Tag Archives: Wolf Commercial Real Estate


Commercial Properties: Who owns the fixtures at lease expiration?

fixtures and trade fixturesLet’s explore fixtures, trade fixtures and who owns what at lease expiration. In order to facilitate a smooth transition between commercial tenants, it is important for landlords to understand their rights regarding items attached to their property. Generally, a lease will govern these rights. However, if the lease is silent on the issue, articles annexed to the property deemed “fixtures” must stay with the property, while articles deemed “trade fixtures” may be removed by a vacating tenant.

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In New Jersey, a fixture is an object that “become[s] so related to particular real estate that an interest… arises under real estate law.” N.J.S.A. 12A:2A-309(1)(a). In contrast, an article may be considered to be a trade fixture if: (1) the article is annexed to the property for the purpose of aiding in the conduct of a trade or business exercised on the premises; and (2) the article is capable of removal from the premises without material injury thereto. Handler v. Horns, 2 N.J. 18, 24-25 (1949). As such, an important distinction between fixtures and trade fixtures is whether removal of the item will cause material injury to the premises. See e.g. GMC v. City of Linden, 150 N.J. 522, 534 (1997). In applying this test, courts infer that if removal of an article would cause material injury to the premises, the parties must have intended for the article to remain beyond the lease term. Id.

A typical conflict involving this nuanced distinction may involve a vacating tenant removing an item from the leased premises under the assumption that it was (1) attached to the premises for the purpose of conducting a trade or business; and (2) capable of removal without material injury to the premises. A landlord may dispute one or more of these assumptions, arguing that the article was not used in the conduct of business (that it was in fact attached to improve the structure) or is not capable of removal without material injury to the premises. Over the years, vacating tenants have attempted to remove countless items from leased premises, including air conditioning systems, irrigation systems, bolted down light fixtures and even circuit breaker panels, by arguing these items were trade fixtures. See e.g. In re Jackson Tanker Corp., 69 B.R. 850 (Bankr. S.D.N.Y. 1987).

However, it isn’t difficult to imagine a hypothetical where the traditional landlord and tenant arguments are reversed – that is, where the tenant argues that the article must remain with the property and the landlord argues that the tenant is responsible for its removal. This unusual fact pattern may especially arise where the tenant’s business is specialized in nature, and where equipment is not easily removed from the premises.

For example, Landlord rents out space to Tenant, who plans on operating a restaurant. The lease does not specifically address what does and does not constitute a trade fixture. Tenant plans on installing a walk in freezer and other specialized, complex systems. After several years of operating, Tenant declines to renew the lease, closes, and vacates the premises. Tenant removes the furniture, appliances not fixed to the premises and other items it deems to be trade fixtures and leaves the walk-in freezer infrastructure.

Tenant refuses to remove the walk-in freezer, arguing its removal will cause substantial damage to the premises. Unable to re-let the premises to a restaurant tenant, Landlord is left with a walk-in freezer occupying a substantial portion of the premises.

It is important that during the lease negotiation, landlords think carefully about the business their prospective tenant is in, the kinds of equipment the tenant will install and what will happen to that equipment upon termination of the lease. This same thought process applies when landlords receive requests for alterations. In the above hypothetical, Landlord could have avoided being left with a walk-in freezer and a less than desirable space if it addressed the issue during negotiation of the lease. A discussion with prospective tenants concerning the specific kinds equipment the tenant will install is always a good idea, followed by specifications and drawings for approval. Landlords are wise to reduce these conversations to writing, and specifically address each party’s expectations regarding the disposition of specific equipment when the lease inevitably comes to an end. As always, an ounce of prevention is worth a pound of cure.

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


William F. Hanna, Esquire

Hyland Levin LLP
6000 Sagemore Drive, Suite 6301
Marlton, NJ 08053-3900
(p) 856.355.2900
(f) 856.355.2901
www.hylandlevin.com

 

WCRE Third Quarter Report: Fundamentals Remain Strong

SOUTHERN NEW JERSEY & PHILLY CRE MARKETS PERFORMING STEADILY

October 6, 2017 – Marlton, NJ – Commercial real estate brokerage WCRE reported in its latest quarterly analysis that the Southern New Jersey market is in good shape, but remains in somewhat of a holding pattern.

“For most of 2017 we have seen an overall positive tone and conditions that usually indicate a period of strength,” said Jason Wolf, founder and managing principal of WCRE. “The national economy has been adding jobs, the financial markets are on a hot streak, and our market continues to attract outside investors – yet increased activity and enthusiasm are tempered by trouble in the retail sector and uncertainty related to current events.”

