October 2011 A proposed sales tax on improvements to leased property would have a major negative impact on Florida business and discourage many from leasing office, industrial and retail space in the State, according to Bob Zegota, Chairman of Government Affairs, Florida Gulf Commercial Association of Realtors (FGCAR).
Zegota characterized the proposal as “double taxation” since there’s already a sales tax on leases.
“Double taxing commercial real estate is a new picture of an old practice that has been occurring in Florida for years with common area maintenance fees,” Zegota said. “Now the Department of Revenue wants to impose a sales tax on the tenant while the tenant is already paying tax on the improvements through a lease. That is double taxation.” Full story at Maddux Report
Goodness gracious. What is the Florida Department of Revenue THINKING!? A tax on tenant improvements? This year, the Florida Legislature cut, cut and cut some more and that was before Gov. Scott unilaterally decided to increase those cuts. Apparently, they are beginning to feel like they cut bone, so there is a perceived need to generate more revenue. I get that. But, why tax tenant improvements? It makes no sense if your goal is to increase the job pool. Tenant Improvements are spent largely on tenants that are moving in to a new or different space than they currently occupy. Growing companies expand and with each new lease, there are costs associated with arranging the property in a way that is best suited for their business. These “improvements” could be as simple as paint or carpet….or they could be a massive build out that could cost as much or more than the original building shell.
This action is blatantly anti-business expansion….anti-job creation. So, why consider it? The answer is simple. Its an easy target. That is why. Doing my best Yogi Berra imitation… Tenants that haven’t moved in, don’t know what they don’t know. New commercial tenants are not an organized industry group, they don’t hire lobbyists, and they won’t march to “Occupy Tallahassee.” They probably won’t even know they are hit with this tax until they start considering moving. At that point, it is too late for them to do anything about it.
As a tenant rep, I deal with expanding businesses every day. They are a skittish group. One day they are full of confidence. The next day they aren’t. If “WE the People” make them comfortable, we increase the chances that they make that leap of faith, sign that new lease for more space AND?….Voila’ ADD MORE JOBS! Adding an additional tax to the Go/No-Go decision could be the proverbial straw that breaks the camel’s back in favor of No-Go. Do not place additional barriers on companies that are considering expanding…not right now.
This is a bad bill. It is harmful to growth. It is harmful to job creation. It is bad for the people of the State of Florida. Please contact your legislators and tell them to “KILL THIS!”
It was my first trip back to the annual Orlando conference in three years. Since the beginning of the 3+ year old downturn in the real estate market, I, like many of my colleagues, had steered clear of the conference, deciding not to invest the time or money in the face of stiff economic resistance and little chance for deal consummation. While the economic ice appeared to be cracking several quarters ago, I thought it was time for me to make like Punxsutawney Phil and explore the Spring thaw.
Here are a couple of my thoughts of the conference and an overview of the first session of the day on Monday, the Florida Regional Overview.
Conference planners estimated that there was an increase of 10% in attendance from the previous year.
The gloom and doom was gone from the last time I attended in 2008. I am not sure what that means other than perhaps people are becoming more comfortable with the new norm.
The mix at the Expo appeared lighter than usual with developers and heavier than usual with brokers.
One of the reasons I have enjoyed this conference in past years was the introduction to new technology and services. With brokers and developers having less disposable income these days for technology investment and retailer expansion muted, it should come as no surprise that the conference was almost devoid of new technology. Some of the well known established service providers apparently decided not to attend either.
Most of the Economic Development teams in the State were present. Hillsborough County, City of Tampa and Tampa Bay Partnership were noticeably absent. Orlando had a terrific booth, full of education about how to invest in the area and what incentives are available.
Miami seems to be recovering faster than the rest of the State. The weak dollar has definitely been a help with foreign investors from Brazil and Europe.
All that said, the mood was upbeat and optimistic. While deals are hard to come by, many were out with their wish lists, trying to find the perfect match. I hope it was a productive conference for all in attendance. I know I was glad to feel like I was officially back in the game.
“Government needs to have more efficient regulation as opposed to less regulation.” Industry is unified in Central Florida unlike in other places in the State….Amway Center was used as an example.
