Commercial one Brokers has launched their new web site. This new version is complete with many of our “Available Properties” as well as “News”, other “Resources”, our all important “Market Reports” and Information about our team.
Thanks to the development team of:
Quality Business Services
And
Way Out Web Dezign
After a well thought out “wish list” was given to the development team they went to work making miracles happen and we are looking forward to using this new site to help all our friends and customers. Over the next year several new additions will be incorporated.
Follow the progress of the market on our Market Reports and check out our “News” section for information that may effect real estate values from time to time. Click on any available property to get some of the details and even send it to a partner via e-mail at the click of a button. Explore the new site and let us know what is missing.
12 January 2009
06 January 2009
Location, Location, Location!
But, what is the right one?
We’ve all heard the old adage: What are the 3 most important things regarding commercial real estate,, Location, Location and Location! The problem is, what is the right location for your business? Main and Main might not be the right location for your business. So often, you as a prospective tenant may not really know where the right location for your business is. Sometimes the criteria for identifying the right location are different for a particular community. For example, most experienced tenants who have many locations across the country will have very specific criteria. These criteria may include such exactness as which side of the street and on which end of an intersection. They may know exactly how many feet from the intersection they might need to be and what the minimum automobile traffic count per day must be.
Often in the city where we work (Branson, Missouri), we need almost first and foremost, to understand the exact nature of the tenants business before we are able to correctly identify the right location. One great example was a specific nationally known retailer who sent their professional real estate department people to town to identify the right location. The pros searched the available data and virtually matched the very precise location criteria to a “T”. The traffic count was in excess of all other options and met the minimum criteria for their business. The relative location to companion tenants that the company had identified as the perfect neighbor was next door. The side of the thoroughfare was correct with regard to the location of their target market. And the cost of the space was within the budget. Perfect, they had identified the triple threat- “ Location, Location, Location”. But, by not consulting a local professional or moving here and living here for a period of time, they made one major mistake. They neglected to identify the correct target consumer habits and challenges. You see, they sold a product that small businesses and even individuals would buy for use at home. Unfortunately, their “perfect” location was an area the local patrons did not frequent and seldom would drive to if given a choice. The huge traffic was mainly tourist traffic. Tourists were one segment of the market that would be very unlikely to buy the products offered by this company.
Selection of location is also going to be very dependant upon the amount of money that a business can typically budget for rents. Just like home buying, different location will effect the rent rate required by the Landlord. Identify the percentage of gross revenue that you will be able to budget toward rent. Identify the potential revenue for each location and weigh the results. Sometimes the perfect location at first glance is not the right choice. If your particular product is such that the “perfect location” will increase sales potential and therefore net revenue by $ 10,000 per year, and rent is $14,000 per year higher than the other choices. That “perfect location” might not be the right location.
When considering the right location, keep other factors in mind.
Where are my competitors and does it at all help me to be near them or away from them. Competition is not always bad. Most of us realize, the fast food chains all seem to be located in the same area. That’s not because they all bought or leased at the same time and none knew about the others. One led and the others followed. These businesses know that competition means choices and choices for the consumer mean more frequent visits and each believes they can achieve their share of the market place. It is seldom an accident.
Who is my customer and which location is likely to be more accessible to that customer? Once again we need to examine the product or service your business sells. Then who really is the typical customer? Easy examples of this would be a store that specializes in lawn and garden supplies like riding lawn mowers and garden tillers. While there are a few commuters in a big city like Manhattan, NY. It would be a poor choice of location to place an 8,000 square foot Lawn & Garden Store on Fifth Avenue. Now why would that be a poor choice? After all, Fifth Avenue is by far recognized as the premier avenue for retail shops. The patrons on Fifth Avenue are very wealthy and riding lawn mowers are expensive, seems like a great combination. The traffic count is huge and the walking traffic is almost impossible to top. Of course most of us recognize the problem, the patrons there, for the most part, don’t have lawns to cut.
Now your business has similar issues to deal with. In the case of Branson, we need to find out who really is your customer or who will most likely be your customers, when will the most likely time be that they will visit your establishment, and maybe, how are you going to get them to come to your establishment. Other bits of information that will help determine the right location are, who would be the best neighbors for my business, will most of my customers come due to an impulse, walk-in type customers or are they sent to me from another source, and maybe, how long will my customers be at my establishment and will the parking be adequate for them or will they be hesitant to visit because they don’t want to fight traffic. These are some of the things we need to establish to evaluate the locations available and determine the right location for your business.