There were approximately 421,113 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), which represents an increase of approximately 6.6 percent compared with the previous quarter, and a 15 percent increase over the same period last year. While leasing showed moderate gains, the sales market was quite active during the third quarter, with more than 1.76 million square feet worth more than $105 million of completed sales transactions trading hands.

New leasing activity accounted for approximately 43.3 percent of all deals. Overall, net absorption for the quarter was in the range of approximately 91,600 square feet.

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Other office market highlights from the report:

  • Overall vacancy in the market is now approximately 9.75 percent, which is a solid improvement over the previous quarter.
  • 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 maintained its dramatic improvement, standing at 10.8 percent for the quarter, down from 13.3 percent at the beginning of the year.

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:

  • The Philadelphia industrial market continues its hot streak, and the outlook is positive. Vacancy rates for flex and industrial properties in Philadelphia are well below the regional and national averages, and this is expected to continue.
  • Philadelphia’s office market continues to gain strength across the board, with far lower vacancy rates than regional and national averages for both Class A and Class B properties in the Central Business District and the suburbs. We see increasing employment and new construction, both of which bode well for continued strength.
  • The Philadelphia retail sector is the one area that is not performing well. It has been affected by the same challenges facing retail businesses everywhere. Namely, the massive shift to online retailing and away from brick-and-mortar. Still, there were some positive signs amid the announced store closings and bankruptcies. Community shopping centers remain an area of strength in the market, with vacancy rates nearly half the national average.

WCRE also reports on the Southern New Jersey and Philadelphia retail market, noting slight declines in consumer confidence and related metrics as the third quarter wound down. Overall retail sales were 3.2 percent higher this year compared to 2016, and were likely impacted by the major hurricanes affecting Texas and Florida in late August and early September. Highlights from the retail section of the report include:

  • Retail vacancy in Camden County stood at 9.5 percent, with average rents in the range of $12.47/sf NNN.
  • Retail vacancy in Burlington County stood at 10.7 percent, with average rents in the range of $13.38/sf NNN.
  • Retail vacancy in Gloucester County stood at 7.9 percent, with average rents in the range of $14.10/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 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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Protect Your Property Against Attractive Nuisance Dangers

attractive-nuisance-dangersThe following article explores how to protect your property against attractive nuisance dangers. Although property owners are generally not responsible for protecting trespassers, in some cases, landowners or those who occupy land under leases can be held responsible for injuries to children that are caused by man-made conditions on the property. Considered attractive nuisances, these might include buildings, construction sites, heavy equipment or even man-made ditches.

Property owners have the power to thwart entrance onto their property and discourage young trespassers from getting hurt. One might use fencing, illustrated signs or other means to prevent children from entering the property and potentially injuring themselves. If you have any reason to believe that children might trespass onto your property or in your facility, treat the problem with the highest gravity. Doing nothing to prevent the entry or injury of trespassers creates a serious financial risk for your company.

Owner Liability in attractive nuisance dangers

As the owner of the property, you are responsible for taking steps to assure that anyone who enters, whether welcome or unwelcome, stays safe from injury. While warning signs are an excellent start, many children may not be able to read them, so it is important to find additional ways of protecting your property.

Ensure that gates are secured and fences are not easily climbed. Adequately protect any conditions,
including pools, ditches, walls or other man-made physical features, that might present a hazard. This may mean covering the pool to avoid accidental drowning, placing sturdy fencing around hazardous areas or placing warning or “No Trespassing” signs. In addition, all safety equipment should be stored and locked at the end of each shift to avoid trespasser tampering.

Premise Liability in attractive nuisance dangers

Property owners are also liable for the maintenance and security that the property needs so that it remains safe for all visitors. This includes the following:

• Fixing cracks or gaps in walkways to avoid slip and fall dangers
• Locking all hazardous tools, equipment and chemicals away from the public
• Ensuring that employees can conduct work duties without the risk of injury
• Hanging flood lights in areas with low visibility
• Hiring security guards for added protection
• Installing rescue equipment, such as ropes and poles, when necessary
• Installing alert devices, such as flashing lights, sirens, alarms and telephones to alert security that
someone has trespassed onto the premises

With regard to attractive nuisance cases, negligence means that the property owner was aware that someone could get hurt on the property and did nothing to prevent it. If you take all necessary precautions to protect individuals that are on your property, you are less likely to be found negligent in a premise liability suit.

