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How Architecture & Design Can Increase Marketing Value in Commercial Real Estate

June 9, 2014
via National Real Estate Investor: http://bit.ly/1mxnogy

 

As originally posted online at National Real Estate Investor. Written by Joshua McClure:

Good design has become a requirement in office spaces, particularly in forward-thinking cities like Austin, Boston and San Francisco. In order for a landlord to be truly competitive in these markets, they need to offer prospective tenants great architecture and interior design.

In these creative cities around the country, there is a big trend towards open space design. Open spaces are particularly desirable in the under 10,000 sq. ft. market, attracting boutique firms, creative companies and tech startups. Startups have become a large driver of new businesses in this country. Small businesses are the largest employer nationwide, and these firms sign a huge percentage of commercial office space leases. Landlords can’t afford to ignore these companies. Such enterprises look for open spaces because they encourage inspiration and attract top-notch employees.

People like natural light. Look at the movie Office Space. When one of the characters unscrews the cubicle and pushes it down to see the window, everybody applauds. Human beings feel caged under fluorescent lights. They turn us into lab rats. In order to dream up the next big idea, workers need an office that stimulates their minds. Good architecture with lots of natural light and open space helps facilitate creativity.

Raj Raghunathan, a professor at the McCombs School of Business, who specializes in happiness issues, says that open spaces end up producing more creative output. Raghunathan says that the ability for people from different walks of life to regularly interact allows for serendipitous connections, thus fostering creativity. “Open office spaces encourage people from different backgrounds to interact with each other—the accountant with the creative guy or the C-suite executives with the janitors—end up producing more creative output,” says Raghunathan. “Open space connects people with diverse experiences to exchange notes on what is going on in their life and offers new perspectives.”

Landlords can play up good design assets to increase the market value of their properties and to attract would-be tenants. A space’s design qualities and even a name brand architect is akin to adding an LEED certification to a building– both are appealing to tenants and offer excellent marketability.

Playing up design in marketing materials should not be limited to just one or two listings. In fact, building managers can build their brand by highlighting good design across their portfolio of properties. By creating a good tenant experience, landlords have an opportunity to build long-term relationships with clients. These strong alliances will span across the tenant’s growth cycle as a company, lasting a lot longer than a 3 to 5 year leasedeal. Today’s small client could be tomorrow’s big client. Smaller companies that are in hyper growth phases are more likely to stick within that landlord’s property collection, as they grow bigger. Creative design techniques can keep tenants engaged in the long run, as opposed to having them move in with a competitor.

An added benefit to adopting open design is that there is less build out. Landlords can actually decrease costs and increase the marketability of the space by creating an open design. Non-traditional methods of dividing spaces include using sound dampening fabrics and new types of furniture. These materials can help divide spaces while still allowing for light and air. These designs are also more flexible for the tenant, which makes the property more marketable.

Good design and world-class architecture have the power to elevate your portfolio. With so many companies placing an emphasis on the look and feel of their office space, landlords have an opportunity to market the stylistic design of a building in order to attract great clients.

To continue reading, visit http://bit.ly/1mxnogy.

Commercial property sales jump 59 percent in first quarter

May 15, 2014

As originally posted online at Crain’s Chicago Business. Written by Micah Maidenberg.

Sales of Chicago-area commercial properties jumped in the first quarter to their highest level since 2008, fueled by rebounding rents and occupancies and a pickup in lending.

Investors plunked down more than $3 billion to acquire 192 apartment properties, retail centers, industrial buildings and hotels in the first quarter, up 59 percent from $1.9 billion in year-earlier period, according to New York-based research firm Real Capital Analytics Inc. It was the best first-quarter showing since the first three months of 2008, at the tail end of the last boom, when investors bought $3.9 billion in commercial real estate here.

“That’s really strong for the first quarter, especially considering the weather we had,” said Real Capital Managing Director Dan Fasulo. “It wasn’t easy for people to get into town and see the buildings. That makes the number all the more impressive. If you write a check for $100 million, you had better go look at the damn building.”

Investors are stepping up acquisitions as the real estate market continues to recoverfrom the worst of its post-crash depths. Rents and occupancies have improved across all property types in recent years.

An improved lending climate is helping, too. More investors are able to finance acquisitions on favorable terms because banks have boosted their lending.

‘WEALTH OF HUNGRY BUYERS’

“There’s a wealth of hungry buyers. Why not when money is available?” said Al Klairmont, president of Chicago-based real estate firm Imperial Realty Co.

