LWR Commercial
Archive for July, 2009
Short Sales, Fascination and Frustration
Jul 31st
With his permission, I'm reprinting some comments made by Florida businessman Felix Santiago on Activerain.com, the excellent networking site for real estate agents. Santiago is in the business of helping homeowners negotiate the sale of their homes for less what they owe the bank-- a process known as a short sale. I am in no way endorsing this business, but I think it's good to get a lot of different voices on this blog. Everything that follows are the words of Mr. Santiago.
"ANYONE THAT TELLS YOU THEY KNOW THE SECRETS OF DOING SHORT SALES, RUN FROM THEM AS FAST AS YOU CAN! AND HERE ARE THE REASONS WHY...
The lenders still are not sure that what they are doing is right FOR THEM. They are constantly changing their short sale and loss mitigation process to figure out what will make the most return on the loss. It will change at the whim of those assigned to review the pipeline disaster that is their loss mitigation. And, time and time again, the changes usually are not for the best. They only further complicate the process. The banks are in the business to lend money. The whole loss mitigation and short sale business is still a blur to them. Think about how absurd this business is...they will forgive $300,000 on the property without blinking, but will kill a short sale for the remaining $5,000.
The housing crisis is NOWHERE NEAR A BOTTOM! The biggest reason for this is the tremendous amount of inventory. And I'm not simply talking about the inventory in the lender's hands. I'm talking about inventory yet to be taken back. There are millions of homeowners living in their homes for free. I have clients going on 2 and 3 years without a mortgage payment. The lenders and their investors are simply overwhelmed by this crisis and they would rather see someone in the property taking care of it. Once they foreclose, they are responsible for all the bills on the house. Only 30% of the lender inventory is even available for sale. Nearly three times the current inventory is pending foreclosure. And unless everyone behind on their payments gets back to work and starts paying their mortgage, the crisis will not be going away any time soon."
Why Generation X Has the Leaders We Need Now
Jul 31st
I found this article very interesting and left-brain in how she makes her determinations. A good read for anyone doing business in a multi-generational office or works with family.
Tamara J. Erickson is both a McKinsey Award-winning author and popular and engaging storyteller. Her compelling views of the future are based on extensive research on changing demographics and employee values and, most recently, on how successful organizations work.Erickson has co-authored four Harvard Business Reviewarticles and the books Retire Retirement: Career Strategies for the Boomer Generation and Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent. She is with nGenera.
Why Generation X Has the Leaders We Need Now
10:58 AM Sunday July 19, 2009
Tags:Generational issues, Leadership
William Strauss and Neil Howe, coauthors of Generations, posit that each generation makes a unique bequest to those that follow and generally seeks to correct the excesses of the previous generation. They argue that the Boomer excess is ideology and that the Generation X reaction to that excess involves an emphasis on pragmatism and effectiveness.
As many of you know, I’ve spent much of the last year talking with members of Generation X — those of you born roughly in the 1960s and ’70s. The book I’ve written based on those conversations (What’s Next, Gen X? Keeping Up, Moving Ahead, and Getting the Career You Want — safely in the hands of the publisher and due out in December) includes many of your voices — including quotes from your responses to posts on this site. Through this research, I developed a deep admiration for the generational traits evident among most X’ers, particularly in the context of our current challenges.
Future leaders in all spheres will have to contend with a world with finite limits, no easy answers, and the sobering realization that we are facing significant, seemingly intractable problems on multiple fronts. Perhaps the biggest change from the past: leaders will have to listen and respond to diverse points of view. There will be no dominant voice.
In this context, I’m convinced that Gen X’ers will be the leaders we need. The experiences that shaped those of you who were teens in the late ’70s and ’80s, as I’ve outlined in past posts, translate into valuable contemporary traits and perspectives.
- Your accelerated contact with the real world, for many through a “latch-key” childhood, has made you resourceful and hardworking. You meet your commitments and take employability seriously.
- Your distrust of institutions grew as you witnessed the lay-offs of the ’80s and has prompted you to value self-reliance. You have developed strong survival skills and the ability to handle whatever comes your way with resilience. X’ers instinctively maintain a well-nurtured portfolio of options and networks.
