Tag Archives: Jason Wolf


Installment Sale of Commercial Real Estate Properties

Installment Sale of Commercial Real EstateLet’s explore using an installment sale to evenly distribute tax liabilities stemming from a commercial real estate transaction. Do you own a property that has appreciated considerably and that you want to sell? Are you concerned about incurring a large capital gains tax liability or worse – ordinary income recapture? One option is to structure the sale as an installment sale. Here the buyer pays the cost of the property plus interest in regular installments, perhaps for 5 years, enabling the seller to reflect the gain for tax purposes over the entire payment period. Alas, the installment sales method can’t be used for the following:

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• Sale of inventory. The regular sale of inventory of personal property doesn’t qualify as an installment sale even if you receive a payment after the year of sale.

• Dealer sales. Sales of personal property by a person who regularly sells or otherwise disposes of the same type of personal property on the installment plan aren’t installment sales. This rule also applies to real property held for sale to customers in the ordinary course of a trade or business.

• Stock or securities. You can’t use the installment method to report gain from the sale of stock or securities traded on an established securities market. You must report the entire gain on the sale in the year in which the trade date falls.

Items to note about installment sale transactions:

• Installment obligation. The buyer’s obligation to make future payments to you can be in the form of a deed
of trust, note, land contract, mortgage, or other evidence of the buyer’s debt to you.

• If a sale qualifies as an installment sale, the gain must be reported under the installment method unless you
elect out of using the installment method.

• Sale at a loss. If your sale results in a loss, you can’t use the installment method. If the loss is on an installment sale of business or investment property, you can deduct it only in the tax year of sale.

• Unstated interest. If your sale calls for payments in a later year and the sales contract provides for little or no interest, you may have to figure unstated interest, even if you have a loss.

Sellers who decide on this strategy are cautioned, however, that an installment sale carries more risk than an outright sale of the property. Here are some areas of concern this CPA believes the seller must review in depth with his/her seasoned attorney (and if you need one you can call us at Abo and Company or my buds at WCRE): Carefully assess the creditworthiness of the buyer and possibly obtain personal guarantees if the purchaser is a business; Evaluate the future income producing capability of the property to make sure it provides sufficient
cashflow to enable the buyer to make the payments; Use an interest rate competitive with current market rates so as not to squash the deal; and Obtain a significant enough down payment, perhaps at least 20%, to have a cushion if buyer default occurs, and to cover the expenses if foreclosure becomes necessary. Business property transactions are often complex, and the services of knowledgeable professionals can be vital in developing strategies that make it possible to bring a contemplated transaction to a successful conclusion.

FOR MORE INFORMATION:

Martin H. Abo, CPA/ABV/CVA/CFF is a principle of Abo and Company, LLC and its affiliate, Abo Cipolla Financial Forensics, LLC, Certified Public Accountants – Litigation and Forensic Accountants. With offices in Mount Laurel, NJ and Morrisville, PA, tips like the above can also be accessed by going to the firm’s website at www.aboandcompany.com.

Qualified Opportunity Zones and The Potential to Drive Community Development

Qualified Opportunity ZoneAn investment in a Qualified Opportunity Fund that is in turn invested within a Qualified Opportunity Zone is entitled to certain tax deferral of capital gains, certain basis step-up and, if held long enough, the ability to not have to pay tax on the appreciation of investment within the fund beyond the initial deferred gain.

On December 22, 2017, as part of Congress’ House Resolution 1, the concept of a Qualified Opportunity Zone (QOZ) was added to the toolbox of potential community development tools. In this Alert, we explain what a QOZ is and offer strategies to help real estate developers take advantage of the benefits of QOZs. In short, an investment in a Qualified Opportunity Fund that is in turn invested within a QOZ is entitled to certain tax deferral of capital gains, certain basis step-up (which will lower tax on sale/disposition) and, if held long enough (10 years or more), the ability to not have to pay tax on the appreciation of investment within the fund beyond the initial deferred gain. As explained below, QOZs are in low-income areas; thereby, investment in these areas is incented by the creation of the ability to defer gain within them.

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What is a Qualified Opportunity Zone?

A QOZ is a census tract that is located in a low-income community (LIC), i.e., an area designated as such due to it having a 20 percent poverty rate. The qualification process to designate QOZs will end on March 21, 2018:

• QOZs must be located within a LIC as shown on the census map.
• The governor of each state must nominate their desired LICs to the U.S. Treasury Department by

March 21, 2018. Each state may only nominate up to 25 percent of the eligible LICs within a given state, noting that up to five percent of the 25 percent may be non-LIC tracts that are contiguous to other applicable LICs.

What is the Benefit of a Qualified Investment in a Qualified Opportunity Zone?

If designated as a QOZ, the bill allows investors to defer short- and long-term capital gains realized on the sale of property if the capital gain portion of the sale or disposition is reinvested within 180 days in a Qualified Opportunity Fund (QO Fund).

Benefits of Investing Within a Qualified Opportunity Zone Fund

• Owners of low tax basis properties can sell these properties and defer the capital gains to the extent the gains are invested in a QOZ; and
• QOZs are likely to attract investor capital that is looking to defer capital gains, thereby making
the QOZs potentially more valuable than non-QOZ properties.

Recognition of Gain

• Gain is required to be recognized on the earlier of a disposal of the QO Fund investment or December 31, 2026.
• Gain is reduced over time in the following manner:
• The basis of the QOZ investment increases by 10 percent of the deferred gain if the investment is held for five years from the date of reinvestment; and
• The basis of the QOZ investment increases by 15 percent (i.e., an additional five percent) of the deferred gain if the investment is held for seven years from the date of reinvestment. In other words, the gain on which capital gains is paid is reduced to 85 percent of the original gain.
• Appreciation on investments within the QO Fund that are held for at least 10 years are excluded from gross income (i.e., if held for 10 years, the appreciation is not taxed).

