June 30th, 2010
An example – ABC company is in a lease with 10,000 SF of office/warehouse space and they need more warehouse area. With no expansion alternatives at their existing location they know they will need to move upon lease expiration. Given that they have no real special requirements, should they start looking at A) 30 days out, B) 60 days out, C) 90 days out or D)120 days out? If you guessed C or D you are probably safe.
Many business owners wait until the last minute to stare their search. This compromises their ability to negotiate and hold out for the ideal property. On the other hand, if you start 6 months out, you are probably wasting your time because most landlords will not hold the space for 6 months until they get rent.
A few tips when thinking about begining your search:
- Locate a qualified commercial broker…preferably one experienced in the type of commercial real estate you need (i.e. office, industrial, retail, etc.)
- Take a good look at your current facility needs and forecast 5 years out.
- Be sure you are not able to obtain additional space or give up space at your current location to make staying feasible.
- Start your search 90 days out, given you can be fully moved in 2 weeks.
- Open up your parameters as much as possible and then narrow down as the results allow. Being too specific in the beginning may cause you to miss out on an opportunity just outside narrow guidelines.
Be patient, ask questions and understand your needs so your broker can better assist you.
If you have any questions about commercial real estate, feel free to call us at:
Centermark Commercial Real Estate/713.461.4750 office
Eric Hughes
EricHughes@CentermarkRealEstate.com
Categories: Building TIPS, Leasing
June 20th, 2010
The late 1990’s and especially 2003-2007 experienced an unbridled push of retail, office and industrial speculative development. Lenders were handing out non-recourse money on projects which, to any experienced commercial broker, had little chance of success. The immediate reward of development and loan fees along with short term interest put blinders on banks and investors and has led to some dire circumstances.
Hopefully, we are nearing the end of the fallout on commercial loans. However, the result of the madness may have permanently reshaped the landscape of loan underwriting thereby changing the future of new commercial development.
Before the drama, a qualified developer could get financing on a pure spec development (i.e. no tenants, all vacant) on terms of 60% loan to value…sometimes even better, with interest only and no real principal reduction required for up to 48 months. This combined with over inflated appraisals led to loans teetering on default with even the hint of slow lease up.
Fast forward to 2nd qtr. 2010. While brokerage is my bread and butter and what I really feel I am best at, I also am involved in several joint venture developments. Although our group has impeccable credit and deal history, we are unable to secure ANY bank/lender money for purely speculative development. Unless we have a strong tenant in tow for at lease 40% of the project, the only funding that is available is private. Thankfully, our stable of investors provides us the equity required to pursue the industrial developments with which we have done so well.
This model will become the new norm with smaller spec development deals. Funded all out of cash thru private investors. While this definetly can limit the transaction size, it does have its advantages.
- Quick closing process
- No lender origination fees, appraisal fees, bank inspection fees
- No interest expense
There will always be people with more money than sense. I continue to see development, primarily retail, going up around the Houston area which makes no sense. Why build in a depressed market which is already oversupplied with product?
Banks are still shedding assets a record pace and this will probably continue for sometime. There are some great deals out there for tenants, investors and user-investors as well. You just have to know where to look and what to ask.
If you have office, industrial warehouse or retail needs, please contact us.
Eric Hughes – Broker
________________________________________
Centermark Commercial Real Estate
800 W. Sam Houston Parkway N., Suite 300
Houston, Texas 77024
Office (713) 461-4750
Fax (888) 889-7540
Cell (281) 236-9553
EricHughes@CentermarkRealEstate.com
www.CentermarkRealEstate.com
www.linkedin.com/in/centermarkrealestate
Categories: Market Outlook
Tags: commerical real estate broker, houston commercial real estate market, houston commercial real estate outlook, office for lease, property investment, warehouse for lease
May 15th, 2010
Dear friends and clients,
After 13 years with TNRG, I have formed a new commercial real estate brokerage firm. CenterMark Commercial Real Estate is focused on Industrial and Office brokerage, with over 18 years of direct warehouse and office leasing, sales and development. We offer a streamlined approach to servicing our clients and implement “out of the box” strategies for marketing listings and finding property for our customers.
We thrive on challeging circumstances and feel we have the experience and track record which allows us to get deals closed.
Our goal…
To provide our clients thorough, accurate results and bring significant value to transactions that close in a timely manner.
A broker’s job is to bring value to the deal. How?
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Bring together a market buyer/seller or lessor/lessee.