Often there are no perfect choices. Sometimes the rental rate will not allow you to select the best space or the absolute best location has no available space or will not rent to another one of your type of businesses. This is why a complete evaluation of all the acceptable locations is always a very good idea.
21 September 2008
CAM, Pass-Through Expenses…What They Mean to You
Ever called on a retail or office space “For Lease” sign and was told that rent is $X per month + CAM? What are they talking about?
Why isn’t it like renting an apartment...rent is rent and upon paying that amount I get to live there?
You should ask yourself…what should be included in the CAM charges that I pay?
CAM is an acronym for “Common Area Maintenance” and it’s uses are often different in various areas of the country. For the most part, and in it’s simplest form, CAM is an estimated annual amount of total expenses for operating a property. When a landlord discusses or quotes a CAM charge during lease negotiations, they are usually expressing an estimate of the per square foot expenses to pass through to the tenant.
As with many items in a lease, the expenses that are included in calculating CAM charges are determined by actual verbiage in the lease. For the purpose of this discussion, we will discuss the most common meaning of CAM for the retail trade in the Branson, Missouri market. Beware however, there are no absolute rules. Landlords may include additional items or may exclude traditional items as detailed in this discussion. To fully understand all items included in CAM, read your lease carefully.
Generally speaking, CAM charges are all expenses common to all tenants in a given property. For instance, a small neighborhood shopping center will have several custodial or maintenance jobs that must be done regularly. Some of those regularly completed jobs are: grass and weed control, parking lot sweeping, sidewalk cleaning and trash receptacle emptying. Other CAM expenses that are often experienced are: common electric usage for parking lot lights and lighted signs or flagpoles; rental and servicing of large trash dumpsters; often the water is supplied for irrigation as well as consumption in the stores. Virtually any “operating expense” will be added to the CAM charges. In most cases, any costs or expenses related to management company fees or property owner’s employees are added to CAM charges. Often, real estate taxes and insurance for the center are added to CAM charges (although there is usually a separate clause in the lease denoting these expenses).
Calculations of the estimated CAM charges are relatively easy and fairly accurate, once the center has experienced a year or two of expenses. If the center is newer, estimates will be slightly more difficult to assess. However, if represented by an experienced broker or if the landlord is familiar to the area, the estimate will most likely be very close to actual.
CAM is estimated by setting a budget that will list all probable expenses for the calendar year. The total of all estimated, probable expenses is then divided by the total rentable square footage in the property. The answer to this calculation is the estimated CAM charge per square foot. The next step is to multiply the per square foot rate by the total number of square feet in the space leased. This is the annual CAM estimate for the space you are leasing.
Since the amount is usually relatively large and for many legal reasons, the annual CAM estimate is divided by twelve therefore creating a monthly charge. It is important to note that this is only an estimate. Usually there is language in the lease regarding CAM reconciliation at the end of each year. Most leases will have rules regarding overages and shortages. Most typically, remedies are either an invoice for shortages or a credit (or check) for overages depending upon the outcome of the reconciliation.
You may ask why a tenant has to pay CAM since the property is the landlord’s building and asset. The answer is comprehensive and many fold.
First, the tenant is the entity receiving use of the building and are therefore the reason for the expenses. In other words, a landlord expects to receive a certain amount of money for the space they are letting to the tenant. To ensure the landlord receives that amount of money, it has several way in which it can collect it’s rent.
One simple way is what is referred to as a gross lease rental income. This lease arrangement is much like the apartment rental you may have experienced. Tenant pays a set rent amount and the landlord pays all CAM expenses. The problem with that is both the landlord and the tenant have a good chance of losing. If the landlord was willing to rent based on the gross lease rental basis, he would naturally need to add the expenses to his rental rate and since the expenses are not accrued as of yet he will need to estimate them on the high side. Thus, the rent for a gross lease will be higher per month than the net lease.
A net lease arrangement is one in which the tenant does pay their portion of the expenses (CAM) with a few limitations; those limitations should be spelled out in the lease document. Now, the landlord and tenant set the rent and the landlord bills the tenant for the actual expenses on an estimated basis throughout the year with reconciliation at year end. This is a much more equitable method of leasing for all parties. The landlord knows its tenants will not be wasteful and leave water running, or lazy and throw trash out onto the parking lot because the increase in expenses or repairs will be the tenants expense. The tenant should feel confident that the center will not quickly be run down and dirty because the landlord is being reimbursed for the expenses.
