Delinquencies for commercial-mortgage-backed securities have topped 9 percent for the first time.
The Trepp National CMBS Delinquency Report shows that 9.05 percent of about $694 billion in commercial loans that back outstanding CMBS were 30 days or more delinquent as of Sept. 28 versus 6.49 percent at the beginning of 2010 and just 0.38 percent three years ago.
Source : Wall Street Journal (09/29/10)
Entries Tagged as 'Commercial Real Estate'
Delinquencies for commercial-mortgage-backed securities have topped 9 percent for the first time.
Small businesses face competition every day and any edge that can be gained over the huge corporate entities must be taken advantage of in order to compete effectively. For mature small businesses, there is a new way to gain a competitive edge that wasn’t even an option not very long ago.
Commercial condominiums have appeared on the real estate market recently and small businesses are taking advantage of the benefits. While this option isn’t viable for every small business, it can make a huge difference for those companies that can most benefit.
Young, immature small businesses need lots of leeway regarding office space as they grow and change. Those companies will likely move through several leased office spaces before reaching their “right size” and being ready to stay in one location and one size facility for the long haul. These are organizations that should remain in the office leasing market for some years to come.
Those small businesses that have found their “right size” and know exactly what they want and need in office space for the coming years can greatly benefit from a commercial condo. The reason to let a company mature and adjust before investing in an office condo is that it may be difficult or even impossible to obtain another condo in the same building in which to expand as the company grows. Businesses that have remained one general size for some time are best suited to investing in commercial condos for office space.
Leasing has lots of downsides. The largest, of course, is the fact that the investor who owns the office space wants to generate a profit from his or her investment. After all, that’s what owning real estate for lease is all about. Other down points include limitations on use, remodeling, even restrictions on paint and carpet color in many cases.
Investing in a commercial condo for small business office space clearly takes the “middle man” – the landlord – out of the picture entirely. The small business obtains financing directly from a mortgage lender, just as is done when a private individual purchases a place to call home. Small Business Administration guarantees also may be available to allow for a 10% down payment and favorable interest rates. If you have bought a home, you already know how much less expensive it is to make mortgage payments on a home when compared to leasing a like residence from another owner. The very same is true of office condos.
The small business becomes responsible for all repairs on the interior of the commercial condo because there is no landlord to turn to should something break or stop working. A small prudent reserve for such situations is wise on the part of any business purchasing a building, whether a condo or more traditional office space. In the case of leasing, the landlord is already charging an amount to hold toward repairs in the lease payment each month. Instead, the small business can invest the money in an interest bearing bank account for earn money on the reserve held for repairs.
The business is also responsible for payment of all taxes on the unit. Here again, the landlord of a leased office space has taken this sum into account when setting the monthly rental fee. It’s just a matter of managing your budget so that making tax payments on a timely basis will not create a hardship on the firm.
In the next post about commercial office condos, we will look into the condo association board of directors and how the small business can effectively deal with and participate in that area of commercial office condo ownership.
Related Blog Post: Join the Emerging Trend of Office Condo Owners
Buying Office Space , Commercial Condo , Commercial Real Estate , Lease vs Buy , Office Building Sales , SBA Loan
Bellevue, WA – June 7, 2010 – CommercialCondos Inc. (CCI), a website dedicated to connecting buyers and sellers of commercial condominiums, today announced that it has entered into an agreement with OfficeFinder.com, one of the largest networks of highly qualified experts in office tenant representation working locally in over 550 markets, to supply OfficeFinder agents with integrated access to CommercialCondo.com’s premier listing service and CCI website visitors with even more local experts to assist them in meeting their needs.
As part of its agreement, OfficeFinder's network of agents can now post properties and receive leads on those properties directly through www.CommercialCondos.com. CCI currently features over 400 current property listings, but expects that number to grow as it adds quality network agents, like OfficeFinder, and brokerages to its portfolio of clients.
"OfficeFinder's networks of agents are all specialists in tenant representation," said CCI President and Co?founder, Derek Doke. "It will be great to have their local expertise available to our visitors and accessible through our 'Find A Broker' tool. This agreement is a win-win for both sides as it expands our available local expertise and the potential for adding additional commercial condo listings available for sale or lease."
OfficeFinder President and Founder, James Osgood, said: "We feel our network will benefit greatly in working with Commercialcondos.com and utilizing their listing service which is hyper-focused in the markets our agents specialize in. We feel this agreement will extend the reach of our agents and increase the flow of qualified leads for both entities."
As part of the agreement, Osgood has accepted an advisory board position with CommercialCondos Inc.
"OfficeFinder has been in business since 1995 and has done an incredible job of gaining market share in the tenant representation niche vertical market," said Doke. "We believe Mr. Osgood is a great addition to our advisory board, and believe there is a great benefit to both of our organizations in working together at this level moving forward. Our goals are very much aligned with no direct competitive aspects in conflict."
CCI's service model is focused on an untapped and growing trend in the field of commercial condominiums where subdividing commercial real estate allows current property owners to reposition their properties into more marketable and financeable sizes, allowing more business owners and investors the opportunity to buy versus lease.
CCI offers annual memberships to both individuals and real estate firms, allowing unlimited postings, management tools and bulk uploading of properties for individuals with single locations and brokerages with geographically displaced agents.
"While at our core CCI is a listing service for commercial condominiums, our model goes far beyond by focusing on marketing and education programs that pull targeted buyers through to brokers and places brokers in front of buyers," said Doke. "CCI provides tools and resources that empower buyers, agents and owners interested in conducting commercial condominium transactions."
