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Friday, December 30, 2011

Marriage and Real Estate

You might be surprised to know that in about half of the states, marriage provides a special kind of real estate ownership known as Tenancy by the Entirety. This type of ownership is unique in that the law in essence treats the married couple as though they were one unit. The interest in the property cannot be severed without the consent of both or the death of either. Upon death of one, the surviving spouse remains as sole owner.

In other states, married couple may own property according to the legal concept of Community Property. These laws treat the married couple as though they are business partners. States recognizing the concept of Community Property consider property acquired during the marriage to be equally co-owned by husband and wife. Each has a one half interest in property acquired by either during the marriage no matter how the title of the property is held.

This is not to say that spouses cannot have individual title to property, however. Even in Community Property states, there is a concept of Separate Property which separates property as belonging specifically to one spouse if it was acquired prior to their marriage or if it was acquired during the marriage by gift or inheritance.

While these may seem like bland concepts, this information will become very important to you IF you have a real estate deal go bad, you find yourself in the unfortunate position of facing divorce, or someone wants to collect some debts by foreclosing on real estate.

Especially in Commercial Real Estate, it is commonly assumed that these laws do not apply. And in practice, the majority of commercial real estate deals occur without a hitch. But it is a mistake to think they do not apply. Kentucky real estate law requires a listing contract to be written and signed by all owners. Likewise, real estate contracts must have the signatures of all of the owners. Also, you may not be able to borrow money without your spouse's approval.

If you are married, your spouse may well be partial owner of the property. The net effect here is that in Kentucky you cannot legally sell your property without your spouse's consent, nor can you legally buy property using borrowed money without your spouse's consent. You can purchase property for cash without your spouse's approval however you may well share ownership with your spouse in that transaction.

An agent friend of mine recently discovered the difficulties that these laws can cause when he sold an office condo. He had a signed listing agreement from the owner of the condo, received an offer on the condo which the owner of the condo accepted. He had a contract signed by both buyer and seller. Unfortunately, the Seller got cold feet and decided he did not want to sell after all. None of the contingencies of the contract would allow him to renege on the offer. The Seller relied on Kentucky State law to declare that the listing contract and the purchase and sales contract were both invalid because they did not have the signatures of his wife, a partial owner by Kentucky State law. Since state law requires a written contract with signatures of all of the owners of the property, the contract was not valid.

These kinds of problems can sometimes be avoided with a little foresight.   If a property is held in a company name, I like to ask for a copy of a company resolution which states that the signing party has the authority to bind the company.    If the property is held individually or jointly with individuals, the best practice is to have all parties sign, including spouses even if they are not listed on the deed.   If for some reason, it is not practical for all parties to sign, I like to ask that the signing party have an executed power of attorney to demonstrate that he / she has the authority to sign for all parties.  These documents can then be added as exhibits to the contracts.  

Let me know if you have any questions or comments.   Thanks for reading.

Notes, Disclaimers and such -

BTW - If you need any help with real estate, give me a call.   I specialize in Commercial Real Estate and work with Buyers, Sellers, Landlords, Tenants and Investors.   I handle Office, Industrial, Land, Investment and Retail properties.   Heck, I can even set you up with a residential specialist if you need help there.  

ALSO - I am sure that my managing broker would appreciate me clarifying that the view expressed here are my own and not necessarily those of Commonwealth Commercial Real Estate, its brokers, agents, or employees (other than me, of course).   If you have a question, comment or opinion you would like to express, you are free to add one in the comments sections.   What you are not free to do, is to make inappropriate, or offensive remarks.   Should I see any such remarks,  I will exercise my right to delete them.


David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

ofc: (502) 379-6005
cel: (502) 905-5274
www.ccre.biz

Tuesday, December 27, 2011

Positive Outlook for Commercial Real Estate?

If you have been reading along for a while, you know that I think a lot about the economy and taxes.   Commercial Real Estate activity is obviously dependent on how well the economy is doing.   The last few years, we have had several fits and starts where it appeared that the economy was trying to improve.   And while I have analyzed inflation, taxes, international trade, consumer confidence, and other economic indicators, the fact is that one of the best predicters of real estate activity is unemployment.   

It's really obvious when you think about it.  When people have jobs, they can afford to buy a house, goods or services.   If they do not have jobs, they have to cut back on purchases and maybe have to sell a house.   Likewise for businesses, if they are hiring more people, they will at some point need more space for them to work, whether in a warehouse or an office.    If on the other hand they have to lay people off, they need less space.   

The last couple of months, we have been getting good reports on the jobs front.   While there are many pundits telling us that the improvement is not nearly good enough, the fact is that unemployment has decreased.  Certainly, I would like it to decrease faster but as long as it is decreasing, we can expect there to be an improvement in the commercial AND residential real estate markets.

So, keep your fingers crosssed for continued improvement in 2012 and have a great day.  

Thanks for reading.

Notes, Disclaimers, and such -

I am sure that my managing broker would appreciate me clarifying that the views expressed here are my own and do not necessarily represent the opinions of Commonwealth Commercial Real Estate, it's brokers, agents, and employees (other than me, of course.)   If you have a comment or another opinion, you are welcome to make a comment.   However, you are not welcome to make inappropriate, inconsiderate or hateful comments.   Should I see any such comments, I will exercise my right to delete them.