Kieran Quinn, from Guggenheim Partners,
Florida has not done a great job of creating careers in Florida. Great universities… but not a great job of keeping graduates.
Regarding Real Estate: Retail on “First and Main” is not much of a concern. Demand will always be there. Office is on shaky ground.
Tim Becker from the University of Florida,
Capital markets are going to be shaken up by S&P downgrade, Politics, Europe etc.
CMBS Origination will not reach $50 billion this year. There was a big hiccup due to political impasse and economic uncertainty.
Life Insurance companies will be overweight real-estate, if stock market continues to drop. This will slow activity and take key buyers out of the market.
Q2 dip in UF sentiment, due to capital markets and political uncertainty. Fundamentals are pretty good actually, compared to previous years.
Innovation Square is the most exciting project in the State…it has the concept of creating careers for people in our State.
"Juniors" Break Out Session
Suk Sing from Darden
Tertiary malls are having the most problems.
Restaurants, entertainment and fitness centers, which are activity based, are highly valued. Retailers want shoppers to stick around. The longer they stick around, the more likely they are to buy at other shops.
There is an oversupply of secondary and tertiary space with a shortage on prime locations. There is an increased focus on second generation space.
Land Assemblage is back. In-Fill skills are important.
Lenders are very focused on leases right now. Deals are taking two years to complete because of increased scrutiny from government and lenders.
Hot retailers like Wawa, Desigual, Lulu Lemon are expanding. Globalization and more specialization is what is happening in retail.
Attendees: Eric Odum with Ken Stoltenberg, Mercury Advisors
Date: May 31, 2011
Subject: The Commercial Real Estate Market Minute – Grand Central and Current Events in Tampa’s Channelside
EO: Welcome to today’s Market Minute. I’m Eric Odum, I’m the principal broker for Net
Channside - Grand Central @ Kennedy
Lease Commercial Advisory, and today we have with us, Ken Stoltenberg from Mercury Advisors. I appreciate you sitting down with us and having a chat about what’s going on with your property today.
KS: Good to be here, Eric.
EO: For those that don’t know, Ken developed Grand Central which is in the Channelside District. You can’t miss it – brightly colored building as you’re driving down Kennedy Blvd. into downtown. It’s really an eye catcher.
KS: You need a vision exam if you miss it; let’s put it that way.
EO: Let’s talk about it because you had a unique path in sales and marketing of the building, because I think originally it was meant for sale…
KS: Correct.
EO: And then the market hit a little bit of a challenge, a little bit of a road bump, and you guys seem to be the first in the market to adjust. You adjusted pretty quickly to that situation. How did you handle that?
KS: We were closing into 2007. We did very well in the East Building, which closed in the early part of the year, February. In the West Building, we did not do nearly as well because that was closing in July/August. At that point, the mortgage market was pretty much in full disintegration mode and a lot of people just couldn’t get loans. So, we saw this coming and didn’t really think it was going to be something that was just going to be a couple quarter event. So, as soon as we closed the last unit, we hung out the “for rent” signs and into the rental business we went. My partner and I have built apartment complexes, leased them and managed them for years, so that wasn’t something that we were unaccustomed to.
EO: So you were comfortable with the apartment complex situation and it was pretty natural for you to go from a sales situation over to an apartment situation.
KS: Absolutely.
EO: It’s interesting, because I know that you seem to be the first one to pull the trigger on that strategy. Everybody that knows the market in Downtown Tampa knows there’s a lot of residential tower/condo development that was going on after you, but a lot of them seemed very late to the game to try to convert over to rentals. Do you think that’s a fair assessment?
KS: Yes, I would tell you that a few of them wanted to convert to rentals, but their lending institutions did not let them do it. How we solved that problem was, we didn’t ask.
EO: You begged for forgiveness?
KS: Yes.
EO: Well, the end result, you are 98% occupied right now?
KS: That is correct.
EO: We were talking a little bit earlier about it. You managed to sell about 50% of the entire amount of the residential space, and then 48% of it you turned into rentals. So, you are pretty much a full house now.
KS: Well, obviously we are going to start up our sales program, and we do have a lot of leases rolling over the next three months, which will give us the inventory we need to go forward on our sales program.
EO: Let’s talk about that a little bit. You said you are going to try to switch over now to go back into selling some of these units.