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Recognize and suggest value add improvements to maximize return on investment.
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Negotiate pricing based on superior market knowledge and skills.
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Understand the sophisticated economic structures of commercial sale and lease transaction.
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Treat all parties ethically, fairly and with honesty.
We are excited about our new endeavor and look forward to adding to our list of long-time customers. If you have warehouse or office for lease or are looking for a warehouse or office to lease we are your best option. If you need to sell a warehouse or office or are looking to lease a warehouse or office…again, we are the best option.
Best Regards,
Eric Hughes – Broker/Owner
CenterMark Commercial Real Estate – EricHughes@CenterMarkRealEstate.com
713.461.4750 Office
Categories: Houston Commercial Real Estate
Tags: commercial broker, houston broker, houston commercial real estate brokerage news, houston commercial real estate market, office for lease, office for sale, warehouse for lease, warehouse for sale
April 10th, 2010
Every large MSA is unique in its style of office architecture and available lease space, and Houston is no exception. However, the Bayou City seems to have a void yet to be filled. That void is office space built to resemble the converted from older, exposed beam warehouses and buildings or actual converted historic buildings. Loft type office space is in demand and there is not much of it…especially outside the downtown and heights areas.
Why is “loft” type office in short supply?
This slim supply is partially due to the relative young age of Houston and also in part a result of lagging preservation of historic buildings. The older style of loft structures comes from some of the first warehouses and manufacturing facilities which featured concrete roofs and often two to three floors. As technology changed, Houston began to see more steel frame construction or concrete walled buildings with built up tar roofs over steel panels. The days of the concrete roofs where numbered as multi-floored warehouses were replace with high clear buildings and modern racking systems. As demand for housing and office space near the downtown Houston area increased, developers did not think twice about demolishing many of the historic structures to make way for modern, more efficient buildings.
With a booming population and growing business centers located on the outskirts of Houston and in surrounding suburbs, the need for office space to lease in these areas often outpaces supply. The trend of “green” LEED certified buildings unfortunately is rarely mixed with the older “loft” style design.
While style and design are personal preferences, it would be nice to see a few new office projects laid out along the lines of the older loft style combined with modern, effecient materials and mechanicals. The layouts can be very efficient as a result of the open concept.
If you are in need of office space to lease in Houston and desire an architectural layout like the old warehouses in the downtown area, you best find a very knowledgeable and resourceful office broker to assist you in your endeavor.
Eric Hughes – Commercial Real Estate Broker – 281-236-9553 Cell
Office and Industrial Specialist
www.Warehousefinder.NET * www.LeaseOfficeHouston.com * www.CommercialRealEstateBrokerHouston.com
Email us at Info@Warehousefinder.NET
Categories: Leasing
April 3rd, 2010
From Star-Telegram.com “A February report by the Congressional Oversight Panel paints a bleak picture of commercial real estate…
Commercial loans
The report estimated that $1.4 trillion worth of commercial loans will be due between 2010 and 2014, and more than half are considered “underwater,” meaning more is owed than the property is worth. Mortgages on apartments and other multifamily housing make up about a fourth of all commercial loans.”
Read more: http://www.star-telegram.com/2010/04/02/2086404/texas-tenants-may-feel-fallout.html#ixzz0k31EimTH
As a commercial real estate broker and owner of commercial property, I have mixed feelings on the future of commercial real estate as it relates to potential foreclosures and the collateral damage extending to the consumer. It does not take a rocket scientist to understand that owners got greedy, pushed rent rolls to the extreme and under-reported expenses in order to maximize leverage. Irresponsible accounting combined with a horrible economic climate compounded the problem and now there is potentially in excess of $700mm dollars in commerical assets which may be worth less than what is owed in the property’s loan. Not mentioned in the article is another problem. Even on “above water” properties, many lenders are unable or unwilling to renew or refinance existing loans as they mature thereby hanging the borrower out with no resource to pay the existing loan balance and thus creating another foreclosure situation. So, not a pretty picture for many owners and lenders.
Who stands to prosper? Attorneys, accountants and savvy investors with cash.
My real estate attorney friends are reaping a windfall of profitable foreclosure work and will continue to do so for several years, in my opinion. With foreclosures come bankruptcies…and more legal work, more fees, and more padding the attorney’s pockets.
All of the fallout revolves around accounting and therefore requires CPA services and creates more work for accounting firms.
