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Monthly Archives: August 2018


Commercial Construction Spending Headed to Record High

Spending on hotel, office, distribution, and other commercial and public buildings likely will expand for an unprecedented ninth-consecutive year in 2019, according to a consensus forecast by the country’s top industry economists.

The panel of experts from construction industry analytics company Dodge Data & Analytics, trade organization Associated Builders & Contractors, and others recently surveyed by the professional organization American Institute of Architects raised its prediction for nonresidential construction spending in 2018 in the national and Philadelphia commercial real estate market to increase 4.7 percent, up from the 4 percent increase it forecast in January.

The panel also slightly raised its spending forecast for 2019 to 4 percent at midyear from 3.9 percent in January.

This report involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“If these projections materialize, by the end of next year, the industry will have seen nine years of consecutive growth,” said American Institute of Architects Chief Economist Kermit Baker. “Much of the optimism in the outlook is coming from the over-performing commercial sector.”

The panel’s consensus is that spending on commercial buildings in the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – will increase 6.7 percent this year, up sharply from 4.4 percent projected at the beginning of the year, and 3.4 percent in 2019, up from 2.9 percent in the January forecast.

Total spending by the end of next year in the national and Philadelphia commercial real estate properties market on nonresidential buildings, which includes public safety, health care, education, and religious facilities, is expected to be 5 percent greater than the last market peak in 2008, Baker said.

The bullish forecast is significant because, as recently as a year ago, the same economists warned a construction industry downturn could be on the horizon for U.S. and Philadelphia commercial real estate listings due to a shortage of construction workers, rising interest rates and construction costs, and concerns the economy was slowing. U.S. nonresidential spending increased just 2.2 percent last year, barely outpacing rising inflation in building costs.

One key sign that construction won’t be slowing any time soon is architect workloads in the U.S. commercial real estate market, including Philly office space, Philly retail space and Philly industrial space; these continue to increase. Architecture firms saw healthy growth in billings and new project activity last year, and both indicators remain strong through the first half of 2018.

Billings by design firms are an indicator of hard construction spending a year to 18 months in the future. Architects designing all types of buildings and housing types among current national and Philadelphia commercial real estate listings are reporting average project backlogs of more than six months, the longest since 2010.

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.

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Cost Segregation Misconceptions Prevent Tax Savings

Cost Segregation MisconceptionsProperty owners misconceptions about cost segregation are leaving money on the table. In 2001, an IRS ruling allowing taxpayers to “catch up” on prior years’ depreciation deductions was a significant upgrade to the benefit of cost segregation studies. Yet, as we approach midyear 2018, it’s estimated that 9 out of 10 commercial real estate owners don’t take advantage of this exceptional savings tool on a regular basis.

This inaction can easily be traced to misconceptions that persist in today’s marketplace. They are preventing the capture of large tax savings and increases in cash flow for commercial property owners and investors.

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Cost Segregation Misconception #1:

The real property (building) depreciable value should be at least $10 million. The size of any tax savings that results from a cost segregation study is tied directly to the value of the property. However, a building does not need to be worth several million dollars to benefit. Because the realized savings are generally 7-10% of the value, even a $500,000 property could generate a savings of $35,000-$50,000, a large sum for many small business owners. Multiply that by larger property values and the savings will quickly exceed six figures. Commercial properties valued at $500k-$5 million have been the most underserved due to this
most common misconception.

Cost Segregation Misconception #2:

Cost segregation studies are just too expensive to see any real return. For the $500,000 property, the net cost of a study would be in the $3500-$4500 range. This provides a return of 8-12 times the investment. What owner wouldn’t be pleased to get their money back several times over? There are few business investments that can generate that level of return, especially on an immediate basis, in a single tax year.