KS: Yes, it’s back to the future.
EO: How is that going to work? Was there a re-pricing of the model, or is it at the price it was before? How is that working? KS: Well we were able to restructure things at the end of last year financial with the entire project, which is going to allow us to sell units at today’s prices, which are obviously significantly below where they were in 2005/2006.
EO: It’s a pretty cool place to live, and I suppose your target market is young professionals looking for an urban environment, is that fair?
KS: Actually, that’s part of the market, but the demographic actually skews a little bit older than people think. It’s not a bunch of twenty-something’s running around here. It’s much more people in their 30’s 40’s and 50’s.
EO: So, if somebody wanted to move in here, (i.e., Young Lawyer), what is his/her first option to come in here in terms of price point?
KS: Our pricing is very attractive. It’s starting in the $120’s which is really the lowest price point that has been seen in this market for luxury high rise living in an urban setting. All of our residences are priced between $120k and the high $300’s, with the majority being under $200,000. So, it’s very affordable for your average, working downtown, pulling down $50,000 to $100,000 per year. You can afford to live here and pretty much have run of the roost.
EO: What do you think in terms of time frame for you to be completely out, in terms of being able to sell out the rest of the space?
KS: Well, obviously we don’t know what is going to drive that. But, we think that within 18 months to 24 months, we should be through the inventory here, and we’ll see what the future holds.
EO: This is a mixed use complex for those that don’t know, not just residential. Residential makes up about 75% of the floor space, no?
KS: A little bit less than that. We have about 70,000 sq. feet of office space and about 108,000 sq. feet of retail space. So, it truly is Tampa’s only mixed use urban project. Some other high rises have a couple stores down on the first level. We have a 70,000 sq. foot office building on the second floor of the building and a full shopping center on the first floor. Now my background is originally retail. When I got out of college I went to work for Leo Eisenberg and at the time we were the largest Wal-Mart developer in the country. So, I learned a thing or two about what retailers need, and that was some of the things we incorporated in this complex, which is proving to make the retail successful. The single biggest aspect is building enough parking; the city regulations did not require me to build but 3 per 1,000 for retail and 1 per 1,000 for office dwelling. Well…that dog simply won’t hunt. So, we have 900 parking spaces dedicated to the retail and the office. Part of the reason we put structured the parking this way is office is busy when the retail is not. So, we double use that parking. We effectively have a parking ratio for the retail on evenings and weekends of about 8:1, and since Wal-Mart only requires 7:1…. I figure we were probably safe there.
EO: And you have the gym you put downstairs, and they seem to be knocking it out of the park.
KS: Yes, they were our first retail tenant. They opened in June, 2009; they have now expanded three times. We’re about to expand them a fourth time, and the brothers who are the proprietors of that establishment are originally from California. They had five or six gyms in LA for a period of over 10 years, so they really know what they’re doing, and create a great atmosphere. I would stick my neck out and say its Tampa premier fitness facility.
EO: You’ve also got the Pour House that’s downstairs as well.
KS: Yes, that’s a beer and wine bar that has over 40 craft beers on tap that are local micro-brewery’s that you won’t find anywhere else. They also have a nice wine selection, and it’s proved really popular. Their sales are strong. We put in just over a year ago, a whole courtyard in between the two buildings that has shade elements, pavers, umbrellas, and all the tenants that occupy space in that area, get a certain portion of the courtyard to use. Last year, we wet zoned the entire property. We ended up going downtown. We got the liquor license thing. We have done that for the entire property. It really works out well, because it’s kind of a turn key situation for somebody who wants to open up a restaurant. One of the things that (you have to make sure you have zoning, parking, and go through the whole process to get a liquor license…) is already done here. The only thing you really need to do as a potential proprietor is get your plans drawn up, send them into permitting and we’re ready to go.
The other thing that we have done, since this project was approved in 2005 is (this is a very significant economic factor for any business, but especially for restaurant businesses), we’re grandfathered in to the old impact fees. We paid them all for the entire property. The last restaurant that we put in – would they have had to pay the impact fee – was almost $8,000, and that’s already been paid…..was grandfathered in. So it is pretty substantial.
