whammy: he is not getting paid for his business, and his building just lost its only tenant. Ouch.
Read the full article at Should a Business Buy Its Own Building? by Bill Conerly, Contributor + Follow on Forbes
Since [January], vacancy rates have dropped a little in most markets and rents have stabilized. However, very little new construction has been completed, and what has been built is almost all owner-occupied or build-to-suit. Almost no speculative real estate has been constructed this past year. Thus when the economy improves, rents will rise immediately. Normally developers see this coming and put up new buildings in anticipation of better conditions, but that isn’t happening.
That’s the argument for our small business owner buying his own building, but there’s another side to consider. This fellow has almost his entire net worth tied up in his company. Like many other entrepreneurs, he’s thinking about buying a building as a personal asset or through a separate company. Then his business would sign a long-term lease for the property.
Many business owners have succeeded with this approach, but there’s a large risk. This owner is thinking about retiring in a few years, selling his business at that time. Many small businesses are sold with seller financing, meaning he would get a portion of the price up front, and then the buyer would pay the rest of the purchase price from company earnings over the next few years. Now suppose that the buyer fails at running the business. The original owner gets a double whammy: he is not getting paid for his business, and his building just lost its only tenant. Ouch.
Read the full article at Should a Business Buy Its Own Building? by Bill Conerly, Contributor + Follow on Forbes
Tuesday, December 13, 2011
Slow Growth in 2012 and Commercial Real Estate Investing Strategies for the 'New Normal'
Summary: The "new normal" is limited growth for 5 more years, income producing property is key, be prepared to reduce lease amounts to meet changing market conditions.
Key Quotes:
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Key Quotes:
- We are in a balance sheet recession that likely will limit economic growth for 5+ years. Ubiquitous acquisition strategies targeting 15% to 20% IRRs driven by terminal valuations may not be viable;
- Projections for new tenants in vacant space and lease renewals remain challenging with a potential slowdown in the U.S. economy. Consider focusing your investment thesis on cash-on-cash returns supported by existing leases;
- Segment your asset projected cash flows and handsomely value in-place leases and whack pricing related to vacant space and lease renewals;
- The 10-Year Note and 30-year Bond yields, at approximately 2.1% and 3.1%, respectively, are likely to stay comparatively low. If your projected cash flows are largely dependent on in-place leases, IRRs in the 10% to 15% range may be ample with a conservative capital structure;
- Four and five handle capitalization rates do not work as in most cases cash flow growth will be insufficient to save pricey acquisitions from adverse factors;
- All real estate is local and pricing will vary, but the majority of buyers should be targeting 8 to 11 caps for most non-core properties to accommodate an apparent lack of prospective cash flow growth and the potential of higher interest rates in 5+ years;
- This is a Buyer’s Market. As such, there is rarely need to accept unreasonable P&S contract language that became common during the real estate bubble of 2006-2007;
- Due to capital markets liquidity risks, financing contingencies should include a requirement that banks can and will fund at closing; and
- Shopped deals are now okay. In many markets, the transaction volume is so limited, price discovery created by a brokered deal is necessary for Seller’s to understand reality and not waste your time.
- Distribution hubs and ports will lead the industrial recovery in 2012.
- Total investment transaction volume to increase by 15 to 20 percent to $190 billion in 2012 – a slower increase than the last two years.
- Businesses will take real estate into greater consideration in 2012, focusing investments on efficiency and productivity. Additionally, businesses will consider corporate real estate as a greater contributor to corporate social responsibility initiatives in 2012, shifting investments from new construction toward retrofitting existing assets.
- Hotel demand is expected to continue to rise in 2012, but likely on a more cautious trajectory than in 2011, with private equity groups at the forefront of asset bidding.
