Charlotte NC Commercial

by Rob Cassam, CCIM

Negotiating The Sublease

Written April 1, 2024 by
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In this issue

    • Negotiating The Sublease

    With changes in business strategies, a major existing tenant wants to sublease all or some of their rented office space to eliminate some locations and shrink operations in others. In this situation, the problem for landlords is whether it is a better strategy to enforce lease restrictions against subleasing or to work with tenants on the theory that the sooner sublease space is filled, the better for all. (In addition, another problem could be whether landlords should insist on sublease restrictions in new leases being negotiated now.)….(more)

    • Individual Building Or Commercial Condo

    Which is the better investment — a separate (single) commercial building or a commercial condominium within a larger complex? Each has its own unique set of attributes, and so the answer really depends on the needs, goals and characteristics of the investor…..(more)

    • Unusual Pieces Of Real Estate

    In many metropolitan areas, commercial land for development is in very short supply. Developers are converting older warehousing to shopping areas, demolishing existing buildings to build new projects in areas in transition. However there may be many hundreds or even thousands of unusual parcels of property that have been overlooked. Many are ready for commercial development close to downtown areas, suburban commercial developments, and densely populated areas. Owners of many of these properties consider the property as “surplus” and have not considered development.
    Some of these properties are in the inventories of city, county and state ownership and are surplus parcels that were unused in street, highway and freeway development. Others are owned by railroads…….(more)

    • Extra Income From Campus Apartments

    When an owner has an apartment property near the campus of a University, there are particular problems. The competitive situation dictates that leases be offered for one semester of nine and a half months. A twelve-month lease for students is virtually unheard of. That means there are lots of vacancies as soon as final exams have ended. (This does not apply to a few University communities where there is always an apartment shortage. In those few places, the student must lease for 12 months or have no lodging.)…..(more)

    • A Step-Down Rental

    Tenants understand the need for step-ups in their leases because they recognize the inevitable upward trend of costs. There is no reason for elaborate set of definitions in the lease. The lease simply needs to spell out in a schedule the applicable period and the rent to be paid during that period…….(more)

    • Screening For New Tenants

    The property manager provides the tenant applicant with the lease application which must be filled out for the interview. A leasing agent may assist during the review process, but the final selection of tenants is ultimately the property manager and owner’s responsibility…….(more)

How Good Management Add Value

Written March 1, 2024 by
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In this issue

    • Is Your Commercial Property Secure?

    The problem of security is a major concern of owners or managers of office buildings or other commercial properties. There are many things to check both inside and outside of a property. Particular attention must be given to the perimeter of the property, as this is where an intruder will make the first contact….(more)

    • In A Sale/Leaseback Check Tenant Stability

    When an investor is looking for a management free investment, nothing can beat a sale/leaseback. This is the ideal investment for an absentee owner because the tenant pays all the operating expenses and the investor-owner usually has a completely management-free and trouble-free investment. Typically, the tenant–who is the former owner–will take care of the property. Therefore, a sale-leaseback can be an excellent investment. Watch out though! Make sure that the tenant is dependable and able to pay the rent regularly and promptly…..(more)

    • The High Risk Problem Property

    In any market, good or bad, there are always problem properties. Most are only troubled or problem properties because of the current ownership. Some may be neglected only because the present owner has failed to do fairly simple things that can solve the problems. Buying property and solving problems is a profit-making business…….(more)

    • Things To Check With A Ground Lease

    Landowners may choose the ground lease as a way to benefit an easy and risk-free investment vehicle and as a way to secure the long-term appreciation of the property. Sometimes a ground lease can put the lessor at risk. That is because the deal centers on the concept of sharing economic returns. The lessor becomes a partner of the lessee because the total rent is usually determined by the lessee’s net operating income or net cash flow. If the lessee does well, the lessor does too. However, if the lessee’s business is a loser, so is the lessor……(more)

    • Good Management Adds Value

    Investors purchase residential and commercial income producing real estate to make money. There are two obvious ways of making money from a property. First, the owner takes a share of the annual operating profit generated by the investment, and Second, profits from increasing the market value of the investment beyond what it would be because of inflation alone.
    Apartment properties lend themselves to the second way of making profits better than many other types of investments. Increasing the market value of rental units does require know-how, absolute understanding of the market values of this type of property and excellent management…….(more)

