Comments for Commercial Grove

Comment on What To Do With Empty Space? by Ed M

Ed M — Fri, 16 Oct 2009 17:38:37 +0000

Check out this website for a hotel concept that’s more of a deconstructed hotel providing different, local experiences, instead of your typical hotel which provides essentially the same experience to all its guests.
http://www.coolhunting.com/archives/2009/03/pixel_hotel.php
This concept was created in Linz, Austria for the precise purpose of taking advantage of all the empty, unused commercial space that existed throughout the city, and even an underutilized commercial fishing boat, that were then transformed into unique independent hotel rooms scattered throughout the different neighborhoods in the City, but still operated by a centralized management team. Here is the Pixel Hotel – Linz, Austria – website.
http://www.pixelhotel.at/en/home.html
The creators of this concept actually won the Radical Innovation in Hospitality Award at the 2009 HD Boutique Expo held this past September in Miami Beach. See this link
http://www.hdmag.com/hospitalitydesign/content_display/industry-news/e3i2abb9d0f8f4b8fdccd8edbf6007579d7
I actually work with one of the creator’s local partners here in South Florida who is currently scouting the area for unique locations that will work with this concept throughout South Florida. The creators of this concept are also looking at cities around the world that will be hosting large international (yet temporary) events such as the Olympics, where a large number of hotel rooms (more than the existing supply can satisfy)will be in demand for a temporary period of time. Why build a hotel, which by its very nature tends to be a long-term investment, to capitalize on a short-term demand for hotel rooms. This concept can be put together a piece (or pixel) at a time as demand for a place to spend the night increases in different parts of a city. And when demand for that area falls off, you just pick up the pieces and move the room to a more desired location. If anyone would like to discuss using their vacant space for this concept, please feel free to contact me at edmiranda121406@yahoo.com and I will discuss your interest with the pixel hotel team to see if your space may work for this concept.

Comment on What To Do With Empty Space? by Tim

Tim — Wed, 14 Oct 2009 18:15:25 +0000

Has anyone tried opening a store or chain of stores called something like “American Made”, where only goods/products made in America are sold? They might be a little pricier, but I’ll bet they would get a good customer base that understands that buying American goods creates American jobs…

Comment on Getting Closer to the Bottom by Norman

Norman — Tue, 13 Oct 2009 15:43:39 +0000

In DC metro market is just startig to feel the effects of this economy. The acquisition/disposition market is experiencing a sharp down turn in returns, especially the buildings located in the suburbs of DC. With all the money sitting on the sidelines, intervestors are looking for solid purchases, not just a place to park some money like the last 7 years.

I believe the next 6-9 months will be a true tail of the commercial market for the next 2+ years.

Comment on What To Do With Empty Space? by Andrew

Andrew — Tue, 13 Oct 2009 14:22:04 +0000

Very interesting post.

We also took a look at the same article (in a more satirical fashion):

http://netleasenation.blogspot.com/2009/10/vacant-commercial-real-estate-reuse.html

Comment on Getting Closer to the Bottom by Greg in Tampa

Greg in Tampa — Thu, 08 Oct 2009 14:48:26 +0000

How can we be close to the bottom when (and in no particular order):
1) Banks are still closing and credit is still frozen.
2) The banks that are open are playing the extremely dangerous “extend and pretend” game with insolvent properties.
3) A “W” shaped recovery and rising unemployment for the foreseeable future.
4) Strong potential for inflation (if not hyper-inflation).
5) Falling prices and no sales velocity means no one really knows what anything is worth – regardless of product type or location.
6) The potential for 2 million additional home foreclosures in the next few years.
7) Israel bombs Iran – Iran blocks the Straits of Hormuz – oil goes to $200/barrel+.
Are there a few deals happening, yes; but even the distressed asset sales of a year ago now look way over priced. But what’s also frustrating from a broker perspective is that Sovereign Funds and other substantial investors are going directly to the banks or owner to negotiate an offer. I think it is going to be a longer slog back than many think.