In February, Mr. Klairmont’s firm capitalized on the investor appetite for retail properties in luxury shopping districts, selling a 6,306-square-foot building on Oak Street for $18.9 millionto New York financial services company TIAA-CREF.

Borrowing costs have remained low because of low interest rates, though that could change as the economy improves and the Federal Reserve continues to scale back its bond-buying program.

The market can “digest a slow rise in rates, but a massive spike could certainly have some serious implications,” Mr. Fasulo said.

During the quarter, sales were distributed fairly evenly over property types, Real Capital’s data show. The office sector led in the Chicago area, with $855 million in sales, followed by retail, at $666 million, industrial, $616 million, and apartments, $620 million. Local hotel sales totaled $288 million.

Where sales go from here will depend on whether the local economy continues to improve, further boosting occupancies and rents, Mr. Fasulo said. Key economic indicators in the region have lagged the rest of the country. The unemployment rate here was 8.1 percent in March, down from a year earlier but still higher than the 6.7 percent national rate that month.

To push sales volumes back to 2006 and 2007 levels, “going forward, people have to kind of believe in the Chicago story,” Mr. Fasulo said. He noted that Houston is booming for commercial real estate deals right now because of the region’s expanding energy industry. “Chicago needs a similar type of gravitational pull.”

Significant sales that closed in the first quarter include:

• A venture between Chicago-based Zeller Realty Group and Chinese investor Cindat Capital Management acquired a 65-story office tower at 311 S. Wacker Drive for $302.4 million.

• White Plains, N.Y.-based Acadia Realty Trust bought the retail shops in the Waldorf-Astoria hotel for $44 million.

• New York-based Pioneer Acquisitions LLC paid $28.9 million for eight apartment buildings on Chicago’s North Side.

• Farmington Hills, Mich.-based Village Green Cos. bought a 21-story Gold Coast apartment tower for about $19 million.

• Chicago real estate firm Newcastle Ltd. spent close to $19 million for a 21,000-square-foot, two-story retail and office condominium at the base of the Bristol condominium building in the Gold Coast.

To read more, visit http://bit.ly/1oUEdoD

Where Chicago Home Prices Are Rising The Most

May 1, 2014

Where Chicago Home Prices Are Rising The Most

Single-family home prices rose last year in every Chicago-area ZIP code tracked by CoreLogic Case-Shiller, the first time that’s happened since 2006.

The 60655 ZIP code in the Mount Greenwood neighborhood on the South Side of Chicago posted the biggest gain, 16.5 percent, followed by 60643 in nearby Morgan Park, with 15.9 percent, according to CoreLogic Case-Shiller. Joliet (60432) pulled up the rear, with a 2.5 percent increase, and Elburn (60119) posted the second-smallest gain, 2.8 percent.

CoreLogic Case-Shiller computes a single-family price index for each ZIP code by matching up repeat sales of the same property. Although there are 299 ZIP codes in this Chicago-area map, CoreLogic Case-Shiller has sufficient data to calculate an index for only 235 of them. Many of the 64 that are excluded are in Chicago, leaving only about half the city covered by the data.

Interactive map: http://bit.ly/1npjYzl

Wall Street Journal: Real-Estate Crowdfunding Finds Its Footing

April 14, 2014

As originally posted online at the Wall Street Journal. Written by Andrew Blackman.

Before last year, Ed Medley had never invested in commercial real estate. Now, he’s a part-owner of shopping malls, mobile-home parks and apartment buildings from Los Angeles to Tennessee.

Dr. Medley’s springboard into real-estate investing was supplied by a process known as crowdfunding—the sale of shares in a venture, in this case real-estate projects, to hundreds or even thousands of individual investors. Dr. Medley, a consulting engineer and geologist in San Mateo, Calif., has invested in 15 properties, with a minimum of $5,000 in each.

“Being able to invest relatively small amounts of money into different real-estate ventures was appealing” as a way of limiting risk, he says.

Clearly, other real-estate investors feel the same way, with new websites springing up that allow individuals to buy stakes in everything from self-storage facilities to luxury hotels.

“The interest is huge,” says Scott Whaley, president of the National Real Estate Investors Association in Cincinnati. “There’s massive demand, both from entrepreneurs who want to get access to capital, and from people who want to invest capital.”