EO: Well, it sounds like you’re just missing the grocery component to it, and there’s really no reason at that point for anybody to even leave the complex. You can work out, go drink a beer; you can go get grocery, dry cleaning…
KS: Well that would be great, and I have been working with a number of supermarkets for about two years now. The biggest challenge that we’ve had, is not the location. We’ve had three major chains that are here in Florida come look at the site. From a logistical standpoint and design standpoint, everything works. There’s enough parking. There is room for transformers. There is room for loading docks, all those kinds of things that you would normally see. We put all that in not knowing exactly who we were going to get. Obviously, if we would have had a little more input from a potential user that would have been helpful. But, we’ve had three folks look at it and as a physical plant, everything checks out just fine. The biggest issue is just the overall economy of the area. Retailers at that level are really watching the eggs they already have in their basket and making sure their existing stores are performing, and keeping their sales where they are, or increasing them a little bit. Any type of new business development for those types of companies has been greatly curtailed in the past 36 months, so we ran into that (the economic pull back). That’s been the biggest issue. I don’t have any doubt we will get a grocer. It’s just a question of when.
EO: What’s the straw that essentially breaks the proverbial camels back to instigate the grocer to start a new store?
KS: Well, I think the market is there. If you look at the channel district downtown at Harbor Island there are over 10,000 households and that seems to be the number that everybody looks at. So we’re about that point. I think what it’s going to take is maybe a couple more projects that are on the horizon, so somebody can say, “Hey, you know not only are we at the point, but we know we are going to be exceeding that within a period of 18 to 24 months.”
EO: You mention that there’s another project that’s coming into Channelside District, correct?
KS: Yes, the Related Companies from Miami have bought the old Sembler piece that’s about 2 blocks south of here and they plan to build 360 apartments.
EO: So you’re going to have additional 360 apartments coming in. What else is happening in the Channelside District that might be of interest to folks, coming down the pipeline?
KS: When we developed the property we donated about 6,000 sq. ft to Stageworks Theatre. They are Tampa’s oldest professional theatre group. They’ve been around for 23 years now and we donated space in the West building for a new theatre. They are going to open August 4th which is their first show. The construction is underway. We were able to help them secure a loan with the Bank of Tampa to get the rest of the build out done. Total project cost is about $1.2m and it’s going to be a first rate theatre. They are going to have over 180 shows a year. They also have a youth outreach program where they help underprivileged children, which is a really neat thing. They also offer the space for a conference or an event and you wanted a stadium seating venue, for a presentation, you could rent that space out.
EO: I should be careful saying this, because you’ll have every philanthropic organization pounding on your door, but you have always been very generous to the local arts scene, not only with Stageworks, but also with the Gasparilla Film Festival. You donated office space to them. I know that the Arts Community has been grateful for what you have done.
KS: With the theatre, or any type of Arts contribution, you can’t put a dollar figure on it – as far as how it enhances your project – but one thing I do know, is they’re going to have 180 shows a year, and they are also going to have an outreach program. They will also open it up during the daytime for various business groups.
EO: It’s not all altruistic, there’s some business motivation there too.
KS: Those folks are going to want to go to a show, going to want to get a meal before or a drink afterwards, or cup of coffee or something like that. Anytime you can add eyeballs and footsteps to a retail project, that’s what you want to do. And this very effectively does that on more than 50% of the days of the year.
EO: That’s awesome. Well is there anything else you’d like to add about what’s happening in Channelside? I think there are apartments coming in?
KS: Yes, and the city has started construction down on Washington Street, building the first community park which is about 25,000 – 30,000 square feet. That’s going to be a great addition. I believe it’s going to be done in October. The city has also now started the streetscape improvements on Washington St. They’re about halfway done right now and that will be done in October. That will really give folks – being in the development business, you want to everything done yesterday. We have had the CRA, which is the Community Reinvestment Area since 2004 now, and this is really the first big project where the city’s gotten in there in and said they were going to put in the streetscape, the landscaping, and the lighting per comprehensive planning. So when people come down here, they won’t see a bunch of dumpy warehouses with telephone poles hanging all over the place, and that type of thing. They‘re going to see a modern landscaped streetscape, so they can really get a sense of, “OK…Now I get an idea of what this place is going to look like!” These buildings have been up for almost 4 years now, and when people come down here they see a bunch of beautiful buildings, and the rest looks like Beirut, and that is extremely unfortunate. Obviously we have a new sheriff at the rodeo, and we’re certainly hopeful that the Mayor is going to look at what’s going on down here, and whatever’s getting done gets done quicker, and gets more of it done.