For more assistance in protecting your property and your business, contact Hardenbergh Insurance Group today.

brian-blaston-hardenbergBrian Blaston
Commercial Lines – Manager
Hardenbergh Insurance Group
phone: 856.489.9100 x 139
fax: 856.673.5955
www.hig.net

Tips for Furnishing a New Office

Tips for Furnishing a New OfficeLet’s explore some cost effective tips for furnishing a new office. Working conditions play a significant role in the output of one’s work. There is no secret that your mood and overall productivity are impacted by your surroundings. Whenever you either walk into work or relocate to a new facility, you’ll want an office space that keeps your employees/staff happy, engaged, and focused. Here are some ways to furnish your new office that won’t break the bank:

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When Furnishing a New Office: BUY PRE-OWNED:

Generally, the highest cost associated in designing an office comes from the office furniture itself. If you are on a tight budget, we highly recommend that you consider pre-owned or certified preowned. That’s where we come in. At Boomerang, we specialize in pre-owned and new office furniture for businesses. We take unwanted or gently used office furniture and add our creative refurbishing techniques to make your furniture seem new.

When Furnishing a New Office: DETAILS ARE EVERYTHING:

The first step to consider before buying office furniture is to get a better understanding of what your space is and what your space is not. Setting a proper budget includes designing a layout and location of each office and cubicle that is conducive to your work environment. This will help to avoid any unforeseen circumstances which may occur in the future. Furnishing ultimately depends on your budget and the industry you operate in, that’s why we recommend hiring professionals to design your space.

When Furnishing a New Office: BRING THE OUTSIDE…IN:

Indoor plants and flowers are known to improve productivity and the general mood amongst employees. You can use a variety of plants which survive year round with little to no maintenance. If indoor plants sound bothersome to you, then you can always try to make the best use of your windows. Using the ledges can make your working place feel more at home and can even lower anxiety. Furniture that uses untreated wood or live edge wood tables can also help in creating an outdoor feel in the office. The idea is to stay close to nature.

When Furnishing a New Office: ADD A SPLASH OF COLOR:

Sometimes small upgrades tend to have much more impact than a huge renovation. A splash of bright colors will do wonders. Putting beautiful colors on the white walls of your office will make your office vibrant creating a positive and productive atmosphere.

When Furnishing a New Office: END WITH A CREATIVE FLAIR:

You should use modern technologies and “fun” items to give the finishing touch to your office space. Add fun creative items like pictures, a creative wall, drawings, murals, or even millennial items into your office. Pending on the type of business you have, it’s important to make your working environment fun! Adding items that work well for millennials such as ping pong tables, pool tables, and other recreational pieces. We hope you consider each tip when you furnish your next office.

FOR MORE INFORMATION CONTACT:
Josh Smargiassi: Principal

6950 Sherman Lane
Pennsauken, NJ 08110
P 856.582.0100
F 856.582.0104
www.boomerangofficefurniture.com

SECOND ANNUAL WCRE CELEBRITY CHARITY HOCKEY EVENT RAISES $65,000

charity hockey event

In its second year,  built on the remarkable success of last year, this time raising $65,000 to be shared by several charitable causes. The game, which was played At the Flyers Skate Zone in Voorhees this past Saturday, is the brainchild of Philadelphia Flyer legend and WCRE director of strategic relationships Brian Propp. Blending community fun with sports fantasy camp, he brought several Flyers fan favorites back to the ice for a game alongside thirty area business leaders. Over its two years, the game has raised some $112,000 for The WCRE Foundation.

Joining The WCRE Foundation for a second year were former Flyers Brian Propp, Doug Crossman, Kjell Samuelsson, Andre Faust, Todd Fedoruk and Ray Allison. Philadelphia Sports Hall of Fame inductee Lou Nolan, public address announcer of the Philadelphia Flyers, served as emcee. This year Kerry Fraser served as referee. Fraser was a referee in the NHL for 30 seasons, including officiating 12 different Stanley Cup Finals series.
All proceeds from the event will be shared among the CARES Institute at Rowan University, the Jewish Federation of Southern New Jersey, the Alzheimer’s Association Delaware Valley Chapter, the American Cancer Society, YMCA of Burlington and Camden Counties, and Samaritan Healthcare and Hospice. Each of these organizations benefits from WCRE’s long-standing practice of donating a portion of its proceeds from every transaction to an area charity. Learn more about this program at http://wolfcre.com/community-commitment/.

“Last year we saw what was possible, and this time we had more sponsors, more spectators, more raffle prize donations, and more money going to our excellent charitable partners,” said Jason M. Wolf, founding principal of WCRE. “It is a credit to our friends, neighbors, and business associates that we are able to come together to improve the lives of others.”

See a video recap of the game featuring comments from the participants, sponsors, and beneficiaries below:

Play
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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  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.

