Yield Curves, Interest Rates, Volatility Indexes, and the Impact on Net Lease Sector

Contributing Author: Sean O’Shea

There is a lot of discussion in a range of national publications, right now, to acknowledge that we may be in a new era for Investors.  The 10-Year Treasury Rates have moved past 3.0% for the first time since 2013.  The yield curve of 2 Year and 10 Year has rarely been this close.

So, we ask, “What are the implications for the net lease niche?”

I confess that I am one of the observers who can remember how ‘the music stopped’ in 2008-2009, when Lehman Brothers, Bear Stearns, AIG and other august financial institutions stopped trusting each other and the overnight lending mechanisms of the Repo Market which had come to a halt. Scary times that required the triage of QE by the Federal Reserve and forced mergers of a number of banks and financial institutions to attempt to salvage our economy. As seasoned Net Lease Advisors we not only witnessed this, but were in the middle of it. Continue reading Yield Curves, Interest Rates, Volatility Indexes, and the Impact on Net Lease Sector

Selling a Challenging Commercial Property

Contributing Author: Jay Verro, CCIM

In early April of 2017, I was invited to do a Listing Presentation for a 22 acre parcel of Light Industrial zoned land in Saratoga County, the fastest growing County of New York State. Sounds like a listing that most commercial brokers would jump all over, right? Let’s take a closer look at the marketing challenges that accompanied the property:

  • There are 2 parcels of land that lie within 2 different Townships.
  • A County Sewer Easement bisects both parcels in the most developable portion of the property and there are no current lateral connections that serve the existing structures on the parcels.
  • An electric transmission line crosses the western portion of the property with an approximately 60’ wide easement.
  • The property is terrain challenged and to physically get to the top of the property where there are the majority of the developable land requires an access easement from the neighbor to the south, who is also trying to sell.
  • A Class C protected trout stream winds through the property, which creates the need for a 100’ setback in addition to the additional wetlands that are on the parcels.
  • The permitting and approval process would require coordination among no less than 6 State, Town and County Agencies as well as Utility companies.
  • Without the significant expense of adding a bridge to traverse the stream, the result was approximately 2 acres of developable land out of the 22 total acres.

Continue reading Selling a Challenging Commercial Property

The 1031 Net Lease Broker Conundrum

Contributing Author: Sean O’Shea

As a Net Lease Investment Advisor and Buyer’s Broker, we face a number of practical challenges in the recent and current Net Lease Market.

Challenge #1:  Accessing net lease ‘product’ or properties that match a Buyer’s stated criteria.  Reproducing the cash flow of their existing asset is a point of departure, only. Then, we need to establish “What is a risk-adjusted return?”  OK, you say, you want a limited risk new investment.  No problem; but since the Great Recession with most compressed cap rates in memory (Higher prices), we have to sort through the “Net Lease Wheat from the Net Lease Chaff”. Continue reading The 1031 Net Lease Broker Conundrum

Take a Closer Look at Your Commercial Property Assessment

Contributing Author: Jay Verro, CCIM

After a long winter in our region, most folks are eager for nicer weather. Take advantage of the nicer weather by taking a trip to your local Town or City Assessor’s Office. While mundane sounding, the effort could be well worth it when you get your property tax bill.

There isn’t a fixed percentage at which a property must be assessed at in New York State. Many communities rely on the state to provide something called an “Equalization Rate”.  Each community determines its “Total Assessed Value” (AV) while the state determines the municipality’s “Total Market Value” (MV).

TOTAL  AV ÷ TOTAL  MV = EQUALIZATION RATE (ER) Continue reading Take a Closer Look at Your Commercial Property Assessment

University of Michigan Student Housing Research Report 2017-18

Contributing Author: Sean Lyons

An in-depth analysis of the private student housing market at Clemson University 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 market research reports on leading Universities in the United States.