EO: Is there anything else you’d like to leave us with today in terms of what’s happening downtown and maybe you’d like to let us know how if somebody’s interested in residential condo, how they could find out information?
KS: The easiest thing to do is go to our website which is www.notthesuburbs.com, and that will take you right to the website. We have all of the units, all the floor plans. You can print everything out in pdf. We are getting on Facebook and Twitter, so you can check us out there. If you want to learn more about the project, you can certainly do that, and its going to be interesting next year. There’s going to be a lot of pretty cool things happening. For some reason, I can’t put my finger on it, we’ve got more activity for the retail and the office, than we have had in three years. We just signed a lease with St. Leo University, about 16,000 square feet; they are locating their administrative offices, as well as 5,000 square feet of classroom space. That’s going to bring more people. Obviously, the gym is very excited about that because of potential new members. I think the Channel District in the next several years is really going to be on the rebound again.
EO: Well good luck on the grocery store. I hope that you guys get something, I’m pulling for you because I live over in Harbor Island – you’d be the closest store to us over there. Hopefully that works out for you and good luck in moving along with your plans on the rest of the residential properties. I hope all goes well for you over the next year.
Thinking Space is a Commodity – In commercial real estate, square feet are not created equal. Load factors, functional obsolesce and poorly laid out floor plans can quickly diminish actual value to the tenant.
Thinking Rent Is an Absolute Measure – There are a lot of factors to consider when comparing price per square foot. Electricity, Janitorial Expenses, and Common Area Maintenance charges are just SOME of the factors that come in to play. Full service (Gross Leases) are supposed to include all expenses. In triple net leases, all expenses are passed through to the tenant.
Not Understanding Rentable vs. Useable Square Feet – Useable Square Feet (USF) is the space within the walls of your unit. Rentable Square Feet (RSF) is USF plus common area space that is outside of your suite, but is accessible to and from your space (i.e. hallways, corridors, bathrooms, foyer, etc). In office space, there can be a significant difference between USF and RSF. With a free standing building, the difference is negligible. It is important to know, because a lot of common space can be of no use to you or your business, but yet you pay for it on a monthly basis.
Not Planning for an Exit Strategy or the Future – What happens if you have to leave the space before the end of the term? That rate that was negotiated for 5 years might not seem so great if you have a hiccup in your business and need to downsize. Negotiating a shorter term lease might have made the rent more expensive in the short run, but limited your downside expense in the longer term. Clauses that allow for subleasing can mitigate risk. What about if your business out grows the space? Can the landlord accommodate your need for additional space without you having to break the lease?
Not Allowing Enough Time – If you wait until the last minute to search for a space, not only will you have trouble finding that perfect space for your business, but by waiting, you transfer negotiating leverage to the landlord.
Not Utilizing a Professional Team – Unless you are in the real estate business, you probably only become familiar with the market when your lease is up or you acquire more space. Attorneys, commercial real estate brokers, architects, and insurance agents work with real estate every day. They can assist to guide you away from some very expensive mistakes.
Poor Site Selection – Location, Location, Location ….its not just about being situated in a visible location for your clients. Ingress and egress should be considered as well as distance from your employees when selecting property.
Not Paying Attention to the Fine Print in the Lease– Do you understand how the landlord is calculating Common charges? Is it fair and reasonable? What about the other clauses, such as parking, access to the building after hours, insurance, use and exclusivity?
Underestimating the Condition of the Premises or Access to Utilities– How you would like to run a technology company that doesn’t have access to the Internet? Or a flower company housed at a location in which the AC constantly breaks down? Check to make sure that the space can accommodate your business and mission critical features actually function.
1. Alienating Tenant Brokers – Brokers are not afraid to share opinions of properties and landlords with their colleagues. Defaulting, negotiating down after the fact, or slow paying on commissions is a sure fire way to retard future leasing efforts.