    • Take Action For Overdue Rents

    A critical indicator of a management company’s success is their effectiveness in controlling overdue rents. A well-run property should not have chronically delinquent tenants. However, when delinquency does occur, immediate action must be taken. A list of all delinquent rents must be prepared showing all tenants who have not paid, or for those who have partially paid rents and other monies due. In addition, a delinquency report recording the manner and date of all collection attempts should be prepared…….(more)

How To Handle Distressed Commercial Real Estate

Written February 1, 2024 by
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In this issue

    • How To Handle Distressed Commercial Real Estate

    It is hard to believe that someone can totally neglect a valuable investment property like a multi-unit office building or an apartment complex. It happens. The run down property may have been acquired from a seller who did not understand real estate investments and failed to manage it at all. The professional investor can usually spot the low-priced and currently unprofitable income property that can be purchased, then upgraded with some reasonable expense so that it becomes a cash flow property. That property can then be added to the investor’s real estate portfolio or quickly sold for a profit. First, a professional management company must take over the property. It is faced with a problem property that the new owner has purchased for the purpose of a “turnaround” for profit….(more)

    • The Proper Balance Within A Shopping Center

    In Recent years, many stores have widened their lines and no longer specialize in only one form of merchandise. Such operations as supermarkets may sell anything from CDs and DVDs to refrigerators, and drugstores are as apt to carry pots and pans as well as pills. However, in order to insure the success of small as well as large store operations within the shopping center, management specialists must try to create a harmonious balance and limit the amount of “overlapping merchandise” that causes unnecessary competition. Big Box stores sell almost everything but are usually a “stand-alone” store……(more)

    • How To Handle Lease Provision Questions

    When a landlord and a tenant agree to a commercial lease, it may contain clauses covering things that neither party to the lease ever expects to happen. Occasionally, one of these will happen with costly and damaging consequences to the tenant. One lease clause that may seem very reasonable to a tenant is one that agrees to subordinate the lease to any future mortgages that the landlord may place on the property. After all, it is reasonable for an owner to want to refinance a property. The result of the provision is that the foreclosure of a mortgage loan will either automatically terminate the lease or entitle the lender, at its option, to terminate the lease (depending on the law of the state involved)……(more)

    • Corporate Shared Office Space

    With the new revolution in communications, building owners must keep up with the changing needs of the corporate tenant. Often the larger, well-organized businesses do not need the space that was necessary just a few years ago. Electronic communications to and from employees have substituted for leased office space. Managers are more willing to grant favorable lease terms to operators of shared space. The operator sometimes receives a monthly management fee for operating the shared space plus a portion of rent revenues over a certain amount…..(more)

    • Real Estate Investment Consultants

    When you need professional advice and help in commercial real estate please come to our office. We are experts in values and knowledge of the entire market in this area. If you have been looking for a certain type of property we probably have the full information on several like it already. Today’s investor in real estate must have a grasp of market conditions and potential that is usually beyond their own available time to attain. Investors need assurance about the true condition of the market. With increased competition, the market place is becoming more complicated. As your professional commercial real estate advisors, we are in the position to represent you in real estate transactions by setting up sales, exchanges, leases, purchase and sales of options, and management of real estate More investors are turning to real estate consultants as a means of providing a sounding board for their ideas as well as expertise in the planning and construction stages for their projects. Feasibility studies are essential for commercial office, industrial, resort and hotel investors. With this kind of information, planning is better and there is less chance for error. Real estate investing is not just the structure and the land. It is investing in the type of property that you want at the price and terms that suit you at the time you want to make the purchase. We can be your consultants. Lets talk and find out if we might be a fit……(more)

Important Differences In Commercial Real Estate Leases

Written January 1, 2024 by
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In this issue

    • Important Differences In Commercial Real Estate Leases

    ​When there are vacancies in commercial buildings, tenants may feel that they are in a good position to seek concessions from landlords on new leases or in exchange for extending or renewing existing leases. Landlords are apt to make deals for two reasons: (1) The landlord may be facing high vacancy rates, and (2) The landlord also recognizes that tenants may also be suffering from declining business during a recession and are less able to pay the high rentals……(more)

