North Carolina Commercial Real Estate

Retailers Post Gains in August

Charles Rankin — Thu, 02 Sep 2010 13:19:24 +0000

Retailers are turning in surprisingly strong monthly sales reports in August, as sales-tax-free holidays and discounting coaxed shoppers to open their wallets and stock up on back-to-school items.

Overall, the Thomson Reuters Same-Store Sales Index is expected to rise 2.5 percent in August, the research firm said.

The majority of the retailers reporting monthly sales results have topped analysts’ estimates, according to Thomson Reuters.

One of the best performances came from Limited

[LTD 24.27 --- UNCH (0) ] , which posted a 10 percent increase in same-store sales, far better than the 7.3 percent increase analysts had projected.

Teen retailers were expected to struggle, and that was reflected in the results from Hot Topic [HOTT 5.27 --- UNCH (0) ] and The Buckle [BKE 24.37 --- UNCH (0) ] . Hot Topic missed estimates with same-store sales falling 3.7 percent, while The Buckle’s sales fell 3.5 percent. The companies were forecast to post sales declines of 6.2 percent and 6.5 percent, respectively.

Consumers remain cautious about spending as unemployment remains high and questions about the economy persist. The real test for retailers will come in September. That is when investors will see if consumers are truly picking up their spending or if back-to-school sales merely shifted to August from September.

On Wednesday, MasterCard’s SpendingPulse report showed an uptick in total retail spending in August, but shoppers stuck to the basics and spent on essentials such as children’s clothing. Sales in other categories, including women’s and men’s apparel and luxury goods, fell, the report said.

More than one-third of the states held sales tax holidays in August, including three large states that did not have this kind of event last year.

Retailers are likely hoping that the fall brings more clarity about the economy and an improved employment picture. Meanwhile, investors will be looking at August sales for the lessons they may teach about the upcoming Christmas holiday season.

One thing that isn’t up for debate: the bar will be raised in the months ahead as retailers will be facing much tougher comparisons with their year-ago performance beginning in September.

August 2010 Same-Store Sales

Retailers	August 2010 Estimates	August 2010 Actuals
Costco Wholesale (excluding gas)	3.6%	5%
BJ Wholesale (excluding gas)	2.4%	1.9%
Target	2.0%	1.8%
JC Penney	1.6%	2.3%
Kohl’s Department Store	2.6%	4.5%
Dillards Department Store	(0.5%)	Breakeven
JW Nordstrom	5.9%	6.3%
Saks Department Store	4.3%	1%
Stage Stores	1.3%	0.5%
Macy’s	4.0%	4.3%
Gap	(0.2%)	Breakeven
TJX	2.4%	2%
Limited	7.3%	10%
Ross Stores	2.9%	5%
Stein Mart	Breakeven	8.5%
Abercrombie	5.9%	6%
American Eagle	1.1%	1%
Aeropostale	1.2%	(1%)
Hot Topic	(6.2%)	(3.7%)
Wet Seal	(3.5%)	1.1%
The Buckle	(6.5%)	(3.5%)
Zumiez	7.7%	9.1%
Walgreen	2.4%
Rite Aid	(1.0%)	(1.0%)

Source: CNBC

Cary Retail Space, Raleigh Retail Space, Retail Space for Lease, Cary Retail Space for Lease, Raleigh Retail Space for Lease

Rankin Commercial Properties Market Update

Charles Rankin — Wed, 01 Sep 2010 18:13:29 +0000

Rankin Commercial Properties says Commercial Real Estate Back to Black.

Rankin Commercial Properties released a press release with their latest market insight.

Raleigh, NC (RCPNEWS) 1, September 2010 – Rankin Commercial Properties announced their latest view on Commercial Real Estate Market Conditions today saying that the industry is “Back to Black.”

Rankin Commercial Properties a full service commercial real estate firm in Raleigh, North Carolina, has been a market leader in maintaining property portfolios for clients in the South Eastern United States. Rankin Commercial Properties occasionally releases market updates on conditions surrounding the commercial real estate market.