Focused Investments

Crowdfunding has caught on in a variety of industries, spurred in part by regulatory changes that make it easier for such businesses to look for investors. In real estate, Mr. Whaley says, the key advantages are the ability to access more deals, invest smaller sums and connect directly with developers to ask questions and research deals. Unlike real-estate investment trusts, crowdfunding also allows people to invest in particular buildings.

Dr. Medley found his opportunities on RealtyMogul.com, operated by Beverly Hills, Calif.-based Realty Mogul Co. When a property starts to earn rental income, he gets a share of that. Most pay 8% or 9% annually, and he has received a couple of thousand dollars so far. He’ll also receive a share of any profits when the buildings are sold.

Dr. Medley and his wife are in their mid-60s and semiretired, so the income stream is “attractive,” he says. He knows there’s risk involved, but says he isn’t too concerned. “The total position that we have in crowdfunding is a relatively small part of our portfolio.”

Most crowdfunding deals work in a similar way, with investors funding a project and receiving a share of the income when it’s up and running, plus a share of the proceeds when the property is sold. Jilliene Helman, co-founder and CEO of Realty Mogul, says that while returns vary and aren’t guaranteed, the company aims to provide investors with a 14% to 15% annual return, including quarterly payments and price appreciation.

Right now, most crowdfunding deals are limited to accredited investors, those with an annual income exceeding $200,000 or a net worth (excluding a primary residence) above $1 million. But the Securities and Exchange Commission is working on proposed rules to open crowdfunding to non-accredited investors as well.

Types of deals offered vary by site. Fundrise LLC of Washington, D.C., accepts investments as low as $100. “We’re focused on letting everyone invest in private real estate, not just high net worth individuals and institutional investors,” says Fundrise Co-Founder Ben Miller. The average investment is less than $10,000, compared with $60,000 at Realty Mogul.

Micah Lubens, 26 years old, has used Fundrise to put a total of $700 into two Washington, D.C., buildings under redevelopment. “I’ve lived in D.C. for the last seven years and I love it, so this was a way for me to own and be invested in the city,” he says.

For higher-end projects, some investors turn to New York-based Prodigy Network. The company has raised more than $200 million from 4,200 investors in Colombia to build that country’s tallest skyscraper, and $30 million for a luxury extended-stay residence in New York’s lower Manhattan. It’s now seeking to raise $55 million from individual investors for another luxury New York hotel project.

Do Your Homework

Experts caution that crowdfunding in real estate is a very new area, and that investors should do plenty of research before committing.

“By nature, [real-estate] crowdfunding is a high-risk asset class,” says Sherwood Neiss, co-founder of consulting firm Crowdfund Capital Advisors. He recommends starting with only a small portion of your overall portfolio, and focusing on the track record of the people running the projects. “Have they had prior successes? Who knows them? Look at all the disclosures. You can’t go into this thinking that just because the opportunity’s there, it’s a good investment,” Mr. Neiss says.

Prodigy Chief Executive Rodrigo Niño says investors should make sure any money they invest is handled by a third-party fund administrator and held in escrow until the project is fully funded. Ask for full disclosure about “related parties” in the transaction, too. “If I bring in my cousin to do the construction and my wife to be the hotel operator, that is shady,” Mr. Niño says. And be sure investors have equal rights. “You want to know that the sponsor is not making money if you’re not making money as well,” he adds.

Gary Spirer, CEO of technology firm DilogR LLC in Austin, Texas, and author of a book on crowdfunding, advises investors who are just starting out to become an expert in one type of property. “Look at a lot of deals,” he says. “Learn about the criteria for determining value, then weigh that against what’s being shown to you.”

And finally, investors should ask about the exit strategy, since some properties can take a long time to sell. Even if a promised yield is achieved, says Mr. Spirer, “there’s still a risk that you won’t get the cash out at the end.”

To read more, visit http://on.wsj.com/1gxeTj8

Q & A: The Chicago Real Estate Market 2014

March 28, 2014

Do you have questions about the real estate market this year? Our residential broker, Neil Hackler, sat down with the Neighborhood Parents Network to answer common questions:

Neighborhood Parents Network

The Chicago Real Estate Market 2014: Frequently asked questions…

How is the real estate market this year?