- A sense of alienation from your immediate surroundings as teens, coupled with rapidly expanding technology, has allowed you to look outward in ways no generation before could or did. You operate comfortably in a global and digital world. Many of you are avid adopters of the collaborative technology that promises to re-shape how we work and live.
- Your awareness of global issues was shaped in your youth, and you are richly multicultural. You bring a more unconscious acceptance of diversity than any preceding generation. Your formative years followed the civil rights advances of the 1960s. High divorce rates during your youth meant you are the first generation to grow up with women in independent authority roles. You welcome the contributions of diverse individuals.
- Your preference for “alternative” and early experience in making your own way left you inclined to innovate. You tend to look for a different way forward. Your strongest arena of financial success as a generation has been your entrepreneurial achievements.
- Your skepticism and ability to isolate practical truths have resulted in rich humor and incisive perspective. You help us all redefine issues and question reality.
- Your childhood made you fiercely dedicated to being good parents, prompting you to raise important questions about the way we all balance work with commitments beyond the corporation.
- Your pragmatism has given you practical and value-oriented sensibilities that, I believe, will help you serve as effective stewards of both today’s organizations and tomorrow’s world.
The most difficult elements of your past may well be those that provide you with the strongest capabilities for today.
You have traded the idealism of my generation for realism, tempered by value-oriented sensibilities. At mid-life, you are well-prepared to serve as pragmatic managers, applying toughness and resolution to defend society while safeguarding the interests of the young. You will force nations to produce more than they consume and fix the infrastructure.
In today’s challenging world, your humor may be your most-valued asset. Czech leader Václav Havel said, “There are no exact guidelines. There are probably no guidelines at all. The only thing I can recommend at this stage is a sense of humor, an ability to see things in their ridiculous and absurd dimensions, to laugh at others and at ourselves, a sense of irony regarding everything that calls out for parody in this world.” You help us step back . . . and remind us to laugh.
You will have the opportunity to change the corporate template, and create organizations that are more conducive to your values. As leaders, you will be able to reshape the organizations you lead to make them better places for future generations and yourselves, make them more humane, and break the cultural norms of corporate life — long hours, a focus on full-time work, heterogeneous perspectives, and language of combat. You will bring your desire to create better alternatives, including how to balance work with commitments beyond the corporation and finding meaning in work. Most importantly, your preference for “alternative” and your inclination to innovate will allow you to look for a different way forward.
I’m ready to join the team.
Commercial Sales Still Few and Far Between
Jul 28th
According to Moody’s/REAL Index, the transaction velocity has slowed to practically nothing and the prices made their second most dramatic fall after April. See below for the full article.
CRE Prices Continue to Drop in May, Says Moody’s/REAL Index
Jul 23, 2009As the economic uncertainty continues, real estate prices continue to fall. The Moody’s/REAL National All Property Type Aggregate Index from Real Estate Analytics L.L.C. measured 125.04 for May, a decrease of 7.6 percent from the previous month. That represents the second largest one-month decline after April’s 8.6 percent drop. The index, which has captured price data through the end of May 2009, is now 28.5 percent lower than it was a year ago and 34.8 percent below the peak measured in October 2007.
“We cannot underestimate the enormity of what the data has represented in the past two months,” said Neal Elkin, president of REAL. “The fact that this month’s price decline is less than last month’s price decline might be seen as a positive sign in some circles. It could suggest that bottom in prices maybe starting to form, however, we need see higher transaction dollar and deal volume in order to draw a more would definitive conclusions.”
While Transaction volume in the overall market has fallen to its lowest level yet. There were 282 transactions capture by REAL in May and of those, 52 were qualified as repeat-sales transactions to be incorporated into the calculation of the index
2009 – Best in Client Satisfaction Award
Jul 27th
Five Star Real Estate Agents
Best in Client Satisfaction Award
Thank you for choosing me as one of the top 7% of licensed agents in the Sarasota area.
I look forward to continuing to exceed expectations for my clients this year. If I can be of any service to your commercial real estate needs in sales, leasing or property management please do not hesitate to contact me.
Thank you,
Anthony Homer
One Picture Everyone Can Relate To
Jul 27th
A little bit of levity on a Monday morning.
Who hasn’t foudn themselves wishing for this?
As Featured in Herald Tribune Business Monday
Jul 27th
An experienced hand in a tough era
JOE HEMBREE: Past lean times help prepare him for the current slump
Joe Hembree at his downtown Sarasota office.STAFF PHOTO / MIKE LANG
Published: Monday, July 27, 2009 at 1:00 a.m.
