Sep 102017
 

Aerial Busch Bv Assemblage

Description

Mixed Use Assemblage With Income
Address: 2,400 E Busch Blvd, Tampa FL 33612

Summary:  66,000 sf.
Location:Close to USF & Downtown Tampa

WANT MORE INFORMATION: FOR PROPERTY BROCHURE  CLICK HERE

  • Income Producing
  • 11 Acres
  • High Traffic
  • Excellent Visibility
Property Information
Sale Price:  $7,800,000
Acres:  11
SF: 66,000
Use:  Mixed Use
Location:  10 spaces
Frontage: Busch Blvd

 

 

Sep 102017
 

Description

 Office Building For Sale, Brandon, FL 
Address: 8002 Beaty Grove Dr., Tampa FL 33626

Summary:  1,2800 sf.
Excellent location:Strong demograpbics

WANT MORE INFORMATION: FOR PROPERTY BROCHURE  CLICK HERE

Property Information
Sale Price:  $485,000
Free Standing:  Yes
SF: 2,800
Use:  Office. Prof Office
Land:  0.76 Acres
Demographics: Excellent

 

 

Jul 052017
 

 

Description

 Office Building For Sale, Brandon, FL 
Address: 307 N Parsons Av, Brandon FL 33510

Summary:  1,671 sf.
Excellent location:Close to Brandon Bv

WANT MORE INFORMATION: FOR PROPERTY BROCHURE  CLICK HERE

Property Information
Sale Price:  $265,000
Free Standing:  Yes
SF: 1,671
Use:  Office. Prof Office
Parking:  10 spaces
Demographics: Excellent

 

 

Aug 222016
 

 

Description

 Office Space St Petersburg. FL 
Address: 360 Central Ave. Suite 1560, St Petersburg.  FL  33701

Summary:  Sublease .
Suite A: 1,473 SF
Click Link to see brochure Click Here

  • Class A
  • Downtown Location
  • Below market
Property Information
Lease Price: $23/sf ($2,823/mo)
CAM  None – Full Service
SF: 1,473
Use:  Office
Parking: In Building Parking
Demographics: Excellent

View this p

Jul 302016
 

 

Description

Medical Condo For Sale Tampa. FL 
Address:3709 W Hamilton Av, Tampa FL 33614—Suite 9

Summary:  Across from Hospital .
Close to Dale Mabry Hwy

Click Link to see brochure 

  • Excellent visibility
  • Close to Hospital
  • High traffic count.
 Price: $145,000
Assoc Fees:  Approx $220/mo
SF: Approx 1,000
Use: Medical Office
Parking: Ample Parking
Demographics: Excellent

View this property brochure; Click Here

Apr 192016
 

 

Description

Office/Retail For Sale Temple Terrace, FL  
Address: 13428 Telecom Dr, Temple Terrace, FL 33637

Summary: Drastic Price reduction.   3 buildings. Mixed use Office/Retail Multi-Tenant.  23,800 SF total, comprising leased and vacant spaces.  Already organized as a condominium.   Offered as combined sale of all units only. Suitable for a user or an investor who can sell off or lease out individual condo units. Telecom Park is a development of Regional Impact. It is a 199 acre corporate campus in Northeast Tampa. Confidentiality Agreement s required, contact an addison real estate lawyer if you want to get involved in investing with us.

 

  • 8,000 People work in the area
  • Easy access to Highways
  • Accessible to major corporations
Property Information
 Price: $1,300,000
Use: Office or Retail
SF:  23,800
Location: Office Park
No Of Buildings: 3
Additional Info: CA Required

View this property brochure; Click Here

Sep 172015
 

 

Description

Medical Office Space For Lease Tampa. FL 
Address: 2309 W Dr Martin Luther King Bv, Tampa FL 33607

Summary:  Walk to St Joesephs .
Suite A: 2,671 sf. Medical Office:
Suite  B: 2,137 sf Rehab Center

Click Link to see brochure 

  • Excellent visibility
  • Close to Hospitals
  • High traffic count.
Property Information
Lease Price: $19.20/sf ($7,595 pm)
CAM  Included
SF: 4,000
Zoned: Medical Office
Parking: Ample Parking
Demographics: Excellent

View this property brochure; Click Here

Sep 142015
 

 

Description

Professional Office Space For Lease Brandon FL 
Address: 344 E. Bloomingdale Ave., Brandon, FL 33511

 Summary: Free standing building in Bloomingdale Executive  Park. Concrete block construction built in 2002 . 100% leased with one regional known tenant and one national
tenant .
Our client wanted a stable income producing property that was in a growing area.  After researching the market we found this property that met our clients criteria. This was a cash deal

  • High Traffic Area
  • Office Park
  • Excellent Demographics.
Property Information
 Price: $480,000
CAP Rate  8%
SF: 3,604 sf
Cap Rate: 8%
Property: Office Building
Tenancy: Long Term

View this property brochure; Click Here

Jun 202015
 

 

Description

Professional Office Space For Lease Brandon FL 
Address: 1064A -1064B E Brandon Blvd, Brandon, FL 33511

  Summary: Free standing building— 6,300sf .
Suite 1064A:  3,529 sf.  Executive Office Center or  General Office:
Suite 1064 B: 1,694 SF. Vanilla Shell condition.

New—Can Combine spaces. Click Link to brochure 

  • High Traffic
  • Close to Hospitals
  • Excellent Demographics.
Property Information
Lease Price: *$10/sf
CAM  $4.50/sf
SF:  3,529sf  + 1,694 sf
Zoned: Office
Parking: Ample Parking
Condition: Buit out + Shell space

View this property brochure; Click Here

May 162015
 

 

 

Description: Commercial Space For Lease

Address:

320 W Fletcher Ave, Tampa, FL 33612

               

Summary:  Multi Purpose Retail/Office Strip Center on a busy main road. Building for Lease.  Suitable for Office, Retail, Medical Office

 

 

  • Excellent location – just west of exit ramp I-275
  • Excellent visibility
Property Information
Lease Rate: $15/sf modified gross
Offering 1,100-  sf
Tenancy: Office, Retial
Land Parcel Commercial
Site: L shaped strip center
Location: Easy access to all Tampa

View this property brochure; Click Here

Apr 112015
 

 

 

Description

Office Buildings & Commercial Land For Sale  FL Address:

715 E Bird St, Tampa FL 33604                

Summary:  Multi Purpose Office Building for Sale. Suitable for Office, School, Church

 

  • Excellent location – at exit ramp I-275
  • Excellent visibility
Property Information
Sale Price: $3,800,000
Offering  57,000 sf
Tenancy:  Multi Tenant or single user
Land Parcel Commercial
Site: Free Standing on 1.3 Ac
Location: Easy access to all Tampa

View this property brochure; Click Here

Apr 112015
 

 

 

Description

Office Buildings & Commercial Land For Sale  FL Address:

715 E Bird St, Tampa FL 33604                

Summary:  Multi Purpose Office Building for Lease.  Suitable for Office, School, Church

 

 

  • Excellent location – at exit ramp I-275
  • Excellent visibility
Property Information
Lease Rate: $10/sf modified gross
Offering  57,000 sf
Tenancy: Office, Church, School
Land Parcel Commercial
Site: Free Standing on 1.3 Ac
Location: Easy access to all Tampa

View this property brochure; Click Here

Jan 172015
 

Jan 15, 2015

Steven Silverman Installed as 2015 President Of The Florida Gulfcoast Commercial Assoc Of Realtors (FGCAR)

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At the annual meeting held on January 15, 2015 Steven Silverman, CCIM of Tampa Commercial Real Estate was installed as the President of the Florida Gulf Coast Commercial Assoc. Of Realtors (FGCAR).