Cost Segregation Misconception #3:

A cost segregation study should be done within the first 3 years of ownership, or the opportunity is lost. This was addressed in the 2001 IRS ruling that created the single most awesome feature of cost segregation – “catch up” depreciation. In a given tax year, a study allows the taxpayer to deduct all of the depreciation they could have taken since Day One of acquisition, minus the depreciation that was taken. Accumulated over all the years of ownership, this difference, and the resulting tax savings, can be quite substantial.

To understand how this all comes together, let’s look at a real-life example:

Owners of a medical services business were making plans for retirement. This included the sale of their office building which they had acquired 12 years earlier. At that time, it had a depreciable real property value of about $1,340,000. A cost segregation study was never performed during their years of ownership.

The tax advisor for a potential buyer suggested a study be completed now to “unlock” the tax savings benefit they had been sitting on. They were then able to deduct $303,000 in additional “catch up” depreciation, leading to a tax savings of $121,300. This was a very surprising and welcome boost to their retirement fund, extra money they didn’t know they had. Cost segregation companies will typically provide a free, no-obligation analysis for any commercial property. Owners are then positioned to weigh the study’s cost against the possible huge financial return without wasting time or money.

About John Ottino:

John is a Consultant serving the Greater Philadelphia/South Jersey region for Fuller CSS. FullerCSS, cost segregation specialists, with on-staff engineers and accountants, has completed hundreds of tax-savings studies for real estate investors and commercial property owners.

john ottino

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WCRE APPOINTED EXCLUSIVE AGENT TO MARKET KINGSWAY LEARNING CENTER’S MOORESTOWN AND HADDONFIELD CAMPUS PROPERTIES

Wolf Commercial Real Estate (WCRE) is pleased to announce that it has been retained by Kingsway Learning Center as exclusive agent for the sale and marketing of 144 Kings Highway West, Haddonfield, New Jersey and 244 West Route 38 Moorestown, New Jersey. This high-profile institutional disposition assignment also includes advisory duties for the properties, which are located in the affluent towns of Haddonfield and Moorestown.

The Haddonfield location consists of approximately 50,000 square feet and is situated on 2+ acres. The property is positioned in the downtown business district along Kings Highway. Surrounded by residential homes and an exuberant amount of retail, restaurants and amenities, this property is ideally positioned to be utilized as another school, office headquarter or redeveloped into alternative uses within a prestigious town within Camden County.

The Moorestown location is positioned on Route 38 and consists of 33,000 square feet and is situated on 4 acres of property. This single-story office building offers tremendous visibility with convenient proximity to The New Jersey Turnpike, Route I-295 and front along Route 38 providing for outstanding curb appeal and visibility.

Kingsway Learning Center will be working closely with WCRE to make sure they are considering all options. “For us, this is about community. We will work to ensure that the entity that lands on this site will be a great addition to these high-profile neighborhoods,” said Jason Wolf, founding principal of WCRE.

This assignment adds to WCRE’s growing number of partnerships with institutional and healthcare clients in Philadelphia and Southern New Jersey. It is the firm’s second engagement with Kingsway Learning Center. Earlier this year, WCRE helped facilitate their consolidation of Kingsway’s Moorestown and Haddonfield campuses into a new site in Voorhees, New Jersey. The school leased a 73,000 square foot building at 1000 Voorhees Drive with plans to relocate its pre-school, elementary, and secondary programs for its 175 students to a single site starting with the 2018-2019 school year.

“We look forward to working with an organization whose values align so closely with ours,” said Phil Rodriguez, COO of Kingsway Learning Center.

WCRE’s Chris Henderson, vice president and principal said, “WCRE is proud to partner with Kingsway as our latest institutional relationship in Southern New Jersey. We look forward to applying our WCRE 360 marketing approach to find the right users for these highly-desirable properties.”

WCRE’s institutional specialist team of Chris Henderson and Jason Wolf will be working closely together with Kingsway Learning Center on this disposition initiative.

A marketing brochure is available upon request.

Learn more about Wolf Commercial Real Estate at www.wolfcre.com and Kingsway Learning Center at www.kingswaylearningcenter.org.

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 at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at ww.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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