What is a Qualified Opportunity Fund?

A QO Fund is an investment vehicle that is organized as a corporation or partnership for the purpose of investing in a QOZ property that holds at least 90 percent of its assets in QOZ property. Note, there are presently no limitations on the amount of the investment, and there are no overall limits on the total investment that the collective funds can make. Moreover, the QO Fund, if it so desires, could invest in Low Income Housing Tax Credit deals, historic tax credit deals and New Markets Tax Credit deals if it so desired within the QOZ.

Qualified Opportunity Zones Viewed as an Economic Tool

The permitted creation of a QO Fund that can: 1) receive appreciated property within 180 days of a sale or disposition; 2) appropriately shelter it with an applicable investment within a QOZ; and 3) enable up to 15 percent of the gain to be deferred until sale of the investment or December 31, 2026, enables a 15 percent increase in the basis of the asset that is subject to gain recognition, which results in a very powerful means to reduce applicable tax.

Moreover, if one does not sell or dispose of the property within the QO Fund in the QOZ for 10 years or more, the appreciation of such property (beyond the initial deferred gain, which is taxable), will be not be subject to tax. This potential to appropriately avoid capital gains on a future sale should encourage funds to be invested in QO Funds that will in turn invest in QOZs. These QOZs, as noted above, will be in LICs that might not otherwise have seen such an investment, which should thereby act as an economic driver within these more difficult investment areas.

Owners of properties within LICs should be considering whether to reach out to the applicable governing authorities within their state to have their properties tendered by their governor for inclusion within the QOZ designation. If a property is not proposed as a QOZ by March 21, 2018, the opportunity to be designated as a QO Z is likely to be lost forever (absent a future reopener, which is unc ertain).

Attorneys in the Real Estate Practice Group and the Corporate Practice Group at Duane Morris will continue to monitor and provide updates on any related developments once applicable regulations from the Treasury Department are issued.

If you have any questions about this alert, please contact Brad A. Molotsky, Arthur J. Momjian, any of the attorneys in the Real Estate Practice Group, attorneys in the Corporate Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.

WCRE 2018 FIRST QUARTER REPORT

SOUTHERN NEW JERSEY & PHILLY CRE MARKETS SEE MODERATE GAINS AMID TAX REFORM OPTIMISM AND FINANCIAL MARKET SHAKINESS

April 10, 2018 – Marlton, NJ – Commercial real estate brokerage WCRE reported in its latest quarterly analysis that the Southern New Jersey market is in largely good shape, with moderate gains in leasing activity and strong fundamentals. The firm believes the market may be poised to take off as benefits of the new tax law begin to reverberate in personal and corporate checkbooks.

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“Our market appears to have picked up steam, with a healthy pace of business growth and continuing new investment,” said Jason Wolf, founder and managing principal of WCRE. “Despite corrections ending a long winning streak in the financial markets, the benefits of the new tax law should shore up commercial real estate, especially industrial and office demand.”

There were approximately 272,550 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which was a gain of 23 percent over the previous quarter. Leasing picked up, and the sales market stayed active, with about 1.63 million square feet on the market or under agreement and an additional 320,691 square feet trading hands. The sales figure is a 36 percent increase over the previous quarter.

New leasing activity accounted for approximately 77.2% percent of all deals. Overall, net absorption for the quarter was in the range of approximately 105,250 square feet. Both of these figures represent large increases over the fourth quarter.

Other office market highlights from the report:

  • Overall vacancy in the market is now approximately 11.2 percent, which is more than a full point higher than the previous quarter. This may be attributed to large blocks of space returning to the market.
  • Average rents for Class A & B product continue to show strong support in the range of $10.00-$14.50/sf NNN or $20.00-$24.50/sf gross for the deals completed during the quarter. These averages have stayed within this range for most of this year.
  • Vacancy in Camden County improved steadily last year, but jumped nearly a point to 12.5 percent for the quarter.
    Burlington County vacancy was at 9.9 percent, which was also higher than the fourth quarter.

WCRE has expanded into southeastern Pennsylvania, and the firm’s quarterly reports now include a section on transactions, rates, and news from Philadelphia and the suburbs.

Highlights from the first quarter in Pennsylvania include:

