Link to Profiles:    Property Management | Brokerage

Working in the local market for over 20 years has given this brokerage and property management company the ability to provide their clients with a high level of service that is unparalleled in the industry.

Link to:      SD&S Properties, Inc.

As of July 1^st the following obtains.

Since January:

- The Dow is down 695.52, or 6.7 %

- The S&P is down 87.73, or 7.9%

- The Nasdaq is down 167.79, or 7.4%.

That’s not such good news.  How about the bond market, what’s happening there and what does that tell us?

-  The 10 Yr Treasury Yield is at 2.95% on the first day of Q3 2010.

That’s gotta be good news right?  Wrong!  When do T Yields get that low?  They get to that level when meaningful segments of the US and world economy are under severe stress and alternative investments are considered risky.  What’s an alternative investment?  Assets such as real estate.  Low Treasury Yields often signal low long term interest rates, but be careful what you wish for.  If rates get too low, as they are now, it is a sign of economic contagion.  It is a symptom of a disease infecting the capital markets and the economy.

Ironically, we welcomed the advent of Q2 2010 in April with the 10 Yr Treasury Yield rising through the 4.0% level.  Now it’s 100 basis points lower and yet that is not cause for celebration.

Treasury Yields were last in the range below 3.0% in late Q4 2008 and Q1 & 2 2009, in the shadow of the worldwide collapse of the capital markets.  That was the threshold of the worst economic crises experienced during the careers of anyone reading this.  It’s been 80 years since the world’s economies have faced challenges of greater magnitude than those we face today.

How About Some Good News?

There is good news, more in the nature of “green shoots”, obviously not full blown economic revival.

Commercial Real Estate (CRE) has generally been starved for debt capital.  In contrast, multi-family property continues to benefit from the largesse of the GSE’s (Fannie & Freddie).

It is fair to say that most of the big life companies are back in the game.  That’s the good news. But product criteria are still narrow, i.e., deals with NO hair, fully stabilized, nothing smaller than $10-$15M.  Bottom line: those institutions are chasing (are your ready for this?) institutional grade properties.

More good news is that rates are very aggressive, typically in the range of low 5% to mid-6%. Leverage is loosening up also.  Some will lend up to the low 70% range.  As one large life company guy said to me, “It’s back to the future”.  The competition for Prime deals is savage. They are all chasing the same limited number of qualifying Prime deals and like buyers doing the same, they are having to compromise cap rate objectives.  But also like buyers, they are dealing in a rarified range of product and it’s a product everyone wants.  It is this chase which seems to be giving rise to the observation that cap rates are falling.  That, plus the fact that cap rates are falling for multi-family.  The latter is thanks to the extraordinary financing available from the GSE’s.

Deals <$10M can find financing, but the rates are not as favorable as those noted above and there are fewer lenders active in that range.

Multi-Family

Consider this about multi-family:

1.  Refi – HUD 223(f) is currently priced below 4.2%, 35yr fully amortizing.  However, it takes 6 months to get approval so it is not viable for acquisition financing.

2.  Fannie – today you could get a Fannie loan at 5.1% – 5.2%, 80% LTV.  Obviously, those low rates are symptomatic of a sick capital market and a desperate monetary policy.  At this time the 10 Yr T Yield is 2.95%.  It has been at that level before and every time it has been there, it has been the sign of a contagion.  In late 2008 early 2009, in the post crash shadow, the T Yield was that low.  Then again in 1998 with the post LTCM default and Russian bankruptcy it was in that range for a short period.   If the T Yield falls much lower, we will be in a virtual “non-market” because it is a sign of contagion, not health.

CMBS

The CMBS market is showing nascent signs of revival.  But it will take awhile.  Maybe the God-awful low bond yields will drive investors to CMBS sooner rather than later.  But currently, CMBS is not a viable financing solution for the typical CRE property.

About the Author: Jack Harty is the President of Harty Capital | Commercial Mortgage and Asset Recovery Advisory Services.  Please click on the link to Harty Capital for more information.

