Fed Accelerates Plans to Raise Interest Rates in 2022 by Christopher Sanz, JD, LLM

Posted on January 20, 2022

In mid-December, the Federal Reserve Bank announced it is prepared to begin raising interest rates earlier than previously announced due to the potential threat of broader and longer-term inflationary pressure. In November, the annual rate of inflation exceeded expectations, reaching 6.8 percent, the largest 12-month increase since June 1982.

From a historical perspective, stocks have not fared well during periods of rising interest rates, when operating expenses and the costs of borrowing money increase, negatively impacting future profitability and stock price. For commercial real estate investors, there is a fear that rising interest rates will cause capitalization rates to also rise, triggering a potential decline in property value and weaker returns. However, investors also must consider that rising rates signal an improving economy that can commanded high rents and help to buoy commercial property values and investor returns over the long term. The key to navigating these potentially challenging times is to work with experienced commercial real estate advisors with a proven record of performance.

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 Outperformed Expectations in 2021 by Kevin Sanz, CCIM, MSIRE

Posted on January 11, 2022

According to a report released in December by the National Association of Realtors, 2021 was a banner year for commercial real estate with investment acquisitions exceeding both pre-pandemic levels and the peak sales volume of 2006. Among the sectors performing exceedingly well have been retail and food services, especially free standing/single-tenant stores and units conveniently located in neighborhood shopping strip centers. Looking ahead into 2022, we expect demand for commercial property with strong fundamentals to continue along with declining cap rates, indicating lower investment risks and potentially stronger valuations, higher rents and improved returns for property owners.

Despite this optimistic outlook, investors must be forewarned that commercial real estate as an investable asset is entirely different from any other investment class, including residential property. Working with experienced commercial property advisors with deep tenant relationships and local market knowledge can help investors conduct thorough due diligence to minimize risk and help support investment goals.

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.

Identifying Replacement Property in a 1031 Exchange by Christopher Sanz, JD, LLM

Posted on January 04, 2022

Investors must abide by very strict timelines and specific rules to yield the favorable tax deferral benefits of a 1031 exchange of real property. For example, investors generally have 45 days following a property sale to identify like-kind replacement property and no more than 180 days to close on the replacement property without triggering a taxable event. When identifying potential replacement property, investors must consider the following guidelines:

  • Investors may identify up to three replacement properties to complete the exchange
  • Investors may identity an unlimited number of potential replacement properties as long as the cumulative value does not exceed 200 percent of the sale of the relinquished property.
  • Investors may identify an unlimited number of potential replacement properties provided those properties can be acquired at 95 percent valuation.

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 Can You Learn from a Rent Roll? by Kevin Sanz, CCIM, MSIRE

Posted on December 21, 2021

One of the first documents investors will look at when evaluating potential investment property is a rent roll, which lists all of a property’s current tenants, the size of the space each tenant occupies and the percentage that space represented in the total building (net rentable square footage) as well as each tenant’s lease terms and the rental rate each pays per square foot. With this document, investors can glean critical information that includes the potential rental income a property can generate, current vacancies and opportunities for renegotiating lease terms, and how the rental rate compares to that of comparable properties in the same market.

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.

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