Total Enrollment: Up 2.87%

For the second consecutive fall, total enrollment at the University of Michigan’s flagship campus in Ann Arbor grew by more than a thousand, registering 1,284 more students than fall 2016, for a new University record of 46,002.  Undergraduate student enrollment increased 2.89%, slightly out pacing the 2.83% growth of graduate and professional students. Continue reading University of Michigan Student Housing Research Report 2017-18

Seattle, Washington goes to the Côte d’Azur / Seattle goes to MIPIM 2018

Contributing Author: Chad Gleason, CCIM

It is not often that the State of Washington attends international real estate conferences, but with the incredible growth of the Greater Seattle Area and growing interest from international investors, Washington State made its debut at MIPIM 2018.  MIPIM (Le Marché International des Professionnels de l’immobilier)is an international property, real estate development and investment event hosted annually in Cannes, France. From the official press release from MIPIM, there were over 26,000 real estate professionals, many city and political leaders, with well over 4,500 investors from over 100 countries, who came together for the 4-day event at the Palais des Festival, Cannes. They came to see, share and network with what the world has to offer in real estate investment and development. Continue reading Seattle, Washington goes to the Côte d’Azur / Seattle goes to MIPIM 2018

1Q18 Officially in the Books

Contributing Author: Nick Miner, CCIM

It is amazing how fast the first quarter of each year always seems to fly by.  It is a non-stop, press on the gas pedal type of quarter and 2018 was no different than 2017; well, maybe?

In looking back at total transaction velocity for Phoenix Metro in 2017, there was on average about 260 closings a month (office, retail, industrial, land, apartments, etc.).  When you look at 1Q18, that number is about 192 closings a month; a net drop of almost 26% just in transaction velocity. This is before a deep dive into any one product class; just the macro look at transaction velocity.

There are several reasons that could go into the drop in transaction velocity with one of the main issues being tax reform and the debates leading up to the final product.  The banter back and forth in Washington definitely had the investment markets captivated as to what would ultimately be passed. Continue reading 1Q18 Officially in the Books

A Net Lease Asset History Lesson

Contributing Author: Sean O’Shea

We believe it is, in fact, helpful to have some historical sense of the evolution of the Net Lease Niche of the Real Estate Industry to have a better sense as to how these asset fit into the investment objectives of investors small and large in today’s maturing marketplace.

If you think about it, real estate, as an investment asset class, is a relatively recent development. It was always an entrepreneurial endeavor and was fueled as a worthy investment vehicle going back to the ‘mid-70’s and ERISA provisions, in those days total assets of private pension funds amounted to something like $164 billion dollars; today, of course, its in the “Trillions.” Continue reading A Net Lease Asset History Lesson

The Lost Art of Due Diligence

Contributing Author: Jay Verro, CCIM

Today’s CRE investment transactions involve investors from around the globe, which can lead to pertinent due diligence items being over-looked. A significant percentage of larger property sellers and buyers rely on 3rd party vendors to provide items such as building size, acreage, ceiling height, etc. As an example, Leases that have missing Exhibits, such as site plans, building / space drawings should be a red flag that further “boots on the ground” verification is warranted. It is not uncommon for buyers to submit offers and even purchase properties sight unseen.

Engaging local experts is an excellent way for a buyer to hedge their bets for the future vs. simply buying for an acceptable return now. Continue reading The Lost Art of Due Diligence

Building Bridges not Walls, the Future of Commercial Real Estate

Commercial Real Estate Technology (CRE Tech) firms have emerged addressing a number of industry challenges, which have long been accepted as normal. A few of the solutions are enhancing Customer Relationship Management (CRM), centralizing information sharing, simplifying the creation of marketing materials, increasing the quality of market data, and increasing market reach on offerings. Each CRE Tech Company offers beneficial solutions, but what is most important is the value these CRE Tech firms collectively offer to their clients. Continue reading Building Bridges not Walls, the Future of Commercial Real Estate

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