“For the first time in a long time, we are seeing significant activity in the Commercial Real Estate markets that suggest a fall out is no longer expected” said Charles Rankin, President of Rankin Commercial Properties. “Institutional buyers are stepping into investments helping the Dow Jones REIT index significantly outperform the broader market.” FTSE NAREIT’s All-REIT index, comprised of 148 publicly traded REITs, was up 11.7 percent year-to-date as of Aug. 26 while the Standard & Poor’s 500-stock index was down 4.9 percent. Publicly traded REITs represent 15 percent of the total U.S. commercial real estate market.

However, Rankin Commercial Properties forecasted a foreclosure rush earlier in the year which would have offset the scarcity of property acquisition opportunities, which has limited many REITs’ ability to grow as the economy recovers. “We thought a fall out would have been a good thing, a great thing for our business, but it never happened, now we are focusing on leasing properties and maintaining properties” said Charles.

Rankin Commercial Properties believes Apartments and Retail properties will outperform the market as Office properties and Industrial Properties begin moving off the bottom. But the fact that the commercial real estate market hasn’t crashed is overall positive.

According to Rankin, CMBS loans in 2010 while a fraction of the peak in 2007 have already far exceeded the total for 2009. Commercial Real Estate Sales spiked to $9.7 Billion in June, while commercial property values continued to increase at a premium above current rental rates. The aggregate value of Commercial Real Estate (CRE) loans priced by DebtX that collateralize CMBS increased to 79.4% as of July 30, 2010, up from 77.4% as of June 30, 2010. Loan values were 71.1% as of July 31, 2009. In July, DebtX priced 57,801 Commercial Real Estate loans with a $679.5 billion aggregate principal balance. “The fact is, sum 90% of CMBS loans are performing” said Charles.

July’s numbers followed June’s where there was a spike in national multifamily and commercial real estate sales, rising to $9.7 billion in the month. This was the highest volume of significant commercial property sales since September 2008. The increase in activity-over the year, from the first to the second quarter and over the second quarter itself-suggests that investors remain largely undeterred by downward revisions to the economic outlook. The current tally of commercial properties in contract suggests that prevailing levels of activity will be sustained into the third quarter.

“Cap rates are beginning to rise significantly” says Charles “from 9 to 10% last year to 7 to 7.5% today, there still could be a backlash and slight double dip, but still we are talking about capitalization rates at all significant highs yielding great commercial property investment opportunities.”

“Apartments will outperform the entire real estate industry as renters move back into the community but aren’t ready for purchasing a home, a common trend following a recession” said Charles. REITs that primarily own apartment buildings are in a stronger position than those that concentrate on office, retail, and industrial properties. With home prices continuing to fall, and access to credit diminished, renting is the only option for many people who can’t get mortgage loans or aren’t willing to buy a house now. Occupancy rates for apartment buildings are currently running at 92 percent to 94 percent, compared with about 88 percent for warehouses and other industrial properties and 84 percent for office buildings.

But Rankin Commercial Properties believes the Retail Property market is leaning towards a pop. “US consumers are deleveraging faster than expected, they are cash heavy, and it’s only a matter of time before they start spending.” Today consumer spending rose slightly as some consumers began fretting off fears of unemployment. “The worst for the retail industry is over, has been over, and as those retailers begin looking for ways to increase revenue and reallocate funds, property leasing activity is going to rise, and higher spending will increase percentage rents.”

“In August we saw a pop in Retail sales driven by back to school shoppers and sales tax holidays” said Charles, “that was actually an unexpected improvement.” Better consumer confidence numbers, spending numbers, and August sales numbers are all good signs for Retail Properties.

Although Rankin Commercial Properties is bearish on the suburban office space and industrial space, they still had a few positives. “Our entire economy has changed, we simply won’t return to the same conditions we had pre 2007, however, one thing is certain and that is recessions are restored with innovation. Innovation requires office space and industrial space, the question is where will that innovation come from, Tech, Medical, Research and Development, who really knows at this point, it’s too early to tell” said Charles.

“On a local market level, Raleigh Commercial Real Estate and Cary Commercial Real Estate have several strengths that will help push a recovery in Office and Apartments as Fort Brag expands and DOD contractors search for offices in the Raleigh-Fayetteville areas” said Charles. “Other office space users seem to be temporarily medical and counselor driven, however RTP has seen some significant activity recently from Research and Development type corporations.”

