| Property Information | |
|---|---|
| Office: | Medical Build-out |
| Lease Rate: | $18/sf MG |
| Condo: | Yes |
| SF: | 2,500 sf approx |
| Space Plan: | 5 Medical Offices |
| Location: | Access to Brandon Blvd |
| County: | Hillsborough |
| Property Information | |
|---|---|
| Use: | Medical Office |
| Sale Price: | $475,000 |
| Free Standing: | Yes |
| SF: | 2,500 sf |
| Use: | Medical Office |
| Space: | 7 Exam Rooms + Offices |
| County: | Pinellas |
| Property Information | |
|---|---|
| Building: | 4,217 SF heated |
| Price: | $1,410,000 |
| Cap Rate: | 6.1% |
| Tenancy: | Long Established Medical Office |
| Location: | South Tampa |
| Folio: | 11674-0000 |
| County: | Hillsborough |
| Property Information | |
|---|---|
| Building: | 10,500 SF heated |
| Price: | $2,200,000 |
| Cap Rate: | 8.0% |
| Tenancy: | Fully leased with 3 tenants |
| Location: | Convenient to St Josephs Hospital |
| Folio: | 109296-0000 |
| County: | Hillsborough |
| Property Information | |
|---|---|
| Building: | 2,100 SF |
| Price: | $285,000 |
| Cap Rate: | 8.5% |
| Space Size: | Fully leased with two tenants |
| Location: | Convenient to Mall & I75 |
| Folio: | 06943.0114 |
| County: | Hillsborough |
| Property Information | |
|---|---|
| Building: | 200,000 sf on 10 Acres. Multi-tenant. Warehouse/Manufacturing |
| Lease Rate: | $3.98/sf NNN + $1.40 CAM |
| Available: | 61,703 sf. Can be subdivided |
| Space Size: | Various – 13,462 sf to 61,703 sf |
| Zoning: | IH Industrial Heavy |
| Ceiling: | 16ft – 24 ft |
| County: | Hillsborough |
| Property Information | |
|---|---|
| Condition: | Vacant Land with Office Bldg. Development Site. |
| Sale Price: | $1,200,000 |
| Free Standing: | Yes |
| Acres: | 1.45 |
| Zoning: | Commercial Office. Can be Retail |
| Location: | Close to 56 St. |
| County: | Hillsborough |
The Industrial Market In Tampa Bay
By Steven Silverman, Tampa Commercial Real Estate
We are moving out of the recession and the inventory of very low priced bank owned industrial owned space on the market is decreasing. While purchase prices are increasing for high quality product and lease rates are improving, they are still low since there is still high vacancy. As an example, in the industrial market in the airport area of Tampa we have a 15% vacancy rate which we have never seen before. In this market this represents at least a seven year supply of industrial space and it is definitely a tenant market. There is a plentiful supply of Class C space available which is keeping rates down. Industrial warehouse space for lease can be found from three dollars a square foot. The high vacancy rate is inhibiting new development which will not come until there is a faster rate of absorption.
There is a lot of talk about Amazon coming into Tampa Bay and setting up a 1,000,000 ft.² distribution center near Apollo Beach in Hillsborough County. The brokers and developers that I have spoken with feel that aside from increasing some demand for housing, Amazon will not have a have a major positive impact on the traditional industrial real estate market. The reason for this is that Amazon is self sufficient. They bring in inventory and ship it out very quickly. The will not have a gravitational effect in attracting suppliers.
In the longer term as our transportation improves, the Port of Tampa expands and the Panama Canal renovations are completed the industrial market in Tampa Bay will improve. For now we need to concentrate on absorbing existing space.
Steven Silverman is the Broker at Tampa Commercial Real Estate
www.TampaCommercialealEstate.com steven@TampaCommercialRealestate.com
For companies considering relocating or expanding to Florida, the investment in Commercial Real Estate is a major expense. These companies should be aware of the incentives that may be available to them.
