Posted on February 27, 2020
Neighborhood shopping centers in secondary markets where consumers live, work and play are continuing to do well at a time when many national brands are downsizing or closing stores. In fact, when a staid, time-worn tenant vacates a property with strong fundamentals, landlords have an opportunity to revitalize the property and bring in stronger-performing brands and new concepts that create a more vibrant tenant mix and improve foot traffic.
One of the keys to attracting new tenants, however, is having on your side a team of real estate professionals who have deep relationships with potential tenants across a broad range of categories, including restaurants; health, wellness and fitness service providers; grocers; and specialty brands. Moreover, these professionals must keep their fingers on the pulse of consumer trends and continue to build new relationships with brands that can bring new value to their assets, even though they may not fit traditional strategies.
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.
Posted on February 19, 2020
In a full-service lease, also referred to as a gross lease, a tenant’s only financial responsibility is to pay rent for the space it leases. This leaves landlords with the responsibilities of paying all the costs to operate and maintain a property, including insurance and taxes, which can become a significant financial burden. Although landlords may attempt to account for these operating costs from the onset by building them into the rent they charge tenants, they cannot guarantee that their estimations of future expenses will turn out to be correct. After all, commercial leases typically extend over a long period of time, when repairs will be required for not only normal wear-and-tear but also more serious damages that can occur to unforeseeable events, including weather events, fire and flooding.
Instead, investors should look for commercial properties with net leases, for which tenants are responsible for all or a portion of the property’s operating expenses in addition to their rental payments. This will ensure landlords receive the benefits of cash flow from their investments without the risk of exposure to unpredictable future operating costs.
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.
Posted on February 11, 2020
Real Estate Investment Trusts (REITs) can provide average investors with an affordable option for gaining entry to the high yields and steady cash flow that can come with investments in commercial real estate. However, because equity REITs are publicly traded securities governed by the SEC, some of their potential benefits can also prove detrimental and counter to investors’ unique need and goals.
For example, the SEC requires REITs to pay 90 percent of their taxable income as dividends to investors. While these payouts translate to positive cash flow for investors, the REITs themselves must continuously buy and sell properties to fund their growth, often taking on significant debt to expand their real estate holdings. When property acquisitions and dispositions are based on these rules and constraints rather than sound investing principles, buyers/investors are more likely to overspend for a property, and sellers/investors run the risk of missing out on property appreciation. In addition, in today’s extremely low interest rate environment, REIT investors must consider how rising rates will negatively affect REIT profitability and investor returns.
Investors looking to diversify their portfolios and improve returns with commercial real estate should think twice before applying a REIT’s shotgun approach to real property investing. Instead, consideration should be given to working with experienced, private real estate investment firms with local market knowledge and deep tenant relationships who can take a much more strategic and methodical long-term approach to property purchases and sales.
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.
Posted on February 06, 2020
While economic and political uncertainty in the election year will likely produce short-term volatility in the equity markets and slow the country’s record period of economic expansion, long-held commercial property with sound fundamentals is well positioned to survive and even thrive through a market downturn.
Three interest rate cuts in 2019 have kept the federal funds rate extremely low, helping to fuel consumer confidence and spending, including a significant amount of capital chasing real estate deals. In the event the economy slows more rapidly than expected, real estate values for properties in the right locations with good credit quality tenants can continue to appreciate while investors can continue to rely on tenant rent for cash flow. Moreover, if history is any indication of the future, commercial real estate has proven its resiliency as a market class through the most recent recession beginning in 2008, providing investors with buying opportunities that have appreciated significantly over the past 10 years.
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.
Posted on January 29, 2020
CAM is an often-used acronym for common area maintenance, or the fee that commercial real estate tenants pay above their monthly rent payment to cover their pro rate share of the property owner’s operating expenses. These costs, typically associated with triple-net-leases can include property taxes and insurance; building security, cleaning, pest control and trash removal services; landscaping; common area utilities as well as property management and landlord administration fees. Generally, capital expenses to repair or improve a property are excluded from CAM. However, landlords may make an argument that those costs are a part of a property’s CAM, which benefit tenants and for which those tenants should be responsible for some of the costs.
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.
Posted on January 22, 2020
Based on economic indicators at the end of December 2019, we see a bright future for commercial real estate investment in 2020. While stable interest rates and inflation will help to maintain transaction volume and access to capital, the rate of activity may slow slightly due to ongoing, global macroeconomic issues and news leading up to the U.S. presidential election in November. That being said, strong property fundamentals and location will continue to be the fuel that drives acquisitions going forward, regardless of property type. Moreover, we see great opportunities in value-add properties located in secondary markets where we can bring our deep relationships and expertise to improve tenant mix and rent growth for more desirable investor returns.
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.
Posted on January 15, 2020
According to Real Capital Analytics, foreign investment in U.S. commercial real estate decreased more than 50 percent in 2019 from the prior year. One reason for the decline is a notable drop in capital investments coming from mainland China, which, researchers note, previously “represented an outsized presence in the U.S.” following a slew of high-profile acquisitions between 2014 and 2017. In fact, a June, $18.7 billion sale of U.S. property owned by Chinese investors helped to “turn cross-border investors to net sellers of U.S. commercial real estate for the first time since 2012.”
But not all countries are pulling back from U.S. markets. In 2019, Canada led the world in capital investments in U.S. commercial property, followed by Germany with South Korea, Japan and Singapore exceeding those from China.
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.
Posted on January 09, 2020
The Federal Reserve Bank’s decision to leave interest rates unchanged at the end of 2019, following a quarter-point rate cut in October, has caused many investors to abandon the safety of CDs and Treasury bonds in favor of steady cash flow and the promise of higher returns traditionally found in commercial real estate.
In today’s environment of near-record-low interest rates, even properties whose value has climbed over the past decade of economic expansion represent buying opportunities, especially when considering the tax deferral benefits of 1031 exchanges. Rather than paying taxes on capital gains from the sale of long-held, appreciated property, investors may instead reinvest those gains into a similar property and allow their original investment dollars to continue to grow tax-free.
To be sure, investments in commercial real estate do carry greater risks than bank CDs and money market accounts. However, investors can minimize these risks when they work with experienced real estate advisors who can verify property fundamentals and maintain tenant occupancy through its network of industry relationships.
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.