“Overall Commercial Properties are ‘Back to Black’ meaning the cash flows are increasing enough to sustain properties and keep bankers from foreclosing. But significant growth remains weak primarily because the segment is recovering without a washout. We’ve seen a lot of loans rolled and very few foreclosures in recent months accompanied with stronger leasing activity.”

About Rankin Commercial Properties LLC:

Rankin Commercial Properties (RCP) is a Full Service Commercial Real Company. Encompassing all aspects of commercial properties, RCP offers Property Management, Brokerage Services, Tenant Representation, Landlord Representation, Facilities Services, Property Maintenance, Construction, Landscaping, and Cleaning & Janitorial Services. The company currently employs over 13 full time and part time personnel.

Rankin Commercial Properties is North Carolina’s Premier Source for Commercial Real Estate Expertise. Our team specializes in Office, Retail, Industrial, Land, and Investment Properties. Unlike most Commercial Real Estate Companies, Rankin Commercial Properties (RCP) is a Full Service Commercial Real Estate Company offering Landscaping, Cleaning & Janitorial, Property Management, Brokerage, Marketing, Maintenance, and Financial Services. Our “all around, hands on” approach not only gives us the knowledge to negotiate fair deals, but the ability to lower operating costs for most investment properties. The Rankin Team has an uncanny ability to creatively and analytically determine proper solutions to every commercial real estate need. Rankin Commercial Properties is devoted to building long term relationships with its clients and community.

Cary Retail Space, Cary Office Space, Cary Commercial Real Estate, Raleigh Retail Space, Raleigh Office Space, Raleigh Commercial Real Estate

Contact:

RCP Marketing Department

800-737-9632

www.rankincommercialproperties.com

General Growth Properties gets a 4 month extension and relists on the NYSE.

Charles Rankin — Tue, 09 Mar 2010 03:28:38 +0000

General Growth Properties gets a 4 month extension and relists on the NYSE.

General Growth Properties (GGP) has had one heck of a year, filing for bankruptcy this time last year sent the stock plunging to thirty cents a share coming back to over fourteen dollars one year later with two bids on the table. The first bid, a complete buyout by Simon Property Group for nine dollars a share. The second, a solution for General Growth Properties to exit bankruptcy as a standalone company with two separate REIT funds, the first being General Growths core business, class A shopping malls. The second being General Growth’s mixed use developments.

General Growth’s relisting on the NYSE is no surprise for followers of the fund. The relisting establishes General Growth Shares as a viable investment for many investors who took to the side lines one year ago. The fact is, in order to exit bankruptcy General Growth Properties must generate enough capital to pay down some serious debt. Relisting on the NYSE opens the door for that opportunity.

But General Growth isn’t the only Commercial Real Estate stock making waves in the market. Kite Realty Group (KRG) is up 100% year over year with no big news pending. Developers Diversified (DDR) is up nearly 1000% since this time last year. Sure, the entire market has been on a ride back to numbers of the yester years, but Commercial Real Estate is surprising, at least if you’re listening to pessimistic analysts.

The reality is, the commercial real estate market really isn’t all that bad. If it is the next “shoe” to drop, it won’t drop that far. For the most part, the Class A Commercial Real Estate Market collapsed several years ago when big box giants went bankrupt left and right. However, for those who have weathered the storm, those days are over. Most major retailers have more cash in their pockets, leaner budgets, and are ready to start a whole new growth cycle. Even troubled retailers like Borders (BGP) have created a much leaner balance sheet by reducing debt and operating costs.

Last fall, commercial real estate vacancies seemed to level off and in some markets, showed positive absorption. Additionally, the last consumer confidence report showed a 100% increase from last March. Jobs even seemed to comeback with a surprise in February after analysts expected to see an increase in layoffs.

All are indicators of a recovering economy. While most in the commercial real estate industry will tell you that bubble has popped, few predict the shoe to fall. Most would say the only shoe falling is that of local investors who don’t have the cash to climb back out. Even for them, there is plenty of money waiting on the sidelines for a good deal.

-NC Commercial Source.

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Rankin Commercial Properties leases 3870 SF to Mediterraneo at Olde Cary Commons.