The Florida Gulf Coast Commercial Assoc. Of Realtors (FGCAR) has a strong and diverse membership base and its members transact a significant volume of business in the Florida commercial real estate market. FGCAR is an innovator and exercises a leadership role in advocating matters concerning real estate legislation in Florida.   FGCAR members are dedicated to maintaining the highest standards of conduct and ethics in business dealings, and the protection of private property right, building a world wide web with your business can be really successful.

FGCAR helps its members stay at the cutting edge of the real estate industry and provides its membership with a  broad range of benefits and services. This includes, but is not limited to, education, technology, networking, pitch sessions, promotion of listings, recognition of accomplishments and many more. Through the services provided, FGCAR enables its members to provide added value to the clients that they represent.

FGCAR Logo

 

Jan 092015
 

 

Description

Office Buildings & Commercial Land For Sale  FL Address:

300-400Apollo Beach Bvd, Tampa  FL 33572                

Summary:  Multi Tenant Investment Property in the path of growth. Two Office buildings plus vacant Land. Click Link t  Brochure for more details

 

 

  • In the path of growth
  • In a commercial node
  • Commercial & Residential development in area
Property Information
Sale Price: $910,000
Offering  Two buildings 14,000sf
Tenancy:  Multi Tenant
Land Parcel Commercial
Ownership Structure Condo
Area:  Commercial Node

View this property brochure; Click Here

Jan 082015
 

 

Description

Professional Office Space For Lease  
Address: 1032-1034 E Brandon Blvd, Brandon, FL 33511

  Summary: Free standing building— 5,301 sf .
Can be divided: Unit 1032 = 2,951 sf and Unit 1034= 2,351 sf
Adjacent to Walmart and Home Depot & within a Professional Office Park
Space Available: 5,301 sf, 2,951 sf , 2,351 sf
New— Shell condition—can be built to tenant specs

 

  • High Traffic
  • Close to Hospitals
  • Excellent Demographics.
Property Information
Lease Price: *$10/sf
CAM  $4.50/sf
SF:  5,301 divisible
Zoned: Office
Parking: Ample Parking
Condition: Shell

View this property brochure; Click Here

Dec 072014
 

 

Description

Automatic Car Wash For Sale  FL Address:

7850 Atlantic Blvd,Jacksonville FL 32211        

Summary: Bank Owned. Express style drive-through coin operated automatic car wash. Two bays.
Located on high-traffic Atlantic Boulevard, with close proximity to Southside, Arlington, Regency, etc., as well as in the heart of numerous auto dealerships and repair centers. Foreclosure

 

  • High Traffic
  • Close to Southside, Arlington, Regency
  • Foreclosure.
Property Information
Sale Price: $205,000
Folio:  145173 0060
Acres:  0.31
Zoned: Commercial General CCG2
Bank Owned: Foreclosure
Visibility:  Main Road

View this property brochure; Click Here

Nov 242014
 

 

Description

Multi Famil,Retail, Office, FL Address:

6415 S MacDill Ave, Tampa FL  33611       

Summary: The Site is zoned CG Commercial General. Future Land use allows apartments with a density of 20 units/acre. Across the street from a large Apartment complex. Current use is auto repair. Click link below to see brochure

 

  • South Tampa location
  • Close to MacDill Airforce base .
  • Corner Property.
Property Information
Sale Price: $230,000
Folio:  1365610000
Acres:  0.31
Zoned: Commercial General
Future Land Use: R20
Visibility:  Corner Property

View this property brochure; Click Here

>
Aug 252014
 

Description

Retail, Office, Flex Space Tampa FL Address: 13365 W. Hillsborough Ave. Tampa, FL 33635

Summary: United Business Park is a new development on 24 acres comprising of Retail, Office and Flex space. See brochure

 

  • High Traffic Count
  • Between Clearwater and Tampa .
  • Plentiful Parking.
Property Information
Retail Rate: from $17/sf NNN
Office Rate:  from $1,500/mo
Flex Office Whse  For Sale or for Lease
Zoned:  Mixed Use Commercial
Frontage: Hillsborough Ave
Traffic Count:  55,000 cars/day

View this property brochure; Click Here

Aug 192011
 

“MLS (Multiple Listing Service) is a waste of time for commercial real estate brokers”. That’s what the majority of commercial real estate users say about MLS. But this isnt the case all the time.

Well it is true that the majority of commercial real estate deals are NOT done through the  MLS system and most commercial real estate agents do not belong to the MLS system.
Most customers don’t ask about MLS membership  and commercial agents  do not have to disclose that they don’t belong to MLS.  However, commercial real estate agents will explain, if asked, that:
• The real estate agents that belong to MLS are primarily residential and are not qualified to work on commercial real estate. They don’t want to waste time dealing with unqualified agents
• If a commercial property is listed on MLS it is likely to be substandard and a lower price value. Why waste the time on these properties.
• There are not many commercial real estate transactions done on MLS so you don’t find serious Buyers or Sellers
I  am a commercial real estate agent and I don’t feel that way. Yes, I do belong to the important Commercial Real estate networks., but I also belong to MLS.  It is true that most commercial properties do not appear on MLS. However, what is the harm to my client if I do put their property on MLS. It requires  a little more effort from for me but these properties do get additional exposure from MLS.
There are many thousands more Realtors© belonging to MLS; far more than the number of active commercial real estate agents.  Actually, there is no such thing as a commercial real estate license. A licensed real estate agent can sell any type of real estate. A licensed real estate agent that works primarily with residential properties on MLS may receive a request from a client for a commercial property. Or that Realtor© may even be asked to list a commercial property. By listing on MLS I reach a broader market  for my clients. By searching on MLS you can sometimes uncover properties that do not appear on commercial networks, you can try it out, take a look at Flat Fee MLS Listings in Connecticut, and you might be able to find what you’re looking for.

Exterior view

I just received a call from a Residential Realtor©. She has a client in town that is looking for an office-warehouse. She found my listing on MLS. I was happy to meet her and her client and show them the building. I understand that she does not know all the codes and rules for that commercial property in this area. However, I am happy to work with her and impart what knowledge I can.  Both Realtors© after all have a common goal. My job is to get this building sold for my client and I am happy to share the commission with another Realtor©.
Dec 172010
 

I have been working with a new client, a start-up high tech company that will be located in Tampa. From the onset, something was different about this company.  They wanted space that is high tech and modern but had no enthusiasm for the new first generation space in office parks that is readily available. My client told me that they had selected Tampa because they wanted to create a work environment that would attract young high tech workers.

After a few weeks of concentrated searching, we honed in on a few spaces in Ybor City which began to look more and more appealing. This old section of Tampa was formally the cigar manufacturing center and is now more known for its night life. In this old part of Tampa we found several spaces where the complete renovations and had created modern work spaces that exuded charm. Eventually  a lease was executed on an 8,000 sf space.    This was a start-up company with no employees, yet the selected space was not the cheapest space we found. Nor was it the space that was quiet or offered the most parking.