The real estate market is having a slower start this year.  Many people are saying it is due to the weather.  Although it is a slow start many properties are still going under contract very quickly due to the continued low inventory around Chicago.  Single-family homes, townhomes, and 2-flats, in many neighborhoods, are selling very quickly and going under contract within days of being listed.  There are many multiple offers on properties which are continuing to drive up property value.  There is also new construction going on in many areas for single-family homes and condos.

Is now a good time to buy?

Yes, now is a good time to buy due to the low interest rates.  Keep in mind that the tough thing for buyers right now is the low inventory, and there are multiple offers being made on many properties.  Although this is good for property values, it makes it tougher for those looking to buy.  FHA loans are also available which the down payment is only 3.5% of the buyer’s purchase price or conventional loans as low as 5% down for qualified buyers.

Is now a good time to sell?

With this low inventory, now is a great time to sell because property values are going up!  The market place has picked up quite a bit.  Although the property values are increasing, some seller’s are still under water on their property.  The best thing to do is have a Realtor do a market analysis for you to determine an estimated value for the property.  This is free!  Also, if you own a condo, then the association and building need to be in good standing.  For more details feel free to contact me.

What is a good way to find an estimated value of my property?

Many sellers go on-line and visit several websites to try to determine a good estimate of their property value.  This can be timely and in many cases the values can be skewed.  The best way to get a good estimate of value, outside of paying for an appraisal, would be to contact a Realtor like Neil.  He can pull comparative properties via the MLS just like an appraiser will do.  A market analysis can be completed for you for FREE!

If I want to buy a property, where do I start?

Many people start by looking on-line across several different websites, but as a result, you may start seeing the same properties listed over and over again.  The best way to start is by contacting a Realtor to arrange a free property search, which will automatically email you potential properties.  At the same time, you’ll want to begin speaking to a mortgage broker to see what loans are available to you.

______

Neil Hackler is a Residential Realtor with Chicago Real Estate Resources.  He works with buyers and sellers in and around Chicago.  Educating his clients on the home buying and selling processes is key!  Honesty, experience, & knowledge are his methods to helping clients find just the right property.

Contact Neil today with any real estate questions at neilh@crer.com or 773-677-3479!

CRER Brokers Recognized as Top Chicago Producers

March 14, 2014

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CRER Brokers Recognized as Top Chicago Producers

[3/13/14] Chicago Real Estate Resources is pleased to announce that four of its commercial brokers have been recognized as the 2013 Top Sales Producers by the Chicago Association of REALTORS® (C.A.R.).

The four associates recognized include:

  • Nate Gautsche – Platinum Sales Award for Multi-Family 5+ Units Sold, Gold Sales Award for Industrial Units Sold and Silver Sales Award for Retail Leasing Gross Square Footage
  • Steven Rapoport – Platinum Sales Award for Office Rental, Gold Sales Award for Retail Sales Units and Silver Sales Award for Industrial Sales Units
  • Michael Tolliver – Gold Sales Award for Multi-Family 5+ Units Sales Volume and Silver Sales Award for Multi-Family 5+ Units

“Having four of our commercial brokers recognized as top producers by C.A.R. is confirmation of the professionalism anddetermination of our brokerage staff at CRER and how effectively they serve our clients. These top performers truly represent the best of the best in commercial real estate, and they richly deserve to be acknowledged for their proven expertise,” said Eric Janssen, President, Chicago Real Estate Resources

C.A.R. awards are open to all members and were announced only after a precise recording of 2013 had been calculated. While all members are eligible to receive this top honor, only a small percentage of the 11,500 CAR members are able to produce the high volume of sales to rank as one of the best Chicago brokers for the year.

CRER Broker Recognized as Top Chicago Producer for Residential Properties

March 14, 2014

CRER Broker Recognized as Top Chicago Producer for Residential Properties

Image[3/13/14] Chicago Real Estate Resources is pleased to announce that one of its residential brokers, Christie Carmody, has been awarded as a 2013 Top Sales Producer by the Chicago Association of REALTORS® (C.A.R.).

Carmody was recognized as a Top Producer with sales of $12+ million during an award ceremony on Wednesday, March 12.

“Christie has been a great asset for our team, and this recognition is simply confirmation of her professionalism and dedication to our clients,” said Eric Janssen, President, Chicago Real Estate Resources

C.A.R. awards are open to all members and were announced only after a precise recording of 2013 had been calculated. While all members are eligible to receive this top honor, only a small percentage of the 11,500 CAR members are able to produce the high volume of sales to rank as one of the best Chicago brokers for the year.

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