Charles Rankin — Sat, 20 Feb 2010 05:53:05 +0000

Raleigh, NC (RCPNEWS) 19, February 2010 – Rankin Commercial Properties announced today they closed a 3870 SF Restaurant Deal at Olde Cary Commons in Cary, NC. This followed the abrupt departure of Bella Napoli Thursday night. The new tenant, Mediterraneo, a concept by the restaurateurs of the recent Georgio’s Diner in Durham will feature exquisite Mediterranean cuisine at affordable prices, open for lunch and dinner. The restaurant plans to open within 30 to 45 days.

The restaurant is family owned and operated by Georgios and Argyro Papanikolao.

“This is a great accomplishment for both Olde Cary Commons and the Downtown Cary community” said Charles Rankin, president of Rankin Commercial Properties. “We opened our office in downtown Cary with the intentions of bringing more businesses to the area. Mr. and Mrs. Papanikolao and their family bring a considerable amount of energy and enthusiasm that will definitely help reenergize Olde Cary Commons and the downtown Cary business community.”

Charles Rankin Broker in Charge of the Rankin Commercial Properties Cary office and Kenneth Fain a commercial real estate broker from their Raleigh office co-brokered the deal as representatives of CCCC Associates, the Landlord entity of Olde Cary Commons. Rankin Commercial Properties opened their Cary office in Olde Cary Commons last fall and signed the listing agreement on the property in January, 2010 leasing the space in approximately 30 days.

Rankin Commercial Properties currently has two prospects for the remaining space in the center. “Both of our prospects for the remaining retail space in Olde Cary Commons are entertaining wine bar type concepts” said Samuel Thornton, the Rankin Commercial Properties Cary Director “however, we have had three other highly successful showings this past week, which may bring more opportunities for the property.”

Rankin Commercial Properties is the fastest growing commercial real estate company in the Raleigh-Durham market. Driving over 500 visitors a day to their websites, Rankin Commercial Properties picks up, on average, 6 to 8 clients a week and has been quickly moving their property listings in the market. To learn more about Rankin Commercial Properties or to find out how to List your property with Rankin Commercial Properties visit www.rankincommercialproperties.com.

About Rankin Commercial Properties LLC:

Cary Retail Space, Cary Office Space, Cary Commercial Real Estate, Raleigh Retail Space, Raleigh Office Space, Raleigh Commercial Real Estate

Contact:

RCP Marketing Department

800-737-9632

www.rankincommercialproperties.com

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Geesh North Hills. Got Some Critical Mass?

Charles Rankin — Mon, 08 Feb 2010 05:23:17 +0000

I had the opportunity to meet a man who used to work with John Kane at Kane Realty some umpteen years ago. You’d figure the guy was like another Donald Trump with his massive North Hills project. In some ways I guess he is, after all John started out small and grew big. But he didn’t start in a one bedroom apartment in Manhattan, and he certainly doesn’t sound like the type of guy who would trademark the phrase “Your Fired.” Nope, according to my source, John was a simple guy who just knew how to run a business. In fact, unlike Trump, John Kane is very soft spoken. Apparently he’s just good at hiring the right people to handle the right tasks.

Sounds simple but it isn’t. Just look at North Hills. In 2000 North Hills was a trash heap mall with one real tenant, JCPenny’s. Eight years later it became Raleigh’s premier outdoor shopping mall with restaurants and shops that appealed to Raleigh’s young professional crowd.

By 2009 the center became a Raleigh Hot Spot for entertainment with its beach music festival, and now, it is growing again.

The genius behind the development shows why Kane has grown from the strip mall king in 1978 to Raleigh’s premier developer. Mixed use development projects are some of the hardest developments to build while maintaining synergy. Mixed use generally involves retail, office, and residential components. One mistake can ruin the entire project. For example, North Hills built its original office component directly over the retail shops. HUGE Bummer!

Because the office was built over the retail, office tenants had no convenient place to park. Generally office users arrive earlier than the shopping crowd, so what spaces where convenient where then used for the office users, and retail shoppers had to park further away. If there is one deterrent to North Hills, its that dog gone parking.

Luckily it wasn’t a complete flop. North Hills has an underground parking deck that makes up for most of the parking issues. Which brings me to the next genius thing about North Hills.