I was curious enough to research further. It seemed odd that they would choose Ybor City for its start up high tech operation. Why after all would they choose a location that could have parking issues?  Why would they pay more for office space in Ybor City when there is so much less expensive office space available now on the market?   On further examination this is not strange at all. It is part of trend that is sweeping across America
My client is developing some really cool products. One concept is you can start to listen to your music on your computer, then move to your car the song will pick up just where the computer left off. Go super marketing or jogging  and your Ipod will remember where the car audio system left off on the same song.  You never miss or repeat an unnecessary beat.  My client is in the knowledge industry . The employees of the high tech knowledge industry are different from the workers of the 80’s and 90’s. They are called the millennium generation. They thrive on stimulation and are constantly texting, emailing, facebooking while they talk, walk and do their work.  They grew up multi-tasking. I think of them like molecules in a box. Shake the box and the bouncing molecules excite and infect one another with creative energy.  These new workers require a new kind of work environment.
In the 80s and 90’s and even the first decade of this century, the trend was to build office parks out in the suburbs. The philosophy was take the office to the people and give them a tranquil, civilized environment. Place this millennium generation in isolated environments and their creativity withers and dies.   The optimum location for these new millennium workers is an energetic  urban setting or in the hip urban fringe. They need to be able to work all hours of the night; To walk out the door anytime and get a coffee or grab a bite to eat.
As I researched further, I learned that what I was seeing occurring right here in Tampa was not an isolated situation.  In Washington state Expedia moved from a modern office building on the outskirts into downtown Belleview. Amazon and Pixar both moved to downtown locations. Quicken relocated to downtown Detroit.
Companies in the knowledge industry throughout the USA are recognizing that if they are to attract the vital young workers that they need they need to create a work place and a work place setting  that will appeal to the tech generation that works differently. It’s a social generation that needs services and amenities . The area surrounding the workspace is just as important as the work space itself.  They coined a name for these high tech workers.   Rod Stevens wrote a white paper on this subject  titled “The  New Urban Workforce”.
Another changing dynamic which is the design of office space for the millennium workers. The millennium workers never sleep. Some may choose to work the whole night through. Some may come in to the office after lunch.  Some may even keep regular hours. The world is now flat. Everyone has computers. Some may choose to work at home and come in to the office when they have to.  AT IBM 40% of the workforce never come to the office. They work at home or at customers offices. In this new environment many companies can make do with less space, but the space has to be organized for success.  What becomes critical with the new urban workforce is to create spaces for  meetings. There are times when people who do not generally run into each other have to meet. The space has to be designed to accommodate meetings and allow the various incubation centers to cross pollinate.
Ybor City is seeing new construction and complete renovation of old spaces into modish, modern work environments  The space being leased by my client  is urban chic  and the work space flows.  The CEO has purchased a condo around the block so that he can walk to work. Another new high-tech office space nearby has set up a basketball hoop inside the space.  A place where code writing demons can take a few minutes to play and recharge.
Tampa is an ideal location to attract the knowledge companies. In places like Ybor City, Channelside and down town Tampa we have an existing urban environment and an urban fringe. Now there are apartments and townhomes inside these urban environments.  Savtira, as a new company plunged into Ybor City with 8,000 sf space which they expect to outgrow. The CEO of Savtira founded and sold several high tech companies, some of which now employ thousands of people and have billions of dollars in sales, thanks to the coaching that nå dina mål provided. If the past is any indication Ybor City has some good days ahead.
Steven Silverman is the Broker at Tampa Commercial Real Estate  www.TampaCommercialrealestate.cI have been working with a new client, a start-up high tech company that will be located in Tampa. From the onset, something was different about this company.  They wanted space that is high tech and modern but had no enthusiasm for the new first generation space in office parks that is readily available. My client told me that they had selected Tampa because they wanted to create a work environment that would attract young high tech workers .

As we began narrowing down the focus shifted to space in the Westhore office district, down-town Tampa, Channelside and Ybor City.  Another thing that was different about this company was the workin hours.   We did meet in the day time, but we also met late at night to discuss space. We even went back to look at one space after mid-night and then convened afterwards in Ybor City to strategize.  One of their criteria for space was that It had to be a building where they could work the whole night through

After a few weeks of concentrated searching, we honed in on a few spaces in Ybor City which began to look more and more appealing. This old section of Tampa was formally the cigar manufacturing center and is now more known for its night life. In this old part of Tampa we found several spaces where the complete renovations and had created modern work spaces that exuded charm. Eventually  a lease was executed on an 8,000 sf space.    This was a start-up company with no employees, yet the selected space was not the cheapest space we found. This was definitely not your normal start-up company

I was curious enough to research further. It seemed odd that they would choose Ybor City for its start up high tech operation. Why after all would they choose a location that could have parking issues?  Why would they pay more for office space in Ybor City when there is so much less expensive office space available now on the market?   On further examination this is not strange at all. It is part of trend that is sweeping across America

My client is developing some really cool products. One concept is you can start to listen to your music on your computer, then move to your car the song will pick up just where the computer left off. Go super marketing or jogging  and your Ipod will remember where the car audio system left off on the same song.  You never miss or repeat an unnecessary beat.  My client is in the knowledge industry . The employees of the high tech knowledge industry are different from the workers of the 80’s and 90’s. They are called the millennium generation. They thrive on stimulation and are constantly texting, emailing, facebooking while they talk, walk and do their work.  They grew up multi-tasking. I think of them like molecules in a box. Shake the box and the bouncing molecules excite and infect one another with creative energy.  These new workers require a new kind of work environment.

In the 80s and 90’s and even the first decade of this century, the trend was to build office parks out in the suburbs. The philosophy was take the office to the people and give them a tranquil, civilized environment. Place this millennium generation in isolated environments and their creativity withers and dies.   The optimum location for these new millennium workers is an energetic  urban setting or in the hip urban fringe. They need to be able to work all hours of the night; To walk out the door anytime and get a coffee or grab a bite to eat.

As I researched further, I learned that what I was seeing occurring right here in Tampa was not an isolated situation.  In Washington state Expedia moved from a modern office building on the outskirts into downtown Belleview. Amazon and Pixar both moved to downtown locations. Quicken relocated to downtown Detroit.

Companies in the knowledge industry throughout the USA are recognizing that if they are to attract the vital young workers that they need they need to create a work place and a work place setting  that will appeal to the tech generation that works differently. It’s a social generation that needs services and amenities . The area surrounding the workspace is just as important as the work space itself.  They coined a name for these high tech workers.   Rod Stevens wrote a white paper on this subject  titled “The  New Urban Workforce”.

Another changing dynamic which is the design of office space for the millennium workers. The millennium workers never sleep. Some may choose to work the whole night through. Some may come in to the office after lunch.  Some may even keep regular hours. The world is now flat. Everyone has computers. Some may choose to work at home and come in to the office when they have to.  AT IBM 40% of the workforce never come to the office. They work at home or at customers offices. In this new environment many companies can make do with less space, but the space has to be organized for success.  What becomes critical with the new urban workforce is to create spaces for  meetings. There are times when people who do not generally run into each other have to meet. The space has to be designed to accommodate meetings and allow the various incubation centers to cross pollinate.

Ybor City is seeing new construction and complete renovation of old spaces into modish, modern work environments  The space being leased by my client  is urban chic  and the work space flows.  The CEO has purchased a condo around the block so that he can walk to work. Another new high-tech office space nearby has set up a basketball hoop inside the space.  A place where code writing demons can take a few minutes to play and recharge.

