Tips for Purchasing Your Own Stake in the Commercial Real Estate Industry

While most people know and widely understand the residential real estate investment approach, the commercial end of the industry sometimes gets overlooked due to the nuanced nature and opportunity of the sector. Having said that, the diverse opportunities within the commercial division should drive investors toward it. You have options, and before you dive into a residential rental property, you may want to consider different, often times larger fish with a bigger profit opportunity. Sound interesting, but don’t know where to get started? You aren’t alone, so I decided to put together a few tips for dipping your feet in the commercial real estate pool.

Ask Questions

Like the age-old saying, there’s no such thing as a stupid question so don’t be afraid to ask them. The more you know, the more likely you are to make a sound investment. If you find yourself asking what questions you should be asking, Kyle Pennell compiled a few questions to get you started like what kind of property and do you have a location in mind? You can find the full list here.

Find Professionals

This is where commercial real estate professionals like myself and the staff at SVN Northco come in. Because the industry is so varied, you want to find a realtor or advisor that has experience with your type of property. One usually doesn’t assume that because someone can sell a house Minneapolis, they can sell a house in New York City or Dubai. They need to have an understanding of the industry, property type and location. Large real estate firms have diversified portfolios that often span the globe, and as a result, they have more experience with major transactions like selling a resort or even a private island.

As described by Inc., you don’t have to know everything. That’s why you seek help from others who make it their mission to know the ins and outs of the commercial real estate sector. “They can help you determine the right time to buy or sell, the right locations to consider, and the nuts and bolts of closing the deal.” Don’t be afraid to seek counsel from a lawyer, broker, accountant or all three.

Do Your Due Diligence

After you asked the questions and determined the property with help from your team of professionals, you now need to check the bones of the deal. Even if a property seems picture perfect, you want to ensure that it is a sound investment. If there are problems – you want to find them now rather than six months down the line when you already bought into the venture.

Once it passes inspections and your own personal expectations – it’s time to take the plunge.


Hidden In Plain Sight: Understanding Off-Market Real Estate Deals

Are you new to real estate investing? Maybe just the real estate market in general? When searching for a property, you may hear about people buying real estate you didn’t even know was on the market. As described in this article, “Off-market real estate deals were once the preserve of ultra-high-end properties. But whisper listings—or pocket listings as they are also known—have spread to a range of price points as more buyers and sellers realize the advantages of keeping things hush-hush.” With an evolving market, this has become a more common approach.

Typically when selling a piece of real estate, the owner uses an agent to promote and ultimately sell it. The agent then advertises the property through a Multiple Listing Service database more commonly known as MLS and handles coordinating open houses and walkthroughs from there. Now, especially in areas or with properties in high-demand, pocket-listings have become a more discrete approach to getting your property sold.

Of course, there are a few factors when veering away from listing your property with an agent for this more atypical approach. Sellers usually aren’t as eager to get out of their property. They accept that less exposure potentially extends their selling timelines. Rather, they wait for the right buyer at the right time with the right price all of which off-market deals can offer. The obvious enticing factor is also the discretion associated with off-market details. Instead of giving the general public an all-access look inside your home, brokers work directly with buyers who actually want something like your home and aren’t just open-house hopping to find interior design inspiration or see how their neighbors decorate.  

For buyers, off-market deals tend to pay off as well. They usually don’t compete with other bids since these listings are less widely known about. The price is also usually more reasonable since the seller’s commission is typically lower. Buyers looking to flip a property often find deals in this section of the market, but it takes experience and the right amount of background real estate knowledge. To reap the benefits as an off-market buyer, you also need to do your homework. These properties aren’t out for the world to see, so you or your agent need to ensure that agents with off-market properties know that you want in the ring.

This variety of listings isn’t limited to million dollar deals or celebrity sellers either. While some high-end properties take this approach for more discretion, others choose the pocket listing option because they were approached directly by a broker with a buyer in mind. It’s particularly common in an empty market where people aren’t particularly eager to sell like the Bay area where inventory is low, but the demand remains high.