The Bridge Loan – When To Consider Bridge Lenders

bridge-lenders-bridge-loansLet’s explore bridge lenders, bridge loans and when they are appropriate. When in the market for Commercial Real Estate Financing today, a borrower is faced with extensive options to consider. The traditional lenders like banks, Wall Street conduits and life insurance Companies are active and in the market in a big way, but have very precise parameters in terms of how much they will lend, to whom, and how quickly. The implementation of Dodd-Frank regulation is mostly complete and the overlay of the Basel III (Potentially Basel IV) International Banking reform initiatives have created a fairly material void for borrowers seeking loans from conventional sources on transactions that are perceived to be on the outer range of the risk spectrum.

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Enter the Bridge Lenders:

So, you are a seasoned real estate investor who has a unique opportunity to acquire a property in a market you believe know better then anyone and you have the inside track on the deal, but there is an “issue” or “story” that has caused the traditional banking relationships you have spent years cultivating to say no to your request for some reason or offer terms at extremely low leverage. Drop the deal? Pay cash? It may be time for a bridge loan…….

Reasons to Consider a Bridge Loan

Speed – You have to close quickly. Bridge Lenders don’t have long approval processes and don’t have to answer to federal regulators or credit committees so they can move fast. Some can close in a fast as a week. A bank or traditional lender can almost never perform that quickly.

Leverage and Debt Service Coverage – Bridge lenders are typically willing to listen to a “story” surrounding the collateral they are lending against. As a result they may lend up to 80% of value and don’t rely as heavily on appraisals as traditional lenders. The people running the firms that make Bridge Loans are often entrepreneurs and seasoned real estate investors themselves and they understand the business plan and the property’s potential, again the “story”. Many bridge lenders are willing to lend down to a 1.0-1.10 Debt Service Coverage Ratio (DSCR) while most traditional lenders require 1.20- 1.30 DSCR.

Major Event– Perhaps there is an event like a near term material tenant expiration in the rent roll, a management change, a significant capital improvement item which will drive rents or the transition form a “mom and pop” owner to a more institutional caliber firm that will drive NOI? Due to the fact that the aforementioned event(s) has not occurred yet, it’s probably too early to lock in permanent financing which may carry pre-payment penalties and not have the benefit of the future NOI growth needed to qualify for maximum proceeds. Bridge loans typically carry a 1-3 year term which allows time for stabilization to occur before approaching the permanent loan market and locking in. The most important thing to a bridge lender is getting repaid, so they will focus most heavily on the path to stabilization and how realistic they believe the plan and its timing to be.

Borrower Limitations – If the borrower is unable to qualify for traditional financing because their past issues, credit, net worth or liquidity are not consistent with the perceived risk of the transaction, a bridge lender may be willing to consider the loan request.

How much can I borrow?
• There are bridge loans available from $500,000 to $100,000,000.

How much do bridge loans cost?
• Typically we see loans price on a risk adjusted basis, between an interest rate of Libor+550 & Libor+1100. Bridge
Lenders also typically charge origination points between 1% and 3%. Like most loans, the borrower will be expected to cover any costs relative to closing the transaction (legal, appraisal, other 3rd parties etc.).

Who are these bridge lenders?
• There are many Bridge Lenders in market today who are all attempting to fill the large gap left by the recent banking regulations mentioned earlier. Some have called them “Shadow Banks” and they are often grouped into the “Hard Money Lender” category, which may or may not be correct given the specific lender. The group is comprised of dedicated debt funds, private equity groups, family offices, high net worth individuals, mortgage REITS and other fiduciaries that will all consider making bridge loans. Their parameters differ in terms of geography, loan size and asset class. There are easily 50 firms that we speak with fairly regularly.

SUMMARY:
• Bridge loans are readily available for tougher “story” deals.
• Term is 1-3 Years
• Rate is L+550 – L+1100 plus 1-3% Origination Fee payable to lender.
• LTV/LTC up to 80%
• Proceeds of $500,000 to $100,000,000

chris datzChris Datz
President & CEO
Datz Real Estate Capital
(610) 585-2586
rcd@drealcap.com
www.drealcap.com

For more information, contact:
Datz Real Estate Capital is a capital advisory firm which arranges debt, joint venture equity and subordinate debt for real estate transactions across the United States for all asset classes.

Land Development Strategies

land development strategiesLet’s explore land development strategies for getting the best result with the least pain. Rest easy… I’m not writing this to persuade you all to retain my firm for your design, engineering, and land development needs (though I wouldn’t mind, and my contact information is provided)! But since I’ve been around the block long enough to see even savvy business people get hurt by the convoluted, unpredictable, costly, and sometimes unfair world of land development, I feel compelled to share my experience and offer some advice to help others avoid the pitfalls and heartache of such a process.

