When I am working with a small business to determine where they should locate, I have basic and important questions. But recently with the shift in the market to being a buyer's market, I have put some thought into how this affects the landlord/seller. How can you sell your location???
When a business is looking for a location, they have differing needs, so the questions they look at need to be flipped to tell a landlord or seller how to target for their locations. Putting yourself in the other person's shoes can give you valuable insight about your marketing strategies.
1. For the tenant/buyer: What is most important? Visibility, walk-by traffic, security, highway access etc. So as a landlord/seller: where are you? what are its benefits? how can you market them? By far this is number 1 on just about every tenant's list, and it's the least flexible thing about any location, so you need to know what your location's attributes are and play them up.
2. For the tenant/buyer: What is your budget? For the landlord/seller: How much do you need to derive from this transaction? What is your bottom line?
3. For the tenant/buyer: How many employees do you need to accomodate? What is the work environment you are hoping for? For the landlord/seller: How can you make your space the most flexible? What are ways to give the most bang for the buck?
4. For the tenant/buyer: How long of a lease are you comfortable with? What kind of lease are you comfortable with? Newer/smaller businesses are often confused by the nnn lease, more savvy tenants understand the need for passing through the expenses. For the landlord/seller: How flexible can you be in your leasing options?
5. For the tenant/buyer: How is your financial situation? Do you look good on paper? How experienced are you? When a landlord is renting a space, they are truly loaning a space to a tenant and therefore needs to know that the tenant is credit worthy. For a landlord/seller: Do not be inflexible, but do insist on accountability. It will save you headaches and possible legal problems in the long run.
Thursday, February 19, 2009
Sunday, February 15, 2009
Real Estate Close-Up: Portland
Real Estate Close-Up: PortlandBy J.W. ELPHINSTONE, AP Business Writer J.w. Elphinstone, Ap Business Writer Fri Feb 13, 2:33 pm ET
If occupancy rates are high, it's a landlord's market, right?
Not in Portland, Ore., where property owners, fearful of the uncertain economy, are sweetening deals even though vacancies are well below national averages.
Some landlords are knocking off a chunk on rents just to keep tenants in place for the next five years. Others are calling tenants two years before lease expirations to persuade them to stay.
What raises eyebrows is that supply and demand in Portland's commercial real estate market isn't out of whack. New construction was mostly kept under control during the boom and demand has stayed steady.
If landlords are getting anxious in Portland, imagine the discounts property owners are giving in the hardest-hit markets like Las Vegas, Miami or the Inland Empire in California.
"Looking at Portland, it's a national trend. It's nothing unique to the city," said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services.
So what gives?
"It's all about butts in the seats and if you don't have butts in the seats, you don't have demand," said David Squire, an executive vice president at Grubb & Ellis Co. "So landlords are shorting rental rates."
Already, the national recession has left a mark. The Northwest city shed 18,000 jobs last year and it's expected to lose about that many this year, said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services. Portland's unemployment rate clocked in at 8.1 percent in December, and some major employers, including Intel and Nike, have announced massive layoffs this year.
All this is sending shivers through office landlords in Portland. They are giving up many of the gains they made in the past few years on rents just to keep their buildings full, Squire said. Since the end of 2004, asking rents jumped more than 14 percent for the best quality offices, Grubb & Ellis data showed. Now, landlords are discounting up to 15 percent, and sometimes more, on rents.
That normally wouldn't make sense in an office market with a 12 percent vacancy rate, well below the national average of 15 percent. The rate is even lower for the best quality buildings in the downtown at 6 percent. And the next wave of construction won't be delivered to the market until late 2010, so inventory is in check.
"The worst-case scenario should be flat rents," Squire said. "But landlords are jumping the gun. They're saying a tenant is better than no tenant at all."
Owners of shopping malls and strip centers are feeling similarly jittery. They have kissed a number of retailers goodbye because of bankruptcies. Wick's Furniture, Linens 'n' Things, Circuit City and Mervyn's all shuttered stores in Portland, said Marc Strabic, a senior associate at CB Richard Ellis Inc.
As a result, retail developers have tabled a host of projects for the next year or two. The only development on the immediate horizon is Progress Ridge Town Center, a grocery-anchored center in nearby Beaverton, Ore. It's expected to open at the end of 2009.
"Existing product is getting absorbed because the new projects were never built," Strabic said.
That has helped keep the retail vacancy rate low at about 6 percent, compared with the national average of 8.7 percent, Nadji said. He expects the rate to increase to 7 percent by the end of the year.
The city's policy of restricting sprawl limits retail zoning and makes it hard for big box retailers to find space, Strabic said. Even if retailers close stores, like Macy's, they often leave the Pacific Northwest ones open.
Meanwhile, the industrial market started losing momentum the second half of last year. Many manufacturers, the same ones that fueled growth just a year and a half ago, are downsizing their space needs, said Stuart Skaug, a senior associate at CB Richard Ellis.