2. Overly Complicating the Lease – Everyone acknowledges that it is important to have a solid and secure lease, which fairly lays out the intentions of both the tenant and landlord. In every tenant’s mind though, there is an invisible line in the sand in which “enough is enough.” If the lease provisions and clauses become onerous or tilt too heavily in the favor of the landlord, it can be difficult to consummate the deal. Placing the tenant in a defensive posture is no way to complete a deal or forge a lasting relationship.
3. Over Estimating Property’s Value – Having a run down of competitive ask/receive rates is only part of the process in pricing a property. Someone, usually an unrelated third party such as a broker or colleague, should provide the owner with an unbiased estimate of competitive value. Pricing the property from the outset is important.
4. Nit Picking on the Deal – Many a deal have been killed over seemingly minor issues, based on the perception that too much had been acquiesced earlier in the negotiation. Sometimes a little perspective is necessary.
5. Failure to Properly Investigate the Tenant’s Creditworthiness. Provided that it adds value, personal guarantees or large deposits can make the deal more attractive to the landlord.
6. Failure to have a Strategic Leasing Plan and Sticking with the Plan. If the idea is to have a Class A building, then lease to Class A tenants with a compatible Class A mix. Reaching on a tenant that is outside of the box can alienate other tenants and lead to an increase in vacancy.
7. Failing to Create a Value-Added Message – This is the building’s elevator speech…the message that can be told in the short time period that it takes an elevator to go from one floor to the next. “This is a great building because……..” It might sound hokey, but everyone from listing and tenant brokers to maintenance staff will understand how to sell and service the building based on what the perceived value of the building is.
8. Lack of Attention to Details – Cluttered common areas, shoddy landscaping and wilting decorative plants in the lobby can create negative attitudes from current tenants and place downward pressure on asking rates for prospective new tenants.
Florida real estate markets show the first tentative signs of being on the verge of recovering from the most painful recession in the state’s history, according to the latest report from the University of Florida.
“They see the fundamentals of the economy stabilizing and they see the opportunity to get quality assets at a good price,” he said. “So if they think things aren’t going to get worse and they may actually get better, it follows that they’re going to want to start investing again.” Says Timothy Becker Director of the Bergstrom Center for Real Estate Studies
The retail and office markets are the worst off, Becker said. “Until there is an increase in job growth, there is no need for more office space, and people aren’t spending as much money as they used to,” he said.
Very competitive labor costs along with moderately-low office/industrial leasing and sales tax costs help make Tampa the least-costly place to do business among 22 U.S. cities/locations with populations exceeding 2 million, according to a study by KPMG LLP, the audit, tax and advisory firm.
This is not entirely surprising. The Tampa commercial real estate market has been pummeled by vacancies and falling rent rates. With high inventories of shadow-space and vacancies, one can conclude that the pain is not over. Tampa’s once bullet proof economy has shown to be WAY too reliant on the construction industry to employ its citizens. With the highest rate of unemployment in decades, devaluation of rents and prices of commercial property is a natural occurrence.
I attended the Distressed Real Estate Summit in Tampa yesterday. Although, my commercial real estate activity has picked up in the last few months and I seem to be eternally “busy,” it is always good to break away and hear what some of my peers are working on these days.
“Distressed assets” is the buzz term used for all properties that would probably not be underwritten if they were brought to the market today. Ground Zero of the distressed assets crisis was in the residential, residential securities (i.e. Residential Mortgage Backed Securities – RMBS) and Sub-Prime markets in 2008. The commercial real estate market always seems to lag the residential markets and this downturn is no exception. Unless you are Rip Van Winkle and just awoke from a great slumber, it would be hard for you to escape the avalanche of negative media about commercial real estate becoming the next financial Armageddon. I personally, see the stress cracks in the market and anecdotally see individual assets implode, one after another, but I am far from sitting in the Armageddon camp. I do think it is different this time. I have expressed these views in other articles, if you are interested, but I won’t bore you with repetition.