Tampa is an ideal location to attract the knowledge companies. In places like Ybor City, Channelside and down town Tampa we have an existing urban environment and an urban fringe. Now there are apartments and townhomes inside these urban environments.  Savtira, as a new company plunged into Ybor City with 8,000 sf space which they expect to outgrow. The CEO of Savtira founded and sold several high tech companies, some of which now employ thousands of people and have billions of dollars in sales. If the past is any indication Ybor City has some good days ahead.

Steven Silverman is the Broker at Tampa Commercial Real Estate  www.TampaCommercialrealestate.com

Oct 112009
 
NPV vs discount rate comparison for two mutual...
Image via Wikipedia
Purchase vs. Lease Analysis for a Commercial Property
When deciding whether to lease or purchase a commercial property, it is important to crunch the numbers.
Purchasing requires a down payment, which can be an issue for a company that needs the funds for operating capital. But purchasing also offers tax advantages the benefit of appreciation.  When all the factors are compared, Purchasing is often less expensive than Leasing.  Discount Cash Flow Analysis is a useful tool to determine the Net Present Cost of each option. This methodology allows one to consider the future costs and to compare apples to apples.
Some factors such as prices are known, but you must take the time to sit down and write out reasonable assumptions for unknown variables in order to do this analysis. A projection is after all, a best guess.
Consider a free standing building which is being offered for sale at $800,000 or for lease at $70,000 per year. Should you  purchase it or lease it? A discount cash flow analysis will take the following form.
1. USER ASSUMPTIONS:
Ordinary Income Tax Rate: 30%
Capital Gains Tax Rate:       15%
Cost Recovery Recapture Rate: 25%
After Tax discount Rate: 6%
2. PURCHASE ASSUMPTIONS:
Purchase Price $800,000
Acquisition Costs $5,000
Acquisition Loan Amount $600,000
Interest Rate 7%
Amortization Period 25 years
Loan Term 10  years
Payments Per Year 12
Loan Costs   $6,000
Improvement Allocation 81%
Useful Life of Improvements 39 years
Annual Growth Rate 2%
Projected EOY 10 Sales Price $975,000
Projected EOY 10 Cost of Sale 6%
3. LEASE ASSUMPTIONS:
First year payment $70,000
Escalation 5% after three years, 3% after the next three years
Lease Term 10 years
To compare the cost Purchasing vs Leasing this property, first determine the After Tax Cash Flow for each of the next 10 years for both Purchasing and Leasing scenarios. Then use Discount Cash flow Analysis to determine the Net Present Cost for each option and compare the result.
For the above example, the analysis looks like this:
End or Year           Purchasing                     Leasing
0 -$211,000 -$49,000
1 -$33,389 -$49,000
2       etc etc                         etc etc
10 -$35,796 + $386,526 -$52,994
ATNP COST: -$246,794 -$428,933
Internal Rate or Return:  (Purchasing – Leasing) = 16.84%
The After Tax Net Present Cost of Occupancy (ATNP) to the user who purchases the property is $246,794 vs $428,933 for Leasing the property. The Internal Rate of Return in favor of Purchasing is 16.84%.
After considering the other pros and cons of purchasing vs leasing (see article) a reasonable user may prefer to purchase this property.
The usefulness of this type of analysis can be expanded to make other financial decisions regarding the property. For example, for the same property above, assume that the user does not need all the space and that can rent out a portion of the space for $1,875 per month. Using the same type of Discount Cash Flow Analysis, this additional $22,500 in annual income reduces the Net Present cost of Occupancy for the purchaser from $246,794 to $127,900. This could be meaningful factor in the decision.

Purchase vs. Lease Analysis for a Commercial Property

A client who was moving their manufacturing facility to Tampa Bay was unsure whether to purchase or lease a particular commercial property. We looked at the net present value of the comparative costs which helped clarify their decision. When deciding whether to lease or purchase a commercial property, crunching  the numbers can give another perspective on your decison.

Purchasing requires a down payment, which can be an issue for a company that needs the funds for operating capital. But purchasing also offers tax advantages and the benefit of appreciation.  When all the factors are compared, after certain number of years there is a crossover point where Purchasing often becomes less expensive than Leasing.  Discount Cash Flow Analysis is a useful tool to determine the Net Present Cost of each option. This methodology allows one to consider the future costs of Purchasing and Leasing  and to compare apples to apples.

Some factors such as prices are known, but you must take the time to sit down and write out reasonable assumptions for unknown variables in order to do this analysis. A projection is after all, a best guess.

Consider a free standing building which is being offered for sale at $800,000 or for lease at $$70,000 per year. Should you  purchase it or lease it? A discount cash flow analysis will take the following form.

1. USER ASSUMPTIONS:

Ordinary Income Tax Rate: 30%

Capital Gains Tax Rate:       15%

Cost Recovery Recapture Rate: 25%

After Tax discount Rate: 6%

2. PURCHASE ASSUMPTIONS:

Purchase Price $800,000

Acquisition Costs $5,000

Acquisition Loan Amount $600,000

Interest Rate 7%

Amortization Period 25 years

Loan Term 10  years

Payments Per Year 12

Loan Costs   $6,000

Improvement Allocation 81%

Useful Life of Improvements 39 years

Annual Growth Rate 2%

Projected EOY 10 Sales Price $975,000

Projected EOY 10 Cost of Sale 6%

3. LEASE ASSUMPTIONS:

First year payment $70,000

Escalation 5% after three years, 3% after the next three years

Lease Term 10 years

To compare the cost Purchasing vs Leasing this property, first determine the After Tax Cash Flow for each of the next 10 years for both Purchasing and Leasing scenarios. Then use Discount Cash flow Analysis to determine the Net Present Cost for each option and compare the result.

For the above example, the after tax cash flow analysis looks like this:

End of  Year  ………..         Purchase  ………………….     Lease

0 ………………………………. -$211,000 ………………….. -$49,000

1 ……………………………….. -$33,389 ……………………. -$49,000

2  ……………………………….     etc etc ……………………….. etc etc

10…………………………….  -$35,796 + $386,526 …….. -$52,994

ANALYSIS RESULTS:

ATNP COST: ……………….-$246,794 ………………….-$428,933

IRR Internal Rate or Return:  (Purchasing – Leasing) = 16.84%

The After Tax Net Present Cost of Occupancy (ATNP) to the user who purchases the property is $246,794 vs $428,933 for Leasing the property. The Internal Rate of Return in favor of Purchasing is 16.84%.

After considering the other pros and cons of purchasing vs leasing (see prior blog article) a reasonable user may prefer to purchase this property.

The usefulness of this type of analysis can be expanded to make other financial decisions regarding the property. For example, for the same property above, assume that the user does not need all the space and that can rent out a portion of the space for $1,875 per month. Using the same type of Discount Cash Flow Analysis, this additional $22,500 in annual income reduces the Net Present cost of Occupancy for the purchaser from $246,794 to $127,900. This could be a meaningful factor in the decision.

The purpose of this blog is to share information on questions that I have answered or information I have given to my commercial real estate clients in the Tampa Bay, FL area. I hope that others may find the information useful.

Steven Silverman, CCIM is the broker at Tampa Commercial Real Estate, a commercial real estate brokerage firm based in Tampa, FL. Please contact us if you are looking to purchase, sell or lease commercial property in the Tampa Bay area.

email: Steven@TampaCommercialRealEstate.com.