Somehow, Kane got a Super Target in the parking deck, under the entire center. If it wasn’t for the North Hills landscape which hangs over I-440 that would have NEVER happened. There is something to say about choosing development site wisely and I think he nailed it with that one. The fact that Target receives enough visibility from I-440 to make them happy UNDER North Hills makes the project for Kane. With Target and JCPenny’s under North Hills, and the Movie Theatre on top, Kane’s got 3 solid anchor tenants, which have added security to the small tenants throughout the center.

I almost forgot the Renaissance. Hotel’s aren’t the number one business to be in right now, but from what I’ve heard, the Renaissance is the number one place to be if your wife kicks you out for a night.

The next phase of North Hills is almost a perfect model for mixed use development. In fact it is so perfect, even Harris Teeter agreed to bite the bullet and dive into the parking deck (another odd move for an anchor tenant). But let’s face it, if Harris Teeter where in line, the mixed use aspect would never work.

This isn’t the first time I’ve seen a Harris Teeter operate from the depths of a parking deck. The downtown Charlotte Harris Teeter is barely visible at all. However, it is extremely risky of the tenant during today’s economy. At the same time, why not be in the hottest center in Raleigh.

In theory the expansion makes perfect sense. Harris Teeter is under the residential units and parking deck, while the small shops are neck and neck at street level. My only question is, if the Harris Teeter Shoppers never leave the parking deck, how will the small shops survive? We’ll see. Can’t say I have any better ideas, and quite frankly, I am impressed that once again, John has managed to tuck away an anchor deal.

The office component in the second phase is also much better planed. Having the building completely separate from the residential and retail makes it much more inviting to office users. At least those who are willing to fork over $30 PRSF for office space.

However, it is a beautiful building and you can’t say Kane hasn’t left his mark in away you’ll miss it. In fact driving down I-440 the thing looks gigantic. Let’s hope CapTrust doesn’t end up filing for bankruptcy after paying for that name plate. After all Wachovia got way in over their heads in Charlotte and now Wells has several beautiful outstanding, VACANT, landmarks filling the holes in the Charlotte skyline.

Looking forward to watching this project continue to develop. He’s already got the critical mass to keep this project on point. Hopefully some of the other dummies out there trying mixed use will learn a thing or two.

- NC Commercial Source

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Lat Purser and Boxes one in at Saltbox Village

Charles Rankin — Mon, 08 Feb 2010 05:20:55 +0000

Lat Purser boxed one in the Saltbox with a new Meat House for the Village. The Meat House is a neighborhood butcher shop selling high end meats, cheeses, and a little wine for all you drunks.

Lat Purser & Associates represented Saltbox Village LLC and Rankin Commercial Properties represented the Meat House in the retail lease transaction.

Lat Purser & Associates has been a leader in providing Commercial Real Estate Services to clients in North Carolina, South Carolina, and Florida for nearly 45 years.

Rankin Commercial Properties is one of Raleigh’s newest Commercial Real Estate Firms with a very aggressive team of brokers pushing and focusing on Tenant and Buyer Representation Services.

Saltbox Village is a neighborhood shopping center in Cary, NC located on Kildaire Farm Road near the intersection of Kildaire Farm Road and Cary Parkway.

The addition is a great fit for the Village after loosing the Fresh Market in 2007 I think most of us feared the worst for the center. Ace Hardware was a great steel from the old Food Lion center down the road, but the Meat House put the icing on the cake. Now you can go grab all the propane and accessories you need from Ace and then stop by Meat House for some kabobs all at the same time.

Speaking of which, whoever came up with the name Saltbox Village? What is that? What is a Saltbox?

Answer: It’s an Architectural Design

Ahhh I get it, Saltbox Village is named after its architectural design… but I still don’t quite get why someone would name anything, even a design, Saltbox.
“Yeah so make a right at the stop sign and drive down the road about a mile, our house is the second Saltbox from the end.”
Talk about embarrassing.

- NC Commercial Source

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A little Moody on Commercial Real Estate

Charles Rankin — Mon, 08 Feb 2010 05:18:40 +0000

Moody’s reported that the start of 2010 is showing signs of growing demand for investors in commercial real estate. I can honestly say for the last two years we’ve had a demand. Only according to Moody’s it not the industry demanding more money, its investors demanding investments. That’s a good sign. Thanks Moody’s!