Almost every time I attend these industry events, I am able to take away nuggets here and there that will help me help my clients. The Summit was broken in to four parts. I will try to give you a few of my own personal highlights of each section, as I saw them:
1. Evaluating Commercial Properties and Partially Complete Construction: Land, Office, Retail and Industrial
Panelists: Bill Eshenbaugh, Eshenbaugh Land Company
Ed Kobel, DeBartolo Development
Chet Little, Foley & Laudner, LP
Doug Dieck, Ryan Companies US, Inc
Kobel’s Comments on demographics:
Infill and Urban migration will be keys to the next commercial real estate development trends
Boomers prefer a walking lifestyle and want to experience their golden years socializing with other people. They want less stress in maintaining properties. That means they will largely exit residential suburbs and exurbs in favor of urban living arrangements.
Generation Y, Z, Echo’s etc. will be forced to move in to Urban areas as gas prices will push through $5/gallon within the next decade.
Light rail and public transportation will be keys and infill development will offer investment opportunities around station outlets
Believes that “gap in equity” over the next 3-5 years with maturing CMBS debt will mean the brakes will be applied to real estate for the next 3-5 years, which he believes is the minimum time necessary to work through most of the distressed assets currently on or coming to market.
2. Adding Value to Distressed Assets
Panelists: Ron Weaver, Stearns, Weaver, Miller, Weissler, Alhadeff and Sitterson, PA
Todd Pressman, Chairman of the SWFWMD Governing Board
William Stanton, BB&T
Stanton on the banks’ position on handling troubled assets:
If the borrower is paying insurance, taxes, some interest on the property, and the bank is upside down, the bank is much more apt to work with the borrower, than foreclose.
In the past, the bank ordered an appraisal and if necessary, required the borrower to add equity or risk having the bank force the loan out of the bank or worse yet, face foreclosure.Transparency has become the key word for banks now. If the borrowers are willing to disclose and be forthright with the bank, the bank will be much more willing to avoid aggressive adverse action against the borrower and property.
The banks realize the problem is so large that they can not possibly handle all the problem loans if the situation is handled in the similar fashion in which they were handled back in the early 90’s.
The RTC is not coming back. The vibe is completely different this time around. The Loss Share Agreement with BBT/Colonial has more years left and the FDIC does not have appetite to attack the problem loans like they have in the past, as it is still reeling from other losses and bank closures.
Pressman, on the topic of government budget cuts:
If you think the delay for permits is bad now, just wait. With all the financial cut backs recently, government has cut bone. There will be serious log jams in permitting when the economy starts to turn around.
3. Legal Strategies for Distressed and Foreclosed Projects
Changes in Storm water rules make entitlement on infill or reworked properties particularly risky
On Community Development District Bonds (CDD’s)
Banks are hesitating on foreclosing. Why should they take foreclosure action when the CDD will follow them shortly to foreclose on the bank?
CDD’s have superior positions to all debt except IRS debt
“Oppenheimer (large owners of CDD’s) is going to own A LOT of Florida real estate”
4. Transportation’s Impact on Future Development Opportunities
Panelists: Mayor Pam Iorio
Hills Co. Commissioner Mark Sharpe
Sharp & Iorio on light rail:
Passionately spoke about the fact that Tampa loses business to other cities because it has one of the worst public transportation systems in the country
Cited the example of TIA-CREF, the large financial services firm, that moved its operations to Charlotte, because Tampa had limited transportation infrastructure
Sharpe feels like he is fighting an unwinnable fight in the world of economic development without a public transportation system.
Is proposing a Sales Tax referendum to increase sales tax 1 penny to pay for light rail system
The first leg of rail will run from downtown to USF, followed by downtown to Westshore, TIA and Westchase in that order
Was asked if a sales tax is the best way to raise funds, because it is a regressive tax, hurts retailers most, and is punitive to property owners, and is counter-intuitive to building an environment of pro-business. His response was that we could not achieve light rail without a new source of funding. Cutting waste in government is not an option and would not generate enough funds to achieve their goals.
Recognizes it is not a good time to be asking for money, but passionately believes that light rail will make us more efficient stewards of business, education and the environment
They were asked why we should invest in light rail if less than 2% of population would use it on any given day. Sharpe’s response was that there are few roads in Hillsborough County that carry 2% of the county’s population, and there are no tolls to pay for these roads, yet we build and maintain the roads for the good of the entire county. Light rail is no different, except there is fee to use the system and light rail can carry many times more people, much more efficiently than the current car and road system.