    • The Agreement Between Land Owner And Developer

    ​The acquisition and improvement of land is a large-scale operation and requires large amounts of capital. This has created methods of land acquisition that gives the developer access to and control over a large enough tract to make development economical without requiring an initial outlay of all of the capital necessary to acquire such a tract.
    From the point of view of the landowner, the disposal of a large tract at a good price may require a formula that will encourage the developer to commit improvement and development money for part of the tract that will build future value into the entire tract…….(more)

    • How To Refurbish For Future Profits

    IWhen you want an increased return on an older property it may be time to refurbish the property. When you look around a community, you will usually find a number of properties that need to be upgraded. Some existing owners do not recognize the increased return that they could get or do not want to make the necessary investment. Often these buildings can be acquired at a price that reflects the return based on the current condition and income…..(more)

    • Communication Between Management And Owner

    For success in achieving the owner’s objectives, there must be open communication between the owner and the management company. The process must be continuing from the onset of the management plan based on the owner’s objectives to the dissemination of monthly and annual financial reports for the owner’s records.
    Meetings between the owner and the management company should be set up on a regular basis. In these meetings, topics such as major repairs, personnel problems and rent collection can be reviewed. In-between meeting, managers must communicate serious problems with the owner immediately, so they can be addressed in a timely and cost-effective manner. Constant communication is essential to the process of management…..(more)

    • The Need For Both Asset And Property Managers

    When owners of large portfolios of investment properties need to make strategic business decisions involving management of these properties, they will usually call on asset managers. Areas of concern are overall leasing strategy involving rental rates and tenant concessions, in addition to repositioning or redevelopment, tenant mix, managing bulk service contracts…..(more)

What Is CPI and How Is It Used In Commercial Real Estate

Written December 1, 2023 by
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In this issue

    • The CPI Escalation Rental Clause

    Putting a CPI (Consumer Price Index) escalation clause in a lease is to make the lease fair to both the tenant and the property owner. A primary benefit of escalation clauses is they help protect against diminishing purchasing power related to inflation. The CPI measures monthly the average change in the prices consumers pay for certain goods and services such as oil and gas, healthcare, food, and housing…..(more)

    • The Industrial Flex Building Investment

    A high percentage of speculative low-rise industrial buildings today are flex buildings making them a good investment. One of the most appealing aspects of flex space lies within its customizability. For example, if a tenant wants to increase their office space or warehouse space, they are easily able to do that with flex space due to the reduced improvement costs. A flex building also allows for the tenant to have more choices in the type of space their company needs now and in the future at a more affordable price. Developers are favorable toward the flex building as it will meet the needs of many modern sophisticated industrial building users…….(more)

    • The Conversion Of A Railroad Station

    In many areas of the country, railroad stations are being re-awakened and brought back to a beautiful new life. The small town railroad station which had been closed down, boarded up and left to crumble into dust for many years is now being converted to a useful and desirable part of town. The large abandoned terminals which were once the busiest and most accessible buildings in a city are no longer deserted and deteriorating but have been converted to shopping centers, entertainment venues, and hotels. Stations along commuter lines in smaller towns are being used for small cafes, coffee shops, a flower shop and an assorted businesses to take care of the needs of the commuter…..(more)

    • Raw Land For Development

    Land investment is much more complex than it was a few years ago. Because of expanded regulation and environmental concerns, the development process is much longer and so more expensive. The time from the initial raw land purchase until final sale of completed homes may be as long as 10 years…..(more)

    • The Single Tenant Market

    Investors who can provide the housing that satisfies the needs of the single tenant will stand to profit. We all know that the number of persons living alone has increased. Figures from the census bureau show that households that contain only one person have increased 90% since 1970. There are now more than 20 million people who live alone, more than twice the number of twenty years ago. This trend is expected to continue…..(more)

How Warehouses Are Profitable Real Estate Investments

Written November 1, 2023 by
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In this issue

    • Warehouses–Profitable Real Estate Investments

    When Syndicates, partnerships, investment companies and their individual participants look at investments in commercial properties, many tend to look at properties that have that bewitching charm of glamour in brochures. A beautiful office building or an enclosed shopping center seem to have a more acceptable “status” as an investment property. These buildings can be nice to drive by and point out as “our” investment…..(more)

    • Be Ready In Advance For Emergencies

    Building owners and managers need to be aware of their obligations to their tenants for emergencies that can happen in buildings. Emergencies like fires, power failures, bomb threats, crimes, civil disorders, wild weather are just a few that could happen. Be prepared! Emergencies happen when least expected, so office-building and apartment managers must be ready in advance and have a plan prepared. The following are some components of a plan of preparation for emergencies in buildings…….(more)