While anything is possible when negotiating a lease - it is virtually impossible for a landlord to modify it’s CAM calculation and charging methods once other tenants are in the building. The other tenants have a reasonable expectation that all tenants will be paying their fair share. If any negotiations were to reduce the CAM for a new tenant, the landlord would have to make up those deficits.
Some other acronyms that may be seen or some variations are:
CAMTI- Common Area Maintenance, Taxes, Insurance – This is used when the 3 clauses are lumped together.
NNN or Triple Net - The actual definition for this would be much too long, and local custom will often allow for many variations, but in it’s simplest form the description would be: Tenant pays for all expenses. Sometimes there is an exception for the replacement of the structure and roof.
Absolute NNN- The tenant pays for the roof and structure also – most often seen in single tenant buildings specially built for the tenant. – ie. a Walgreen’s stand alone building.
Our experience has shown that a property which has tenant’s paying their fair share of expenses by way of a CAM charge will usually be better maintained and professionally managed property.
Learn more about CAM as a tenant or a landlord. Visit CommercialOneBrokers.com before you sign your next lease.
Why isn’t it like renting an apartment...rent is rent and upon paying that amount I get to live there?
You should ask yourself…what should be included in the CAM charges that I pay?
CAM is an acronym for “Common Area Maintenance” and it’s uses are often different in various areas of the country. For the most part, and in it’s simplest form, CAM is an estimated annual amount of total expenses for operating a property. When a landlord discusses or quotes a CAM charge during lease negotiations, they are usually expressing an estimate of the per square foot expenses to pass through to the tenant.
As with many items in a lease, the expenses that are included in calculating CAM charges are determined by actual verbiage in the lease. For the purpose of this discussion, we will discuss the most common meaning of CAM for the retail trade in the Branson, Missouri market. Beware however, there are no absolute rules. Landlords may include additional items or may exclude traditional items as detailed in this discussion. To fully understand all items included in CAM, read your lease carefully.
Generally speaking, CAM charges are all expenses common to all tenants in a given property. For instance, a small neighborhood shopping center will have several custodial or maintenance jobs that must be done regularly. Some of those regularly completed jobs are: grass and weed control, parking lot sweeping, sidewalk cleaning and trash receptacle emptying. Other CAM expenses that are often experienced are: common electric usage for parking lot lights and lighted signs or flagpoles; rental and servicing of large trash dumpsters; often the water is supplied for irrigation as well as consumption in the stores. Virtually any “operating expense” will be added to the CAM charges. In most cases, any costs or expenses related to management company fees or property owner’s employees are added to CAM charges. Often, real estate taxes and insurance for the center are added to CAM charges (although there is usually a separate clause in the lease denoting these expenses).
Calculations of the estimated CAM charges are relatively easy and fairly accurate, once the center has experienced a year or two of expenses. If the center is newer, estimates will be slightly more difficult to assess. However, if represented by an experienced broker or if the landlord is familiar to the area, the estimate will most likely be very close to actual.
CAM is estimated by setting a budget that will list all probable expenses for the calendar year. The total of all estimated, probable expenses is then divided by the total rentable square footage in the property. The answer to this calculation is the estimated CAM charge per square foot. The next step is to multiply the per square foot rate by the total number of square feet in the space leased. This is the annual CAM estimate for the space you are leasing.
Since the amount is usually relatively large and for many legal reasons, the annual CAM estimate is divided by twelve therefore creating a monthly charge. It is important to note that this is only an estimate. Usually there is language in the lease regarding CAM reconciliation at the end of each year. Most leases will have rules regarding overages and shortages. Most typically, remedies are either an invoice for shortages or a credit (or check) for overages depending upon the outcome of the reconciliation.
You may ask why a tenant has to pay CAM since the property is the landlord’s building and asset. The answer is comprehensive and many fold.
First, the tenant is the entity receiving use of the building and are therefore the reason for the expenses. In other words, a landlord expects to receive a certain amount of money for the space they are letting to the tenant. To ensure the landlord receives that amount of money, it has several way in which it can collect it’s rent.