In the wake of the past recession, Florida wants to increase employment. With each corporate relocation Florida is not only creating employment, but if the jobs are high paying then it also raises the per capita income.
With its sea ports, proximity to South America ,international airports low cost housing and business space plus the natural beauty. Florida already is appealing to many out-of-state companies as place seeking to expand or relocate . But government has realized that the appeal alone is not enough. The State of Florida, its Counties and the Cities are courting out of state companies to relocate and expand into to their area. They are offering financial incentives to enhance the appeal
As an example for the companies moving to Tampa Bay
Amazon is opening a $200 million distribution center in Hillsborough County which will create 1,000 jobs Amazon will receive local and state incentives for the 375 high paying jobs of approx. $1 million plus property tax reductions over seven years of $6.4 million
Briston Myers will open a new North America Capability Center in Brandon that will create 579 jobs. They will receive incentives of $2 million from Hillsborough County plus additional state incentives that will bring the total incentive package up to $6 million
In Clearwater, the city recently used incentives to convince General electric to relocate positions from New York. GE made a $49 million investment and relocated 263 jobs.
The incentives are not just being used to help out-of-state companies. Local companies are also benefiting.
As an example, Retail Process Engineering LLC is relocating its corporate headquarters from Tampa and has purchased an office building in Pasco County to serve as its new headquarters. The Pasco Economic Development Council is assisting with the relocation. The company is anticipating job creation incentives of $5,000 per job created, equal to a total of $80,000. It should be noted however that average wage of each job is more than $105,000 which is more than three times the average annual wage in the county ($32,161). That was why Pasco County was so aggressive in the incentive package that it offered. The local incentives was a major reason cited by the company for selecting Pasco County as its new home
However, the State and the local authorities are conservative. They won’t just give money away. There are certain criteria that any government authority will look at before offering incentives.
Industry: QTI is Florida’s Qualified Target Industry Program. Industries such as Information Technology, Aviation, Life Sciences and financial services are their prime targets.
Salary Level: QTI is targeting companies that will pay higher than average salaries
The number of Jobs – less than ten jobs will not usually merit any incentive package
Typically the government officials will want to understand the companies commitment. They will ask how much the company will invest in commercial real estate, and how much they will invest in equipment. They will also want a sense of the competition. What options other than Florida or the particular geographic area is the company considering. The incentives are usually performance based. They are given after the company has created the promised jobs
An important aspect for companies that are considering applying for an incentive package is that they do not sign a contract to purchase an Office Building or the purchase of an Industrial facility before meeting with the local Economic Development Councils and making a formal application for an incentive package. The company must create the atmosphere where the EDC competes for the company relocation or expansion and the jobs the company will bring. You want the county to offer their best package. Once a lease is signed for commercial real estate or commercial real estate is under contract or has been purchased in Florida, the State and local government know that the Buyer is already locked in. The company will move regardless, so there is no incentive to offer incentives. If you are considering a corporate relocation or expansion and think that you may qualify for incentives, then then we encourage our clients to make a visit to the local Economic Development Corporation one of the first stops that they make. We are more than happy to set this up meeting for our clients.
With careful planning and awareness of the inventive programs available the company that is considering moving or expanding into Florida can make a huge difference to its bottom line
The economy in Florida and Tampa is rebounding. After years of decline construction is once more taking place. Developers and property owners are once more trying to develop properties to their highest and best use. Commercial real estate development is occurring. Shopping centers are planned into new and larger redevelopments which swallow up adjacent land. Residential subdivisions are being contemplated for rural areas. There are competing interests for local residents who want to preserve their old way of life and developers who want to promote commerce. A particular homes for cash company in san diego, believes that the area they buy in is more suitable. There may also be opposition from the county who may feel that the proposed development does not meet their objectives for the community
The first factor that developers should consider is the long range plan for the community in which they seek to build. It is much easier when a property is already zoned for the proposed use. Often, however, the land use must be changed to accommodate a particular development. Counties in Florida assign a “Future Use” to properties so that development can be planned and consistent. The land use for a particular property can be changed but it is a lengthy process that requires consideration of the local community and approval of the Board Of Commissioners
With social media and the internet local communities are increasingly able to organize in opposition to a project that they do not feel fits with their community . Residents worry about environmental issues, increased traffic, noise, landscaping, architecture. Sometimes they do not want to lose property to development that they have come to regard as a local play area. The local county is obligated to notify local residents by mail of new project applications and also put up public notices on the property.