    • Controlling Property With Purchase-Option

    Some investors look for the short-term investment with less of an emphasis on “doing business” and more pre-investment research on controlling property for the maximum gain in the short term. These investors often use the option or purchase-option…..(more)

    • Costly Mistakes In Real Estate

    Investors sometime make investments in real estate that turn out badly. They may then blame the loss on the “real estate cycle” when there were mistakes that could have been avoided by better planning and analysis. Based on data obtained through interviews with more than 200 real estate practitioners, several costly mistakes were identified and discussed. Here are three of them…..(more)

    • Real Estate Investment Guidance

    Which way is the right way in real estate investments in 2024? What is the future in these investments? An answer to these questions can be an interview with an interested professional real estate broker who can act as a real estate investment counselor. Each prospective investor can be interviewed in depth to find out specific needs in an income property. At the same time their needs are being evaluated, the broker will also communicate what benefits are available in various properties and how to identify them. Some considerations should be given to the risk of loss for each age bracket of investor. Should an older investor purchase a property with the smallest down payment and highest leverage position? This will limit cash flow and may cause the property to have a “negative” cash flow. Is this what they want – or do they want cash flow from the property?…..(more)

Opportunities In Commercial Properties

Written October 1, 2023 by
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In this issue

    • Opportunities In Commercial Properties

    There are a wide range of opportunities out there in commercial properties. Commercial properties provide space for businesses, and the kinds of properties are as diverse as the businesses. Following are the major categories of commercial properties:….(more)

    • Closing The Commercial Lease

    When all of the negotiations have been completed, the broker and tenant have agreed to the terms of the lease. Now all that is left is the lease closing. Often there are so many back-up papers that must be produced, examined and approved, the closing can be held up because of a forgotten document. Following is a list that provides basic information on typical documents that may be required at a closing………(more)

    • The Small Shopping Center–A Good Investment

    When you are looking at shopping centers, bigger is not necessarily better. While a well-run regional or super-regional shopping center can produce a good financial return, so can a successful small-market shopping center. In many cases, the small town center can turn out a better return…..(more)

    • Legal Definition Of A Shopping Center

    There are all kinds of shopping centers from the smallest strip center up to the super centers. In a case in a federal bankruptcy court, the court was required to distinguish between a “shopping center” and other types of retail properties. The federal bankruptcy code did not define the term. The Third Circuit provided the following 14 elements to be used in determining whether a property is a shopping center……(more)

    • The Type Of Buyer For Commercial Property

    When we represent a seller of a commercial property, we try to determine, as soon as possible in the marketing process, what type of buyer is most likely to be interested in this particular property. We then focus the main appeal on those elements that are most important to that type of buyer. Normally there are three types of buyers for commercial property:…..(more)

Physical Inspection Of Investment Property

Written September 1, 2023 by
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In this issue

    • Physical Inspection Of Investment Property

    When a buyer makes an offer on an investment property, it is usually only after a thorough inspection of all of the data that is available on the financial records of the building. The physical inspection of the property could be as important or more important than the rents and expenses. Some investors pay more attention to the data than the structure. With a physical inspection on the potential investment property, a buyer may be able to:….(more)

    • The Commercial Condo

    Statistics show business and professional firms are buying offices rather than leasing. While buying or constructing an entire building is an option for major corporations or for smaller firms outside metropolitan areas, owning commercial space generally means being part of a condominium structure………(more)

    • Property Values Around A New Hospital

    What happens to nearby property values when a new hospital is built? Usually the surrounding area feels a ripple effect. No matter how old the buildings that surround a new hospital complex are, land values increase. Developers are quick to provide new space for offices and stores. The biggest profits are realized by the investors who get involved early (during the planning stages) before or while the hospital is being built. As a new hospital is being built, the surrounding area around it will began to improve by demolishing older building and revamping existing buildings to create ancillary businesses. Among the new activities that create an abnormal demand on land located near the hospital are:….(more)