Despite the perception that land developers are all super-wealthy and greedy, I’ve seen development projects get caught-up in litigation for years, at an expense of millions of dollars, for deals that marginally make financial sense, yet provide a needed service, housing, or economic development opportunities for the community. I’ve seen deals that die (and orphaned properties languish in the process), because a developer was denied access to certain incentives that might render a project feasible, all because he/she is perceived to have “deep pockets”.

But more impactful to me as a professional, I’ve seen many that do not have the experience, knowledge, and expertise in land development strategies get themselves in substantial trouble by either not conducting the proper due-diligence, overpaying on property because of ignorance of value, or listening to poor advice. These are not the big developers that we all know and love (or hate), but the small business owner that is fortunate enough to expand a business and now needs to add to his/her facility or even open at a different location. This could also be the franchisee who wishes to operate a retail or restaurant establishment that knows their business well, but is understandably clueless when purchasing and entitling property, and/or seeking capital.

It’s certainly true that no two deals, properties, or situations are ever the same in real estate, but I’ve enumerated several general things to consider when deciding whether or not to “take the plunge”, and also things to be aware of once the “go” decision has been made.

Many of these are more specific to smaller deals and the “non-developer”, but many are also attributable to the larger owner/investor/developer as well:

Land Development Strategies #1.

Understand your true needs… You’ll need to take stock in what you and your organization or operation truly need in terms of space, acreage, accessibility, geography, exposure, proximity to skilled workforce and other resources, etc. Attention must also be paid to future expansion plans based on growth strategies. Only after this is clarified to yourself can it be made clear to your broker, consultant, investors, capital resources, etc. If developing property for investment purposes, your goals are already likely in place…maximize property and get the best possible returns! Read on, as many of the following will resonate for you as well.

Land Development Strategies #2.

Seek assistance as you source property for your program… This one’s easy, as everyone reading this already knows who is the best broker and real estate advisor in the Delaware Valley. Still, there’s no reason not to ask others you trust on issues such as market conditions and trends, property values, likelihood of success to secure entitlements, local government intelligence, etc. Additionally, make certain that the site meets your physical criteria, such as ingress, egress, circulation, parking, loading, building location and orientation on site, and the ability to promote your brand and/or operation.

Land Development Strategies #3.

Understand the challenges and constraints of a property you’re sourcing… There are numerous things to consider under this heading. First, you must know the property’s zoning designation, and how to interpret it’s meaning relative to permitted uses, density, height, number of stories, parking requirements, etc. These things are not only public policy and matters of law, but also make sense for you… Who wants to build a new manufacturing facility next to a group of single-family homes, a high rise commercial building near a horse farm, or build homes next to a nuclear power plant? Beyond zoning, you must also be aware of the local political climate and fervor, and assure that any “Not-In-My-Backyard (NIMBY)” issues are innocuous and easy to deal with. Quite frankly, I’ve found that if a municipality clearly doesn’t want your development or project, even if the zoning is appropriate, sometimes it’s better to not even start down that path and select another location.

Land Development Strategies #4.

Assess, Manage, and Mitigate Risk… When developing property or expanding a facility or operation, you must pay attention to the following general risk categories:
a.) Environmental Risk
b.) Market Risk
c.) Entitlement Risk
d.) Finance Risk
e.) Construction Risk
All of these can be daunting to the real estate neophyte, and downright dangerous if proper due-diligence isn’t undertaken. However, with the proper consultants, these risks can be understood, identified, quantified, and mitigation strategies can be implemented. Make sure these risks are understood before “hard money” deposits are released to Seller, as the costs associated with these risks are commonly grounds for negotiating purchase price.

Land Development Strategies #5.

Understand property’s value, and DON’T OVERPAY! There are a few methods to determine the fair price that you should be paying for property (sale or lease), but don’t be pressured to accept a price that doesn’t work for you. Chances are that if a price doesn’t pencil-out as you evaluate a deal, it won’t work for other interested parties either. Many times, a rejected offer comes back, and you might find yourself back in driver’s seat a month or two later, and at your number.

Land Development Strategies #6.

Understand all documents you execute… Many savvy business owners, operators, and land developers can review documentation for “business terms”, but I recommend also having your attorney review for “legal terms”. This can include Purchase and Sale Agreements, Option Agreements, Partnership/Operating Agreements, Financial Agreements, Leases, Developer Agreements, etc.

Land Development Strategies #7.

Understand available programs and grants that may apply… If developing property, there may be property tax incentives and other programs to help the deal’s proforma, which can make an otherwise lean deal become more sensible. There are several other grants and programs available for those looking to simply expand their business, based on your positive impact on the community and job creation/retention. The flip side to this is just as important… if not vigilant, a town may impose unfair fees on your project, such as impact fees, off-site infrastructure improvement costs, and funds for affordable housing and others. Again, make sure you’re aware of these, and have your attorney review any documents that memorialize any negotiated impact costs.

