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
January 28th, 2010
Several major, local Houston area warehouse construction projects rebid since the summer have come back at 22% to 27% less than the original bids. These quotes are for industrial, metal warehousefacilities over 50,000 SF with no interior finish. Office build-out costs seem to only be down about 15 – 18% over the same period.
Major drops in concrete and steel commodity pricing are most likely the driving force. As smaller Houston area construction companies exit, labor costs also continue to drop.
The contractors which are able to ride the storm should fare quite well as permits for new construction trend upward…hopefully by end of 2010 or early 2011.
The attractive pricing for new construction does not help owners of existing vacant warehouse facilities. Especially those priced at the top of the market.
Categories: Market Outlook
Tags: commercial construction pricingcommercial real estate market conditions, construction pricing, houston commercial real estate outlook
January 26th, 2010
More fallout to come in Houston’s industrial market? There are a substantial amount of large industrial vacancies on the market today and while activity is picking up, it is doing so at a very slow rate and not with any consistency. Each week brings news of another property headed back to the lender. Multi tenant buildings are seeing some hard times and landlords are offering rates to suit. Newly constructed projects have been particularly hard hit as tenants seek 2nd generation facilities for lower rates.
With few exceptions, it is a Tenant’s market. What are the exceptions?
- Quality space with rail service…how about any space with rail service…active rail.
- Well located smaller user buildings with crane capacity and yard.
- Smaller dock high space east of downtown.
As financing remains tight, new construction will be almost nonexistent. This lack of new product will hopefully aid net absorption, eventually tightening the market and increasing average rental rates.
Categories: Houston Commercial Real Estate
Tags: commercial real estate news, houston commercial real estate brokerage news, houston commercial real estate market, houston constructed projects outlook