    • The Protection Of Confidential Information

    Typically, a landlord has access to leased premises at all times for purposes of making repairs and inspections. But in today’s information age, many tenants have valuable trade secrets, confidential information, and unique documentation in tapes, CDs, DVDs, listings, and other intellectual property that should not be accessible to the landlord.
    A software company tenant, for example, should try to obtain the right in the lease to maintain locked documentation rooms where even the landlord’s janitorial and maintenance people have no access and the landlord is given no copies of keys, pass cards, or cipher lock combinations to the additional locks installed by the tenant on the documentation room door…..(more)

    • How To Find Commercial Tenants

    At all times, good or bad, we must aggressively search for replacement tenants. A month’s rent from a vacant unit can never be recovered. Just running expensive advertising for this space can be nonproductive. A better way might be to have a professional management company that keeps all local brokers who specialize in leasing informed of the advantages and amenities of the building. Here are some other ideas:…..(more)

How To Prepare A Commercial Loan Request Package

Written August 1, 2023 by
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In this issue

    • How To Prepare A Commercial Loan Request Package

    When preparing a loan request package for presentation to the lender, the real estate borrower must be as complete as possible the first time. Insufficient, imprecise, or incorrect data in a loan request package can mean a rejection for an otherwise attractive real estate loan. Following are suggestions on things to include with the loan request package….(more)

    • The Future Buyer For A Commercial Property

    ​If you are new to investing in income property, you may have made a choice in advance of the type of investment property that you wish to own. There are many good types of investment properties: apartments, office buildings, shopping centers, high rise parking garages in downtown areas, warehouses, resort rentals and many others. Each of these takes a different type of management. Any and all should be under professional management during your ownership. Good management will ensure a profit for you when the investment is sold……..(more)

    • How Preventative Maintenance Saves BIG Money

    Maintenance of any rental building, either residential or commercial, should be handled as much as possible as a routine rather than an emergency. Preventative maintenance must be performed on a regular basis to keep the level of service at the property high and to reduce equipment breakdowns and service interruptions. Toward this end, the maintenance staff and on-site manager should make regular inspections for the repair and replacement of items before problems occur. Preventative maintenance reduces the number of emergencies by anticipating wear and tear that the property, buildings and equipment will undergo. Preventative maintenance is one of the most important components of successful property management. An appropriate preventative maintenance program should be developed for both large and small properties, regardless of whether building staff consists of only a part-time maintenance worker or a larger number of employees supported by a computerized maintenance program…..(more)

    • Protect Your Building’s Occupancy

    Owners, managers, and brokers of new office buildings are usually anxious to fill their space, and to do so, they may not be above trying to charm your tenants away, even if your leases still have some time to run. Some new-building owners may offer to find sub lessees to sublet their prospects’ space in old buildings, and others may even go so far as to offer to help tenants pay their rents for the duration of their leases. Even if the demand for competing space in your area is high and you don’t have trouble filling your building, tenants who don’t renew their leases and tenants who leave the building before the expiration of their leases can cause serious problems. This article discusses an important provision that you should include in your lease to ensure that your occupancy level remains high…..(more)

How Good Planning Helps Vacancies

Written July 1, 2023 by
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In this issue

    • How Good Planning Helps Vacancies

    When an investment property is located in an overbuilt market, the marketing effort must have good planning and direction. Just throwing large amounts of money into advertising can be a waste. Rather than broad advertising, a more direct action is required by keeping the local brokers who specialize in leasing constantly updated about the amenities of a certain property. This may be the best way to make it more marketable. Here are some other ideas:….(more)

    • The Master Lease

    When new development is occurring in a market and developers are anxious to sell when the construction is complete, use of a master lease may facilitate a sale before the lease-up period is ended. A master lease is a form of seller guarantee that has several specific goals…….(more)

    • A Land Development Agreement

    The acquisition and improvement of land is a large-scale operation and requires large amounts of capital. This has created methods of land acquisition that gives the developer access to and control over a large enough tract to make development economical without requiring an initial outlay of all of the capital necessary to acquire such a tract. From the point of view of the landowner, the disposal of a large tract at a good price may require a formula that will encourage the developer to commit improvement and development money for part of the tract that will build future value into the entire tract. This may be accomplished by the following:….(more)

    • Essential Parking Spaces For Commercial Properties

    Parking is not just important at your commercial building or apartment property; it is absolutely crucial for any business. Without it, potential tenants and their customer will reject the building. Parking spaces may be located below, at, or above ground level but wherever located, there must be enough spaces to accommodate the realistic, projectable needs of the particular building…..(more)