  • Philadelphia’s office market saw a decrease in vacancy in the Central Business District during 2017 and Q1 2018, as demand for office space continues to be strong. Still, we see increasing employment and new construction, both of which bode well for continued strength.
  • Comcast’s second office tower, the Comcast Innovation and Technology Center, is a 59-story (1,121 feet), LEED Platinum certified skyscraper developed by Liberty Property Trust. The development, positioned in the heart of the CBD, will also include a Four Seasons Hotel. The project is estimated to cost $1.2 billion, is expected to be the tallest building in the United States outside of New York and Chicago, and will be the largest private development project in the history of Pennsylvania. Net of the hotel, the property is planned for 1,336,682 SF of office space. Comcast has signed a 20-year lease for 98% of the building, with the remainder available for lease. However, Comcast may fill the remaining space themselves.
  • The project is estimated to cost $1.2 billion, is expected to be the tallest building in the United States outside of New York and Chicago and will be the largest private development project in the history of Pennsylvania. Net of the hotel, the property is planned for 1,336,682 SF of office space. Comcast has signed a 20-year lease for 98% of the building, with the remaining available for lease. However, like with the Comcast Center original headquarters, they potentially may fill the remaining space themselves.
  • At 2400 Market Street, the new Aramark Headquarters is utilizing the former Philadelphia Market Design Center and will comprise the entirety of floors 5-9 on a long-term lease. Thus, the expansion (new inventory) is effectively 100% pre-leased. Estimated delivery is early 2018.
  • The Philadelphia Planning Commission has approved zoning changes to an area west of 30th Street Station, where Brandywine Realty Trust and Drexel University plan their Schuylkill Yards redevelopment project, a 14-acre district of labs, offices, residences and shopping. There is not a definitive timeline for the project. According to Brandywine, the master plan will comprise a total buildout of 2.8 million square feet of office, 1.6 million SF of residential, 247,000 SF hotel, 1 million SF of lab, and 132,000 SF of retail space. This reflects the bulk of proposed inventory in the Center City submarket.
  • Developer Oliver Tyrone Pulver Corp. is proposing a 38-story office tower on a long-empty lot east of City Hall at 1301 Market Street. It will comprise 841,750 SF upon completion if developed once a lead tenant is secured. The tower would tentatively open in 2020.
  • Demand for multi-family product is demonstrating significant growth, with nearly 2,800 units recently completed, 1,250 units under construction, and 3,200 units proposed in the PA suburbs. Within the Center City market, there are 2,200 units under construction with an additional 6,300 units proposed. Market participants are questioning whether these units will continue to be absorbed. Many high-end apartment complexes are facing concessions and compression in rental rates.
  • Quarter-over-quarter, industrial vacancy in Southeastern Pennsylvania was flat at 6.8%. The market’s largest yearly occupancy gains were recorded in Bucks County, where positive absorption totaled 709,530 square feet, and Delaware County, where 233,633 square feet was absorbed. The year’s largest moves were Almo and Amazon occupying 300,000 and 104,000 square feet of warehouse space along Cabot Boulevard in Bucks County in the second quarter.
  • Philadelphia County recorded 169,134 square feet in negative yearly absorption. The increased demand for warehouse and distribution space from e-commerce firms has focused on larger scale properties and newer buildings, both of which are in low supply. E-commerce and logistics warehouses may require anywhere between a few hundred thousand square feet to over 1 million square feet, but the tightness of Philadelphia’s industrial market means that many companies are starting to look outside the city to fulfill their space needs.

WCRE also reports on the Southern New Jersey and Philadelphia retail market.

The first quarter saw a continuation of the unfortunate trend of legacy brands such as Toys R Us and Sears closing stores and/or filing for bankruptcy protection. However, there was good development news in the region, with several healthcare, entertainment, and retail projects receiving approval. Other highlights from the retail section of the report include:

  • Retail vacancy in Camden County stood at 8.4 percent, with average rents in the range of $13.75/sf NNN.
  • Retail vacancy in Burlington County stood at 10.4 percent, with average rents in the range of $14.24/sf NNN.
  • Retail vacancy in Gloucester County stood at 7.0 percent, with average rents in the range of $14.83/sf NNN.

The full report is available upon request.

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com and www.phillyretailspace.com.

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Why You Need a Phase I ESA and a Preliminary Assessment Report in New Jersey

I’m buying a commercial or industrial property in New Jersey, and I’ve been told I need an ASTM Phase I Environmental Site Assessment (Phase I ESA). However, I’ve also been told I need a NJDEP Preliminary Assessment Report (PAR) as well? Do I really need both? Won’t the Phase I ESA provide me adequate innocent purchaser protection?

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SHORT ANSWER: NO. HERE’S WHY:

Chances are, you’re conducting a Phase I ESA to satisfy one of the requirements to qualify for the innocent landowner, contiguous property owner, or bona fide prospective purchaser limitations on CERCLA liability (Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §9601)), and the Environmental Protection Agency (EPA) All Appropriate Inquiry (AAI) Rule, Subsection 312.10 of 40 Code of Federal Regulations 312 (40 CFR §312). However, CERCLA is a federal law, and provides landowner liability protections under that particular law. What a Phase I ESA does not necessarily do, however, and as is made clear in the Phase I standard itself (ASTM E 1527-13, section 1.1.4), is address requirements of state or local laws; users of a Phase I ESA are cautioned that federal, state, and local laws may impose environmental assessment obligations that are beyond the scope of [the Phase I standard itself].

Like many other states, New Jersey has enacted its own innocent purchaser defense that requires a property owner to demonstrate that, at the time they acquired the property, they did not know and had no reason to know that any hazardous substance had been discharged at the property, by performing an “all appropriate inquiry” prior to purchase of the property. As stated in the New Jersey Spill Compensation and Control Act (Spill Act), any person who owns real property acquired on or after September 14, 1993 on which there has been a discharge prior to the person’s acquisition of that property and who knew or should have known that a hazardous substance had been discharged at the real property, shall be strictly liable, jointly and severally,
without regard to fault, for all cleanup and removal costs no matter by whom incurred [N.J.S.A. 58:10-23.11g(c)(3)].

However, contrary to most states, New Jersey has not adopted the federal All Appropriate Inquiries rule (which can be satisfied by performing a Phase I ESA) but instead has its own unique definition for satisfying “all appropriate inquiry.” Under N.J.S.A. 58:10-23.11g(d)(2), an “all appropriate inquiry” is defined as the performance of a preliminary assessment, and site investigation, if the preliminary assessment indicated that a site investigation is necessary.

As was again made very clear during a January 14, 2016 court ruling, a party buying property in New Jersey after 1993 must obtain a PAR in accordance with NJDEP rules in order to have a chance of obtaining innocent purchaser protection in the state of New Jersey. The decision was affirmed regarding environmental contamination at the Accutherm mercury thermometer manufacturing property in Salem County, that later became a Kiddie Kollege daycare. DEP v. Navillus Group, App. Div. Dkt. No. A-4726-13T3. In this case, despite advice of counsel, the defendants merely relied on various environmental reports, instead of performing a PAR; thus, no innocent purchaser protection was afforded them under the Spill Act, and they were liable for the contamination identified at their property.