Last Modified: Friday, July 24, 2009 at 7:06 p.m.
Last Modified: Friday, July 24, 2009 at 7:06 p.m.
SARASOTA – Anyone can sell, lease or manage commercial real estate in the middle of a boom.
The difficult task comes when buyers and tenants are hard to come by and banks are exerting pressure on owners to perform on their loans.
In lean times such as these, it pays to have experience. And Joe Hembree has experience.
The 62-year-old commercial real estate veteran, who heads a 17-employee commercial real estate brokerage in downtown Sarasota, prides himself on being able to manage problem properties in difficult times.
He managed the old Southeast Bank building at Five Points in Sarasota for eighteen months after it was seized by regulators during the savings and loan crisis. At a time when buyers were just as scarce as they are today, he sold the 75,000-square-foot structure to insurance executive Bill Griffin for $2.5 million in 1993.
At the beginning of this decade, Hembree’s firm was appointed by the bankruptcy court to manage a 300,000-square-foot health care complex at the corner of Bahia Vista Street and Tuttle Avenue in Sarasota after the former owners ran into financial trouble. Hembree was charged with leasing and maintaining the buildings and finding buyers who could figure out what to do with the complex. In 2002, Hembree sold it to Sarasota investors David Band and Mark Kauffman, who turned it into a successful medical operation.
In 2007, Hembree’s firm took over the Acculab Laboratories’ 13,258-square-foot industrial warehouse on Northgate Boulevard in Sarasota after the company’s owner was charged in 2007 with Medicare fraud and filed for bankruptcy protection. Hembree’s firm found a buyer who paid $620,800 for the building in May 2008.
In each case, Hembree was handed a problem and had to figure our what to do.
“You have to find out what is missing to make a deal work,” Hembree said.
In the case of the Southeast Bank building, Hembree found a buyer who needed extra parking — something the Southeast Bank building had plenty of. Hembree was able to show Griffin that it would cost about the same amount of money to buy the building and its parking lot as it would have to erect a new parking building nearby.
With the health care building, it was a matter of finding patient, deep-pocketed investors who were willing to experiment and see what would work.
“Distressed properties require buyers who are diligent and persistent,” Hembree said. “Problems bring opportunities, but you have to keep trying things to see what will work.”
With the Acculab building, it was a matter of working with the bankruptcy court and finding a solution that would maximize the return for creditors.
Though Hembree has had a history of success in turning around properties, he is the first to admit that he cannot help everyone.
If someone came to him today and said they had to get $18 a square foot in rent to make their project work, he would have to pass on the opportunity.
“I can only make suggestions based on the reality of the market,” Hembree said.
Reality in the commercial market is not pretty these days.
After topping out in 2006, sales, prices and lease rates of commercial properties have been dropping. At the same time, commercial foreclosures are on the rise.
The biggest problem, Hembree said, is that banks are beginning to turn up pressure on owners of commercial real estate — even those who are current on their interest payments.
As the value of properties drop, banks are asking owners to bring more money to the table if they want their loans renewed.
“The biggest concern going forward is how banks are going to handle all the properties whose values are getting down where they are equal to what has been borrowed,” Hembree said. “If banks start demanding payment, it’s going to be a disaster.”
In the midst of the chaos, Hembree is confident that clients will seek out advisers who have been there before.
“There are so many people out there advising clients that have only been in the business for 10 years or less and have never been through something like this,” Hembree said. “All they’ve known is a sustained boom and have no other point of reference.”
Proof there are deals out there: even for land!
Jul 21st
Eola Capital LLC, one of the Tampa Bay area’s larger office landlords, bought 72 acres of undeveloped land near the Lee Roy Selmon Crosstown Expressway in southeast Tampa.
Crosstown Owner LLC, whose address is the same as Eola Capital according to state corporate records, paid $2 million for 72 acres, or roughly $27,800 per acre, according to a deed filed July 9 with the Hillsborough County Clerk of Court.
“That’s an unbelievable deal for Eola Capital,” said Derek Pettigrew, an associate land broker atCushman & Wakefield Inc. in Tampa.