Land Development Strategies #8.

Hire the best team of consultants possible… There are numerous strategies to accomplish this goal, and some may have better results than others on a deal-by-deal basis. For instance, many say to retain a local and “connected” land-use attorney to advance the project through Zoning and Site Plan Approval process. I agree in some cases but not others. If your project requires these types of land entitlements, it is imperative that you retain consultants that not only have experience in their specific disciplines, but their expertise must be specific to your project, your program, and with the types of entitlements required. These consultants consist of the land-use attorney, architect, civil engineer, professional planner, landscape architect, traffic/transportation consultant, environmental scientist, wetlands specialist, real estate valuation expert, market research specialist, and others based on specific needs of the deal. It’s also imperative to have a single “quarterback” run the process. For more experienced and savvy developers, this is usually someone in-house (or the principal him/herself). Sometimes it’s the attorney, and sometimes it appears that NOBODY is truly steering the ship.

These considerations are generic in nature, but I’d be delighted to elaborate on these and other deal-specific strategies to assist getting your project or development deal to the finish line. Best of luck to you all on your future growth, expansion or development plans.

Alan S. Brandies
VP Client Relations and Business Development
Jarmel Kizel Architects and Engineers
42 Okner Parkway, Livingston, NJ
(O) 973-994-9669
(C) 732-966-5273
abrandies@jkarch.com

 

 

Jarmel Kizel Architects and Engineers is a full service and uniquely diversified consulting firm, specializing in architecture, planning, interior design, structural engineering, civil/site planning, and MEPF services, serving building owners, developers, facilities mangers, and end-users. We are active in many sectors, mostly focused on multi-family residential, child daycare centers, corporate interiors, health and wellness, and others. We also possess decades of land-use and development experience, and offer full “Development Advisory Services”, including deal facilitation and entitlement management. Please visit our website for more information, and call Alan Brandies for more details.

 

A Quarter of Houston CRE Properties Suffer Flood Damage

As the flood waters continue to recede in Texas and Louisiana, officials caution the storm waters continue to pose threats to life and property. However, the region is shifting into recovery mode and beginning to take a full measure of the unprecedented destruction brought by Hurricane Harvey.

An assessment of the potential impact of the epic storm on the Houston commercial real estate market indicates 27 percent of the market’s gross leasable area, representing approximately $55 billion in property value, was likely affected by flooding.

This report is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm, based on information collected and studies conducted by the by the CoStar commercial real estate information company.

Included in the estimated is 175 million square feet of commercial real estate market space located within the Houston metro’s 100-year flood zone that appears to have been inundated by the epic floodwaters, including some 72,000 apartment units and 20 million square feet of office space.

Harvey, which first made landfall at Rockport, TX, as a Category 4 hurricane early August 26 and then stalled over the Texas coast, broke all records to become the wettest tropical cyclone in the contiguous United States. Weather experts have estimated that through the middle of last week, the storms had dumped an estimated 20 to 25 trillion gallons of water on Texas and Louisiana.

The greater Houston commercial real estate market ranks as the sixth-largest metro area in the U.S. by total CRE space at 1.6 billion square feet. According to CoStar data as presented Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm, $16 billion of the $55 billion in property at risk is comprised of apartment buildings within the 100-year flood zone.

The densely populated Southwest Houston submarket segment of the overall Houston commercial real estate market, home to more than 66,000 apartment units, is likely to be the district most affected by flooding. Nearly 30 percent of the submarket’s apartment units are estimated to be impacted, with the Braeburn, Greater Fondren and Sharpstown neighborhoods having the largest number of units within the 100-year flood zone.

For more information about Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm specializing in Philly office space, Philly retail space, and Philly industrial space, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings, Philly office space, Philly retail space, Philly industrial space, and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.

If you are looking for Philadelphia commercial real estate listings and services – including Philly office space, Philly retail space, and Philly industrial space – Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

WCRE Expands Philly Team with Joe Nassib

Wolf Commercial Real Estate (WCRE) is pleased to announce the hiring of Joe Nassib as the firm’s newest sales associate. Nassib is a former commercial construction project management specialist who will be a valuable partner to clients seeking expertise in development and understanding the potential of a space. Nassib will work closely with WCRE’s team of sales professionals to generate new business relationships and create opportunities for clients in Philadelphia and its suburbs.

For four years Nassib was a defensive back and special teams player for the Syracuse University Orange football team. He began as a walk-on, and through his perseverance, earned a scholarship and appeared in more than 40 games. He will bring this same type of tenacity and commitment to his clients at WCRE.