But the vacancy rate is still hanging tough at 8.6 percent versus the average national vacancy of 10.1 percent. However, that rate is expected to climb to about 10 percent, Nadji said, because the industrial sector is wading through a hefty amount of new supply. Since 2006, about 8.2 million square feet of industrial space has come online, a construction pace Nadji calls "robust."
This has industrial landlords scrambling to lock in tenants for the long term. They're renewing leases early and giving a month's free rent or reductions in rent.
"It's not an easy pill to swallow," Skaug said, "but if it means you have a tenant in place for another five to 10 years, that's the best they can do."
Aside from the downtown where condos sprouted like weeds during the housing boom, Portland's apartment market is healthy with a 5 percent vacancy rate, Nadji said. The national vacancy rate for apartments stood at 6.7 percent at the end of the year.
But job losses will likely eat into rent growth this year and vacancy will inch up as renters double and triple up to save on rent. But the deterioration in the apartment market won't be as bad as in the office or retail markets, which will feel the worst of the recession.
"It's not going to be nearly as bad as many markets around the country," Nadji said, "but Portland won't be able to skirt the downturn."
Copyright © 2009 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.
Copyright © 2009 Yahoo! Inc. All rights reserved.
If occupancy rates are high, it's a landlord's market, right?
Not in Portland, Ore., where property owners, fearful of the uncertain economy, are sweetening deals even though vacancies are well below national averages.
Some landlords are knocking off a chunk on rents just to keep tenants in place for the next five years. Others are calling tenants two years before lease expirations to persuade them to stay.
What raises eyebrows is that supply and demand in Portland's commercial real estate market isn't out of whack. New construction was mostly kept under control during the boom and demand has stayed steady.
If landlords are getting anxious in Portland, imagine the discounts property owners are giving in the hardest-hit markets like Las Vegas, Miami or the Inland Empire in California.
"Looking at Portland, it's a national trend. It's nothing unique to the city," said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services.
So what gives?
"It's all about butts in the seats and if you don't have butts in the seats, you don't have demand," said David Squire, an executive vice president at Grubb & Ellis Co. "So landlords are shorting rental rates."
Already, the national recession has left a mark. The Northwest city shed 18,000 jobs last year and it's expected to lose about that many this year, said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services. Portland's unemployment rate clocked in at 8.1 percent in December, and some major employers, including Intel and Nike, have announced massive layoffs this year.
All this is sending shivers through office landlords in Portland. They are giving up many of the gains they made in the past few years on rents just to keep their buildings full, Squire said. Since the end of 2004, asking rents jumped more than 14 percent for the best quality offices, Grubb & Ellis data showed. Now, landlords are discounting up to 15 percent, and sometimes more, on rents.
That normally wouldn't make sense in an office market with a 12 percent vacancy rate, well below the national average of 15 percent. The rate is even lower for the best quality buildings in the downtown at 6 percent. And the next wave of construction won't be delivered to the market until late 2010, so inventory is in check.
"The worst-case scenario should be flat rents," Squire said. "But landlords are jumping the gun. They're saying a tenant is better than no tenant at all."
Owners of shopping malls and strip centers are feeling similarly jittery. They have kissed a number of retailers goodbye because of bankruptcies. Wick's Furniture, Linens 'n' Things, Circuit City and Mervyn's all shuttered stores in Portland, said Marc Strabic, a senior associate at CB Richard Ellis Inc.
As a result, retail developers have tabled a host of projects for the next year or two. The only development on the immediate horizon is Progress Ridge Town Center, a grocery-anchored center in nearby Beaverton, Ore. It's expected to open at the end of 2009.
"Existing product is getting absorbed because the new projects were never built," Strabic said.
That has helped keep the retail vacancy rate low at about 6 percent, compared with the national average of 8.7 percent, Nadji said. He expects the rate to increase to 7 percent by the end of the year.
The city's policy of restricting sprawl limits retail zoning and makes it hard for big box retailers to find space, Strabic said. Even if retailers close stores, like Macy's, they often leave the Pacific Northwest ones open.
Meanwhile, the industrial market started losing momentum the second half of last year. Many manufacturers, the same ones that fueled growth just a year and a half ago, are downsizing their space needs, said Stuart Skaug, a senior associate at CB Richard Ellis.
But the vacancy rate is still hanging tough at 8.6 percent versus the average national vacancy of 10.1 percent. However, that rate is expected to climb to about 10 percent, Nadji said, because the industrial sector is wading through a hefty amount of new supply. Since 2006, about 8.2 million square feet of industrial space has come online, a construction pace Nadji calls "robust."
This has industrial landlords scrambling to lock in tenants for the long term. They're renewing leases early and giving a month's free rent or reductions in rent.
"It's not an easy pill to swallow," Skaug said, "but if it means you have a tenant in place for another five to 10 years, that's the best they can do."