IN SUMMARY:

If you’re performing real estate due diligence in New Jersey and want to qualify for both federal and state innocent purchaser liability protections, you need to perform both an ASTM Phase I ESA, as well as a NJDEP PAR.
Here at Whitman, in addition to standalone Phase I and Preliminary Assessment reports, we also provide our clients a single, combined PA/Phase I report that concurrently satisfies both federal and state innocent purchaser protections.

If you have any questions regarding real estate due diligence in New Jersey, or would like a quote for any of Whitman’s wide selection of the due diligence services, please contact Chemmie Sokolic, Whitman’s Director of Due Diligence Services, at 732-390-5858 or csokolic@whitmanco.com.

FOR MORE INFORMATION CONTACT:

Chemmie Sokolic, Director
Whitman
7 Pleasant Hill Road
Cranbury, NJ 08512
(732) 390-5858 (phone)
(973) 931-2474 (cell)
(732) 390-9496 (fax)

How to Get the Most Out of Your Office Space

Let’s look at How to Get the Most Out of Your Office Space. There’s nothing worse than working in a cluttered cramped space from 9 to 5. The space you share with your team matters. The culture of your business depends on the comfort of your employees. However, before you evaluate how much square footage you need, look into the design of your floor plan. Make a list of what is most important in your office space in order drive the most business and keep employee morale high. Is your company heavy on meetings? Do you have a need for a fun and extensive lunch area, or do most people leave the office for lunch? Do you entertain in the office space? Do you need specific areas for storage of marketing goods or other products? You may be holding onto a layout you no longer need, when you can be maximizing the space for more important things. There are many ways to make the most of the space you’re in now, therefore take the time to properly evaluate your office space using the steps below.

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How to Get the Most Out of Your Office Space

LET NATURAL LIGHT IN to Get the Most Out of Your Office Space

Natural light not only affects mood, but also the aesthetics of a space. Light can make rooms feel larger and better the mood of your employees. This comes down to color contrast. If you’re in a room that is dark, it will feel like you’re in a tight constricted space. Consider opening the blinds to let light in. If you have light colored walls and furniture, the light will bounce off and give the feeling that you’re in a larger space than you really are. If
you’re feeling adventurous, install a skylight in the office. You’ll be surprised how much light a skylight lets in. To avoid glare, add a filter so light is spread evenly throughout the office.

BECOME LESS RELIANT ON PAPER to Get the Most Out of Your Office Space

Not only is printing documents killing trees, it’s not as necessary as it was in the past. With the technology that we have today, you can share documents easily without having to print on a single piece of paper. This will also allow you to minimize the space needed for a printing station and using the space for something else. You will also save on ink, paper, and electricity costs by switching everything to digital.

UTILIZE COMMON AREAS to Get the Most Out of Your Office Space

You may not have as small a space as you think! Do you have dedicated areas specifically for meetings like conference rooms or a dining area? Those spaces can be used as extra work space.

It’s refreshing to have a change of scenery when you’re working. This is great, especially if your employees have their own laptops. Spread out and utilize the space you already have, but may not be using 80% of the time. Your employees will feel happier and their productivity will go up as a result.

CREATIVELY STORE to Get the Most Out of Your Office Space

You would be surprised on how many “dead spaces you actually have within your office layout. Underneath most desks and cubicles there exists an empty space where you can add either low bookcases or filing to hide items that require long term storage. By examining this storage option you will eliminate the need for storage in other areas, and gain back some of that wasted square footage. Cubicles and office desks now even have options for built in coat closets which allow employees to store their coats within their own space and allow you to eliminate the need for a central coat closet. Gaining the closet space back can allow you to rethink how that area can be designed.

MAKE SMART CHOICES ON FURNITURE to Get the Most Out of Your Office Space

Select furniture pieces that are easy to store and tuck away neatly when furnishing areas that are used less than 25% of the time. Plan your space with the overall design in mind. Whichever is your preference in color and style try and stay consistent throughout so that your message is as consistent as your sales process. Filing cabinets tend to take up a lot of space. Save your files digitally in a cloud instead of having physical pieces of paper, folders, binders, paper clips, etc, whenever allowable. You and your employees will be much more comfortable with the fresh open space!

FOR MORE INFORMATION CONTACT:

Josh Smargiassi
Principal
Boomerang, Inc.
6950 Sherman Lane
Pennsauken, NJ 08110
P 856.582.0100
F 856.582.0104
www.boomerangofficefurniture.com

WCRE Honored with 2017 CoStar Power Broker Award

Local Firm Selected by Commercial Real Estate’s Largest Research Organization as One of the Top Leasing Firms in the Market

power broker awardWolf Commercial Real Estate (WCRE) has been selected by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, to receive a CoStar Power Broker Award. This annual award recognizes the “best of the best” in commercial real estate brokerage by highlighting the firms and individual brokers who closed the highest transaction volumes in commercial property sales or leases in 2017 within their respective markets.

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With the largest independently researched database of commercial real estate property information available online, CoStar can easily identify the top firms and brokers in each market throughout the U.S. and Canada. All awards are based on transaction data maintained in CoStar’s commercial real estate database.
WCRE qualified as one of the top commercial brokerage firms in the Philadelphia region based on total leasing transactions closed during the year. WCRE is also proud to announce that Andrew Maristch was recognized by CoStar as one of the top Leasing Brokers in the Philadelphia region. In order to be selected for this honor, WCRE’s overall transaction volumes were evaluated by CoStar against other commercial real estate brokerage firms active in its region, and subsequently ranked among the top firms in the market.