WebSite: www.TampaCommercialRealestate.com

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Oct 052009
 
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officeLeasing  Tips for Tenants Negotiating a Lease– Part 2
In the broad  terms a tenant is concerned about
annual lease cost  and
lease term and terms.
Leases usually favor the landlord, but  within the above  two key parameters there are negotiation points all along the way for a tenant to try and gain some advantage
The Lease Term and Lease Terms
Leases usually favor the landlord, but  within the above  two key parameters there are negotiation points all along the way for a tenant to try and gain some advantage
In Part 1 we explored the annual lease cost. In this section we will explore  the Lease Term and Terms
To negotiate with a Landlord you have to think like a Landlord. Understand what is important to a Landlord and turn this to your advantage.
At some point a Landlord will want to refinance or sell his property. One method a Lender or a purchaser will surely use to  value the property is according to the Capitaliztion Rate formula.
PRICE = NET OPERATING INCOME ÷ CAP RATE
The Cap Rate will be a market derived rate. Therefore to maximize the property value the Landlord will want to demonstrate with signed leases, the highest possible Net Operating Income. A higher NOI will give the property a higher value. Understanding that the property valuation is a motivating factor for the Landlord can help you negotiate more favorably with the Landlord
It is so important for the Tenant to study the market and know what is going on. Look at lots of spaces. If the market supply of space is greater than demand then the Tenant has more negotiating room.
FREE RENT AND IMPROVEMENTS
As a Tenant you are concerned with your total lease cost, at least in the short term. For a fledgling company low start up costs may be even more important for the tenant. Therefore, as a negotiation tactic the Tenant may choose to give the Landlord his higher lease rate so that the Landlords property value is enhanced (see Cap Rate formula), but as the Tenant, you can get it all back plus more in concessions such as free rent, tenant Build-out by the Landlord or a Tenant Improvement Allowance. As a tenant, it may make little difference how the cost are apportioned as long as you get the lowest overall cost. To the Landlord seeking a higher rent roll, it may make a lot of difference.
LEASE TERM
A Tenant and Landlord may have conflicting needs on the term of  the lease. The tenant could desire a short lease term while the Landlord may want a longer lease term. Everything is negotiable. The tenant can try to negotiate a short lease term with several renewal options. There is no law that each option must be accompanied by a rent increase. It is a negotiation.
Again, going back to the Cap Rate formula to value the property. A Landlord that is able to demonstrate to the Lender or a Purchaser, a stable future stream of Net Operating Income will have a higher value for his property. This stability is supported by the rent roll. Understanding the Landlords need for a longer lease term, the Tenant may be able to extract larger concessions from the Landlord, especially if the tenant is can demonstrate that they are financially a quality tenant.
OTHER LEASE TERMS
The Lease is a binding contract and the Tenant has a liability and a duty to perform. There are several lease terms that the Tenant can look at to reduce his overall risk
Space Size Change
The Tenant may be concerned that he will outgrow his space before the lease term ends. One industrial tenant of mine specified that I had to find him a lease with Landlord who owned a lot of space. Then the Tenant wrote in the Lease that should he need more space, the Landlord will agree to upgrade him to a larger space in the same or another similar building owned by the landlord without penalty. As a tenant you could take this a step further. Perhaps you are concerned that the space will turn out to be too large. You could write into the Lease that if after a specified period, if you find the space too large, you can downgrade into a smaller space owned by the Landlord without penalty.
Subleasing
Business can be unpredictable. The ability to sublet could help the Tenant survive if times became difficult. Or subletting could be an additional source of revenue if the Tenant has extra space
Personal Guaranty
Many Landlords will demand a personal guaranty on the lease. From their point of view they don’t know the Tenant and they want the comfort level that they have a viable lease. As a Tenant you could try to get them to meet you half way. Perhaps you could negotiate that the personal guaranty terminates after two years, or declines annually to become zero after 5 years. At that point the Landlord may have more of a comfort level with the Tenant.
Landlord Performance
In most leases the Landlord is demanding a lot from the Tenant. However, the Tenant can also negotiate Landlord performance benchmarks in the Lease. If the Landlord does not perform, the lease is less valuable to the Tenant and the Lease rate decrease
Co-Tenancy – In many retail spaces the Anchor tenant is the main draw to the shopping center. The Tenant may negotiate a clause that if the Anchor is not replaced by another anchor of equal stature within a specified period, the Tenant my terminate the lease or be entitled to a rent reduction
Occupancy – The attraction of a particular space may be the high occupancy and traffic. The tenant may negotiate a rent reduction if the occupancy of the Center falls below a certain level.
Exclusivity: Before the lease is signed the Tenant will find the Landlord much more amenable to inserting a non-compete clause into the lease preventing a competitor leasing in the same center. After the lease is signed?………. Good luck
Quality of Tenant – Do everything you can to provide your Landlord with information about you and your company. A Landlord that feels he has a quality tenant will be more likely to negotiate more favorable terms. Don’t come off like Atilla the Hun and strong arm the Landlord during negotiations. Presumably you will be living with the Landlord for a Long time and the Landlord is conscious of this. Develop a cordial and respectful relationship.
A knowledgeable Broker can be of enormous help to the Tenant. The Tenant needs to gather a lot of information to understand the market and strategize his lease deal. A specialized real estate attorney should also be part of the equation. Do your homework to find qualified professionals that will work for you and will help you negotiate the most favorable lease deal

LEASING TIPS FOR TENANTS NEGOTIATING A LEASE – PART 2

In the broad  terms a tenant is concerned about

Annual lease cost  and

Lease term and terms.

Leases usually favor the landlord, but  within the above  two key parameters there are negotiation points all along the way for a tenant to try and gain some advantage. In Part 1 we explored the Annual Lease Cost. In this section we will explore  the Lease Term and lease Terms that can be beneficial to the Tenant

THE LEASE TERM AND LEASE TERMS

To negotiate with a Landlord you have to think like a Landlord. Understand what is important to a Landlord and turn this to your advantage.

At some point a Landlord will want to refinance or sell his property. The Property value will be calculated from the leases in place, using the Capitaliztion Rate formula.

PROPERTY VALUE = NET OPERATING INCOME ÷ CAP RATE

The Cap Rate will be a market derived rate which is obtained from sales of similar properties. The Landlord cannot do much about the denominator in this equation. He can only influence the numerator. To maximize the property value the Landlord will want to demonstrate with signed leases, the highest possible Net Operating Income. A higher NOI as the numerator will give the property a higher value. Understanding that the property valuation is a motivating factor for the Landlord can help you negotiate more favorably with the Landlord

It is so important for the Tenant to study the market and know what is going on in the market. Look at lots of spaces. If the market supply of space is greater than demand then the Tenant has more negotiating room.

FREE RENT AND IMPROVEMENTS

As a Tenant you are concerned with your total lease cost, at least in the short term. For a fledgling company low start up costs may be even more important for the tenant. Therefore, as a negotiation tactic the Tenant may choose to give the Landlord his higher lease rate so that the Landlords property value is enhanced (see Cap Rate formula), but as the Tenant, you can get it all back plus more in concessions such as free rent, tenant Build-out by the Landlord or a Tenant Improvement Allowance. As a tenant, it may make little difference how the cost are apportioned as long as you get the lowest overall cost. To the Landlord seeking a higher rent roll (as  determined by the Cap Rate formula, how the costs are broken down may make a lot of difference.