Aside from the downtown where condos sprouted like weeds during the housing boom, Portland's apartment market is healthy with a 5 percent vacancy rate, Nadji said. The national vacancy rate for apartments stood at 6.7 percent at the end of the year.
But job losses will likely eat into rent growth this year and vacancy will inch up as renters double and triple up to save on rent. But the deterioration in the apartment market won't be as bad as in the office or retail markets, which will feel the worst of the recession.
"It's not going to be nearly as bad as many markets around the country," Nadji said, "but Portland won't be able to skirt the downturn."
Copyright © 2009 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.
Copyright © 2009 Yahoo! Inc. All rights reserved.
Friday, February 13, 2009
Marketing 2009 Style
In 2009, the marketing landscape has altered, we are cold calling, we are networking, we are pitching and we are spending money. Marketing properties is a job again. Your property should be on at least two Web Sites, there should be a targeted marketing effort, your agent should be well connected in the community, and believe it or not, good signage is still our best tool. Your agent should also be honest with you about your market placement, are you at the right price? Or is your agent just saying what you want to hear and leaving you overpriced in a down market? Or are you not listening to their advice? It's hard to hear and to tell bad news. But product placement and marketing are the tricks today. Buyers and tenants are not driven by emotion, it's all economics. If you hear otherwise, let me know.
The hardest part -- none of this will guarantee a tenant or a buyer, but if you mix good marketing with the right product at the right price, you've got a place to start and your chances of a lease or sale will greatly improve.
The hardest part -- none of this will guarantee a tenant or a buyer, but if you mix good marketing with the right product at the right price, you've got a place to start and your chances of a lease or sale will greatly improve.
Tuesday, February 3, 2009
What is a Tenant Representative?
1. As the title implies, a tenant rep represents the tenant’s side in a negotiation for a lease.
A good tenant's rep can also be the landlord's rep, but should do all of the following for the tenant's side of the table.
2. A real and ethical tenant rep will send the tenant an exhaustive list of all of the listings that might suit the tenant.
3. A tenant rep will show the tenant the properties they are interested in and help them to analyze the location for their particular business.
4. A good tenant rep will be knowledgeable about the community and its business needs, and if she/he is not, they will be honest about it and bring in professionals to assist the tenant in their decision making.
5. A tenant rep will be knowledgeable about the leasing market and will show the tenant comparable leasing situations that will help the tenant and the rep to determine a reasonable lease rate for the properties of interest.
6. A tenant rep will freely interpret the language of leasing to the tenant. Such as “what is a nnn lease?”
7. A tenant rep will draft a letter of intent outlining the tenant’s proposal to the landlord. The letter of intent is an industry standard way to begin negotiations on a leased space.
8. A tenant rep will put the tenant’s interests first and negotiate reasonably and fairly on behalf of the tenant.
9. A tenant rep will be familiar with leases and their language and help review the lease the tenant is expected to sign. Then the tenant rep will recommend that the tenant take the lease to their attorney for additional review.
10. A tenant rep will make referrals to reputable attorneys, inspectors and contractors.
11. A tenant rep is most often paid by the landlord with whom they negotiate the lease, but sometimes the tenant will negotiate a lease with a landlord who does not have agency representation of their own and in this case, the tenant will pay the rep’s fee.
12. Ideally the work a tenant rep does is governed by a contract into which both parties agree to work exclusively together to accomplish the tenant’s goals.
A good tenant's rep can also be the landlord's rep, but should do all of the following for the tenant's side of the table.
2. A real and ethical tenant rep will send the tenant an exhaustive list of all of the listings that might suit the tenant.
3. A tenant rep will show the tenant the properties they are interested in and help them to analyze the location for their particular business.
4. A good tenant rep will be knowledgeable about the community and its business needs, and if she/he is not, they will be honest about it and bring in professionals to assist the tenant in their decision making.
5. A tenant rep will be knowledgeable about the leasing market and will show the tenant comparable leasing situations that will help the tenant and the rep to determine a reasonable lease rate for the properties of interest.
6. A tenant rep will freely interpret the language of leasing to the tenant. Such as “what is a nnn lease?”
7. A tenant rep will draft a letter of intent outlining the tenant’s proposal to the landlord. The letter of intent is an industry standard way to begin negotiations on a leased space.
8. A tenant rep will put the tenant’s interests first and negotiate reasonably and fairly on behalf of the tenant.
9. A tenant rep will be familiar with leases and their language and help review the lease the tenant is expected to sign. Then the tenant rep will recommend that the tenant take the lease to their attorney for additional review.
10. A tenant rep will make referrals to reputable attorneys, inspectors and contractors.
11. A tenant rep is most often paid by the landlord with whom they negotiate the lease, but sometimes the tenant will negotiate a lease with a landlord who does not have agency representation of their own and in this case, the tenant will pay the rep’s fee.
12. Ideally the work a tenant rep does is governed by a contract into which both parties agree to work exclusively together to accomplish the tenant’s goals.
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