“We are thrilled to have earned this recognition from CoStar for a fifth consecutive year. I am grateful to our entire team and to all our clients and associates. Congratulations to all the winners,” said Jason Wolf, managing principal of WCRE.

“With such an active year in commercial real estate, CoStar is proud to honor the individual brokers and firms who perform at the industry’s highest level,” said CoStar Group founder and CEO Andrew C. Florance. “These industry leaders deserve to be recognized for their expertise, hard work and superior deal-making abilities. We extend our congratulations to this year’s winners on their exceptional sales and leasing success.”

The complete list of 2017 CoStar Power Broker Awards winners can be found at CoStarPowerBrokers.com.

About CoStar Group

CoStar Group, Inc. (NASDAQ: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. LoopNet is the most heavily trafficked commercial real estate marketplace online with more than 10 million registered members.

Apartments.com, ApartmentFinder.com, ApartmentHomeLiving.com, and Westside Rentals form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Through an exclusive partnership with Move, a subsidiary of News Corporation, Apartments.com is the exclusive provider of apartment community listings across Move’s family of websites, which include realtor.com®, doorsteps.com and move.com.  CoStar Group’s websites attracted an average of nearly 24 million unique monthly visitors in aggregate in 2016. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of over 3,000 worldwide, including the industry’s largest professional research organization. For more information, visit www.costargroup.com

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com and www.phillyretailspace.com.

Pre-Purchaser Administrative Consent Orders

Pre-Purchaser Administrative Consent OrdersThe NJDEP recently approved the use of Pre-Purchaser Administrative Consent Orders (ACOs). This tool allows a buyer with no connection to the Person Responsible for Conducting the Remediation (PRCR) to purchase a Site that is in Direct Oversight (DO) with modifications to the DO requirements. Under DO, remediation timeframes are tied to the Site, not to the PRCR. However, ARRCS (N.J.A.C. 7:26C-14.4) allows NJDEP to adjust certain direct oversight requirements. The new Pre-Purchaser ACO allows for the following adjustments:

  • A Remediation Cost Review must still be certified by an LSRP and a Remedial Funding Source must be
    established for the full remediation cost; however the 1% annual surcharge is waived.
  • The entire contaminated Site must still be remediated, but the PRCR selects the remedy and remediation
    proceeds without prior NJDEP approval.
  • Annual Remediation Fees replace DO costs.
  • The Feasibility Study is waived.
  • Submittals are reviewed by the Bureau of Inspection & Review.
  • A new Remedial Investigation Timeframe will be established, but no extensions will be available.

Download “Pre-Purchaser Administrative Consent Orders” (PDF)

Three to four months prior to a proposed property transaction, the prospective purchaser must submit a letter to
NJDEP providing basic identifying information on the Site and certifying that they have no prior connection to the
Site or current PRCR.

The Pre-Purchaser ACO must be executed with NJDEP prior to the transfer of ownership (not necessarily the date
the Deed is recorded). If a deal does not go through, the Pre-Purchaser Agreement is cancelled with no obligation from the purchaser.

The NJDEP hopes to make this a collaborative effort that fosters property transactions while bringing contaminated Sites, that have languished for years in DO, into compliance.

Want More Information on Pre-Purchaser Administrative Consent Orders?

Advanced GeoServices Corp. was founded in 1992 as a specialty environmental engineering firm serving private sector clients. Effective February 1, 2018, we have joined Montrose Environmental, with over 40 offices across the country. For additional information please feel free to contact Rick Shoyer at (856) 354-2273, or Chris Valligny at (610) 840-9100.

 

Accelerated Depreciation of Commercial Property

Accelerated Depreciation of Commercial PropertyLet’s look at how accelerated depreciation of commercial property can help your business. As a commercial property owner, how would you like to receive cash flow from tax savings of 7%-10% of your building cost within the first five years of ownership? That’s $70K-$100K for each $1M in building costs!

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Accelerated Depreciation of Commercial Property – It’s YOUR Money!

Cost Segregation is an IRS-approved application by which commercial property owners can accelerate depreciation and reduce the amount of taxes owed. This savings generates cash flow that owners often use to reinvest in the business, purchase more property, apply to their principle payment or spend on themselves.
But we at STRYDE take it one step further with our “Engineered” Cost Segregation. Our engineers break down
your building into the smallest of components, e.g. carpeting, plumbing, & light fixtures, etc. to maximize your
depreciation. Engineered Cost Segregation is the answer.

Engineered Cost Segregation for Accelerated Depreciation of Commercial Property

The study accelerates the depreciation of your building/renovation components into faster depreciation categories such as 5-,7-and 15-year rather than conventional 27.5-and 39-year schedules. Five-and 7-year items might include decorative building elements and electrical for dedicated computer equipment. Fifteen-year items might include site utilities, landscaping and paving. This engineered cost segregation study results in a much higher depreciation expense and significantly reduced taxable income for the property owner. Best of all, the IRS ruling states cost segregation can be applied to all categories of buildings purchased or built since 1986, including renovations, and there is no need to amend your tax returns. This provides for the results to be easily applied to your tax return.

“I’m Already Doing That.”

It is true that a fair number of CPA’s may apply some of the benefits of Cost Segregation but an Engineered Cost
Segregation Study is the only way to truly maximize your benefits and get all of the depreciation and money your
entitled to. Our goal is to support your CPA or tax advisor with the most accurate cost segregation study results so you can realize maximum savings and increased cash flow. Our service utilizes a performance based method that is affordable for your commercial property application.