LEASE TERM

A Tenant and Landlord may have conflicting needs on the term of  the lease. The tenant could desire a short lease term while the Landlord may want a longer lease term. Everything is negotiable. The tenant can try to negotiate a short lease term with several renewal options. There is no law that each option must be accompanied by a rent increase. It is a negotiation.

Again, going back to the Cap Rate formula to value the property. A Landlord that is able to demonstrate to the Lender or a Purchaser, a stable future stream of Net Operating Income will have a higher value for his property. This stability is supported by the rent roll. Understanding the Landlords need for a longer lease term, the Tenant may be able to extract larger concessions from the Landlord, especially if the tenant is can demonstrate that they are financially a quality tenant.

OTHER LEASE TERMS

The Lease is a binding contract and the Tenant has a liability and a duty to perform. Any commitment always has an element of risk. There are several lease terms that the Tenant can look at to reduce his overall risk

Space Size Change

The Tenant may be concerned that he will outgrow his space before the lease term ends. One industrial tenant of mine specified that I had to find him a lease with Landlord who owned a lot of space. Then the Tenant wrote in the Lease that should he need more space, the Landlord will agree to upgrade him to a larger space in the same or another similar building owned by the landlord without penalty. As a tenant you could take this a step further. Perhaps you are concerned that the space will turn out to be too large. You could write into the Lease that if after a specified period, if you find the space too large, you can downgrade into a smaller space owned by the Landlord without penalty.

Subleasing

Business can be unpredictable. The ability to sublet could help the Tenant survive if times became difficult. Or subletting could be an additional source of revenue if the Tenant has extra space

Personal Guaranty

Many Landlords will demand a personal guaranty on the lease. From their point of view they don’t know the Tenant and they want the comfort level that they have a viable lease. As a Tenant you could try to get them to meet you half way. Perhaps you could negotiate that the personal guaranty terminates after two years, or declines annually to become zero after 5 years. At that point the Landlord may have more of a comfort level with the Tenant.

Landlord Performance

In most leases the Landlord is demanding a lot from the Tenant. However, the Tenant can also negotiate Landlord performance benchmarks in the Lease. If the Landlord does not perform, the lease is less valuable to the Tenant and the Lease rate decrease

Co-Tenancy – In many retail spaces the Anchor tenant is the main draw to the shopping center. The Tenant may negotiate a clause that if the Anchor is not replaced by another anchor of equal stature within a specified period, the Tenant my terminate the lease or be entitled to a rent reduction

Occupancy – The attraction of a particular space may be the high occupancy and traffic. The tenant may negotiate a rent reduction if the occupancy of the Center falls below a certain level.

Exclusivity: Before the lease is signed the Tenant will find the Landlord much more amenable to inserting a non-compete clause into the lease preventing a competitor leasing in the same center. After the lease is signed?………. Good luck

Quality of Tenant – Do everything you can to provide your Landlord with information about you and your company. A Landlord that feels he has a quality tenant with less chance of defult will be more likely to negotiate more favorable terms.

Manners: Don’t come off like Atilla the Hun and strong arm the Landlord during negotiations. Presumably you will be living with the Landlord for a Long time. There is no point to winning the battle and losing the war. Develop a cordial and respectful relationship.

A knowledgeable Broker can be of enormous help to the Tenant. The Tenant needs to gather a lot of information to understand the market and strategize his lease deal. A specialized real estate attorney should also be part of the equation. Do your homework to find qualified professionals that will work for you and will help you negotiate the most favorable lease deal.

The purpose of this blog is to share information on questions that I have answered or information I have given to my commercial real estate clients in the Tampa Bay, FL area. I hope that others may find the information useful.

Steven Silverman, CCIM is the broker at Tampa Commercial Real Estate, a commercial real estate brokerage firm based in Tampa, FL. Please contact us if you are looking to purchase, sell or lease commercial property in the Tampa Bay area.

email: Steven@TampaCommercialRealEstate.com.

WebSite: www.TampaCommercialRealestate.com

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Sep 242009
 
The Embarcadero in downtown San Francisco was ...

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Tips For Tenants Negotiating A Lease– Part 1
The Annual Cost of the Lease
In the broad  terms a tenant is concerned about
• annual lease cost  and
• lease term.
Leases usually favor the landlord, but  within the above  two key parameters there are negotiation points all along the way for a tenant to try and gain some advantage
In this section we will explore  the Annual Lease Cost
The total annual lease cost rent is the sum of the rent and the expenses. Lets examine each component
a) Lease Rate: The lease rate component is fairly straightforward . It is usually quoted as an annual rate of $ per square foot. In some shopping centers retail tenants have percentage leases where the Tenants pay a percentage of their gross sales plus an agreed base rent per square foot. Obviously, the retail tenant will want to consider how best to balance the base rate and percentage rent. If the tenant anticipates a high sales volume per square foot, it is better to negotiate a lower percentage rent and pay a little more on the base rent. Of course, the opposite  is true if the tenant expects a low sales volume per square foot. It is not always easy negotiating  this with mega landlords who may not be that flexible, but his depends on the market.
Since the  lease rate is quoted in terms of dollars per sf, both the dollars and the square foot part should be examined. All too often the tenant simply accepts what the landlord is quoting.  You would be surprised how often the landlord has the square footage of the space incorrect. How can something so simple be incorrect? The space could have been reconfigured by prior tenants. The space SF is often measured incorrectly. Two different people may both measure and come up with a different total SF.  I have seen this work to the tenants advantage where the lease rate/sf is agreed and the lease is signed. Then the tenant has the space measured by a professional using BOMA standards. If it turns out that the SF is less than quoted, the tenant goes back to the Landlord and with the actual SF and effectively reduces the annual dollar rent. See my article on BOMA standards
b) Expenses:
(i) General Property Expenses: Lease can vary from Triple Net Leases (NNN) where the tenant is responsible for the taxes, insurance and maintenance to Gross Lease . These expenses are often called common area maintenance (CAM). In a Gross Lease the landlord generally pays the taxes, insurance and maintenance. In a Modified Gross Lease the tenant and landlord each pay a portion of the CAM. The tenant must be sure that he understands the type of lease he has and that he is on the same page as the Landlord in defining these expenses. Some brokers define a Full Service Lease as a Gross Lease that includes utilities, others use the term Full Service Lease as a synonym for a Gross Lease.  Understand exactly what costs you as a Tenant will be responsible for. The Tenant should ask for an explanation of the components of the CAM cost. Sometimes the CAM component is based on estimated expenses. These should be adjusted at year end and the tenant should be entitled to see an accounting. Look for expense escalation clauses, even in a gross lease. The landlord may define the first year as a base year and not charge expenses, but in year 2 if some property expenses increase, the tenant is surprised to receive a bill for the increase over the base.
(ii) Tenant Space Expenses: A tenant may agree in the lease to be responsible for certain expenses of the individual space, such as Heating, Ventilation and Air Conditioning (HVAC). The equipment should be checked before occupancy. Some tenants just don’t bother. The air conditioning may seem fine but a 15 year old system that has not been well maintained represents a huge cost.  Similarly for plumbing, electrical etc. Do your homework and challenge the Landlord if you find problem. You may find the landlord a lot less cooperative in these matters six months into the lease.
Find out if the Landlord owns the property free and clear. In many cases mortgage loans required the landlord to keep the cash flow above a certain level. This may prevent the Landlord from giving you rent concessions. Owners that have a small mortgage or no mortgage at all have greater flexibility and are more likely to cut you some slack.
Love is blind so don’t fall in love with a space. Do your homework. The Landlord will have an asking price for the space. You need to know what the market rates are and be able to show the Landlord if he is above market.  Let him know that you are looking at alternative spaces.