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“We believe Joe has a lot of potential as a sales associate, combining what he knows about commercial development with his can-do competitive spirit,” said Jason Wolf, founder and managing principal of WCRE. “I’m thrilled to welcome him to our company.”

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 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

Chinese Government Moves to Reduce Overseas Real Estate Investments

The U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space –  could soon find out what happens when the government of the world’s largest country tightens the spigot on overseas investments from its citizens.

Last week, the State Council of the People’s Republic of China officially announced measures to curb outbound investment – a move Chinese officials had been hinting at all year.

Announcing the new measures were intended to promote the “healthy growth of overseas investment and prevent risks,” the new directives from China’s State Council cover all overseas investments including U.S. and Philadelphia commercial real estate properties, companies, and projects.

This report in relation to national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm, and was provided by the CoStar commercial real estate information company.

Prominently featured on the restricted list of the new investment guidelines now in effect worldwide – and in the U.S. and Philadelphia commercial real estate markets – are real estate, hotels, casinos, entertainment, sport clubs, outdated industries, and projects in countries with no diplomatic relations with China, as well as “chaotic regions” and nations that should be limited by bilateral and multilateral treaties concluded by China.

In addition, China said it would redirect overseas investment currently in national and Philadelphia commercial real estate listings specifically to support the framework of its 2013 “Belt and Road Initiative.” More specifically, China said it would encourage domestic investors to put their money into eligible projects in Southeast Asia, Pakistan and Central Asia, and beyond to the Middle East, Europe and Africa. The State Council said it would encourage companies to invest up to $1 trillion in that initiative, with the goal of strengthening China’s trade links in those regions, which have surged this year.

Mergers and acquisitions by Chinese companies in countries that are part of the 68 countries officially linked to the Belt and Road Initiative – and are not among U.S. and Philadelphia commercial real estate listings – totaled $33 billion year to date, surpassing the $31 billion tally for all of 2016.

At the same time, Chinese investment in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – has plunged by 50 percent in the first half of 2017. However, despite the huge drop, the amount of Chinese money flowing to the U.S. is still likely to be the second-highest for Chinese investment in the U.S. on record, including mergers and acquisitions, it was reported.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

Tenant Improvements and Betterments

Tenant Improvements and BettermentsLet’s explore how Tenant Improvements and Betterments impact insurance. Suppose that a landlord leases a storefront to a retailer that makes improvements to the facility by adding features to help sell its products. During the lease, a fire breaks out and damages the building, including the features added by the retailer to improve the space. When the insurance claims are made, the following questions arise:

• Who did the improvements belong to?
• Who is responsible for paying the damages?

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Defining Tenant Improvements and Betterments

While legal definitions vary, improvements and betterments are anything that a tenant attaches to the landlord’s real estate that becomes a permanent part of that real estate. Under most leases, such improvements become the property of the landlord and tenants are responsible for repairing or replacing the improvements in the event of loss. However, property policies can be customized to determine whether tenants’ improvements and betterments are covered under the building category or under the contents category.

A Landlord’s View of Tenant Improvements

When a tenant makes substantial improvements and betterments to a building, it adds to the building’s value. In order to realize this added value, the landlord needs to clearly establish who is responsible for damages to that property to avoid insurance complications. In doing so, the landlord typically has to make one of the following decisions:

1. Increase the limits of the property insurance policy to account for this extra value.

2. Add a clause to the rental contract stating that the tenant is responsible for damages to improvements and betterments.

In the absence of one of the aforementioned decisions, the landlord may face penalties in the event that he or she has to make an insurance claim. For example, if a tenant makes $100,000 worth of improvements and betterments to a property that was initially worth $500,000, and a fire destroys the entire building, the insurance adjuster will value the property at $600,000 when processing the claim. But, since most landlords’ property policies consider improvements and betterments as covered property, the landlord may be charged an underinsured penalty if the building’s policy hasn’t been increased to reflect the amount of the improvements
and betterments.

A landlord who does not wish to insure for the values of the improvements and betterments should specifically exclude them.

A Tenant’s View of Tenant Improvements

If the lease requires the landlord to repair or replace tenants’ improvements and betterments that become damaged, the tenant does not need to insure them. In contrast, if the lease does not require the landlord to repair or replace tenants’ improvements and betterments, tenants need to make sure they are covered under their own property policy.