Do You Qualify for Accelerated Depreciation of Commercial Property

Even though 90% of all commercial properties do qualify for this benefit, there are a few rather broad minimum
requirements. They are: any building that was purchased or built within the last 20 years of $500,000 or more, OR,
has renovations within the last 20 years of $250,000 or more, AND, has paid federal taxes with in the last 3 years,
or plans to this year. There is also a “catch Up” method, in fact, 75% of our projects are older buildings.

FIND OUT WHY YOUR COMMERCIAL REAL ESTATE DEPRECIATION COULD BE WORTH 40% LESS IN 2019

For over 16 years, STRYDE has been delivering quality, affordable, engineer-based cost segregation studies to a wide range of individuals and businesses. Our team of experts can help easily apply the results to your current financials with your CPA or financial professional to assure successful results. In addition, our national coverage and expertise allows us to work with customers and properties across the United States.

Over the course of the 16 years we’ve been doing engineered Cost Segregation, we’ve had zero dismissed deductions and zero push-back, where the IRS says, “we’ll allow that deduction, but only this much ”

Our background allows us to provide not only the best possible results, but also strictly adheres to all IRS guidelines and provides our clients with all of the verifying documents and Audit defense.

HOW TO GET STARTED

Follow the IRS recommendation for application: Get an Engineered Cost Segregation Study. It’s easy:

  1. Call your local STRYDE affiliate for a no-cost preliminary property analysis to illustrate your potential savings.
  2. Engage STRYDE to begin your cost segregation study. The process is usually completed in four to six weeks, after which we provide the cost segregation study to you and your CPA.
  3. Your personal CPA will apply the results to your tax return and you will realize your tax savings dollars. This is your money!
  4. The NEW Tax Law provides a unique opportunity that you must act on during 2018 in order to fully capitalize on this change.

bill cooper

WCRE Rapidly Expands Exclusive Agency Relationships In PA & NJ

New Assignments Bring Additional 113,000 Square Feet Under Firm’s Control

March 1, 2018 – Marlton, NJ – Wolf Commercial Real Estate (WCRE) is pleased to announce that it has been appointed exclusive agent for 13 new projects in the Southern New Jersey and Philadelphia region.

WCRE continues to raise the bar with an aggressive marketing and branding strategy and has increased its South Jersey and Philly presence. WCRE will assume marketing, leasing and sale responsibilities for an additional 13 properties totaling approximately 113,000 SF.

The team at WCRE now oversees over 175 properties throughout the PA/NJ market encompassing over 4.2M square feet of office, retail, industrial, healthcare and investment real estate.  

“We see endless possibility in the properties our clients have entrusted to WCRE, and we are excited to connect new prospects with these assets.” said WCRE managing principal Jason Wolf.

The New Projects awarded to WCRE during the first two months of 2018 are as follows:

  • 1140 White Horse Road, Voorhees, NJ (25,000 SF Retail Building)
  • 1030 Auburn Road, Woolwich, NJ (4.2 Acres)
  • 601 Route 130 North, West Collingswood, NJ (2,113 SF Commercial Building on .35 Acres)
  • 605 Route 130 North, West Collingswood, NJ (1,200 SF Commercial Building on .27 Acres)
  • 513 Centennial Drive, Voorhees, NJ (6,700 SF Office Building on 1.31 Acres)
  • 1504 Blackwood Clementon Road, Blackwood, NJ (3,000 SF Office Building on .34 acres)
  • 297 Easton Road, Horsham, PA (.62 Acres)
  • 146 East Evesham Road, Cherry Hill, NJ (.92 Acres)
  • 133-136 Route 73, Voorhees, NJ (25,000 SF Medical Office on 2.85 acres)
  • 816 North Black Horse Pike, Gloucester Township, NJ (1.39 Acres)
  • 162 West Cohawkin Road, East Greenwich, NJ (25,000 SF Retail Property on 2.5 Acres)
  • 55-59 High Street, Mount Holly, NJ (13,000 SF Office Building on .12 acres)
  • 735 Bethlehem Pike, Montgomeryville, PA (3,234 SF Retail Building on .39 acres)
  • 700 W Browning Road, Collingswood, NJ (8,250 SF Retail Building)

A marketing brochure for each of these properties is available upon request.

Download Printable PDF >>> 

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long-term growth and success.

Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.moorestownofficespace.com, www.moorestownmedicalspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com and www.phillyretailspace.com.

Energy Usage Benchmarking Disclosure Policies

Energy Usage Benchmarking

Let’s look at energy usage benchmarking mandates and disclosure policies for commercial real estate. Increasingly, states, counties and cities nationwide are continuing to implement enabling legislation that mandates energy usage benchmarking and disclosure for commercial real estate. Benchmarking is the process of measuring energy usage and comparing it to that of similar buildings in similar geographic locations.

According to the Institute for Market Transformation (IMT), the building sector (think: office buildings, schools, homes, etc.) accounts for about 40 percent of the country’s total energy usage, making it the largest consumer of energy in the country. The theory behind benchmarking and disclosure of the relevant energy usage data is that by measuring the consumption of energy, real estate owners can thereafter improve their buildings’ efficiency, reduce their energy usage, cut energy costs, minimize harmful emissions and make their properties more attractive to potential financers, buyers and tenants.

Download Printable Article (PDF)

ENERGY STAR:

To aid in energy efficiency efforts, the Environmental Protection Agency (EPA) created ENERGY STAR©, which allows building owners and operators to measure and record energy use data online, for free, using the Portfolio Manager system. Using the energy usage data inputted, Portfolio Manager assigns each building an efficiency rating on a scale of one to 100. A higher score reflects a building’s scoring better in efficiency that a set of similarly situated buildings. For instance, a score of 90 would mean that the building scores better than 90 percent of the buildings in the applicable data set; similarly, a building with a score of 30 would be only 30 percent better than similar buildings (or put another way, the 30 score would be 70 percent worse off efficiency-wise than its competitive set buildings). A building receiving a score of 75 or higher is eligible for an Energy Star designation and decal to be displayed in the lobby, demonstrating its commitment to energy efficiency and reduced consumption.