Watch the video here to learn more about why this website is quickly becoming the premier website for linking owners, tenants and lenders with pre-screened commercial real estate professionals in markets across the country.

A GlobeSt.com article indicates what most of us in the industry already know; that smaller regional and community banks are the ones who hold a majority of commercial real estate loans.  Many of these loans will come due in the next four years and with commercial properties valued at up to 40% below below their value at loan origination, many of these banks will not be around in the future.  This will have a greater impact in secondary markets where access to institutional capital is non-existent and interest from larger lenders is lacking due to low loan-size and volume.

EVS Realty Advisors, Inc. is one of the latter.  Close attention to symmetry with a balance of information, organized tabs and an ability for even a novice web surfer to easily navigate its pages make this website our pick of the week.  There is nothing special about this website when you first view its contents however, in an industry where a website should at the very least provide a sense of stability, EVS Realty Advisors, Inc. portrays a company that appears to have been around much longer than its 8 year history.  The tabs across the top of the website drop down to allow the website visitor to digest information in bite-sized chunks, a organizational strategy that we think should be used more frequently in the commercial real estate industry.  Whether you’re looking for an investment brokerage advisory firm or an asset manager, this company’s website allows you to review only those items that are of interest without having to wade through awards, accolades, and industry news… Unless you want to.

Landmark Sign Group is the owner of the website featured in this week’s Innovative Friday installment.  More so than most industries that use websites to promote their companies, the signage industry has a unique opportunity to showcase their work through pictures.  Set these pictures to music and you have a perfect recipe to impart more than a list of past clients or a paragraph about how one’s company was founded.  Music and pictures (used appropriately) make a website come alive and fill more than just your brain with information about the company.  They leave an impression that lasts longer than the minute or two that the website occupies your computer screen.

Think back to a memory of an event from the past few years; a baseball game perhaps.  When you remember the event, do you recall sounds and smells that you associate with this memory?  In a small way, the proper use of sound and images on a website can cause the same effect. In reviewing several websites for this week’s blog, I can’t tell you specifics about many of the sites I visited but I can tell you that when I think about Landmark Sign Group, my mind evokes an image of a “visual parade of pictures” and upbeat music that reminds me of Chicago.  This adds interest and excitement and as a result, the life of the website has lived longer in my mind than any of the others.

Try a little test with me.  Click on the link above to the Landmark Sign Group website and view it for about 30 seconds with your speakers turned up.  Set an appointment reminder for this time tomorrow and when your reminder alerts you, think back to the website.  Can you remember the website?  Can you remember more than just the words and the names on the sign?  Do you remember the music and how it made you feel?  If you’re like me, the memory will bring back the sound of the trumpets and the “parade of pictures.”  Congratulations Landmark Sign Group for a website that is well done and appropriate for the sign industry.

Carving out just the sales figures for the U.S., the WSJ suggested that perhaps sales were down due to an improving economy and not due to a poor economy.  Reports that other retailers are reporting higher first quarter sales fall in line with this angle (Nordstrom income jumped 44% in Q1).  When sales figures are reported it is difficult to form a well-guided opinion without the benefit of the sales figures for the rest of the industry.  Sort of makes one think about the political ads that use sound bytes of opponents, doesn’t it?

In any event, it will be difficult to ascertain the true reason why same-store sales are down for Wal-Mart until some time has passed and we can look in our rear-view mirror.  I suspect that the WSJ is more correct than other reports.

In today’s challenging economy, Owners and Investors are seeking out the best values available in commercial real estate and attempting to negotiate the optimum terms to lease or purchase real estate.  In order to achieve such goals and objectives Owners and Investors should utilize a qualified and experienced professional.  Following are ten simple reasons to hire a commercial real estate broker.

