Blizzards on Eisenhower Drive

No, not weather resulting from Hurricane Sandy, but rather the construction of a new Dairy Queen at the southeast corner or Hodgson Memorial and Eisenhower Drives.

I am relieved that another prominent corner is not going to become another gas station / future brownfield. I believe this is the same group that owns local KFCs and Taco Bells.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

AJ&C Garfunkel buys Abercorn Common

The Savannah Morning News reports that David Garfunkel with AJ&C Garfunkel purchased Abercorn Commons for $24.2 million on Thursday.

Considering KimCo paid $40 million for Chatham Plaza in June 2007 and sold Largo Plaza in March for $10 million, this seems like a heck of good deal.

Kudos to the Garfunkels for bringing the development back to local owners and keeping the it in the local economy! Next step is to get the center back up to 100% occupancy, which won't take them long at all.

Read the full article at Local investor buys Abercorn Common

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Atlanta developer to build luxury outlet mall near Savannah

This project has been in the works for the last five years and I am glad to finally see it coming to fruition!

Posted: October 10, 2012 - 12:38am  |  Updated: October 10, 2012 - 7:46am
Reported in the Savannah Morning News by Mary Mayle 

The company that built the Mall of Georgia in Gwinnett County and the upscale St. John’s Town Center in Jacksonville, Fla., is planning a 560,000-square-foot luxury outlet mall in Pooler.

The Outlet Mall of Georgia is projected to open in the summer of 2014 in the southwest quadrant of I-95 and Pooler Parkway with four anchor stores, a food court, restaurants and a wide variety of shops.

The proposed $200-million project is set to break ground next spring and would create as many as 2,000 construction jobs, according to Ben Carter of Ben Carter Enterprises. When fully open, the mall would create between 1,700 and 2,000 retail jobs, Carter said Tuesday.

The 170-acre site will accommodate another half-million square feet for peripheral retail and hotel construction.

While financing is not complete and he would not name potential tenants, pre-leasing has begun, with interest from a number of high-end retailers, Carter said.

Abercrombie, Brooks Brothers, Coach and Louis Vuitton are among the tenants in the Jacksonville mall.

“From a visitor’s perspective, one of things that is missing here is really quality retail,” Carter said.

The Savannah engineering and architectural firm Kern-Coleman is working with Carter on the project.

Carter’s unscheduled presentation came at the end of the Savannah Economic Development Authority’s monthly meeting and was greeted with enthusiasm.

“The announcement today that Ben Carter is developing a luxury outlet mall in Chatham County is fantastic news,” said David Paddison, SEDA board chairman. “In addition to the massive construction investment, job creation and additional tax revenues, the Outlet Mall of Georgia will be a significant amenity for our residents, visitors and the millions of travelers passing through the I-95 corridor.

“This will be the signature outlet project on I-95 between Florida and Virginia”

Savannah is the second largest tourism market on the regional coast with 12 million tourists per year compared to Myrtle Beach at 14 million, Charleston at 4 million St. Augustine, Fla., at 3.4 million and Hilton Head Island at 2 million, according to Carter’s research.

“The closest comparable malls along the I-95 corridor are in Virginia and Florida,” he said. “While the Savannah regional trade area alone would not be sufficient to support a mall of this size, the tourist and traffic counts along the interstate more than make up for that.”

Traffic counts on I-95 run approximately 68,000 vehicles a day or 24.7 million annually.

“This is going to be huge for Pooler and all of Chatham County,” said Pooler Mayor Mike Lamb. “This is the shopping piece we’ve been looking for to make us a more complete city.”

Pooler has been in the bulls eye of targeted growth in the area for the last decade, and Lamb credited city council and staff with helping the city make good growth decisions. “We are ready for this,” he said. “Ben Carter Enterprises is the real deal, and we really appreciate them choosing our city.”

Savannah Area Chamber of Commerce President Bill Hubbard agreed.

“There’s a lot of work still to be done, but this is a great organizaion with tremendous capability,” he said.

“We are eager to help in any way we can.”

Read more about the Outlet Mall of Georgia at Upscale outlet mall proposed for Pooler and Atlanta developer to Ben Carter build luxury outlet mall near Savannah.  

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

The Last Time This Indicator Flashed Buy Was 2002

Just read this entire article. It is too good to minimize with a summary.

Alternatively, read the full article at The Last Time This Indicator Flashed Buy Was 2002.

Oct 9th, 2012 | By Chris Mayer

I just locked down a 2.875% interest rate, fixed for the 15-year term of the mortgage. No points. With rates like these, I find myself rethinking the idea that I want to pay off my mortgage.

I can do a lot better than 2.875% investing the money. If I just sock it away in gold, I bet I’ll come out way ahead. Finding investments that clear such a low hurdle is not that difficult. This is true especially in commercial real estate, where you can use modest leverage and lock up tenants in long-term leases. You make money on the difference.

