Certainly for the last decade or longer, the drugstore sector has been viewed by many single tenant investors, as a bond-like investment, in the sense that they had investment grade ratings (this has changed over the last decade, in part, due to the additional debt that has been incurred for various mergers in the sector); and predictable, stable income streams that were afforded due to absolute NNN lease structure of most drugstore tenants’ leases.
There has been some concern, over the years, regarding whether these assets afford an inflation hedge, since in the case of Walgreens-Boot Alliance, that the rental income was stabilized or ‘flat’ for almost 75 years. The CVS Health and Rite Aid lease structure can vary; but do afford some scheduled increases.
Most people have heard or even used the expression “Stay in Your Lane,” and almost everyone would apply it to when they are behind the wheel of an automobile. But it can have significant meaning in the world of Commercial Real Estate (CRE). We live in an age of technology where the internet and social media have increased the amount of information available and the speed at which someone can obtain information about almost anything, including commercial properties.
This access has certainly benefitted the general public as would-be buyers and tenants can peruse the various websites anonymously to search for the right property that meets their needs, and only after identifying such property, will they engage the assistance of an owner or listing broker. However, this accessibility to information has also “allowed” or even encouraged real estate brokers to venture into areas where they may not have comprehensive and thorough knowledge.
As most of the country is finally digging out from a long and snowy winter, it’s a great time for commercial real estate (CRE) professionals to add value to their existing client base. What is the one thing that we hear so often from our colleagues and clients? Answer – “there’s not enough hours in a day,” especially with continual interruptions thanks to the growth of mobile technology.
As their trusted advisor, you can lessen their load while making you more valuable to them by doing one easy, yet often over-looked task. Each spring, I make the time to visit each of my landlord and seller client properties for the sole purpose of looking at them with a fresh set of eyes, just as a prospective tenant or buyer would do on their first time into the property. CRE professionals, landlords and sellers often get tunnel vision after pulling into their property day after day, making it too easy to overlook deferred maintenance items.
Commercial Real Estate (CRE) transactions range from the fairly simple to immensely complex! The degree of transaction complexity can be mitigated by an educated and understanding commercial real estate broker who has expertise in your type of transaction and the resume to prove it.
A broker’s education and experience on specific sides of the transaction make he/she more understanding and knowledgeable of the other side’s needs. If you’re a commercial real estate landlord, you should seek out the expertise of a broker / agent with a significant amount of Landlord Rep. experience as the needs for a landlord typically differ from those of a tenant. It would also be beneficial to you if that broker/agent also has tenant representation experience, so they understand what typical expectations are from small business tenants to corporate tenants, etc.
Every one of us is a broker. That is to say, we’re all using someone else’s money. Whether you’re a baby-faced runner at CBRE or quarterbacking a big-time pension fund, you’re still a broker—you need to sell your deal to somebody, whether to a mom & pop investor or a bored investment committee. It’s not your money and, for that matter, it’s usually not theirs. The only true principals in real estate may be the millions of 401K retirees who are the capital behind every major player in the industry. Even the old rich guys still in the game are using some else’s money; in their case, it’s their kids’.
Commercial brokerage is a bit like bull-riding. Only a handful of agents, the best, last much beyond their twenties, the vast majority unable to deal with the pressure of having their cash flow meter reset to zero every January 1st.
To fully understand and thrive in commercial real estate one has to understand much more than the simple “bricks and mortar” that make up a building. A successful commercial real estate broker (developer, investor, or lender) wears many hats and should have knowledge across a variety of different industries and disciplines.
An in-depth analysis of the private student housing market at University of North Carolina conducted by Triad Real Estate Partners. Triad Real Estate Partners concentrates in private student housing and multi-family real estate brokerage. Triad Real Estate Partners’ research team compiles in-depth student housing market research reports on leading Universities in the United States.
Total Enrollment: DOWN 0.86%
Fall 2018 saw Florida State’s total enrollment decline for the third time in the past four years, although none of the decreases accounted for more than 1% of FSU’s roughly 41,000 students. Between 2000 and 2010, enrollment at FSU grew from 33,951 to 40,416 – an increase of 19.04%. The subsequent eight fall semesters have been essentially stagnant. Since fall 2011 total enrollment has oscillated, though always landed between 40,600 and 41,400.
Contributing Author: William F. “Felton” McLaughlin, CCIM, SIOR
When it comes time to sell a commercial property that sits in a challenged location, the first course of action for a seller and/or the listing broker should not be to wonder about the size of the discount that should be placed on the valuation of the property. Rather, focus your efforts on all characteristics of the property that are either unique or offer some sort of competitive advantage. If you can identify how these unique features benefit the user, you can market the challenging property more effectively.
As the recent sale of a veterinary medical office building will show, we discovered some unique property attributes that helped the seller achieve a sale price close to the asking price.
There has been a lot of discussion, recently, in broader investment circles, that we have come through ten years since the “Great Recession of 2008-2009,” and that some scale of a Recession is on the horizon, whether Q4 2019 or mid 2020, which suggests, a round of “defensive investing” may be in order.
Having come through this period of historically compressed cap rates (higher prices) across all asset classes, none has been more pronounced than the NNN retail sector of the real estate investment industry.
Immediately after the Great Recession, when debt sources were becoming more diverse, both debt and equity were available, in abundance, in the multi-family or recycled housing sector, since you had a new captive audience of former home owners (newly created renters) who, in some markets, actually rented their own prior homes from their new hedge fund landlords, who had swooped in and bought up bank REO assets en masse in certain markets like Phoenix.
Commercial property owners who lease out their buildings to others have multiple choices when designing the lease. Even after the lease is designed, further consideration must be taken to determine the execution of the designed lease.
In the event a commercial property owner has chosen to utilize a triple net lease with their tenant, the next choice to be made is how to handle taxes, maintenance, and insurance costs. The landlord has two options: 1) purchase their own insurance and pass through the cost of the policy to the tenant or 2) to allow the tenant to purchase their insurance directly.