Experience: Commercial real estate is not rocket science yet can be complex in structuring advantageous lease or purchase terms.  Nothing in business can replace years of hands on experience.  You may have access to some real estate information via the library, newspapers, Google and the internet but the benefit of hands on experiences is priceless.  A seasoned commercial real estate broker who has lived through the beginning and the end of numerous transactions can offer the benefit of their experiences to your real estate transaction.  This experience is Priceless!

Market Knowledge: As in every industry, market conditions are constantly changing and opportunities are found and lost on a daily basis.  The commercial real estate industry is very proprietary on sharing information unlike the residential real estate market.  A commercial real estate broker processes hundreds of opportunities each day through various sources while filtering out the best for their clients.

Specialization: In most metropolitan cities, commercial real estate brokers specialize in an area such as the office, industrial or retail markets.  As a result, they achieve and maintain expertise in that specialty and utilize this expertize when seeking out and obtaining optimum terms for their clients.

Time Management: A business owner or manager usually has their hands full running the day to day operations of their company.  By engaging the services of an experienced commercial real estate broker, owners and managers can maintain their focus on their business while obtaining the benefits and guidance of real estate professional in quantifying and securing their new facility.

Cost Savings: The most common reason people don’t engage a commercial real estate broker is to save on the cost of a commission.  In commercial real estate the majority of properties are listed by  owners with commercial real estate firms and or have commission agreements with their in house marketing people.  In such cases a compensation or commission is already built into the pricing of the property or space and it is customary to split commissions with cooperating brokers representing tenants.  Thus, no real savings usually are achieved here.  More important aspects to consider are the cost savings that can be achieved through time management, successful negotiations, and proper deal structuring and market knowledge that only an experienced commercial real estate broker brings to the table.

Negotiations: The art of negotiating in a specific industry is honed over years of transactions.  Successful negotiation of a real estate transaction is stressful and in many cases time consuming for those involved.  A commercial real estate broker utilizes their experience in handling negotiations for their client relieving them of that stress by acting as a buffer, and freeing up their client’s time so that the client can focus on their daily business.

Deal Structure: Each and every real estate transaction is concurrently similar yet unique in its structure and function.  Proper structuring of a transaction can save a client hundreds if not thousands of dollars.  An example of potential savings deals with proper structure of “Base Year” in leases for building operating expenses.  Compounding these costs over a five year term can either be a) costly or b) savings to the tenant dependent upon the negotiated structure of the lease terms.

Professional Network: An experienced commercial broker specializing in a specific area has established a proprietary network of resources and informational contacts to assist and support their commercial real estate transactions.  This network of resources can be utilized as needed for your real estate transaction at no additional cost, or time via your commercial real estate broker.

Access to Data and Systems: An experienced commercial broker has established systems to facilitate the process and eliminate unnecessary costs.  These systems, combined with years of accumulated data are available to you via the commercial broker to assist you in the transaction process.  The result is an efficient, cost effective method of securing your real estate requirement on the most beneficial terms to you.

Integrated Services: An experienced commercial broker will be able to provide a client with integrated services relative to their real estate requirement whether they are internal or external consultants.  Securing qualified service providers such as economic incentive consultants, I.T. providers, legal and accounting services to name a few can be a time consuming and costly process added on to the stress of securing the real estate.

The author of this article, Guy Levingston, SIOR is a commercial real estate broker with Intermountain Commercial Real Estate, LLC. based in Boise, Idaho.  Guy’s area of specialization is in office properties and office tenant representation.  You can learn more about Guy by clicking on his name, above.

The moment your browser opens this website you will think you have entered the Jetsons (cartoon), but you won’t find George Jetson or even their dog, Astro.  What you will find is a well thought out website that highlights a few extremely seasoned retail brokers and a wide variety of brokerage and consulting services.  What is immediately apparent when navigating through this website is that Greenlight Retail is well versed with services that are needed in today’s commercial marketplace.  Services such as litigation support and expert witness testimony are present with their own tabs.  The site is fresh, relevant to our current marketplace and offers up informative “substantial”  information.  Congratulations to Greenlight Retail Real Estate Services for being our pick of the week.