In the broad  terms a tenant is concerned about

Annual lease cost  and

Lease term.

Leases usually favor the landlord, but  within the above  two key parameters there are negotiation points all along the way for a tenant to try and gain some advantage

PART I – THE ANNUAL COST OF THE LEASE

The total annual lease cost rent is the sum of the rent and the expenses. Lets examine each component

a) LEASE RATE: The lease rate component is fairly straightforward . It is usually quoted as an annual rate of $ per square foot. In some shopping centers retail tenants have percentage leases where the Tenants pay a percentage of their gross sales plus an agreed base rent per square foot. Obviously, the retail tenant will want to consider how best to balance the base rate and percentage rent. If the tenant anticipates a high sales volume per square foot, it is better to negotiate a lower percentage rent and pay a little more on the base rent. Of course, the opposite  is true if the tenant expects a low sales volume per square foot. It is not always easy negotiating  this with mega landlords who may not be that flexible, but his depends on the market. Every Tenant should at the very minimum understand what the market lease rates are for comparable space,

Since the  lease rate is quoted in terms of dollars per sf, both the dollars and the square foot part should be examined. All too often the tenant simply accepts what the sf landlord is quoting.  You would be surprised how often the landlord has the square footage of the space incorrect. How can something so simple be incorrect? The space could have been reconfigured by prior tenants. The space SF is often measured incorrectly. Two different people may both measure and come up with a different total SF.  I have seen this work to the tenants advantage where the lease rate/sf is agreed and the lease is signed. Then the tenant has the space measured by a professional using BOMA standards. If it turns out that the SF is less than quoted, the tenant goes back to the Landlord and with the actual SF and effectively reduces the annual dollar rent. See my article on BOMA standards

b) EXPENSES:

(i) General Property Expenses: Lease can vary from Triple Net Leases (NNN) where the tenant is responsible for the taxes, insurance and maintenance to Gross Lease . These expenses are often called common area maintenance (CAM). In a Gross Lease the landlord generally pays the taxes, insurance and maintenance. In a Modified Gross Lease the tenant and landlord each pay a portion of the CAM. The tenant must be sure that he understands the type of lease he has and that he is on the same page as the Landlord in defining these expenses. Some brokers define a Full Service Lease as a Gross Lease that includes utilities, others use the term Full Service Lease as a synonym for a Gross Lease.  Understand exactly what costs you as a Tenant will be responsible for. The Tenant should ask for an explanation of the components of the CAM cost. Sometimes the CAM component is based on estimated expenses. These should be adjusted at year end and the tenant should be entitled to see an accounting. Look for expense escalation clauses, even in a gross lease. The landlord may define the first year as a base year and not charge expenses, but in year 2 if some property expenses increase, the tenant is surprised to receive a bill for the increase over the base. Be careful about real estate taxes. If it is a new building the current tax rate may still be based on the raw land or building shell.  The property tax will increase at the next assessment period when the finished building is assessed.

(ii) Tenant Space Expenses: A tenant may agree in the lease to be responsible for certain expenses of the individual space, such as Heating, Ventilation and Air Conditioning (HVAC). The equipment should be checked before occupancy. Some tenants just don’t bother. The air conditioning may seem fine but a 15 year old system that has not been well maintained represents a huge cost.  Similarly for plumbing, electrical etc. Do your homework and challenge the Landlord if you find problem. You may find the landlord a lot less cooperative in these matters six months into the lease.

(iii) Build-Out Expenses. A Landlord will often agree to allowances for certain build-out expenses and the Tenants should negotiate the best deal he can.  Many landlords, in a soft market, will also offer periods of free rent. The Tenant is responsible for other start up costs (example a burglar alarm). The Tenant may be able to negotiate for the landlord to pay some of these additional upfront expenses in exchange for a slight increase in rent.   It can help with cash flow for the tenant

Find out if the Landlord owns the property free and clear. In many cases mortgage loans required the landlord to keep the cash flow above a certain level. This may prevent the Landlord from giving you rent concessions. Owners that have a small mortgage or no mortgage at all have greater flexibility and are more able to cut you some slack.

Don’t fall in love with a space. Do your homework, be diligent and got the whole way. Inspect all the equipment, especially the electrical, heating and plumbing, companies like Blake & Sons Heating and Air can be hired independently, their second opinion is your life line in many cases. . The Landlord will have an asking price for the space. You need to know what the market is offering and break out lease rate and expenses so that you can compare apples to apples. You need to be able to show the Landlord if he is above market.  Let him know that you are looking at alternative spaces.

The purpose of this blog is to share information on questions that I have answered or information I have given to my commercial real estate clients in the Tampa Bay, FL area. I hope that others may find the information useful.

Steven Silverman, CCIM is the broker at Tampa Commercial Real Estate, a commercial real estate brokerage firm based in Tampa, FL. Please contact us if you are looking to purchase, sell or lease commercial property in the Tampa Bay area.

email: Steven@TampaCommercialRealEstate.com.

WebSite: www.TampaCommercialRealestate.com

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Sep 052009
 
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As the commercial real estate market softens there are many that argue that it is better to lease rather than purchase a commercial property and let the property owner have the headache of management. This argument may be or may not be right. The situation is always specific to the property and the circumstances of the Buyer/Tenant.

In the long run, if the property is purchased correctly and the Buyer’s circumstances warrant it , it is still better to own real estate rather than lease. With ownership you get tax benefits such as interest deduction and depreciation which reduce your after tax cost. Also, you each month you pay down some of the debt and build equity. The property should also appreciate and keep pace with inflation. Ownership creates wealth in the long term.

In these uncertain times, lack of financing in the financial markets hurts Buyers because they can’t obtain financing to purchase a property. But it also hurts Sellers. The Sellers do want to sell, a lot of them use online sites to promote their properties, sites like houseofcashin.com. Sellers have all kinds of reasons for wanting to sell.  It may not always be about the Seller maximizing the cash at closing; they just may no longer want the responsibility of ownership. However, the Seller won’t be able to sell if  Buyers are unable to obtain financing. If you find a property that the Seller owns free and clear, or has paid down a good portion of the debt, ask the Seller to help with financing. It is simpler to do Seller financing without a bank involvement, but even if the Seller helps with only a portion of seller financing, it helps the Buyer a great deal, I was able to Sell My House to Smith pretty fast thanks to their site.
For instance, one of my sellers has a free standing building for sale. The price is $800,000. If the Buyer obtains only bank financing, the bank will require the Buyer to put down 25% , or $200,000 as a down-payment and a bank loan will be $600,000 (75%) which is why they should contact forbrukslån for financing help as well. In the case of this building, the Seller is willing to finance $200,000. This means that at closing the Buyer is required to give the Seller $600,000 instead of $800,000. The Bank may still require the Buyer to put down 25% of $600,000 loan or $150,000. The purchase price remains at $800,000 and is broken down as follows:
• A Bank loan of         $450,000
• Seller Financing of $200,000
• Buyer payment of $150,000

Because of the seller financing, the bank is lending only $450,000 on a building that is worth $800,000. The Bank is in first position and feels more secure because they are well protected should the Buyer default. Therefore the Bank is more likely to lend.