Developers should take the local community very seriously. As an example, eight large projects in Hillsborough County were shelved due to opposition. Developers need to be proactive and make sure that community understands what they are trying to achieve. They should try to work with the community and explain how the project will benefit the community. Developing good will makes negotiation easier with neighborhood associations and local residents and to find common ground to reduce local opposition.
Developers need to factor in the sentiments of the community and understand the objectives of the local County when planning commercial real estate development.
Beware of Open Ended Contracts
Who says that contracts are always fair? Both parties in a transaction should protect themselves.
Setting the time lines in a contract for the sale and purchase of commercial real estate or the leasing of commercial real estate is one of the most important things to take care of in the contract. Every item that has a start date, should have a finite end date. Sellers and Buyers should be on the lookout for this. A Buyer or their attorney may insert clauses that tie up their property indefinitely. For instance, in a development property transaction a clause like “Due Diligence period will terminate when permits are received” What happens if the permits are delayed due to a faulty application or poor plans submitted by the Buyer.
I saw a similar clause for a commercial lease. The Buyers attorney prepared the contract that had the rent commencement date as the date that the tenant received a Certificate of Occupancy. The Landlord was desperate to lease the property and did not even want to have his lease reviewed by his attorney. He just wanted a tenant. Fortunately for the Landlord, we had the Tenant execute an addendum to the lease saying that if permits were not received within six months that the Tenant would commence paying rent. Six months is much more than fair. This was supposed to be a far off event that would never happen. Well it is now one year later and the Tenant has not yet received a certificate of occupancy. The landlord is receiving his rent, only because he put a time-line on the event.
The Purchase And Sale Contract and the Lease Contract are long documents. It is a good idea to extract all the relevant dates from the contract and create a spreadsheet listing the date that all events start and the date that each event terminates. This document should be signed by both parties to the transaction. It is possible that the spreadsheet may address an issue that is omitted in the contract. As an example, I was recently involved in a contract to purchase a building. The contract that the attorney prepared did not address the date by which the Buyer had to obtain financing. This was however addressed in the spreadsheet. When the date for receiving a financing commitment came and went, the Seller had the option to terminate and not be held in limbo because he had taken the time to set an end date.
Of course, it works both ways. Buyers and Sellers should have time-lines during which they must perform their obligations. Any by the way, although an attorney is not required, it is always a good idea to have your attorney review the documents, especially for a lease. Spend a little now to save a lot of money later.
Perspective On The Commercial Real Estate Market In Florida
Conventional wisdom is that commercial property follows the rooftops. As a local economy grows, the demand for housing increases which in turn causes a rise in the price of residential real estate. Commercial real estate such as Office, Retail and Industrial will follow Residential in order to cater to the growing economy. And vice-versa. In a downturn, commercial real estate will follow residential real estate downwards like houses, building or apartments based in St Kilda, Melbourne some of them with big fences from AAA Fence and other facilities. if you require a st kilda apartment then make sure to call us now.
Recently, there has been strong housing growth in Florida. Homes have increased in value and for the first time in years new housing development is occurring. So conventional wisdom says that commercial real estate should follow the residential real estate upwards. recently, I was able to buy an amazing home in Louisville thanks to Family Reality.