One simple way is what is referred to as a gross lease rental income. This lease arrangement is much like the apartment rental you may have experienced. Tenant pays a set rent amount and the landlord pays all CAM expenses. The problem with that is both the landlord and the tenant have a good chance of losing. If the landlord was willing to rent based on the gross lease rental basis, he would naturally need to add the expenses to his rental rate and since the expenses are not accrued as of yet he will need to estimate them on the high side. Thus, the rent for a gross lease will be higher per month than the net lease.
A net lease arrangement is one in which the tenant does pay their portion of the expenses (CAM) with a few limitations; those limitations should be spelled out in the lease document. Now, the landlord and tenant set the rent and the landlord bills the tenant for the actual expenses on an estimated basis throughout the year with reconciliation at year end. This is a much more equitable method of leasing for all parties. The landlord knows its tenants will not be wasteful and leave water running, or lazy and throw trash out onto the parking lot because the increase in expenses or repairs will be the tenants expense. The tenant should feel confident that the center will not quickly be run down and dirty because the landlord is being reimbursed for the expenses.
While anything is possible when negotiating a lease - it is virtually impossible for a landlord to modify it’s CAM calculation and charging methods once other tenants are in the building. The other tenants have a reasonable expectation that all tenants will be paying their fair share. If any negotiations were to reduce the CAM for a new tenant, the landlord would have to make up those deficits.
Some other acronyms that may be seen or some variations are:
CAMTI- Common Area Maintenance, Taxes, Insurance – This is used when the 3 clauses are lumped together.
NNN or Triple Net - The actual definition for this would be much too long, and local custom will often allow for many variations, but in it’s simplest form the description would be: Tenant pays for all expenses. Sometimes there is an exception for the replacement of the structure and roof.
Absolute NNN- The tenant pays for the roof and structure also – most often seen in single tenant buildings specially built for the tenant. – ie. a Walgreen’s stand alone building.
Our experience has shown that a property which has tenant’s paying their fair share of expenses by way of a CAM charge will usually be better maintained and professionally managed property.
Learn more about CAM as a tenant or a landlord. Visit CommercialOneBrokers.com before you sign your next lease.
27 August 2008
What To Look For and Expect from a Professional
The real estate world is complicated and expanding. Both a Landlord and a Tenant need the services of a good professional REALTOR. It is important to seek the advice of a REALTOR that actually practices in the field you are in need of. Unfortunately, licensure to practice real estate is a single license…a very general qualification, if you will. The person who did a great job helping you find a house, would not necessarily be the best choice to help you look for a business location. The very fact that the agent did a good job on the house deal should tell you right away that they specialize in homes.
The Broker that understands commercial leasing fully has little time left or the knowledge needed to even sell his own home. Professional commercial Brokers spend much of their time tracking locations that are vacant, about to become vacant, and new construction. They study the market on a daily basis evaluating official traffic counts, sales revenues, rent and term trends in their market, personal demographics of specific sub-markets, governmental procedures for occupancy, and many more intricacies of commercial real estate and leasing.
Look for a company or Broker that asks you lots of questions about the basics of your business. Simple as it might seem, the Broker will perform best when they really know what you need. Retail Tenants should introduce the Broker to the product type and target consumer you intend to penetrate and market. Practicing this simple rule is much more efficient and effective than blindly looking at spaces available, then picking one that looks good to you. A great looking location that is too far and too difficult for the end consumer to arrive at might just be a catastrophic mistake. For instance, the ideal location may have been the third or fourth choice of the Tenant because there the target consumer base is much larger or qualified.
Many very successful restaurant chains have an actual location ‘check list’. The public might indeed think that a location on Main St. would surely be the best place for this restaurant. However, professionals know that unless a location ‘scores’ a certain point level on their check list, the restaurant will not succeed or meet their sales objectives. These check lists include evaluation of things like racial demographics, average age, income level, education level and marital status of the people living within 1, 3, and 5 miles of the location…all this often before they get into a car to drive over and look. If those numbers don’t measure up, they don’t even leave the office.
Now, not every Tenant will have or even want all that information, but a good commercial real estate Broker has it and can draw conclusions from it to help a Tenant select a location that is right for their business.
Learn more about the role and effectiveness of a professional commercial real estate broker. Visit CommercialOneBrokers.com before you choose a location for your business.
The Broker that understands commercial leasing fully has little time left or the knowledge needed to even sell his own home. Professional commercial Brokers spend much of their time tracking locations that are vacant, about to become vacant, and new construction. They study the market on a daily basis evaluating official traffic counts, sales revenues, rent and term trends in their market, personal demographics of specific sub-markets, governmental procedures for occupancy, and many more intricacies of commercial real estate and leasing.