And lastly, the cash laden investor who has a good commercial real estate broker hunting for value add investment property on the brink of foreclosure. With several such pre-foreclosure sales in the works now with my investors, I can tell you from experience that there are some incredible deals to be had in the market today. As things continue to flow back to the lenders, I feel more outstanding “value add” properties will surface. 90% of these deals never make to market as they are scooped up behind the scenes through attorney, lender, broker and investor relationships. These “brother and law” transactions are good for buyers but absolutely destroy any hope of getting a true market price for the properties. This further stifles property values, worsens lender losses and adds salt to the wound of the borrower. Again great news if you are an investor sitting with cash. Another opportunity for investors with cash is to offer funds to the “trapped” borrowers to payoff the existing loans at the cost of exorbitant interest rates and loan fees with short payoffs and low LTV’s. These are last chance lenders who stand to either make a substantial return on the money lended provided the borrower performs…or in the event of default, get the asset back with a very low basis and still be way ahead of the pack.
Make no mistake, there are and will be hundreds of millions of dollars made in this “down” economy. How deep the fallout…and profit, is yet to be seen.
Eric Hughes – Commercial Real Estate Broker
The National Realty Group, Inc.
(713) 744-7402 office direct
(281) 236-9553 cell
Email: Eric@warehousefinder.NET
Company Website: www.TNRG.NET
National Search site: www.Warehousefinder.NET
Categories: Houston Commercial Real Estate, Market Outlook
Tags: commercial broker, commercial real estate news, houston commercial real estate brokerage news, houston commercial real estate market
March 29th, 2010
As a veteran of the industrial real estate business for almost 19 years now, I have seen countless searches for the ideal building with no real contenders to fill the void. Many times when this happens, the prospect decides they need to build from scratch in order to get exactly “what they want”.
The often missed step here is finding a smaller facility with all the utilities in place for the existing office and then adding the warehouse as needed. Very rarely can you, especially in today’s market, build for less than you can purchase a comparable existing industrial facility.
For example, let’s say you need 100,000 SF of office warehouse, of which 5,000 SF is office. You could theoretically add warehouse to a 5,000 SF office building, provided adequate land area exists. While that is an extreme example, it is feasible. The more realistic alternative to this scenario is locating a 20,000 SF + office warehouse with extra land and adding the warehouse area. This size facility is more likely to have the office area, parking and electrical service you will require for your ultimate layout.
Why can this be cost effective? An existing facility with offices, restrooms and potentially other utilities such as natural gas, already has some of the more costly construction items in place. The cost to add office area from the slab up can be $45 PSF+. The cost to add plain metal warehouse can be as cheap as $15 PSF, including the slab! Not to mention your architectural and permitting should be a breeze compared to full drawings for utilities, office, curb cuts, etc. You may still have to cover detention for any increase in impervious coverage on the site and its related drainage.
So open your mind to smaller properties with the office you need (or close) with immediate warehouse expansion in mind and you may save a substantial amount of time and money. Hire a qualified commercial real estate broker…preferably one with some development experience.
Eric Hughes
Eric@commercialrealestatebrokerhouston.com
(713) 744-7402 office direct
(281) 236-9553 cell
Categories: Building TIPS
March 29th, 2010
Hempstead 8311 Flyer
7,882 SF total (6,518 SF warehouse/1,364 SF office)
$725,000 sale / Call for lease info
This property is fully fenced and paved with great access and visiblity inside the 610 Loop on Houston’s NW side. Great for any service company, light storage, manufacturing or an office conversion. Click on the link above for more information.
This is one of several listings which TNRG has in the area.
Categories: Available Properties
February 18th, 2010
Most Houston office markets see 1st qtr. increases in occupancies, absorption and rental rates. For local developers, this may be why small user office buildings are a small shining light in the fog of uncertainty. In areas where multi-tenant office development has consumed all the vacant land, those owners with a low basis could do well with properly planned user buildings. Construction of any commercial type has all but ground to a relative stop. This leaves investors searching for viable alternatives which don’t require high leverage…or any leverage and users with cash hovering for freestanding product. Recently, smaller speculative office parks in A/B parks have commanded high prices and sold/leased out quickly. Mature, B/C markets with similar developments have not fared as well. Low interest rates, historically low construction costs and lack of new product all bode well for the astute investor/builder. While small in size (three to eight buildings at 2,000 to 10,000 SF each), these developments accomplish adequate economy of scale unobtainable by the single building user/owner. Rental equivalents should be less than ownership costs with owning a facility out of a multi building project vs. traditional office building rental. Unfortunately, the days of sub $5 PSF dirt for said developments are waning. The Houston area has seen a number of small user office park developments do very well. Primarily in Sugarland, Park Ten, the Woodlands and around a few of Houston’s expanding medical centers. As Obama’s economic plan unwinds, it is yet to be seen how it will affect the slow rebound in U.S. office markets.