Right now is a great time to do this, if looked at from a historical perspective…

The 10-year Treasury rate is 1.64% as I write. That is what investors are willing to accept to lend money to the U.S. Treasury for a 10-year term. It seems absolutely crazy. But the Treasury rate we see is something of a forced smile.

The U.S. Federal Reserve, as you know, pledges to keep rates low. So interest rates — probably the most important prices in the whole constellation of prices — are essentially the victim of price fixing. This will have sickening consequences down the road for the U.S. economy, the stock market, the U.S. dollar and more. But for now, it is a license to print money by borrowing cheaply and investing in property.

To see why, you have to understand that Treasury rates are the platforms on which borrowing rates stand. I was a banker before I started writing newsletters. I remember following the “Treasury curve” (all the Treasury rates for different terms) with great interest because we priced our loans off Treasury rates. So if I were in banking today, I might quote a rate of 250 basis points over the 10-year Treasury rate. That would be 1.64% plus 2.50%, for a rate of 4.14%. The rate would change as the Treasury rate changed, or until locked in.

So that’s why Treasury rates are so important. Now let’s look at cap rates.

A cap rate is a real estate term you should know. It’s easy and intuitive to understand. It is basically the annual return you earn as an owner in the property. So if you buy a building for a million bucks and it generates $100,000/yr in profits for you after expenses, then the property has a 10% cap rate. (The $100,000 divided by your $1 million purchase price.)

The cap rates available in the real estate world are attractive when viewed against the 10-year Treasury yield. A wider spread between the two means you can earn a wider profit margin. As you can see in the nearby chart, the post-2008 spread is the widest it’s been since the great 2002 bottom.

From 2002, the NAREIT Index — composed of real estate investment trusts, or REITs —earned nearly a threefold total return over the next five years. That’s pretty good. And I think the odds favor you this time around as well.

There are differences, of course, and I don’t expect an exact replay. In 2002, the NAREIT Index yielded 7%, versus just 4% today. But the spread is more important than the raw yield. And the spread we have today is wide — if only artificially because of the actions of the Fed.

So I think this idea — as with almost all investment ideas — has a time window. When the low interest rate party starts to get into the wee hours and the barmen look ready to make a last call, we’ll have to diligently step for the exit to beat the rush. That won’t happen until at least 2014.

Another caveat to my bullish real estate call is that you have to be a little picky. Not everything is cheap. Already, some of the best properties in the biggest cities are at full price. Here is a snapshot of the cap rates in the central business districts of four American cities that shows you the big differences in markets:

You get much better value if you look at secondary cities.

As I’ve noted before, the opportunity in real estate is especially attractive because there is still a lot of debt coming due. Including 2012, and through 2016, there is $1.7 trillion in commercial real estate debt coming due. (In Europe, there is nearly a trillion dollars of debt maturing in just the next three years.) Borrowers will have to refinance that pile. They will likely have to put cash in the deal — or sell. The latter creates great opportunities for buyers of real estate.

My own 2.875% mortgage reminded me of the advantages afforded those with good credit and their ability to borrow at super-attractive rates. The same is true in the corporate world. Now is the best time to use these advantages in real estate since 2002.

Sincerely,

Chris Mayer
 
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Ga. Ports report strong start to fiscal year 2013

Published: October 9, 2012 by The Associated Press

 

SAVANNAH, Ga. — The Georgia Ports Authority says the states shipping terminals in Savannah and Brunswick are off to a promising start in the new fiscal year that started July 1.

Georgia ports chief Curtis Foltz says the Savannah port handled more than 522,000 containers in July and August, an increase of 4.4 percent from the prior year. Overall tonnage of cargo moving through Savannah and Brunswick was up 5.6 percent to more than 4.5 million tons of imports and exports during the same two months.

The increased container traffic through Savannah was caused entirely by a very strong August. Port officials reported container traffic in July actually dipped 4 percent compared to the previous year.

Foltz released the figures Monday as the port authority's board met in Brunswick.

Read more here: http://www.macon.com/2012/10/09/2206443/ga-ports-report-strong-start-to.html#storylink=cpy

 

Read the full article at Ga. Ports report strong start to fiscal year 2013              

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Keys to understanding opportunities in real estate

By David Sherman | October 2, 2012 10:04 am as seen in http://www.pionline.com

Summary: The savvy commercial real estate investor knows that properties with stable, long term tenants that produce  reasonable (an amount determined by individual criteria) fetch top dollar. Other properties with slightly more risk (expiring leases, high maintenance, vacancy, refinancing needs, etc) are dirt cheap. The goal is to find the mispriced riskier properties, install new management and add significant value, and then sell as a safe investment for a nice profit. Investors are duplicating this process with properties from single family homes to skyscrapers.

Key Memorable Points:

Income is expensive, but bricks are cheap.

As traditional debt capital remains limited, new sources form.