Look for a company or Broker that asks you lots of questions about the basics of your business. Simple as it might seem, the Broker will perform best when they really know what you need. Retail Tenants should introduce the Broker to the product type and target consumer you intend to penetrate and market. Practicing this simple rule is much more efficient and effective than blindly looking at spaces available, then picking one that looks good to you. A great looking location that is too far and too difficult for the end consumer to arrive at might just be a catastrophic mistake. For instance, the ideal location may have been the third or fourth choice of the Tenant because there the target consumer base is much larger or qualified.
Many very successful restaurant chains have an actual location ‘check list’. The public might indeed think that a location on Main St. would surely be the best place for this restaurant. However, professionals know that unless a location ‘scores’ a certain point level on their check list, the restaurant will not succeed or meet their sales objectives. These check lists include evaluation of things like racial demographics, average age, income level, education level and marital status of the people living within 1, 3, and 5 miles of the location…all this often before they get into a car to drive over and look. If those numbers don’t measure up, they don’t even leave the office.
Now, not every Tenant will have or even want all that information, but a good commercial real estate Broker has it and can draw conclusions from it to help a Tenant select a location that is right for their business.
Learn more about the role and effectiveness of a professional commercial real estate broker. Visit CommercialOneBrokers.com before you choose a location for your business.
© Commercial One Brokers LLC
19 August 2008
2008 Mid-Year Update of the Annual Branson-Area Real Estate Market Report
VISITORS NUMBERS SHOW SMALL DECLINE IN FIRST HALF
The year started with ice storms followed by tornados and then floods. The swarms of locus were the only missing calamity so far this year. According to preliminary numbers collected by the Branson Lakes Area Chamber and CVB, visitation appears to be off approximately 7% +/-. At one time during the spring, over 400 counties in our primary markets were labeled national disaster areas by the federal government. When $4 gas is added to the equation, Branson actually performed very well.
RETAIL OCCUPANCIES DROP SLIGHTLY
Even with a softening of the local residential markets…the retail sector appears to be holding its own. It is clear that the newer retail locations that have commanded higher rates are slower to rent and the older centers with lower rental rates have shown more leasing activity in the first half of the year. Many of the new visitors to the Branson area are buying more expensive items and are staying at more expensive, higher-quality hotel properties or condominiums.
OFFICE OCCUPANCY RATES IMPROVING
The area’s office market showed good improvement thanks to the recent commitment by the Veterans Administration to lease nearly twenty-four thousand square feet of The Executive Center for the VA’s new Branson clinic.
Occupancy for the local hospitality market continues to remain steady despite the pressures of weather catastrophes this spring and high gas prices.
Learn what markets and industries Commercial One Brokers projected to increase and prosper by year end…and what Branson and Taney County need as soon as possible. Ask about a full version of this report and view previous market reports at CommercialOneBrokers.com.
The year started with ice storms followed by tornados and then floods. The swarms of locus were the only missing calamity so far this year. According to preliminary numbers collected by the Branson Lakes Area Chamber and CVB, visitation appears to be off approximately 7% +/-. At one time during the spring, over 400 counties in our primary markets were labeled national disaster areas by the federal government. When $4 gas is added to the equation, Branson actually performed very well.
RETAIL OCCUPANCIES DROP SLIGHTLY
Even with a softening of the local residential markets…the retail sector appears to be holding its own. It is clear that the newer retail locations that have commanded higher rates are slower to rent and the older centers with lower rental rates have shown more leasing activity in the first half of the year. Many of the new visitors to the Branson area are buying more expensive items and are staying at more expensive, higher-quality hotel properties or condominiums.
OFFICE OCCUPANCY RATES IMPROVING
The area’s office market showed good improvement thanks to the recent commitment by the Veterans Administration to lease nearly twenty-four thousand square feet of The Executive Center for the VA’s new Branson clinic.
Occupancy for the local hospitality market continues to remain steady despite the pressures of weather catastrophes this spring and high gas prices.
Learn what markets and industries Commercial One Brokers projected to increase and prosper by year end…and what Branson and Taney County need as soon as possible. Ask about a full version of this report and view previous market reports at CommercialOneBrokers.com.
© Commercial One Brokers LLC
Subscribe to:
Posts (Atom)
Posts