Categories: Market Outlook
February 12th, 2010
According to Breakbulk.com, “The Port Commission of the Port of Houston Authority approved $1 million for Bayport construction projects, including a sight and sound berm on its west end and installation of a gate control system, at its regular meeting last week.
The commissioners approved a construction contract with Burnside Services, Inc. to construct the west end sight and sound berm at Bayport for $230,553. A requirement of Bayport permits, the sight and sound berm will serve as a visual and sound barrier to terminal operations.
Commissioners also approved awarding a construction contract to L.A. King Company for Phase 3 gate controls at Bayport for $753,169 and approved advertising and receiving competitive sealed proposals for demolition of transit sheds and lighting and access modification at wharves 24 and 25 at the Turning Basin. Current business trends have created a need for additional open space for cargo handling.”
Hopefully this recent project approval is an indication of an increase in activity for the far East end of the port. Millions of square feet of warehouse were developed over the last 5-10 years in hopes of larger retailers increasing capacity or relocating hubs to Houston. The down market did not help relative leasing activity. That being said, when things do improve in the world economy and the Panama Canal is improved, Houston could be poised for dramatic long term growth.
Categories: Port of Houston
February 8th, 2010
HOW TO GET OUT OF YOUR COMMERCIAL LEASE AGREEMENT…
Ok, this is not intended to be some sneaky loophole for those less than moral business owners looking to stick it to the landlord or anyone else. This is an article intended to expose possibilities in the business end of a lease which may help you reduce or eliminate your lease obligation. As a broker and owner on both sides of the leasing fence, I understand what drives deals and what makes sense as options to terminate them.
If your business is in a situation which requires an untimely exit from your industrial or office lease (and has nothing to do with a landlord default), consider these options…in order.
- Talk to your neighbors, provided you have them. In a well occupied property there is a good chance the business occupying space adjacent to you either needs additional space or could take on another line or service to justify expansion. Ask your Landlord and/or its agent if they have any prospects for space in the building as you MAY consider giving up your lease space if they have a qualified tenant (Don’t appear desperate…yet).
- Look at your lease and tally your remaining monetary lease obligations for the balance of the lease term. Approach your owner and offer a cash buyout of the remaining term with some reasonable notice. Example…You have 24 months remaining on your term. Offer the Landlord 3 months’ rent penalty to leave in 90 days. You will most likely need a smaller alternative in which to relocate, so 90 days should give you enough time to locate your replacement. The rest comes down to what makes sense to your budget and to the landlord. If the Landlord has people on a waiting list and can relet the space in 30 days, your 3 months of penalty gives him a potential 2 month profit (provided the premises does not require tenant improvement money to make it ready for the new occupant). Your Landlord would rather have an opportunity to relet the space and lessen his downtime than have you leave in the middle of night after trying in vain to carry the rent.
- If your think your luck will change in the near term, ask the landlord for partial rental abatement to lighten your monthly load enough to allow your business to see the next upturn.
Other reasons it may it make sense for your landlord to replace you prior to your lease expiration?
· Possibility for increased rate and/or longer lease term for the landlord.
· Allowing an existing tenant in the property to expand and extend its lease thereby increasing the landlord’s net income and credibility of the rent roll.
· Replacing your business with two or more smaller tenants. This can help reduce landlord risk in the rent roll and make the tenant roll over more attractive.
- Contact a qualified commercial real estate broker and list your space with them for sublease. As you continue to run your business, your broker will market your space for sublease and hopefully land a tenant to replace you.
A few more tips:
· Try to terminate your guarantee (if applicable) if you and the Landlord finalize a sublease. If you must remain on the hook, work for a burn off of your guarantee as the new tenant stays out of default and makes timely rent payments.
· Always communicate with your landlord and be honest about the situation. If you are late on your rent and need out…let him know your issues and ask for assistance before things get out of hand.
My last advice and recommendation is to secure a qualified real estate attorney to review your lease. If you are successful in negotiating a termination, a well written termination agreement is a must.
Have more questions on the business end and want a broker’s opinion? Send me an email at Eric@WarehouseFinder.NET.
Categories: Houston Commercial Real Estate