 

Tenant Improvements – Considerations When Entering a Lease

When entering into a new lease or renewal, it is critical for both landlords and tenants to carefully review the terms of the lease to ensure that it adequately delegates the responsibility for insuring tenant improvements and betterments. It is also important to make sure that each party’s insurance policy is adequate enough to properly protect the scope of the tenant improvements agreed upon in the lease. When reviewing the lease, both the landlords and tenants should discuss the following questions:

• Who owns the improvements?
• Who is responsible to replace the improvements if damaged?
• Which insurance policy covers the improvements—the landlord’s or the tenant’s?
• Is the policy adequate?

Insuring Tenant Improvements and Betterments

Tenant Improvements and betterments are not difficult to insure, as a building’s insurance forms automatically cover them. However, many landlords expect their tenants to insure any improvements and betterments that are
made, and some landlords refuse to increase the value of their building policies to reflect the new value of such changes. Therefore, it is important to understand the insurance ramifications of tenants’ improvements and betterments. Hardenbergh Insurance Group can help you identify your exposures and make appropriate recommendations.

For more information on Tenant Improvements and Betterments

Brian Blaston, Partner
Hardenbergh Insurance Group
phone: 856.489.9100 x 139
fax: 856.673.5955
email: brianb@hig.net
www.hig.net

The Advantages and Benefits of Design-Build Construction

design-buildDesign-Build is a delivery method that provide owners with a single point of contact for both the design and construction. The Design-Builder is responsible for all aspects of a project: from estimating, assessments and preconstruction to architecture, schematics, engineering, subcontracting, construction and post construction. Schedules are streamlined. Costs are minimized. Efficiencies are realized. The TEAM works together from initial concept through to ribbon cutting and beyond. All done with open communication and purposeful collaboration, with the owner’s involvement in the decision-making process. TOGETHER… that’s the Design-Build philosophy.

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The Advantages of Design-Build Construction

Singular Responsibility: It’s all under one contract…a “one-stop-shop” for architecture, engineering and construction; a single point of responsibility for quality, costs and schedule. This effort results in a strong relationship that is committed to the ultimate success of the project with a collaborative partner all the way through the project.

Quality:
Greater responsibility is also a motivation for higher quality and the proper performance of process and building systems. D/B equals or improves the quality over typical design-bid-build projects because quality is designed into the project early on.

We’re on the Same Team:
As a team of design and construction professionals, we’re able to quickly and proactively approach the project since the team is closely aligned. Also, the infusion of construction knowledge into early design decisions will result in a highly efficient design from the very beginning…and that carries forward throughout the entire process with advantages to design, constructability, phasing and coordination.

Cost Savings:
Time is money…and working together, the planning, design and construction team members evaluate scope, size, alternatives, material selections, and methods efficiently and accurately…and this results in a strong cost analysis, an increased potential for reduced costs…but the greatest benefit is CERTAINTY.

Value Engineering:
Those can be “fightin’ words” in a typical project, but teamwork enables the evaluation of alternative systems, materials and methodologies efficiently and accurately. From the commencement of a project, the design and construction are woven into one component, even operating expenses can be
properly evaluated against the lifecycle costs of the project.

Time Savings:
The schedule can be crunched because of the overlap of design and construction…and gets you to the market faster. Long lead items can be committed to and purchases made well ahead of time. The entire schedule can be significantly reduced, resulting in earlier usage, and thus, positively influencing your bottom-line. Saving time = saving money.

Early Knowledge of Firm Costs:
This is a crucial benefit: The entity that is responsible for design is simultaneously controlling construction cost while accurately conceptualizing the completed project. This results in guaranteed construction costs far sooner in the project than traditionally possible.

As you can see, the real value is in the process itself, and the real advantage for the client is that the price becomes the price. A number you can count on. It’s a one-stop-shop that you can depend upon. Save time; save money. Design-Build enables the power of the team to deliver projects faster, better and for optimum costs…it’s the best value for the money, time and effort invested. What a better way to protect that investment and build a project that is easier, more efficient, faster and less expensive…it just makes sense!

Paul Stridick, AIA
Paul is Director of Design-Build at The Bannett Group. He is an award-winning architect that also has extensive government experience. Prior to joining TBG, Paul was the Director of Community Development for Cherry Hill Township, NJ, a 26-square mile suburban community in the Philadelphia metropolitan area. Before that, he was the Director of the Division of Housing and Community Resources for New Jersey’s Dept. of Community Affairs.
The Bannett Group is a South Jersey firm that was founded in 1970. Since then, we’ve become one of the fastest growing design and construction firms in the region, with a portfolio of work that spans the country.

The Bannett Group always views our design & construction services as a set of tools available to complete each job. We’ll pick the best tool or delivery method for each job…general contracting, construction management or even a fully integrated Design-Build package. Whatever the tool, we get the job done. With our steadfast history and fine-tuned in-house talent, we’re able to complete each project on time…on budget…every time.