Of course Fitch had worse things to say about the market. According to Fitch delinquencies in commercial mortgage backed securities reached a whopping 4.71%.

Federal Reserve Board governor Elizabeth Duke said in a speech to a Raleigh business group that nearly all of the bankers she has talked to in recent weeks have said that their business plans for 2010 are “based on achieving increases in loan volumes.”

Of course I had a talk with some commercial mortgage bankers at Suntrust who said they aren’t touching loans. Not sure where the Duke got her information, but I know plenty of Commercial Property Owners who would love to see some of that LOAN VOLUME. Thanks Duke!

Well, the good news is that things seem back to normal. That is, no one really knows what’s going on in the market. This time last year, everyone one knew what was going on, RECESSION!

It would seem as though the times are changing, we went from a bullish state to uncertainty that led to unloading of assets and a full melt down back to uncertainty which seems to be leading to “proceed with caution.”

General Growth Properties recently refinanced Carolina Place Mall in Charlotte, NC. That was a significant accomplishment for the second largest US Mall owner. However, General Growth still has about 35% of its company in bankruptcy.

But even the bankruptcy hasn’t been bad for the General, new terms, better terms, and long term refinancing are showing some improvements to the overall General’s portfolio. You got to respect the Generals move on the bankruptcy filing; it was clearly the best tactical move to combat unwilling lenders in the refinancing war.

- NC Commercial Source

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Commercial Real Estate Firms Are Fisting it out for Market Share

Charles Rankin — Mon, 08 Feb 2010 05:16:32 +0000

Cassidy & Pinkard a Colliers International Franchise recently announced they were merging with four other firms out west, making them one of the largest Commercial Real Estate Property Management Firms in the country.

Not surprising to hear about another Commercial Real Estate Firm merger. After all, smaller regional firms are much more vulnerable in the current market. Most of these firms are having problems keeping up with paying the bills.

Commercial Real Estate firms make money when deals are happening and buildings are receiving rent. If a property losses 25% of its rental income, so does the property manager.

The problem is, as these property managers loose income, the first place they cut back (similar to any other business) is marketing and advertising. Ironically, the reduction of marketing and advertising adversely reflects on their ability to release the space and the cycle continues.

Many believe the commercial real estate market is drying up for the time being. From the research we have been able to do at NC Commercial Source, it appears that the leasing market is actually doing fine. The problem is that the tenant mix has changed. There are more franchisees and start up businesses and less established “high credit” businesses.

That doesn’t mean the deals are bad. In fact most of the start ups are coming from previously high income individuals who have the cash to start, run, and operate the business. America is the type of country that runs off of inspiration.

Newer businesses simply aren’t tuned into the “traditional” commercial real estate practices. They don’t have a preferred broker they work with, they don’t know what a tenant representative is, and they certainly don’t realize the necessity of having one.

Why should they, so many commercial properties are now marketed online.

So why all the mergers and acquisitions of Commercial Real Estate Firms. Its really just a false sense of hope that by acquiring other firms, they will expand their market share and get whatever clients are left.

Honestly, it isn’t going to work. The larger firms need to break their “traditional” approach and start reinventing themselves.

Over the past couple of years we’ve seen several “boutique” firms popping out of the wood work. Rankin Commercial Properties established itself in 2008 after the owner left Grubb Properties another boutique firm. These firms are reinventing the commercial real estate market. They are setting the bar on properly marketing space in the 21st century.

However, as successful as these smaller firms are with their marketing, Landlords still tend to flock towards the “Franchise” firms. Perhaps this is why Byrd Commercial Properties of Cary traded in their name tag for Keller Williams Commercial.

We recently did a study on boutique firms vs franchise firms. One of the issues we found was that the Franchise and National Named firms have almost too many listings as compared to brokers. Their brokers can’t focus on marketing their properties because they don’t have enough hours in a day.

So, they use an indirect marketing approach to attract as many people as possible and hope someone leases space somewhere in one of their buildings. There attitude has become, we have the listings, we don’t need to market them, people will come to us. In reality this doesn’t do very much for their landlord clients.