The issue to examine is why the price of housing is increasing. A large part of this is due to the low interest rates which are making housing affordable again. Low interest rates and the return of banks to the lending market are also benefiting commercial real estate. We have seen more demand and increasing prices for commercial real estate because of this. In this respect it does seem that commercial real estate is indeed following residential real estate. Yet as a broker, it does not seem that the increased demand for commercial real estate is as strong as the residential market is experiencing.
However, there is a new factor propelling the increase in values that we are seeing in the housing market. Institutional money . In the past Wall Street was a major factor in the real estate bubble because they supplied easy and risky mortgage financing . Now major investment companies are back in the housing market, buying thousands of single family homes. Their focus has been in struggling markets where they can achieve a low purchase price/sf . It is in these markets, where, as the supply of homes decreases that housing prices are now increasing the fastest. The investment companies have become landlords and are using management companies to control their properties. Some are doing it themselves. Blackstone, as an example has opened 14 offices throughout the country to serve the homes it has purchased. This is new territory. Purchasing houses for investment is not anything new but in the past the landlords were local investors.
The question is how will these institutional players affect the housing market. Buy low and sell high. That is how institutional investors operate. Their strategy is not a secret so we should not be surprised when it eventually happens. We should not be complacent and assume that because they are buying houses now that they will want to stay in this market forever. Some investment firms are stepping up their rate of investment in single family homes and continue to increase their presence in state like Florida and California. However, other investment firms have already taken first steps to cash out. Certain investment firms have filed to go public. Others have started to sell holdings.
Fitch ratings has warned that in certain areas where the rise in housing prices has been faster than the growth of local economies, housing markets could stall or even reverse. Will commercial real estate follow again?
The danger for the housing market is that we are relying on the institutional real estate investors to be rational. Because they are professionals, we make the assumption that they know what they are doing. We have been down that road before. Small moves by them can have a big impact on the market.
There are changes coming to the Florida real estate market. The low current interest rates cannot remain indefinitely. If the new pack of institutional investors act in an orderly manner at the time of disposition the market should hold. If they adopt a herd mentality at the first sign of an inevitable slowdown, and start to sell faster than the market can absorb, there could be a significant impact on the housing market. Housing prices will fall. This in turn will effect the commercial real estate in areas where the institutional funds have made the largest investments. Good commercial properties will hold their value. When making a commercial real estate investment in today’s market, the quality of the property is more important than ever. This all can sometimes get a little confusing, so if youre planning on buying or selling a property, it’s always recommended that you get aid from a professional like https://southerncaliforniahomebuyers.com/san-diego/, they can help you get the most cash in your pocket when selling your home.
Steven Silverman – Broker
Tampa Commercial Real Estate
Tampa Commercial Real Estate is a member of the Florida Gulf Coast Commercial Assoc of Realtors. (FGCAR)
Each month members of the FGCAR hold several commercial property pitch sessions at different locations in the market
In January 2013 Steven Silverman, the broker at Tampa Commercial Real Estate hosted a FGCAR pitch session in Tampa at a property that is listed by Tampa Commercial Real Estate. The building is a free standing office located on W North A street across from Westshore Plaza
Hosting a property pitch session is a great way for a Broker to get exposure of a listing to other Brokers. Brokers that attend get to see the property and can talk with confidence about it to their clients..
At the property pitch sessions commercial real estate members of FGCAR exchange information about new properties on the market and market conditions. Affiliates such as Banks, Title Companies etc also attend the meetings and update the commercial real estate agents on their sector of the market. Members of FGCAR that attend the property pitch sessions keep their fingers on the pulse of the market.
Members of FGCAR have to conform to strict ethical standards. Clients that employ members of FGCAR to Sell, Purchase or Lease commercial property have a distinct advantage in the commercial real estate market place. They know that FGCAR members are serious about their business. An ABL facility is perfect if a business owner is trying to make their income grow. One of the first questions that should be asked of a broker when discussing a commercial real estate project in the Tampa Bay market is whether that broker is a member of FGCAR
As the recession hit Florida and foreclosures came onto the market, buyers with cash discovered that the Internet is a great place to find deals on commercial real estate. Many reasoned they can do this without a broker. Some believed that the less people involved in the deal the better and and thought that they could get a better deal by not having to pay real estate commission.
Most of that logic is misplaced. Firstly, the Buyer usually does not pay the real estate commission. Nine times out of ten the bank that is the owner of the foreclosed property recognizes the real estate commission as a cost of doing business and it is already included in the price. I firmly believe that it is mistake not to use the services of a local expert to help you make your decision. That may sound self serving because I am a real estate Broker. However, since the brokers services are free to the Buyer, a good broker can help the Buyer avoid making a serious mistake.
Recently a prospect called me from California. They were working on the acquisition of a portfolio of properties. They were interested in a property they had learned about in Tampa Bay that seemed like a very good deal. According to information they had received, the property was a partially finished 5,800 sf Day Care Center on 1.5 acres of land. What made this property interesting was that there were no Day Care centers close by to compete with this center. The property was bank owned and very well priced, one time I wanted to sell house fast in Cleveland and the bank bought it from me intermediately, I guess the house was in good conditions.
They asked me to take a look at the property and give them an opinion of value. Google maps told me that I should set aside a few hours to get to the property and back. As the miles rolled away, I was, as usual,busy on my mobile phone so I did not pay too much attention to the travel time. Under normal circumstances I would have become concerned as the road narrowed, traffic decreased and the landscape turned from houses to orange groves but I was not paying close attention. Besides, I had the address plugged into my trusty Garmin GPS which seldom lets me down.
I found the property without a problem and was able to report to the Buyer the good news that the structure had lots of natural daylight. Also it was very peaceful. The conclusion of my report to the Buyer was they not proceed with the acquisition. One look at the photo of the property and my reasons will be readily apparent.
As a Broker my advice to the client was to run, not walk. I hate to see a client lose. By giving honest advice and helping the client prosper, it will lead to more transactions down the road
As a Broker that is closely in touch with the local market, I have noticed that companies in the high tech sector seem to be growing the fastest.
Tampa Commercial real estate is pleased to have brought Savtira Corporation into the Tampa Bay market Savtiras “Cloud” platform is attracting global attention. They grew from zero employees at their Ybor City location in January 20 11 and will reach close to 100 films by the end of 2011. It is forecast that they will reach 300 employees by the end of 2012.
Tampa Commercial Real estate is also pleased to have brought MH Labs into the Tampa Bay area. It MetricHalo p will be relocating from New York and they purchased it office warehouse facility in safety of. MH labs is a high-tech supplier of sound systems and software to the music industry. Their clients include companies such as Apple, the Royal Philharmonic, the Summer Olympic Games and many recording studios and artists.
We were also pleased to find a freestanding building for Knowledge Accelerators. Knowledge Accelerators services client such as Microsoft and IBM with translation services so that they are manuals can be distributed worldwide
On October 28, 2011 the St. Petersburg Times wrote about a recent study of emerging trends in real estate which was just published I the Urban Land Institute and Price Waterhouse Coopers.
The report shows that there has been a definite improvement in the commercial real estate sector in Florida and in Tampa Bay. The report is not saying that commercial real estate is again at the top of the market but it is clear that commercial real estate is no longer below ground level. The improvement has been assisted by price corrections as commercial real estate moved to adjust to the current market.
One of the better performers was Miami which ranked 17th and compared to other markets. Political instability has been driving foreign cash into investment opportunities in Miami. Overall the rankings for Florida as compared nationally with major metro areas were.
At the bottom were Detroit, Cleveland and Las Vegas.
The report states that apartments are benefiting the most across the country and that it will still be slow going for investors in industrial properties, hotels, shopping centers and office buildings, at least until 2012. However, not all local brokers agree with the report. One leading national brokerage company that closely monitors local markets says that the report does not show all the games made during 2011. His analysis shows that vacancy rates have decreased in industrial and office buildings. An example given was the decision by Time Warner to create 500 new jobs in the Hillsborough County over the next five years.
Florida’s real estate markets saw 34,558 total foreclosure sales in the second quarter of 2011 according to RealtyTrac, down 22% from the same three-month period a year ago
The state’s total foreclosure sales represented 35% of all real estate sold in the second quarter, RealtyTrac says. The research firm estimates foreclosed properties were sold at a 33% discount relative to non-distressed properties, at an average price of $114,894.
Source: Gulf Coast Busniess Review
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Florida’s got a better business tax climate than all but four other states. And not one of those four is east of the Mississippi or comes close to being a big population state.
Florida ranks fifth overall in the annual “state business tax climate index” – an annual analysis of the relative competitiveness of states based on their business tax structures. In fact, Florida has remained consistent at No. 5 on this index since at least 2006. Many other states vacillate in rank from year to year.
Business taxes:
How competitive is Florida?
State ranks in latest Tax Foundation analysis.
The best
1. South Dakota
2. Alaska
3. Wyoming
4. Nevada
5. Florida
The worst
46. Ohio
47. Connecticut
48. New Jersey
49. California
50. New York
Source: Tax Foundation 2011 State Business
The index is assembled by the Tax Foundation, a 73-year-old nonpartisan, educational organization in Washington, D.C. The foundation found that states that kept their taxes low, their systems simple and – this one likely comes as a surprise to many people – minimized tax incentives to lure businesses tend to benefit the most.
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Saturday, October 30, 2010 St Petersburg Times
THE ASSOCIATED PRESS November 22, 2010
WEST PALM BEACH, Fl. They’re big, self-entitled and about to start sucking down federal benefits like a college student on free beer night. The first wave of Baby Boomers turns 65 in 2011, making them eligible for Medicare, then full Social Security benefits beginning in 2012. Just as they forced societal changes from infancy on, Boomers will radically change retirement, demographers say.
In addition, this huge bulge of 78 million people between the ages of 47 and 65 is the most economically powerful population in U.S. history, even though the recession took big bites from nest eggs, leaving many futures rocky.
A batch of recent surveys reveals what Boomers are thinking and likely to do in retirement. Some are contradictory, but then, when have Boomers ever been predictable? — Beginning Jan. 1, 7,000 Boomers a day will turn 65. That’s 78 million between now and 2030. In 2011, 200,000 an additional Florida Boomers will turn 65.
This will add to the 4,600,000 Baby Boomers already living in Florida
Overall, there are 78 million Boomers, born between 1946 and 1964. They make up 26 percent of the U.S. population. Fifty-one percent of Boomers are women. — As Boomers age, so will the country’s population. The number of people 65 or older is expected to double in the next 20 years. By 2030, one in five Americans or 72 million people will be 65 or older.
Boomers scoff at the current life expectancy of 75 for men and 79 for women. Those turning 65 next year say they expect to live to 85 and would like to be around until age 89. — Boomers are mostly happy with their own lives but …
Of those turning 65 next year, 78 percent are happy with their lives. Yet only 40 percent are where they expected to be in terms of health and financial security.
About 21 percent say they feel less well-off than their parents are the same age. About 70 percent say they’ve achieved all or most of what they expected in life, while just 3 percent say they’ve achieved little or none of what they wanted. — Get ready for the new phrase: “Working in retirement.”
Boomers will reinvent retirement to mean less than full-time work but not all-out leisure either.
In past generations, 75 percent of men and women would be retired within a few years of turning 65. By the time the first Boomers approach 70, only about half will be retired. Those that retire are likely to work at another career.
Partly, their finances will keep them in the workplace, as they try to pay off the excessiveness of the boom years, such as home equity credit lines and kids’ college debts, sometimes taking care of your finances can be really hard, in my case I like to use Rudy El Gabsi‘s help whenever I feel stuck as well as some financial help from Personalmoneystore.com which gives an extra support.
Among those turning 65 next year, 40 percent of those still working say they’ll never retire. And 35 percent of those still working say they returned to work in a new career after retiring earlier.
That’s good news for younger generations, as older workers may put off taking Social Security benefits and instead continue to contribute. — Boomer retirement capital: Florida, of course!
Florida is the top retirement destination in the country, with eight of the most popular places to retire. Tops on the list is the Sarasota–Bradenton area, followed by Prescott and Lake Havasu City in Arizona. Then come Fort Myers, Naples, Melbourne-Palm Bay, Homosassa Springs, Ocala, Punta Gorda and Port St. Lucie rounding out the nation’s top 10 retirement areas.
Twenty-four percent of younger Boomers expect to move in retirement, but only 17 percent of older Boomers say they’ll relocate. — Look for new ways of living in retirement. Supportive communal living, known as co-housing in Europe, may gain popularity, where homes are clustered around a common building used for social gathering.
There may be more “active adult” communities and fewer traditional retirement developments. — A big Boomer fear: Running out of money.
About 45 percent of Boomers are at risk of running out of money in retirement. In 1950, 68 was the average age for retirees to begin claiming Social Security. Today, it’s 63 and life spans are longer.
A 65-year-old couple’s health-care costs are about $215,000 for the rest of their lives, but staying healthy and active can cut costs by $2,000 a year. — The Boomer lifestyle: Go-go instead of slo-mo.
They’ll embrace and change technology. The fastest growing group of Facebook users are 55-to-64-year-olds. Cell phones and other devices are likely to have larger screens and buttons. We may see hearing aids that look like Bluetooth headsets.
Some 44 percent want to take classes to learn something new. Expect gyms and fitness classes to cater to Boomers.
Many Boomers are opting for RVs rather than second homes or moving to a new location.
Sixty-one percent of Boomers want to travel in retirement but the generation that backpacked in Europe as college students is not going to do it on a tour bus. Look for biking tours, ski trips, sailing and cruising to be vacations of choice for active Boomers.
Sources: U.S. Census Bureau, Money Magazine, CNBC, Social Security Administration, AARP, Portfolio.com, MetLife, Del Web, Employee Benefit Research Institute
Barbara Marshall writes for The Palm Beach Post. E-mail: barbara(underscore)marshall(at)pbpost.com.
Story Filed By Cox Newspapers
“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.
The Republican National Committee today has selected Tampa, FL as the host city for the 2012 Republican National Convention.
Tampa has already demonstrated its ability to rise to the occasion and host major events which includes Super Bowls and NBA tournament.
Nevertheless, to be selected as a host city is an achievement for Tampa and for the state of Florida. It confirms Tampa’s status as a vibrant growing and modern city. It has been 40 years since Florida last hosted a convention. Before making their selection the committee looked at a several factors including the number and proximity of hotels, capacity of the arena to hold the convention, transportation, security, media work space, convention office space, and the ability to finance the operation.
With the exception of the Olympic Games, the Republican National Convention will be the largest media event in the world. Some numbers
The activity will focus in the downtown area which will well covered by the Secret Service and the FBI. Some portions of downtown may be closed off for security reasons. The convention itself will be held at the St Pete Times Forum. The Tampa Convention Center will host the media.
The Convention should have an impact on the economy of Tampa Bay. Aside from hotels, restaurants, retail, tourism will benefit. Visitors will find that Tampa Bay offers opportunities for growth and is one of the lower cost regions to do business in the Untied States. Recognition of the many attributes that Tampa Bay offers to business may be a boon to investment and commercial real estate in Tampa Bay
If you are looking to purchase, sell or lease commercial real estate in Tampa Bay.
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.
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
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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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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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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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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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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