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Friday, December 9, 2011
Rise in commercial mortgage delinquencies is feared
Bloomberg News
In Print: Friday, December 9, 2011
Summary: $19 billion worth of commercial mortgage notes will start coming due in less than 30 days. How/if those notes are honored is causing uncertainty. With Europe in turmoil (see There's About To Be A Massive Real Estate Crash In Central Europe) and the U.S. economy sputtering along it is doubtful that refinancing will be an option for many.
Key Quotes:
About 43 percent of the $44 billion in loans packaged into bonds that come due next year were arranged in 2007 before property values tumbled 42 percent, according to Bank of America. The largest deal ever, a $7.3 billion issue by Goldman Sachs and Royal Bank of Scotland Group, has $586 million of loans maturing in 2012, Bloomberg data show.
"These loans were done at the peak of the market," said Julia Tcherkassova, a commercial mortgage debt analyst at Barclays in New York. "They will have trouble refinancing today."
Loans packaged and sold as bonds typically have terms of five or 10 years. Borrowers with five-year mortgages are finding it "much tougher" to repay, according to a Nov. 10 report from Wells Fargo Securities. About 39.4 percent of five-year loans packaged into bonds were able to refinance in 2011, compared with 80 percent of 10-year commercial mortgages, the report said.
The surge in 2007 loans coming due won't necessarily lead to higher defaults as loan servicers choose to extend the debt rather than foreclose, according to Alan Todd, a New York-based analyst at Bank of America.
Read the full article at Rise in commercial mortgage delinquencies is feared.
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
In Print: Friday, December 9, 2011
Summary: $19 billion worth of commercial mortgage notes will start coming due in less than 30 days. How/if those notes are honored is causing uncertainty. With Europe in turmoil (see There's About To Be A Massive Real Estate Crash In Central Europe) and the U.S. economy sputtering along it is doubtful that refinancing will be an option for many.
Key Quotes:
About 43 percent of the $44 billion in loans packaged into bonds that come due next year were arranged in 2007 before property values tumbled 42 percent, according to Bank of America. The largest deal ever, a $7.3 billion issue by Goldman Sachs and Royal Bank of Scotland Group, has $586 million of loans maturing in 2012, Bloomberg data show.
"These loans were done at the peak of the market," said Julia Tcherkassova, a commercial mortgage debt analyst at Barclays in New York. "They will have trouble refinancing today."
Loans packaged and sold as bonds typically have terms of five or 10 years. Borrowers with five-year mortgages are finding it "much tougher" to repay, according to a Nov. 10 report from Wells Fargo Securities. About 39.4 percent of five-year loans packaged into bonds were able to refinance in 2011, compared with 80 percent of 10-year commercial mortgages, the report said.
The surge in 2007 loans coming due won't necessarily lead to higher defaults as loan servicers choose to extend the debt rather than foreclose, according to Alan Todd, a New York-based analyst at Bank of America.
Read the full article at Rise in commercial mortgage delinquencies is feared.
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Tuesday, December 6, 2011
Georgia DOT Awards Contract for Port of Savannah Connector
Summary: The design and construction of the Jimmy DeLoach Parkway Connector is awarded to Archer Western Contractors of Atlanta. The company submitted a bid of $72,772,000.
Key quote:
The project calls for the design and construction of a new limited access, median barrier-separated, four-lane highway between S.R. 307/Bourne Avenue and the Jimmy Deloach Parkway. The 3.1-mile roadway will be built east of and roughly parallel to S.R. 21.
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Key quote:
The project calls for the design and construction of a new limited access, median barrier-separated, four-lane highway between S.R. 307/Bourne Avenue and the Jimmy Deloach Parkway. The 3.1-mile roadway will be built east of and roughly parallel to S.R. 21.
This unofficial image is my own idea of what the extension (in yellow) could look like and is for illustration purposes only. Click the image for a larger size.
Read the full article at Georgia DOT Awards Contract for Port of Savannah Connector.
The blue star at the south east corner of 30 and Crossgate is a property of 1.57 acres for sale for 1.5 million. The listing can be found on CommercialIQ. Or call me for details at 912-352-1222.