Ironically, the smaller firms are doing the opposite. They are doing what we call direct marketing. When they have a listing they are coming up with prospect lists and then targeting end users of the space. It becomes a much more effective approach to marketing spaces. At the same time, a direct marketing campaign normally focuses on one property in stead of trying to put 15 options in front of the tenant.

Over the past several years we’ve seen several small commercial real estate firms get picked up by larger firms in Raleigh and the Triangle market, similar to Byrd Commercial Properties. Grubb & Ellis franchise Thomas Linderman Graham absorbed Richards Commercial, and on March 1st the local Raleigh Colliers International office, Colliers Pinkard will be joining Cassidy Turley.

However, merging really isn’t the way to go. What firms need to do to gain market share is reinvent their marketing plat form, strengthen their brokerage team, and start leasing space.

- NC Commercial Source

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Stay in tune with Overhauling Raleigh’s Development Ordinances

Charles Rankin — Mon, 08 Feb 2010 05:14:13 +0000

The City of Raleigh appears to be moving toward the concept of Form-Based zoning which would be a complete departure from the current system of land use controls.

They are still in the very early stages of their comprehensive re-write for the City’s Zoning, Site Plan and Subdivision Ordinances, collectively referred to as a Unified Development Ordinance (UDO). The current Code was first released in 1959, and this re-write is likely to be a once-in-a-generation event that will dictate how development occurs in the City of Raleigh in the foreseeable future.

This seems to be an interesting trend in zoning, and while it is a totally different concept, it can be good to work with for Commercial Real Estate Developers. Through community involvement, the community sets standards for what it wants its physical for to look like. Those forms guide development, rather than strict use provisions which then carry with them typical setbacks, parking requirements, and other stipulations. This approach creates a different arena for developers and owners, but if Commercial Real Estate Brokers and Developers get out in front of it and learn about Form Based Codes and participate, the process may give them plenty of opportunities.

-NC Commercial Source

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Opportunity Knocks at Commercial Real Estate

Charles Rankin — Wed, 13 Jan 2010 14:10:20 +0000

Opportunity knocks at Commercial Real Estate, but will the banks knock back?

Many contrarian and opportunistic property investors have been building and holding cash for 2010 Commercial Real Estate foreclosures, but the question remains, will the banks unload these assets at discount rates?

The bubble for Commercial Real Estate can be traced back to January / February 2008, months after the Residential Real Estate bubble. By March 2009 both markets were at an all time low. But many would say Commercial Real Estate vs. Residential Real Estate never had a “bubble” and was simply reacting to the market.

Regardless, the price difference between what a seller is willing to sell for and a buyer willing to buy for are far from reach. Buyers see the market as a riskier investment and only want to see 10-15% CAP rates. Sellers are still looking for 7.5-8% Cap rates on the sale. Banks have mostly been turning a blind eye to technical breaches of loans. Instead of foreclosing and being forced to take write-downs, they have held nonperforming commercial property loans on their balance sheets, extending deadlines, refinancing debt, or selling the debt to other sources.

Some banks are forcing sales of commercial properties without reclaiming the asset. A forced sale keeps the owner in the commercial property until the bank sells, and holds the owner accountable for the interest of the loan and remaining balance.

General Growth Properties has been a poster child for commercial real estate refinancing issues over the past two years. Last year after numerous failed attempts to refinance, General Growth Properties filed for Chapter 13 bankruptcy. Since filing, General Growth Properties has refinanced half their debt and is expected to exit bankruptcy as an independent company in the first few months of 2010. Meanwhile, competitors of General Growth have been circling the company trying to acquire its assets either through buying its debt or making offers to purchase the entire company.

New construction of commercial real estate has slowed as rental rates no longer support the prices of new construction.

But the outlook for Commercial Real Estate is becoming less grim. Existing commercial properties are seeing positive absorption helping to improve leasing standards and push the market forward.

Contrarian investors may have missed their opportunity for a steal, and depending on how long they wait might not get a deal at all. With the banks holding out for better prices, and properties beginning to lease up as the economy recovers, commercial properties could bounce back before any real catastrophic events occur within the industry.