Crescent Resources, based in Charlotte, N.C., is reorganizing under Chapter 11 of the U.S. Bankruptcy Code. The development company, owned by Duke Energy Corp. (NYSE: DRE) and Morgan Stanley, is one of the better-known local developers.
Crescent Resources developed Corporate Center, a Westshore office complex adjacent to International Plaza in Tampa, and the 263-acre Hidden River Corporate Park near the University of South Florida in Tampa.
The company said its June 10 bankruptcy filing was necessary for it to reorganize its finances, reduce its debt level and improve its capital structure.
Orlando-based Eola Capital, which owns 1.6 million square feet in the Tampa Bay area, couldn’t be reached for comment.
Tampa Bay Business Journal – July 9, 2009
/tampabay/stories/2009/07/06/daily54.html
Landlords Cut Rates and Lease Terms
Jul 7th
According to Commercial Property News, landlords are getting shorter leases and tenants are happy with the shorter fuse.
The average terms for office and industrial leases reached their lowest levels of the decade in the second quarter, according to a report by real estate services firm Grubb & Ellis Co. The average office lease during the quarter was just 52.3 months, while the average industrial lease came in at 43.4 months. The recession and weak corporate revenues have prompted many tenants to opt for short-term renewals as existing leases expire, as opposed to longer extensions. And landlords, for their part, are in no position to demand longer terms, given the downturn in demand for space across markets and resultant switch from an owners’ market to a renters’. However, some owners are only too happy to ink tenants to shorter-term leases, hoping that rental rates will rebound by the time those shorter leases are up, this allowing them to jack rents back up.
Commercial Real Estate Getting an SBA Booster
Jul 6th
The SBA is getting involved in the commercial real estate market to protect and create jobs. The Herald Tribune details how the program is supposed to work.
By JERRY CHAUTIN
Herald-Tribune ColumnistPublished: Monday, July 6, 2009 at 1:00 a.m.
Last Modified: Friday, July 3, 2009 at 5:48 p.m.It is something old and something new. It is also something borrowed.
The something new is a worthwhile enhancement to U.S. Small Business Administration’s 504 loan lending. The 28-year-old program can now be used to refinance your existing commercial real estate while it also funds your expansion.
But to understand the enhancement, we need to briefly review the something old.
It allows you to borrow up to 90 percent of your cost to build, buy or expand a commercial real estate building. The funds can also be used for capital equipment, furnishings, fixtures and fees incidental to the transaction. Examples of suitable real estate include owner-occupied, commercial condominiums, offices, warehouses, franchises, restaurants, car washes, bowling alleys and skating rinks. Investor-owned properties do not qualify.
Job creation is 504’s raison d’etre.
“For every $50,000 guaranteed by the SBA, (the borrowers) must be able to demonstrate that they are creating or retaining at least one job,” says Karen Mills, SBA’s administrator. As part of the federal stimulus initiative, job creation has temporarily been relaxed to one job per $65,000.
The program “is administered by about 270 certified development companies in a partnership with the commercial lenders and the SBA,” Mills says.
Christopher Crawford is president and chief executive of the National Association of Development Organizations. It is the trade association for the nation’s CDCs.
He says, “Since this program has been created in 1986, more than 3 million jobs have been created or retained by 504 loans, and that is by far the largest economic development program within the federal, state or local governments”
SBA typically guarantees 40 percent of the project cost in the form of a subordinated debenture. Simultaneously, a conventional lender makes a 50 percent first mortgage. The remaining 10 percent equity is injected by the borrower.
You can read more online at tinyurl.com/yukpux.
The refinancing enhancement allows you to borrow money to pay off an existing commercial real estate mortgage that is not involved with your expansion. It cannot exceed 50 percent of the expansion cost for your new project.
Thus if your cost is $6 million to build your new manufacturing plant, you can also borrow $3 million to pay off the loan on your existing plant. Your total funding would be $9 million.
The 504’s loan-size constants are up to the lenders and CDCs. Most feel comfortable in the $200,000 to $10 million range.
As with most new programs, the dibbuk is in the details. Accordingly, lenders and CDCs will be poring over SBA’s procedural notice to understand the critical essentials.
Meanwhile, stay in touch with your banker, NADCO and its members for up-to-date information as the refinancing enhancement unfolds. See nadco.org for NADCO members and more about 504.
This story appeared in print on page D8
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