The Buyer comes out ahead because he puts down less money ($150,000 vs $200,000) and obtains more financing dollars, so the Buyer has more working capital. The Seller wins also because he can sell the property and have an income stream. It is true that the Sellers are in second position to the Bank, so it is very important  that the Seller who offers financing should do due diligence on the Buyer and feel comfortable with the Buyers business plans for his property.   It is not fair for only the Seller to have some risk. The Buyer should understand that the Seller is entitled to ask for a substantial downpayment. If not, it is easy for a Buyer to abandon a property in which he has only a minimal investment. The Seller conceivably runs the risk of having to foreclose on damaged property, therefore the Buyer should also understand if the Seller requires certain insurance standards to be adhered to like prior DMP advice or a previous DAS agreement.

There are other advantages. Seller financing  has the advantage in reducing the closing costs for both  Buyer and the Seller. The interest paid on the note from the Buyer may be substantially higher than the yield the Seller can obtain by investing the proceeds, which is an advantage to the Seller. A disadvantage for the Buyer is that he will not be able to take a future loan on the property which he may be able do with a conventional property Although Wylie holds its own in terms of job prospects, its proximity to major commercial developments and areas of employment such as both the outlying office buildings of the Dallas and Fort Worth central business districts help make Wylie an incredibly attractive residental location.

I have other properties for sale such as an office building in Tampa and a Retail property for sale in Brandon. Both these Sellers are willing to sell with seller financing. Sellers such as these, who are willing to finance, will facilitate a transaction. Don’t be shy. If you find a property that  fits your needs and financing may be an issue, ask the Seller if they will offer seller-financing. The worst that can happen is that the Seller can cay no. They may just surprise you and say yes. But if they indeed say no, you can still finance with middle man who is willing to help you out. A few years back I used Shoreline Financial Services and they were fantastic. It’s important to be creative in these times of economic uncertainly and restrictive credit from Lenders. Seller financing is a useful tool in your toolbox to help you purchase a commercial property, or you can simply use houseofcashin.com to sell as many properties as you desire.

The purpose of this blog is to share information on questions that I have answered or information I have given to my commercial real estate clients in the Tampa Bay, FL area. I hope that others may find the information useful.

Steven Silverman, CCIM is the broker at Tampa Commercial Real Estate, a commercial real estate brokerage firm based in Tampa, FL. Please contact us if you are looking to purchase, sell or lease commercial property in the Tampa Bay area.

email: Steven@TampaCommercialRealEstate.com.

WebSite: www.TampaCommercialRealestate.com

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Sep 052009
 
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The area or square footage of the property is a major determinant of the value attributed to the asset. Lease rates and sales prices are often determined by the square footage. Yet few participants in the transaction ever verify the properties actual square footage. There are often errors regarding the total square feet in the space being leased or purchased.   Prior tenants may have shifted walls many times and the Landords records may not be current. Often, the square footage quoted by the Landlord or reflected in County records, floor plans or Tax records is accepted as gospel. Property Appraiser records and Tax records were never meant to be used in this manner.

The problem is further compounded by having different measurement standards. Different people measuring will obtain different results. Often a lease will specify the square footage, but does not specify which measuring standards to use. A small difference in square footage can make a difference of thousands of dollars. Sometimes tenants are overcharged. Very often, the owner does not charge enough

Then new BOMA/ANSI made significant changes in the manner of measuring an office building compared to the earlier versions: Under this version the structure is measured and evaluated as a whole as opposed to floor by floor classification. Such classification allows for a better comparison between the office structures, many of which have elaborate common area configurations,

Under BOMA standards, uniform guidelines are established for measuring interior space. BOMA takes into consideration the following areas when calculating the total square feet:
• Useable area (space being occupied by the tenant)
• Floor Common Area on the tenants floor
• Building Common Area
• Accounting for walls and the width of walls is clarified by BOMA.

First the tenants useable area is measured. The useable area on each floor is then increased to support the tenant share of the common area on their floor. A typical amount for floor common area is a range of 8-18% depending on the configuration of the floor That figure is again increased by the tenant’s proportionate share of the building common areas. These areas include main floor lobbies, storage rooms and building service rooms, all of which where not included in the rentable areas when using the previous methods

This Site gives a good definitions of the BOMA concepts: http://www.officefinder.com/boma.html

The BOMA standards were created to apply to office buildings only. Although the basic concepts are often implemented into leases of other building types, the standard does not recognize them.

Retail and industrial buildings are most often measured from the outside face of exterior walls and the center of demising walls, with no increase or gross-up factors for common areas.
Government and residential buildings can vary from this as well. The methods of measurement are unlimited to whatever any one lease may stipulate.

Make sure that your lease specifies which measurement standard to use. For instance BOMA. Services are available to verify the actual square footage using the latest BOMA standards. There is a cost to this, but it may be well worth it if you feel that you are getting the short end of the stick.

ANSI/BOMA Standard, which has become the de-facto standard for the measurement of commercial office and retail space. (NOTE: BOMA and ANSI are currently in the process of incorporating industrial space into this Standard as well.)

The ANSI/BOMA Standard lays out a fairly rigid set of guidelines and definitions, clearly defining such things as common areas, vertical penetrations, usable and rentable areas. Probably the most confusing aspect of the Standard is “where to draw the lease lines”. There are many factors which have to be taken into consideration when deciding whether a lease boundary goes to the inside of a wall, the outside, the center-line, or to the glass. As well, common areas must be distinguished between “Floor Common” (for the benefit of tenants on that floor only), or “Building Common” (for the benefit of all tenants in the building).

This differentiation also affects where the lease lines are drawn, and the resulting areas. Calculating a lease to the wrong side of a wall can dramatically affect not only that tenant, but an entire building when dealing with Building Common Area.

Having buildings measured to ANSI/BOMA Standards makes sense in many ways:

First, it facilitates the comparison of your building with others, as it is the industry-wide standard on which rents are based.

Second, the latest ANSI/BOMA Standard (1996) represents a major change from previous versions, and results in the ability to capture many areas previously not considered as part of Rentable space, in particular large building common areas such as ground-floor lobbies, mechanical rooms, storage facilities, exercise rooms, etc. In most cases, the increase in Rentable area upon resurvey to the latest ANSI/BOMA Standard more than offsets the cost of the survey and plans. And as an added benefit, when using the AccuMeasure system, you end up with a great-looking set of As-Built drawings for each floor!

The new Edition includes very significant changes in a way the measuring office building compared to the earlier versions: structure is measured and evaluated as a whole as opposed to floor by floor classification. Such classification allows for a better comparison between the office structures, many of which have elaborate common area configurations, which have not been classified using earlier BOMA standards.

The most significant change in the 1996 method includes the inclusion of building common areas in each tenant’s rentable area. These areas include such locations as main floor lobbies, electrical and mechanical rooms, service rooms, etc. – none of these were included in the rentable areas in prior BOMA Standards.

The purpose of this blog is to share information on questions that I have answered or given to  my commercail real estate clients  in the Tampa Bay, FL area. I hope that others may find the information useful.

Steven Silverman, CCIM is the broker at Tampa Commercial Real Estate, a commercial real estate brokerage firm based in Tampa, FL. Please contact us if you are looking to purchase, sell or lease commercial property in the Tampa Bay area.

email: Steven@TampaCommercialRealEstate.com.

WebSite: www.TampaCommercialRealestate.com

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