A steady supply of overleveraged assets will continue to come to market.

Fundamentals have bottomed out in most major markets.

Mispriced risk creates attractive investment opportunities.

Read the full article at Keys to understanding opportunities in real estate

A. Joseph MarshallColdwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Buyers Closing Costs for Commercial Real Estate Purchases

Buying commercial real estate in Savannah, Ga. without the services of a broker? Here is an article you must read to have the best understanding of real estate closing costs.

by Daniel Doran - 25 September 2012 on http://realtybiznews.com
Closing a commercial real estate deal involves many of the same costs as you would find in a residential closing. The main difference is the costs are normally much higher for a commercial deal due to the additional research required in not only closing on the physical property but the financial aspects as well.

It is normal for commercial real estate closing costs, even for an inexpensive property, to run into the thousands of dollars. As a buyer you need to be aware of these costs and factor them into your overall price
for obtaining the property.

All of the closing costs are negotiable between the seller and buyer. As a buyer you can, and should, have it stated in the contract which party will be responsible for each cost at closing such as title insurance, deed stamps, surveys and settlement fees just to name a few. However, since RESPA (Real Estate Settlement and Procedures Act) does not apply to properties that have more than 4 residential units, your lender is not restricted in what they can collect from you at closing.

For example, in a residential closing the lender can only collect a certain amount of money to hold in escrow for expenses like real estate taxes and insurance. In a commercial real estate transaction there is no limitation and your lender could require you to put significantly more money into escrow or charge higher loan administration fees, points or any other cost they deem acceptable. Because of this it is critical you negotiate all of the fees for your loan with your lender well in advance of closing.

While there is nothing stopping you from closing a commercial real estate transaction on your own, it is highly recommended you use the services of a qualified real estate attorney. Although this presents an added expense at closing that can run anywhere from $1,000 to $5,000 or more depending on the size and complexity of the deal, it is money well spent. A mistake made at the closing table can cost you untold tens of thousands of dollars over your entire length of ownership of the property.

With all of this in mind, here is a basic breakdown of what you can expect each party to pay for in a commercial real estate closing.
Seller Paid Expenses

1. Title Policy covering the basic insurance requirements but if your lender requires specific endorsements to the title policy then the buyer can expect to pay for those endorsements.
2. ALTA Survey. Most lenders will require a new survey before lending on a commercial property. These surveys can cost anywhere from $800 and up depending on the property involved.
3. UCC Searches. These are similar to title searches except they are done on any personal property or equipment that is being sold as part of the transaction. The UCC is similar to a mortgage that is placed on property. The UCC search tells the prospective buyer if there are any remaining liens on the property and equipment being transferred.
4. State and County Transfer Taxes. This is normally the deed stamps required by the local jurisdiction to be paid whenever title changes hands on a piece of property. The rate collected is set by the state or county.
5. Pro-rated expenses up until the day of closing. For example any utility bills such as water/sewer or electric that are paid on a monthly or quarterly basis will be paid by the seller up to and including the day of closing. This is also true for any real estate taxes that are owed on the property. The seller is responsible for paying all taxes owed up to the day of closing.
6. Costs to clear title. This includes any amounts needed to pay off the sellers existing financing on the property, record satisfactions of liens or mortgages, payoffs to municipalities, or any other expense that must be paid in order for the seller to deliver clean title to the buyer.

Buyer Paid Expenses

1. Environmental Due Diligence. This includes a Phase I or Phase II environmental study on the property. However many times a contract will state the seller will reimburse the buyer for this expense if any undisclosed contamination is found in the report that causes the closing to be canceled.
2. Title Endorsements. As stated above, these are endorsements to the title policy such as an environmental hazard endorsement that the buyer’s lender requires in order to fund the loan on the transaction.
3. Municipal Transfer Taxes that may be required such as operating permits or pre-paid business licensing requirements.
4. Special Survey Additions such as a flood search or topographical contours of the property or aerial views required by the buyer’s lender.
5. Property Inspection expenses. These include the expenses you incurred as part of your due diligence to determine the status of the property both structurally and for its intended use.
6. Financing Expenses. These are any fees charged by the buyer’s lender to facilitate the funding of the transaction and can include the cost of recording the mortgage, assignment of rents, recording the deed, lender administration and closing fees.

Some expenses are shared by both parties such as the settlement closing fee charged by the title company to perform the actual signing and recording of documents. Also any escrow fee charged by the title company to transfer the funds from one party to the other.


Daniel Doran is a 20+ year veteran in the real estate industry. He is a previous owner of a law firm, mortgage and title company. Daniel has also written several books on mortgage modification, short sales and real estate investing. He currently specializes in Commercial Finance and Real Estate Development and is a graduate of Manhattanville College and Brooklyn Law School. You can contact Dan at Buildings By Owner. Read the full article at Buyers Closing Costs for Commercial Real Estate Purchases


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga