Mark's Commercial Real Estate Blog

New to Commercial Real Estate Investing? Some common mistakes to avoid...

It's been said that the best time to invest in real estate is in a down market. Well, what are you waiting for? Commercial real estate prices are at all time lows and interest rates are still very attractive. Admittedly banks are very hesitant to make loans, especially on investment property. Investors in a strong financial position that have a good relationship with their bank are having success. If you are new to real estate investing you need to be somewhat cautious in choosing the right property.

I came across a Blog recently that addressed this very issue. It's title is 6 Beginner Mistakes with Real Estate Investing by Ryan Moeller. Ryan's advice, although taken from a Residential Realtor's point of view, has merit for the newer Commercial Investor as well. It can be found by following this link:

http://www.realreturnrealestate.com/index.php?option=com_wordpress&p=31&Itemid=110

Some of the more common investing mistakes he mentions include "falling in love" or getting emotionally attached to a deal. This is easy to do especially on your first few deals. Make sure that it is a good business decision and be prepared to walk away from a deal at any point if the numbers do not work. He also mentions "Buying in War-zones" as a common mistake. Too often properties seem priced too good to be true possibly because they are in a depressed area surrounded by vacant buildings and foreclosures. You have to remember the "Three L's" of real estate: Location, Location, Location! Another thing mentioned in the Blog is the mistake of having only one exit strategy. Try not to pin your hopes of success with a property on only one course of action. Problems can often arise that can lead to financial disaster if you are not prepared for them. Ryan says it best; "..buy below market properties that cash flow.  That way you can sell retail, wholesale, lease option, seller finance, refinance, even rent and hold."

Thank you for posting the good tips Ryan! Hope everyone finds it useful as well. I welcome your comments, let me know what you think. Good luck and may all of your investments be profitable ones!

For any of your Commercial Real Estate needs in the Greater Akron, Ohio area including the Ohio counties of Summit, Stark, Portage, Medina, and Wayne, please get in touch with me.

NAI Cummins Real Estate (330) 535-2661 x 142 or by email MarkStacy@NAICummins.com

My Blogs: http://markstacy.activerain.com/

Twitter? Follow me http://twitter.com/NAICumminsMark 

Check out my Commercial Listings:

http://showcase.costar.com/markstacy@naicummins.com

www.Listings.Loopnet.com/MarkStacy@NAICummins.com

What is the Silver Lining? Possible Lower Tax Valuations Next Year

I realize that falling RE property values is a big concern to property owners everywhere.  Especially the one's trying to sell their property right now. If you are able, this is a great time to purchase Commercial Real Estate. Borrowing constraints can be difficult but not impossible and rates are very good. The silver lining for those owners planning on possessing their property for the next few years might be found by having a Property Tax Re-Assessment at the beginning of 2010. I know of many that have already done so this year with good success. If you missed the deadline to do so this year, good. Remember that property tax schedules are always a year in arrears. Therefore a re-assessment next January will look at property values in January of 2009. According to some in the appraisal industry, values this year are more than 20% lower than in 2008.

I received a very nice email from Gary Barker who is a commercial appraiser colleague in the local Akron, Ohio market. His company is called Akron Appraisal Group, Inc. His comments about tax valuation and assessments are worth sharing. Additionally he also provides his opinion as to the reason for the lower values relating to vacancies and CAP (Capitalization) Rates. In his email he reprinted a small article from one of his trade publications. that article can be found by following the LINK below: 

http://www.appraisalinstitute.org/ano/current.aspx?volume=10&numbr=9/10#7243

The email from Mr. Barker is as follows:

To friends, clients and colleagues,  

Below is an article I received today from an appraisal trade magazine (Appraisal Institute Appraiser News Online Headlines, Last Updated: May 6, 2009, Vol. 10, No. 9/10). 

This is a great illustration of the issue of tax valuation.  While many feel their tax value is too high it is important to point out that taxes paid this year (2009) are based on the value as of January 1, 2008.  Next year taxes will be based on value as of January 1, 2009.  The below research suggests that across the board values have decreased substantially over the last 12 months.  While that presents little relief at the moment, next year's tax bill should be lower. 

I suspect most (yes...most) commercial property owners should appeal their tax valuation in 2010 based on the market value on January 1, 2009.  I advise taking a very careful snapshot of your property right now.  What is your occupancy rate?  When was your last tenant signed and what was the rate?  What are your monthly expenses? 

Why have values changed so much?  Mostly because of increased vacancies and increased cap rates.  When it comes to the science of appraisal those two numbers have a powerful impact on value.  All else being equal - a small increase in the vacancy rate and a small increase in market cap rates will create a significant decrease in value.    

Commercial RE Prices Continue to Slip; Down over 20 percent from 2008

Based on the Moody's/REAL Commercial Property Price Index prices of commercial real estate are down 21.2 percent from a year earlier and down 17.9 percent from two years ago. The Index, which is based on repeat sales of the same properties across the U.S. at different times, fell 0.6 percent in February to 150.63 from 151.58 in January.

The index is a good measure of where commercial property prices are going. The largest year over year price drop (February 2009 vs. February 2008) was reported in industrial, with a 13.9 percent decrease; followed by apartments, with a 13.6 percent decrease; office, with a 13.5 percent decrease; and retail, with a 8.5 percent decrease. Also, according to the report, sales volumes in February were down 67 percent from the year ago period and most of the sales (90 percent) were for assets under $15 million.

 According to Zack's Investment research, these trends indicate there might be many owners who bought at the height of the boom underwater on their mortgages and that there could be a rise in defaults, due to the risk that such "underwater" owners possess.

 With financing still scarce and fundamentals going south, prices are likely to continue falling, which could mean fewer transactions as owners are reluctant to take losses. However, lower dollar deals are getting done vs. large transactions; financing for smaller properties is easier, which should make price drops in the >$15 million class less severe, according to Zack's.

Hopefully you have found this information useful. Let me know what you think.

For anyof your Commercial Real Estate needs in the Greater Akron, Ohio area including the Ohio counties of Summit, Stark, Portage, Medina, and Wayne, please get in touch with me.

NAI Cummins Real Estate (330) 535-2661 x 142 or by email MarkStacy@NAICummins.com

Twitter? Follow me http://twitter.com/NAICumminsMark 

Check out my Listings:

http://showcase.costar.com/markstacy@naicummins.com

www.Listings.Loopnet.com/MarkStacy@NAICummins.com

 Check THIS out!

NAI Cummins Real Estate has been publishing and distributing a wonderful multiple page Market Directory several times per year since Jim Cummins Real Estate was founded in 1977. For at least the last 10 years (possibly longer) it has been in full-color. It includes of all of our listed properties in the 5-county/greater Akron, Ohio area. We are one of the few if not only Brokerage Companies in Ohio and beyond to consistently distribute a full marketing package to our current and potential clients.

We are extremely excited to have just released our most recent Market Directory in an electronic format called Nxtbook. It allows us to electronically distribute a link which will allow a user to view the Market Directory on their computer as if it were sitting on the table in front of them. It is search-able, save-able, will allow bookmarks and notes, and can be easily distributed. Try searching "Mark Stacy" to view all of my listings. Check it out for yourself by clicking on the following link:

http://www.nxtbook.com/nxtbooks/naicummins/marketdirectory_2009winter/index.php?startid=Cover1  

Please call me for all of your Commercial Real Estate needs. Thanks!

Mark Stacy, NAI Cummins Real Estate, (330) 535-2661 x142, MarkStacy@NAICummins.com

 Is this my 15 Minutes of Fame?

Hopefully not... but, I was pleasantly surprised to open the Winter 2008-09 issue of the Northeast Ohio Office Buildings Magazine and find that I had been quoted by Jay Miller in his Market Survey article titled "Surveying the Market: Uncertainty Finally Reaches Cleveland".  In this article Jay, the highly reputed Crain's Cleveland Business government and economic development reporter, accurately depicts Akron as an exciting marketplace for Commercial Real Estate brokers. He lists several positive happenings in and around Akron, most if not all have been lauded in my previous blogs. I was quoted by Jay as saying "It's been a little bit more of a struggle [in the last four months of 2008]", and "Deals are happening though, and we're optimistic. It doesn't do any good to think otherwise." True, so true. Deals are continuing to happen and those agents/brokers that refuse to keep an optimistic attitude will surely struggle in the months to come. Even in "Down" markets Tenants and Buyers are there. Smart Tenants take the opportunity to find better quality or more efficient locations. Smart Buyers (and qualified Buyers) take the opportunity to purchase properties at well below "normal" strong-market prices. As reported, our market in Northeast Ohio is not overbuilt and by its conservative nature remains relatively stable as compared to the rest of the country. Stay tuned for more positive Akron area commercial real estate news!

Mark Stacy -NAI Cummins Rea Estate

 Low office space vacancy rates in Akron, Ohio, can this be true?

        I am happy to continue my series on the Akron, OH commercial real estate market by relaying some positive news on our office leasing market. In today's Akron Beacon Journal reporter Paula Schleis penned an article on the lower office space vacancy rates in our area. In the article (see link below) she reports that Team NEO's (aera economic development group) recent findings show that vacancy rates for Class "A" office space in our 16-county region fell from 19 percent in 2003-2004 to about 12 percent now. Currently Team NEO also finds that Class "B" space is at 13 percent and Class "C" office space vacancy stands at 9 percent. In the specific Akron, Ohio area, the combigned vacancy rate is reported at 8 percent, down from 12 percent in 2007.

       The article points to the medical sector as a big contributor towards the improved office leasing market and lower vacancy rate. Mike Wojno, of Wojno Development is quoted in the article describing the new medical projects he has been involved in along with the growth in and around the designated Akron Biomedical Corridor.

       Hey Paula, did you read Part 3 of my series of Blogs on the Akron, Ohio Commercial Real Estate Market from September 22? (See link below ) You must have because in it I laudded the Akron area hospitals for their recent growth and even referenced Wojno Development's new Acute Care Facility. I love positive news so the more the merrier! As stated before, this is terrific news for the growth of our region. We are truly seeing good things happening in our area.

       I welcome your comments and suggestions. Let me know your take on the Commercial Activity in your region. More installments to come, stay tuned...

Thanks,

Mark Stacy - NAI Cummins Real Estate

 Here is a Link to today's (9/29/2008) Akron Beacon Journal article on area office vacancy:   http://www.ohio.com/news/top_stories/29873659.html

Here is the LINK to Part 1 of my Akron Series Blog: http://activerain.com/blogsview/631507/The-Akron-OH-Commercial

Here is the LINK to Part 2 of my Akron Series Blog: http://activerain.com/blogsview/674536/The-Akron-OH-Commercial

Here is the LINK to Part 3 of my Akron Series Blog: http://activerain.com/blogsview/703470/The-Akron-OH-Commercial

Hello again! Welcome to part 3! If you missed the 1st two installments, follow their links at the bottom of the page.

Some more highlights of the happenings in the Akron, Ohio Commercial Real Estate Market are as follows:

Area Hospitals & Biomedical Corridor 

            There has been a tremendous amount of growth in and around each of the Akron, Ohio area hospitals over the last few years. Akron Children's Hospital, for one, has spent a reported 160+ million dollars over the last 5 years to grow its downtown campus. Many additional investments in the downtown Akron and surrounding suburban markets have come from Summa and Akron General. With more than 80,000 admitted patients and in excess of 1.5 million outpatients, the combined Akron medical community's volume of service has been reported more than that of the Cleveland Clinic.

            In July of 2006, Mayor Donald Plusquellic announced the plans for Akron's new Biomedical Corridor. This designated area will be used to foster new domestic and foreign medical technology companies. All three local hospitals will be cooperating to help promote development within the medical corridor. A five million dollar grant through the Ohio Job Ready Sites Program will help fund site improvement and infrastructure. The goals are to develop this area to attract businesses that provide materials and services to area hospitals, and encourage the development of medical research and manufacturing. The corridor is planned to include housing and other amenities that support those that work in all of the medical facilities.

            In late July, a ribbon cutting ceremony was held in honor of Select Specialty Hospital's new free standing location at 200 East Market Street, Akron Ohio. The new 53,000 square foot two-story facility, developed by Wojno Development in conjunction with Legacy Partners, is a collaboration between Akron General Health System and Summa Health System and is a terrific addition to the Biomedical Corridor. The long-term acute care facility has 60 beds, private patient rooms, high-observation beds, a CT scanner, telemetry, along with lab and radiology services. Mayor Donald Plusquellic said, "This collaboration between Akron General and Summa is in the best interests of the whole community and sets the stage for more cooperative efforts in the future. The location in the Akron Biomedical Corridor that we announced two years ago further identifies this district as the place where medical treatment and biomedical research interact to create jobs for our residents."

 Click on the following links for more details...

Follow the link http://www.hahnloeser.com/references/607.pdf to access a very nice full article on the Akron Biomedical Corridor by Katrina M. Katka, a Patent Agent with Hahn Loeser & Parks, LLP, along with a map outlining the corridor in Downtown Akron.

Use this link http://www.ci.akron.oh.us/News_Releases/2008/0723.htm to read the News release from the City of Akron on the Select Specialty Hospital ribbon cutting.

Here is the LINK to Part 1 of my Akron Series Blog: http://activerain.com/blogsview/631507/The-Akron-OH-Commercial

Here is the LINK to Part 2 of my Akron Series Blog: http://activerain.com/blogsview/674536/The-Akron-OH-Commercial

 I welcome your comments and suggestions. Let me know your take on the Commercial Activity in your region. More installments to come, stay tuned...

Thanks,

Mark Stacy - NAI Cummins Real Estate

Some of the highlights of the happenings in the greater Akron area are as follows:

 Goodyear Tire & Rubber Company - New HQ 

            The tire and rubber giant, Goodyear Tire and Rubber Company's commitment to staying in Akron by having their new World Headquarters constructed along with the adjacent proposed retail and hotel development is terrific for the city and surrounding areas. This will be made possible by an unusual public-private partnership. A California based real estate investment group will take over Goodyear's current buildings and in turn erect a new headquarters building, along with additional commercial space, and then lease the facility back to them. There will be tax incentives and infrastructure improvements that have been committed by both State and local governments to help finalize this deal. That incentive package has been valued at around fifty million dollars. In addition, a redevelopment program approaching one billion dollars is planned that will refurbish the existing buildings for other uses and include the creation of "Akron Riverwalk" which will be a mix of retail, restaurant, office, and hotel properties. Let's not forget the +/-3,000 jobs that are reportedly saved by this deal and the promised job creation in the future.

Some full articles/opinions worth reading on Goodyear's new HQ are found at the fowing links:

http://edesposito.blogspot.com/2007/12/akrons-real-good-year.html , http://www2.nccommerce.com/eclipsfiles/18192.pdf , and http://blog.cleveland.com/business/2007/12/goodyear_expected_to_announce.html

 The University of Akron - Expansion

            We are all watching the construction project on East Exchange Street and eagerly awaiting the 2009 grand opening of the new stadium that is being built on the campus of the University of Akron. The Zips will play their home football and soccer games in the new 60+ million dollar Summa Field at Infocision Stadium. It will seat a reported 30,000 people and will be complete with club level seating, open-air loge seats, private suites, a President's Suite, 300 ADA seats, numerous heated ADA restrooms, new scoreboard with video, and much more. Sadly, this is the final year for Akron U. football played in the Rubber Bowl. Although it is tough to bid it farewell to a venue with a storied history, we are truly excited about bringing the action onto campus where it belongs. Having a state-of-the-art venue like this will bring the excitement of football game-day to the students on campus and help attract more businesses to the surrounding area. The stadium is part of the University's New Landscape for Learning campus enrichment initiatives.

            These initiatives include adding many new dorm rooms via the Exchange Street Residence Hall and the acquisition of Quaker Square complex last fall. The University will continue to operate half of the hotel rooms under the new name Quaker Square Inn at The University of Akron. Their plans include using the balance of the hotel rooms as a residence hall. The retail shops will remain open and they plan to honor the office tenant's contracts. They plan to preserve Quaker Square's historic cultural and architectural integrity as it becomes a part of the University of Akron's campus.

            The Southwest part of campus is getting a facelift too. A twenty-five million dollar student housing and retail development is in the works on South Main Streets. The former Jillian's and Brubaker's buildings were purchased in February for $4.25 million by a private developer planning an apartment building with two to four bedroom student apartments. They are reportedly planning on having retail space on the Main Street level. This new project will be facilitated by the City's recent purchase of the former Akron Board of Realtors building which will make way for much needed parking.

See the following links for more details...

On Infocision Stadium: http://en.wikipedia.org/wiki/Summa_Field_at_InfoCision_Stadium  and http://www.uakron.edu/stadium/stadiumView.php

On the Quaker Square Complex: http://www.uakron.edu/news/articles/uamain_1891.php

On the new Campus Apartment Project: http://www.downtownakron.com/feature/detail.asp?ID=163 

Here is the LINK to Part 1 of my Akron Series Blog: http://activerain.com/blogsview/631507/The-Akron-OH-Commercial

Much more to come, stay tuned...

            As most of you know from personal experience, or through the constant barrage of negative press, the Commercial Real Estate Market in general has been rough for the past year or two. Some so called experts are not calling for much of a turn around until at least the 3rd or 4th quarter of 2009.

            I on the other hand, along with the other agents at NAI Cummins Real Estate, choose to look at this market as a great opportunity for those businesses looking to upgrade or expand their current facilities. Lease rates and sale prices are about as good as it gets right now, especially for the user/investor. This is true for the office, industrial, and retail sectors in the greater Akron, Ohio area in which I work. As of today, mortgage rates are still extremely low, however they are starting to sneak back up. So, NOW is the time to lease or buy commercial real estate!

 A Positive Outlook for Akron, Ohio 

            It is true that in the past 10 to 15 years, Akron has not seen the number of major expansion projects that have been announced in the last 18 months. I feel that these projects will undoubtedly help bolster Akron's economy and will help spur additional growth. When talking with current or prospective clients, whether owners or tenants, I choose to talk about the positive things that are happening in the area. My upcoming posts will highlight some of the positive happenings in and around the Akron, Ohio marketplace. The topics of discussion are scheduled to include Goodyear Tire & Rubber, Bridgestone Firestone, The University of Akron, Area Hospitals/Biomedical Corridor, and other area company expansions.

Do you know of something positive happening in the greater Akron area relating to commercial real estate? Let me know and I'll try to add it to my scheduled posts.

More to come, stay tuned...

Hello All!

            I want to share with you a link to a great checklist that I found online that helps me itemize and organize the specific needs of office space clients that I represent. Part of it is shown below with a Link to the Website where you can view it in its entirety. It is very detailed and I do not always use everything on it for every client. It does however allow me to overcome one of the largest challenges when representing a company or individual that is looking to make a move; FOCUS. It is often difficult to get a client focused on his or her company's exact needs at the beginning of the search process. By sitting down with this checklist and taking 15-20 minutes with the decision makers, office managers, and key personnel, I can greatly reduce the time that can be wasted looking at properties that would never work for them. My client's appreciate the thorough and thoughtful approach and I can spend my time in a more efficient manner. To most of us in Commercial Real Estate the items on this list may seem very obvious. Credit and "props" to OfficeFinder.com for taking the obvious and putting it in list form. I am not an affiliate of OfficeFinder which is a tenant representation Network and Referral Company. Please respond to this Blog and let me know if this list has or could be a benefit to you. Thanks!

Office Space Planning Checklist   *A partial representation.

*The full list can be found at http://www.officefinder.com/checklist.html