When deciding whether off-market transactions are the option for you, consider these questions. Do you have a particular property in mind that isn’t on the market, but is the only option for you? If yes, then finding an agent to set up an off-market buy may be your best option. Are you looking for a unique or high-end home in an empty market? Again, pocket deals could be your best alternative. No matter the case, a skilled real estate agent can help you find the property for you whether it’s in the MLS Database or not.

Vancouver’s Commercial Real Estate Selling Market

According to Realty Today, commercial property owners have gained the upper hand in Vancouver’s world of commercial real estate as it has turned into a seller’s market. The time is right for owners to take control over the market and command a higher price because of the low inventory of properties. Vancouver’s real estate is slowly becoming a global market too as interest from outside of the country peaks.

Frank Jermusek

Two major commercial properties have already recently been listed: the Molson brewery and the Bentall office towers. The brewery is located on a large stirp of land beside the Burrand Bridge while the Bentall towers are located in the heart of Vancouver’s financial district. More owners are preparing to list, hoping to capitalize on the market too. Maury Dubuque, managing director at Colliers International, commented, “There’s a lot of discussions in a lot of boardrooms throughout Vancouver on real estate strategy. Many of our clients are having those conversations.” Commercial brokerage firm, Cushman & Wakefield’s senior managing director Hendrik Zessel also spoke out on the matter , “Today, there’s a lot of money in the system. People want hard assets and Vancouver is safe.”

When it comes to the Bentall towers, Ivanhoé Cambridge (the main owner) believes that now is the best opportunity to sell the property to the highest bidder. Spokesperson Sébastien Théberge said, “There is great appetite from global institutional investors for core assets in key cities and there is limited inventory that is accessible. Bentall Centre offers a centre-ice location, long-term value and opportunity for more development.” Typically, when a property is sold, minority co-owners are offered to purchase a larger share in the property first, but the towers are such a hot property, smaller companies such as Great West Life were overlooked though they were informed about the listing.

Unlike the Bentall towers, the Molson brewery is taking a different approach by testing the waters of the market. It is still currently occupied and being used to produce beer and kegs. Depending on whether they receive the price they’re looking for will determine how badly they would like to sell and relocate the brewery.

Each owner has their tactics and their motivations, but all can agree that the market is hot for sellers, and now is the right time to take advantage of it.

from Frank Jermusek Law
via Frank Jermusek

Commercial Real Estate Boom

Frank Jermusek commercial real estateCommercial real-estate has taken another leap recently, with prices reaching records highs the market hasn’t seen since 2009. This recent boom in activity is being attributed to a great many things. Some feel that low-interest rates and a massive injection of capital explains the surge in business, while others feel that an uptick in foreign market activity is the reason for this shift. Whatever the case, everyone is holding their breath for fear that the crash of mid-2000 has returned to rear its ugly head.

In cities around the world, valuations of prime real-estate are hitting record highs. With overall dealings increasing 36% from prior years, the commercial real-estate market has already reached $225.1 billion in annual transactions. This level of activity has many concerned, as its kind hasn’t been experienced since shortly before the crash.

Foreign markets are lighting up, too. China’s Anbang Insurance Group recently acquired New York’s Waldorf-Astoria for $1.95 billion, and rival Chinese insurer, Sunshine InFrank Jermusek commercial real estatesurance Group, purchased the Baccarat Hotel for $230 million.  European buyers recently joined the real-estate mania, with U.K. firm M&G Real Estate acquiring a vacant office building for €90 million.

A massive turnaround from the days of the crash, investors are using more of their capital in real-estate than from the past few years, combined. U.S. pension funds that suffered greatly during the crash are investing more in the market. Analysts have noted that an average investiture of 6.3% in 2011, has grown to 7.7% of assets invested in commercial properties.

Whatever the case may be, this unexpected rise in market activity has many jumping with joy. With the valuation index reaching record heights, blowing past the 2013 high and setting a record at 118 last week, analysts are torn between ecstatic hopefulness and concern or the potential threat of an interest rate hike. For more on the story, click here.

from Frank Jermusek Law
via Frank Jermusek