Currently, about 40 percent of total commercial building space nationwide utilizes the Portfolio Manager system
for measuring energy efficiency. This includes more than half of the Fortune 100 companies’ campuses, many
colleges and universities, professional sports arenas, healthcare organizations and more. The number of buildings utilizing Energy Star and Portfolio Manager is steadily rising as more cities, counties and states introduce required benchmarking and disclosure policies.

Using the Portfolio Manager, building owners and operators can track their properties’ energy and water performance, as well as their greenhouse gas emissions. With this information, they can compare their properties’ performance to other, similar properties, set efficiency goals, track improvement, design space to attempt to fit a specific efficiency profile, share performance results and verify a return on their invested energy dollar vis-à-vis energy efficiency. Studies have shown that just benchmarking consistently is likely to lead to a 6 to 9 percent reduction in consumption, which, if energy costs held steady, would result in cost savings.

Additional information can be found on the Energy Star website.

ENERGY DISCLOSURE POLICIES ENACTED:

To date, two states, two counties and 24 cities across the United States have enacted energy disclosure policies for commercial buildings. The adoption of such policies is rising as the environmental benefits and cost- saving opportunities they create become more evident. The data from benchmarking may also be, and is sometimes required to be, disclosed to the public or potential partners in transactions. “We believe that sharing this data can … drive the market to recognize and reward energy efficiency and create a continuous cycle of improvement and demand for high-performing buildings,” says the IMT. The theory of benchmarking and reporting is to attempt to level the playing field and operate as a quasi-miles per gallon equivalent to tenants when they are trying to understand the energy characteristics of similar building within a given submarket.

Implementing benchmarking and disclosure policies can increase market knowledge and competition, foster job
creation (via energy efficiency upgrades) and, of course, create energy and cost savings. The IMT conducted studies and published a fact sheet demonstrating the positive effects of benchmarking and disclosure. It found that when comparing similar properties with like features including rental rate, age and amenities, energy-efficient properties have seen a 10 percent better occupancy rate on average as compared to less efficient buildings. Similarly, properties that are more efficient demand approximately 9 percent higher rental premiums than less efficient properties. In certain areas of the country, properties that utilize benchmarking to inform their energy performance choices have enjoyed sales prices up to 25 percent higher than those of less efficient properties. Finally, an average 2.4 percent reduction in energy usage for buildings using benchmarking to set efficiency goals has equated to hundreds of thousands of dollars in savings each year for the buildings focusing on energy consumption reduction through efficiency.

The states, counties and cities that mandate commercial building energy benchmarking are:

States: California and Washington state

Counties: Cook County, Illinois, and Montgomery County, Maryland

Cities:

Atlanta; Austin; Berkeley; Boston; Boulder; Cambridge; Chicago; Denver; Evanston; Kansas City; Los Angeles;
Minneapolis; New York City; Orlando; Philadelphia; Pittsburgh; Portland, ME; Portland, OR; Salt Lake City; San
Francisco; Seattle; South Portland; St. Louis; and Washington, D.C.

View a Map Depicting This Information (PDF)

 

CALIFORNIA – Energy Usage Benchmarking

In 2015, California enacted Assembly Bill 802, which repealed a previous commercial building energy disclosure law and introduced new standards. Under the old law, owners of commercial properties had to disclose energy use data to prospective buyers, lessees and lenders. They had difficulty, however, obtaining tenants’ energy consumption records, as tenants had to grant prior authorization of such disclosure. Now, California utilities are required to keep benchmarking data on commercial properties in excess of 50,000 square feet that use their services. Upon request by a building owner or operator, the utility must disclose that data to the owner or operator. This streamlines the benchmarking and disclosure process and ensures greater access to information about energy usage. Furthermore, building owners and operators must now disclose the data publicly on an annual basis, rather than only to prospective partners in a transaction.

NEW YORK CITY – Energy Usage Benchmarking

In New York City, commercial buildings 50,000 square feet and larger must benchmark via the Portfolio Manager.
Starting on May 1, 2018, this requirement will extend to buildings of 25,000 square feet and larger. Furthermore,
the city will disclose the information gathered through benchmarking publicly on the internet each year. This will
allow prospective buyers, renters and lenders to understand better the energy performance of properties they
consider buying, renting or financing. It will also prevent building owners and operators from obscuring inefficient energy usage, while instead allowing them to make smart, effective changes to reduce energy costs and output. Benchmarking and public disclosure for a large number of commercial properties are intended to aid the city in reaching its goal of reducing emissions by 80 percent from 2005 levels by 2050. In addition, the city has recently passed Local Law 33, which requires beginning in 2020, that many buildings prominently post their

Energy Star scores along with a letter grade (e.g., A, B, C, etc.) in their lobby, much like restaurants do throughout the city for health inspection scores.

BENCHMARKING AND DISCLOSURE REQUIREMENTS IN SELECT CITIES

Atlanta, Austin, Boston, Chicago, Los Angeles, New York City, Orlando, Philadelphia, Pittsburgh, San Diego and San Francisco

FOR FURTHER INFORMATION
If you have any questions about this Alert, please contact Brad A. Molotsky; any of the attorneys in our Real Estate Practice Group; any of the attorneys in our Energy, Environment and Resources Practice Group; or the attorney with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor
should be construed, as legal advice. For more information, please see the firm’s full disclaimer.

