Migration Patterns Drive CRE Growth, Investments by Kevin Sanz, CCIM, MISRE

The past year of pandemic life has accelerated residential home sales, especially in warm-weather, secondary markets where buyers can find more room to roam – both indoors and out. As more people get vaccinated and re-enter society, we are seeing the impact of these demographic shifts on commercial property, where there has been an increased demand for grocery-anchored retail, restaurants and other tenants on which consumer rely for leisure and lifestyle activities. Unsurprisingly, businesses now operating with a remote workforce have also taken notice, relocating their corporate headquarters or expanded their footprint with new offices these rising markets.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

How Does Commercial Real Estate Help Investors Hedge Against Inflation? by Christopher Sanz, JD, LLM

As consumer prices surged in April, so did the rate of inflation, which reached its highest level in more than a decade and signaled a potential warning to stock and bond investors. As inflation rises, consumers spend less, driving down corporate revenue and profits while increasing market volatility. This rule of thumb does not apply to investments in commercial real estate, which have historically realized higher property values and rental income during inflationary periods. With commercial property’s demonstrated resilience during the past year’s COVID crisis, investors have the ability to stay ahead of inflation with rental income outpacing pricing.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

What’s Ahead for 1031 Exchanges? by Kevin Sanz, CCIM, MSIRE

The Biden Administration’s recently unveiled tax plans propose to limit the benefits of Section 1031 like-kind exchanges, which real estate investors have used as a powerful tax-planning tool for nearly a century. Under Biden’s plan, the tax-deferral benefits of like-kind exchanges would no longer apply to property sales that result in a gain of more than $500,000. Furthermore, the president calls for eliminating the practice of stepping-up the tax basis of inherited property at the time of the owner’s death, which has allowed property owners to make tax deferral permanent. Instead,

While both of these proposals would diminish the viability of 1031 exchanges, it remains to be seen whether they will pass congressional approval and be enacted into law. In either case, real estate will continue to be an attractive investment for its ability to diversify portfolios, hedge against inflation and yield long-term appreciation and passive income for generations to come.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

Commercial Real Estate Appraisal Methods by Christopher Sanz, JD, LLM

There are three appraisal methods commonly used to determine the market value of a commercial property involved in a sale or acquisition. While each approach relies on different data and facts, the final valuation may employ a combination of all four appraisal methods.

• Income Capitalization (Cap) Rates are used to calculate the annual rate of return a commercial property can generate for its owner(s) by dividing net operating income (NOI) by the purchase price. It gives investors an idea of the income or cash flow they can expect to receive from a property, based on gross income, less operating expenses and in consideration of other factors, such as a property’s locations, vacancies and lease terms.

• Sales Comparisons (Comps) estimate a property’s market value based on recent sales of similar properties by location, size, use, features and physical characteristics. Using this method of appraisal involves adjustments in price per square foot or a percentage of overall value based on similarities and differences between the subject property and the comparable properties.
• The Cost Approach to commercial real estate appraisals compares the cost of buying an existing structure versus the amount an investor would need to spend to rebuild and re-tenant a similar property on a similar plot of land at current market rates. It helps investors determine whether a property for sale is overvalued based on a comparison of the asking price to the costs required to reconstruct it from scratch.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.