Comment on Getting Closer to the Bottom by Miguel de Arcos

Miguel de Arcos — Thu, 08 Oct 2009 13:27:27 +0000

Mid to late 2010 is where we will start to see commercial transaction activity start to make its way back to pre-boom numbers. 2004 to 2007 numbers were unsustainable and unrealistic, but we should expect to see moderate stabilization in vacancy and lease rates. This should in turn bring CAP rates down slightly to a realistic value that will apease Seller’s take out price. We are starting to see a major uptick with the small business owner leasing activity, which is a good indicator. Get peole back to work and we can create a foundation to build on. Flush out the toxic bank debt so banks can start lending again along with moderate job growth and we have something.

Comment on Getting Closer to the Bottom by Jeffrey Rome

Jeffrey Rome — Wed, 07 Oct 2009 21:34:37 +0000

I disagree; the bottom is not around the corner! Our successful economy although globally influenced, is predicated on growth which I believe will not be seen for some time. Our domestic unemployment is nearly 10% & substantially more in those areas hardest hit. Alan Greenspan also sees unemployment continuing to increase. I agree cap rates are rising & this will dramatically have an adverse effect on the trillions of dollars from the “heyday” of CMBS & Institutional loans, that will be coming due between 2013 & 2016 and find themselves leveraged upside down. There is debt & equity available for those well conceived projects that can stand the scrutiny of conservative underwriting. “Back to basics” is the successful way to nurture growth. Niche products such as: HTC, LITC, NMTC, Brownfileds & others could be our answer. After 40 years in the real estate business one thing is certain, as memorialized by Yogi Berra “It’s like déjà vu all over again.” I welcome comment & can be reached at jm.rome@capital-access.net

Comment on Getting Closer to the Bottom by Trevor Hall, Jr.

Trevor Hall, Jr. — Wed, 07 Oct 2009 16:36:59 +0000

There is a goodly supply of capital out there but it is largely still waiting. We are in a deflationary phase, a logical reaction to the hyper leverage prior to mid 2007 that drove values way above trend. That leverage allowed an oversupply of almost every type of non-residential development product. Now, as so many businesses are failing, we have 15% vacancies or worse in most cases. Yes, the bottom is about to form. As sales begin to occur, buyers will gain confidence they are not too early. Then there will be a flight to quality utilizing modest leverage as a proper hedge against future inflation. And, since it is so hard to time the bottom, I feel the time is now to make select long term investments.

Comment on Getting Closer to the Bottom by Dunkin'man

Dunkin'man — Wed, 07 Oct 2009 14:45:55 +0000

Until we clear out, or even better, understand the depth of the CMBS unwinding issues, we don’t know where we are.

With all due respect, I don’t think anyone can yet quantify the problems of loans that will be categorized as underperforming due to new underwriting criteria.

Is there that much private equity out there to handle all these deals?

Comment on Getting Closer to the Bottom by Jim Jones

Jim Jones — Wed, 07 Oct 2009 14:36:43 +0000

Absolutely agree with Sweeney. The commercial real estate market is going to come back much quicker than people think. There is a tremendous amount of global equity on the sidelines now that has grown weary of earning 0-1% returns. It is important to note that this real estate cycle-unlike the crash of the late 80s/early 90s-has a much healthier supply and demand situation AND there is much, much more global equity available, mobilized and willing to invest in commercial real estate as it has since become an accepted investment asset class primarily because of the evolution of the REIT industry spawned in the early/mid 90s. Beginning in early 2010, banks, life companies and other lenders are going to clean out their portfolios in bulk selling much of it to the mobilized massive equity players such as REITS, private equity funds (ex. Sam Zell et al), Chinese, Saudis and Germans.

Sellers are beginning to realize that higher cap rates are here for a while due to financing issues and will go ahead and face the music and thus sell at reduced pricing. True, financing is a problem but these bulk buyers will pay all cash and worry about financing out parts of the portfolio as they re-engineer.