Confessions of a Commercial Real Estate Consultant
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The NM Chapter of the Urban Land Institute released its 2013 Commercial Real Estate and Value survey last week at the joint Apartment Association of NM and Urban Land Institute Market forum luncheon.
Previous value and cap rate surveys performed by Cantera Consultants & Advisors Inc. can be found here for 2011 and here for 2010.
Read the full article from the ABQ Journal here
The complete 11 x 17 version of the survey can be found by clicking here.
CCIM has just released the video interview with Greg Lindsay, author of Aerotropolis: The way we will live next from the CCIM Live 2011 conference held in Phoenix last month.
Earlier this year I wrote my review of this fabulous book which can be read here.
Greg’s powerpoint webinar from August 2011 is available at the CCIM website.
In a Wall Street Journal article dated today, Borders Group has indicated that they are making preperations to file bankruptcy in the forthcoming days.
Similar to the fallout of music stores after iTunes, Amazon website and digital readers has encouraged many readers to abandon physical stores. Companies that have figured out how to the digital frontier continue to thrive, while those that haven’t die. Interestingly , the same articles mentions that Borders tried going dot com a while back, threw in the towel and sold their initiative to Amazon.
“I think that there will be a 50% reduction in bricks-and-mortar shelf space for books within five years, and 90% within 10 years,” says Mike Shatzkin, chief executive of Idea Logical Co., a New York consulting firm. “Book stores are going away.””
—wsj.com 2/12/2011
Borders Group currently has over 600 locations, less than 1/2 of what it had in its peak at 2005.
In our market, Borders has a prominent location in the ABQ Uptown lifestyle center. I will be curious to see what the new highest and best use of that store will be.
Bob: what do you have for us today Todd
Todd: Good morning Bob! It’s hard to believe the holidays are already upon us and before you know it the end of the year will be here. As that time approaches, many of our customers wonder what 2011 will hold for the real estate industry and whether NM’s real estate market will lead, follow or diverge from national trends.
Bob: Todd, do you have a forecasting resource to help answer these question?
Todd: We sure do Bob, our firm has followed a publication called “the Emerging Trends in Real Estate” which is published by the Urban Land Institute and Price/Waterhouse/Coopers. For 32 years the authors of this publication have called upon the leading experts in the real estate industry to ask them what they see in their business in the coming year. This report provides an outlook on U.S. investment and development trends, real estate finance and capital markets, with a focus on key property sectors. The report draws on formal and informal surveys of real estate executives, investors, developers, and market experts around the U.S., including survey responses from over 500 real estate executives and personal interviews with over 125 industry leaders.
Bob: Sounds very comprehensive Todd, where can our listeners get a copy?
Todd: Bob there are two ways to get a copy – you can join the Urban Land Institute at www.uli.org, OR, you can attend their “Outlook NM” event to be held on the evening of December 9th, 2010
Bob: Can you tell me a bit more about this event?
Todd: I sure can – the national speaker is Chuck DiRocco from Price/Waterhouse/Cooper and he will be followed by our local panelists, Steve Maestas at Maestas Ward who will talk about retail, John Ranson of Grubb & Ellis who will address Office and Industrial, Jim Folkman of the HomeBuilders of Central NM who will discuss the single family residential market, and I will be covering the apartment industry.
Bob: Sounds like a full event – how can our listeners participate?
Todd: The cost of the event, which includes the publication is $60 – to RSVP – call the local Urban Land Institute office 505-269-7695 or call me anytime at 440-TODD.
Reading this article at the Economist got me thinking…
What if borrowed and lenders had a prenegotiated arrangement that converted debt into equity a commercial real estate deal? I don’t mean like todays, expensive involuntary conversion that happens through foreclosure, but a more organized rational, prenegotiated, pre-nupital like document that said something like “in the event of a capital crisis, or the mid-term (a average of this property’s value over the last 24 months) value of this asset decreases below the loan limit, borrower shall have mortgage their interest converted into an equity interest, thus unemcumbering the asset of all debt, freeing up cash flow which shall be distributed as follows… (cash flow going to lender, tax benefit going to equity position)… until such time as…”
Certainly debt would cost more, but an equity player might be willing to go into a deal knowing the downside was much lower.
Take this example whereby they explain the inputs a home buyer needs to make a decision:
Most people face a future that comprises a combination of Donald Rumsfeld’s known and unknown unknowns. Choosing to buy a house, for example, involves a series of bets on land prices, interest rates, taxes, job prospects, future planning decisions in the area selected and the structural soundness of the property concerned. It is impossible for any buyer to be confident about so many variables. Any decision must be a guess.
Many of us know the story of how Southwest Airlines has remained so profitable against bigger airlines – it focuses on its competitive advantages – they fly one model plane, they cross-train their staff, they turn (term for time plane lands til it takes off) planes twice as fast as the industry standard, they cut costs on things that don’t matter and they offer exceptional customer service.
This graphic does a great job detailing how competitive advantage works – thanks to
Gizmodo.com for finding the article (click the Gizmodo link for the full size image).