New Jersey Marijuana Reform Presents Commercial Real Estate Opportunities

New Jersey Marijuana Reform

New Jersey Marijuana Reform

Let’s look at New Jersey Marijuana Reform and Commercial Real Estate. Governor Phil Murphy campaigned on a pledge to fully legalize marijuana in New Jersey. On January 23, 2018 he signed an Executive Order directing a complete review of New Jersey’s existing medical marijuana program within 60 days, which sets the stage for legalizing recreational marijuana. Presently, only medical marijuana is legal under a New Jersey law enacted in January 2010. Likely marijuana reform presents unique real estate investment opportunities and will probably increase the demand for commercial and industrial real estate. However, there are significant risks that must be carefully considered before making any investment decisions, including criminal and civil liability (including property seizure) if federal laws are enforced, and a limited number of potential lenders and buyers.

Download Printable Article (PDF) >>>

Opportunities Associated with New Jersey Marijuana Reform

New Jersey Marijuana Reform presents a unique opportunity to be capitalized upon by risk tolerant investors willing to invest in real estate and benefit from the cannabis trend. Vacancy rates may decline based on the experience in other states following marijuana legalization and expansion, where cannabis suitable commercial real estate became hot commodities.

For example, in four states with legalized recreational cannabis (i.e. California, Colorado, Oregon and Washington), industrial real estate prices surged. In some Denver neighborhoods, the average asking lease price for warehouse space reportedly jumped by more than 50 percent from 2010 to 2015. Industrial space has been in high demand due to both marijuana growers and manufacturers seeking industrial warehouses to cultivate and process their product. Commercial real estate prices have also experienced double digit annual increases in some markets.

Risks Associated with New Jersey Marijuana Reform

The federal government does not recognize a legitimate medical use of cannabis and can impose criminal or civil liability under the Controlled Substances Act. Marijuana is currently classified as a Schedule I drug, which puts it
under the same category as heroin, cocaine, peyote, meth and fentanyl. It is currently illegal under federal law
to lease or rent real estate for the purpose of manufacturing or distributing any controlled substance. However,
the Department of Justice can direct the enforcement of these laws differently between administrations, as the
Obama Administration issued guidance discouraging the enforcement of federal marijuana laws in states where it had been legalized. United States Attorney General Jeff Sessions has long been strongly opposed to the legalization of marijuana and there is a fear of federal enforcement among owners, developers and lenders as long as the federal and state positions remain at odds. It is tough to make long term real estate investments without clarity predicated on the assumption that the federal government will not enforce its own laws.

Banks traditionally answer to federal regulators and risk losing their licenses by dealing with marijuana businesses. Federal banking laws also prevent banks from lending to or accepting deposits from illegal businesses. The federal government is also allowed to seize property. Thus, obtaining financing from traditional sources and collecting rents is difficult. Borrowing costs will therefore likely be higher than a typical real estate transaction, and tenants may be limited to properties that are owned free and clear of traditional financing.

Therefore, many companies that get into the marijuana business try to buy and control their own real estate. If the state approves expansion, it will probably issue licenses allowing business to legally sell recreational marijuana in designated places, and businesses must find a local jurisdiction that will allow them to operate.

Towns will need to change their zoning ordinances to allow for such uses.

What Does This Means for Commercial Real Estate Investors?

Higher risks will likely translate into higher rents for commercial and industrial landlords based on anecdotal evidence seen in California, Colorado, Oregon, Washington and other states that have permissible marijuana laws. Developers, landlords and investors with a suitable risk tolerance should closely follow the state’s progress in introducing and passing legislation to accomplish Governor Murphy’s goals and evaluate potential opportunities and risks. They should also monitor subsequent municipal efforts to accommodate such uses by amending their zoning ordinances, and work to identify potential opportunities in suitable locations.

The contents of this article are for informational purposes only and none of these materials offered are, nor should be construed as, investment advice, legal advice or a legal opinion based on any specific facts or circumstances.

kenneth-morgan

 

When Should You Repave a Parking Lot

when should you repave a parking lotWhen should you repave a parking lot. Let’s look at indications that you should repave a parking lot. Are you looking at your parking lot wondering how you are going to fix the damage? How you are going to make it more appealing? Are you trying to decide if you can wait to have your lot repaved and/or touched up? This article will help you better understand your parking lot.

Your parking lot is the first impression of your business. There are several ways to enhance the beauty of your lot and to ensure any potential liabilities are
addressed in a timely manner.

Download: When should you repave a parking lot (PDF) >>>

When Should You Repave a Parking Lot

Let’s begin with the basics- when your lot is initially paved you can expect the lifespan to be approximately 15-20 years. Over time nature, gasoline, oil, and other products of the like will break down components of the asphalt. As soon as you notice cracking in your lot, our best advice is to have it filled.

This will prevent further damage and costly repairs. See the table above (Good Pavement) for examples of cracks that should be filled. Cracks within the pavement that are ¼” or greater should be filled. This process consists of injecting the crack with a rubberized material that will ensure the pavement does not continue to expand and contract. If cracks are ignored and not filled, you run the risk of your parking lot alligatoring. Alligatoring happens when cracks continue to spread throughout the entire lot- at which point you would need to have an overlay done or complete repave. An overlay consists of applying a new layer of asphalt over the existing asphalt surface. The thickness of an overlay should range from 1.5” to 2”. If your parking lot needs to be graded, or if the grades need to be changed, then the project will require milling. Milling is the process by which a machine is used to plane the pavement surface to an appropriate depth before it is covered with the new layer. Once the milling is finished and the overlay is complete, the customer is left with a brand new surface, ready for pavement
striping.

Parking lots should be sealcoated every 2 years. Sealcoating does three things for your parking lot: it protects it, beautifies it and ultimately saves you money. Sealcoating gives your lot a sleek black finish, which will enhance the appearance of your property.