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Sunday, December 4, 2011
Just Listed- Four Marsh Front Lots
Four consecutive lots in Richmond Hill on Dunham Swamp Trail.
*Click each image to view full size*
All lots are partially wooded, have marsh views and access to tidal water. Own peace and quiet and excellent views! Everything else is a bonus.
All lots are in foreclosure selling at a fraction of last sale price.
Take 144 (Ford Ave.) south, left on Belfast River Road, right on Dunham Marsh Trail. Continue on road when pavement becomes dirt. Properties are on left through stone gate.
*Click each image to view full size*
All lots are partially wooded, have marsh views and access to tidal water. Own peace and quiet and excellent views! Everything else is a bonus.
All lots are in foreclosure selling at a fraction of last sale price.
A. Joseph Marshall
Commercial Real Estate Advisor
Coldwell Banker Commercial
Connie Farmer Ray, Broker
912-352-1222
Savannah, Ga
Friday, December 2, 2011
Berwick Marketplace sold to South Carolina firm
Posted: December 1, 2011 - 11:14am | Updated: December 2, 2011 - 12:10am
By 
Summary: The Berwick Marketplace is sold to Ziff Properties, Inc., a Charleston firm. Ziff expects an 18% occupancy increase in two years.
Key quotes:
The Berwick Marketplace, a 38,000-square-foot shopping center located at Berwick Plantation, has been purchased by Ziff Properties, Inc. Ziff, based in Charleston, S.C., also owns the Manger Building downtown.
The Berwick property appealed to Ziff because of the area’s potential for growth as the economy improves. Berwick was a fast-developing part of Chatham County prior to the economic downturn.
“We know that it is not growing as fast as it was,” said Christian Chamblee, Ziff’s director of acquisitions. “Developers originally saw an opportunity, and the market liked what they saw and responded. So when the market takes off again, we think they will respond well again.
Read the full article at Berwick Marketplace sold to South Carolina firm
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Key quotes:
The Berwick Marketplace, a 38,000-square-foot shopping center located at Berwick Plantation, has been purchased by Ziff Properties, Inc. Ziff, based in Charleston, S.C., also owns the Manger Building downtown.
The Berwick property appealed to Ziff because of the area’s potential for growth as the economy improves. Berwick was a fast-developing part of Chatham County prior to the economic downturn.
“We know that it is not growing as fast as it was,” said Christian Chamblee, Ziff’s director of acquisitions. “Developers originally saw an opportunity, and the market liked what they saw and responded. So when the market takes off again, we think they will respond well again.
Read the full article at Berwick Marketplace sold to South Carolina firm
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Parking Lots Offer Safe Haven for Real-Estate Investors
Summary: Parking lots as a commercial real estate investment are as recession proof as they get... if you know how to run them. *Click image for full size*
Key quotes:
Key quotes:
“A surface parking lot offers a good rate of return and its rewards are as close to being recession-proof as you’re going to get,” says Ross Moore, chief economist for Boston commercial real estate firm, Colliers International.
“The older ones are nice little cash cows with relatively little maintenance,” adds Moore, who has authored an annual North American Parking Rates Survey for the past ten years.
“It sounds like an easy thing to do, but it’s extremely difficult to make it profitable,” says John Van Horn, editor of Parking Today magazine. “It’s like buying a bar. If you don’t know how to run it, you’ll lose money. Many companies have gone broke. It sounds like a lot of cash, but there are many ways for it to disappear. You’d better have someone who knows about it to work with you as third-party investor.”
Read the full article at Parking Lots Offer Safe Haven for Real-Estate Investors
For example, a parking lot for sale on Loopnet.com.
Thursday, December 1, 2011
Third Quarter 2011 Coastal Empire Economic Monitor Published
Summary: There will be slow economic growth in 2012 but economic indices point in the right direction. *Click to each image to view full size*
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
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A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
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