In addition, CCI will be launching an accredited continuing education program designed around commercial property ownership directed to key professional service verticals, such as dentists, physicians, chiropractors, accountants, attorneys, financial professionals and other core professional service groups.Buying Office Space , Commercial Condo , Commercial Real Estate , Office Space
The opportunity for tenants to renegotiate their office space leases at favorable rates may be ending as the recession comes to a close. In most markets landlords of office space for lease have seen their office renal rates decline by 20 – 30%. With a light at the end of the tunnel, many landlords would rather see office space sit vacant than get tied up in long term leases at reduced rates. The current general belief is that the commercial real estate market will start to see an upswing by early 2011. For tenants in the position to either renegotiate or relocate, the window may be closing on deep discounted rental rates.
Achieving the best possible lease terms is not a simple task. Landlords are sophisticated and know how to mitigate demands. The best bet for a tenant looking for office space for lease or rent is to engage the services of an office tenant representative to level the playing field. For landlords, this is their business and they are very good at it. An office space tenant only negotiates a new lease every few years. If you go it alone, it is not a level playing field. To top it off, a tenant representative service is typically free. Most landlords have a listing agent who is required to share their fees with tenant reps. The fee is already built in. If the tenant does not have an office tenant representative, the listing agent keeps the entire fee. It only makes sense that tenants looking to lease office space take advantage of getting a professional on their side.
We are very proud of our network of local office space tenant representatives. We cover over 550 markets with high quality representatives. The average time in the business of our reps is 12 years and many have achieved advanced designations that demonstrate their outstanding level of achievement and knowledge. If you are looking to renew or relocate your office space, let us help. Just fill out a short form letting us know what you need and we will put you in contact with one of our local licensed office space experts. We have been doing this online successfully since 1995. Give us a try. There is no obligation.
In our office space Blog we have discussed a great deal in the past about how troubling of a time it is for the Commercial Real Estate market thanks to overly abundant unemployment and the recession. With every challenge there is usually an opportunity. In this case, a down markets is a great time to buy commercial real estate. The old adage of buy low and sell high can be applied to this time period. Of course, it is always scary to get into an investment in a down market, but if you can do it now, you will undoubtable be near the bottom of the market with no where to go but up.
One of the best ways to get into commercial real estate is to buy property that your company can use. One of those ways is to buy a commercial condo. The SBA may even be able to help too with a loan guarantee that would allow you to only put 10% down. A great use of leverage.
Here is a primer from CommercialCondos.com to get you started in understanding the concept.
"Many people understand what a residential condominium is because the concept has been around for generations. In order to understand commercial condos (also called "non-residential" condos), we can apply many of the residential guidelines, but with the added benefit of potentially increasing profits for your business.
Following is a simple list of frequently-asked questions that will give you a quick and thorough education about commercial condos.
As a business owner who currently leases my workspace, how would I benefit from buying that space?
The most obvious benefit is that you'll own the property rather than rent it, so over time it will gain equity and become a valuable long-term asset. If you leased your 1000 square-foot work space for $30 per square foot for 10 years, you would spend $300,000 (excluding any annual increases) during that time, but all that equity would go to your landlord instead of you. If you'd purchased the space, each year you would be paying yourself and increasing your equity in the property. You could also have multiple tax benefits that you'd not be able to take as a tenant, such as mortgage interest, property tax deductions and deductions for repairs and depreciation. As an owner rather than a tenant, you'll have complete autonomy and freedom to create the exact space you need for your work. You can redesign and remodel to your heart's content.
What are some of the less obvious benefits?
If you're moving into a new location, a lease option (leasing now with an option to buy later) can lock in the purchase at today's price. And if you purchase more space than you need, you can rent out the remainder. Those rental units will pay for themselves while building equity for you.
How do I purchase a commercial condo?
Many business owners don't realize that while commercial banks are hesitant to make loans, the Small Business Administration (SBA) is actively offering up to 90% financing to established businesses for the purchase of office, industrial and retail space. There are many financing options available, but the financing can be complicated because the lender won't necessarily understand what type of property it's dealing with. Is it residential? Commercial? Retail? What kind of loan is it? That's why we suggest that you work with a trusted banker or broker who can bring in a team of experts (accountants, lawyers, architects, as needed) to help you find the best loan and the best property.
Will I have to pay property taxes?
Yes, because you are the owner of a piece of property. But like a home loan, the property taxes can be rolled into your monthly loan payment.
Some residential condo complexes have homeowners associations and dues to pay. Is this true with commercial condos?
Yes, there will be an HOA (homeowners association), and there will be monthly dues. But these dues pay for property maintenance, landscaping, insurance, professional management, and more. If you owned a house, you would also be paying for these things. One advantage of an HOA is that it guarantees that these maintenance issues will be addressed and that the property will be well cared for.
How are the common areas like parking lots, lobbies and walkways maintained?
Property maintenance will operate the same way it did when you were a renter. The developer, or owner of the property, will turn the management responsibilities over to the HOA and the board of directors (which is usually made up of individual owners like yourself). Usually a property management firm will be hired and paid from the HOA funds.
What does the board of directors do, and how involved will I need to be?
The board makes day-to-day decisions about caring for the property. For example, the parking lot may need to be re-paved, or the sprinkler system may need to be upgraded. The board prioritizes these various needs, seeks bids from vendors and makes sure the work is completed. As an owner, you may choose to serve on the board or not. It's not required."
If you are interested in finding out more, request assistance finding commercial real estate for sale from our top local buyer representatives.
Buying Office Space , Commercial Real Estate , Investment Real Estate , Office Building Sales , Office Space Negotiations , SBA Loan