Address 8206 Citrus Park Dr Property Type FedEx & Verizon – Store Building Sales Date 01/31/2012 Sales Amount $3,500,000 Amount/Sq Ft $531.67 (price includes .29 acres of adjacent parking) Prior Sale Amount $1,750,000 Prior Sales Date 05/11/2007 Exterior Wall Brick Address 15412 N. Dale Mabry Hwy Property Type Sonny’s BBQ – Restaurant Building Sales Date […]
Chicago group’s $4 million bid for Channelside complex rejected Two weeks ago, the Tampa Bay Times reported that at least two well-connected local groups have submitted bids to buy Channelside. Tampa Bay Lightning owner Jeff Vinik has teamed with Andrew Wright, head of Tampa commercial real estate firm Franklin …continue reading Breakfast menus serve up [... […]
Completion of Winn-Dixie and Bi-Lo’s merger means fuelperks program can continue The Hutton Company, representing Family Dollar Stores, secures former Coffee Cup commercial location JP Morgan Chase, Regions bank and Citibank all receive healthy ratings from BauerFinancial as real estate market improves and recession subsides With British Airways already on i […]
You are starting to imagine every aspect of the new restaurant you are about to open, the satisfied customers, the busy tables and the waiters buzzing round ensuring everything is perfect. You can visualize the space, where the kitchen is in relation to the dining area, where you’re going to greet the multitude of guests and how […]
Address 401 E Jackson ST Property Type SunTrust -Office Building Sales Date 12/15/2011 Sales Amount $82,500,000 Amount/Sq Ft $140.33 Prior Sale Amount $114,500,000 Prior Sales Date 09/17/07 Exterior Wall Glass Address 7911 W Hillsboroug AVE Property Type McDonald’s -Restaurant Building Sales Date 12/19/2011 Sales Amount $250,000 Amount/Sq Ft $91.47 Prior Sal […]
ULI Tampa Bay Commercial Real Estate Conference, held at A La Carte Event Pavillion, hear of economy that is slow to recover Tampa Bay Lightning, Wilson company and Tampa Tank team up to find real estate for homeless in Hillsborough County Columbia Restaurant and Metro Bay Real Estate win bid to Renovate Tampa Heights’ Waterworks […]
Owners of Belleview Biltmore hope to demolish property and replace with townhouses Retail or Medical office space to be put on Palma Ceia church site Wellcare, HCPCI and ConnectWise help put positive spin on Office Real Estate lease market Lee Roy Selmon’s Restaurant to Fill Space Vacated by Giordano’s Mexican Restaurant Taco Bus looks to […]
Attendees: Eric Odum with Ken Evans, Principal at Evolution Advisors Date: January 9, 2012 Subject: The Market Minute EO: Good afternoon and welcome to today’s Market Minute. I’m Eric Odum, principal Real Estate Broker for Net Lease Commercial Advisory. Today we have Ken Evans with us. Ken is a friend of mine now, but we […]
Purchase of Schalamar Creek Golf and Country Club the largest Commercial Real Estate transaction of 2011 Retail Real Estate showing signs of improvement according to LandQWest and Franklin Real Estate services Office Real Estate sector worst affected by turbulent market LongHorn Steakhouse, Kohl’s and Dick’s Sporting Goods just some of the new businesses alo […]
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Tampa Commercial Real Estate, a commercial real estate brokerage firm negotiated the lease of an Office Warehouse to Freedom Scientific.www.prweb.com/releases/.../prweb9454203.htm […]
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Goodness gracious. What is the Florida Department of Revenue THINKING!? A tax on tenant improvements? This year, the Florida Legislature cut, cut and cut some more and that was before Gov. Scott unilaterally decided to increase those cuts. Apparently, they are beginning to feel like they cut bone, so there is a perceived need to generate more revenue. I get that. But, why tax tenant improvements? It makes no sense if your goal is to increase the job pool. Tenant Improvements are spent largely on tenants that are moving in to a new or different space than they currently occupy. Growing companies expand and with each new lease, there are costs associated with arranging the property in a way that is best suited for their business. These “improvements” could be as simple as paint or carpet….or they could be a massive build out that could cost as much or more than the original building shell.
are not created equal. Load factors, functional obsolesce and poorly laid out floor plans can quickly diminish actual value to the tenant.