BTW - If you know someone in need of help with real estate, give me a call.  I specialize in commercial real estate and I work with Buyers, Sellers, Landlords, Tenants and Investors.  I handle Office, Industrial, Land, Investment and Retail properties. Heck, I can even set you up with someone to help with residential property.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

ofc:  (502) 379-6005
cel:   (502) 905-5274

DMcCoy@ccre.biz
www.ccre.biz

Wednesday, December 21, 2011

Retail Surprise at Springhurst Towne Center

It would appear that Santa came early for our friends in the Hocker Group.    The Hocker Group was until recently the owners of Springhurst Towne Center shopping center on Westport Rd, which almost everyone seems to associate primarily as the home of Tinseltown Cinema.    The Hocker Group bought this center about 2 years ago for about $42.4 Million from the Centro Properties Group, which was a Real Estate Investment Trust out of Australia which was having financial difficulties due to the world wide recession and real estate crash.   It was announced last week that the center had been sold on December 7th to the California State Teachers Retirement System for $78 Million.  

The obvious question now is, does this indicate a big turning point in retail property values in Louisville?   Since the financial crash in 2008, property values of retail properties have been hard hit.   Although this is a very encouraging sign, I am not ready to declare an end to the difficulties in the retail market.  When you look around the city, there is still a lot of vacancy and until we begin to see occupancy levels returning to pre-recession levels, I don't think we can begin to celebrate.

For our friends with leases in Springhurst Towne Center, they can expect to get a different kind of surprise next year.    Most retail leases require the tenant to pay their pro-rata share of the real estate taxes on a property.    With a sale at nearly double the price of the previous sale, they can expect those taxes to also double next year when the property is re-assessed due to the sale.  

In any case, Kudos to our friends at the Hocker Group. They obviously hit a home run with this one.

Have a great day everybody!  

BTW - If you have a real estate question or problem, give me a call.   I work with Landlords, Tenants, Buyers, Sellers and Investors.  I handle Office, Industrial, Land, Investment and Retail properties.   Heck, I can even hook you up with a residential broker if you need one.   I would love to help

ALSO - I am sure that my managing broker would appreciate me clarifying that the views expressed are my own and do not necessarily represent the views of Commonwealth Commercial Real Estate, its brokers, agents, or employees (other than me, of course).  If you have a question or a different opinion, you are welcome to express it in the comments, or give me a call.   However, you are not welcome to make inappropriate or offensive remarks.   Should I encounter any, I will exercise my right to delete them.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

www.ccre.biz

ofc: 502-379-6005
cel: 502-905-5274

Tuesday, December 20, 2011

Downtown Office Available 20,000 SF with Free On-site Parking

Med Center II - 1046 E Chestnut St


I am looking for some help for an extra nice property in downtown Louisville.   This former textile mill was renovated about ten years ago and features very nice office space with lots of large windows, sky lights, oak trim, and exposed brick walls.    This is a very nice property with lots of free on-site parking.    The ideal tenant would need about 20,000 SF although we can probably accomodate users for 2,500 SF, 5,000 SF, 10,000 SF or 20,000 SF.   

Some of the features follow - 
  • Up to 20,000 SF contiguous space available on 2 floors
  • Divisible to 2,500 SF
  • Super nice historical renovation of 19th century textile mill featuring exposed brick walls and large windows throughout
  • Ample free on-site parking
  • Downtown location with easy access to CBD, downtown medical district and to Intersta!te system
Extraordinarily nice office space in downtown area with free on-site parking.   This is ideal for executive office space where impressions are important.   Please let me know if you know of anyone who might have an interest.   

A few more interior pictures follow:





Thanks, so much.  Have a great day!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

www.ccre.biz

ofc: 502-379-6005
cel: 502-905-5274

Wednesday, December 14, 2011

Bluegrass Industrial Park Activity

I have been surprised at how many people were interested in my post on Bluegrass Industrial Park from last April.    I am reviewing a listing I have in the park and decided to update the information.

Sales Data

Currently (as of 12/13/2011) there are 26 Industrial Properties listed for sale on KCREA (Kentucky Commercial Real Estate Alliance) which is about the same inventory level as last April.   Three Industrial properties in the Park have sold in the six month period since then (period of 5/1/2011 to 11/30/2011).   This included one 7200 SF facility, a 37,175 warehouse distribution building, and a 61,164 SF building.   

Leasing Data

As of 12/13/2011, there are 64 Industrial properties for Lease in Bluegrass Industrial Park.   This is a pretty good sized drop in Inventory from the 79 properties which were listed last April.    In the last 6 months, KCREA reported 36 leases signed.   Only 5 of these leases exceeded 10,000 SF.  

Analysis

It has seemed as though the market in Bluegrass has been improving and this snap shot of the Park would seem to confirm this.   Three sales in six months compared to three sales in eighteen months is a marked improvement.   At this rate, we would expect the time to sell the existing properties to be about 4 years.   Of course, this is still a long time but it is a big improvement over the 12 year expected rate from 6 months ago.    Still with only three data points, we need to be cautious in our optimism.   Certainly this is good news but thee sales does not necessarily indicate a trend.

Leasing also seems to have improved.   A decrease in the number of available properties and increase in the number of leases both bode well.    With an inventory of 64 properties for lease and 36 leases in 6 months, we might expect the existing inventory to be leased in about 11 months.   Once again though, when we look a little closer, we see that only 5 of these lease were for properties larger than 10,000 SF.   If we arbitrarily divide the market at the 10,000 SF line, we see things a little differently.  
  • Below 10,000 SF, we see an inventory level of 45 property with 31 properties leased in the last 6 months.   At this rate, we would expect the inventory of properties under 10,000 SF to lease in about 7 and 1/2 months.  
  • Above 10,000 SF, we see an inventory level of 19 properties with 5 properties leasing in the last six months.   At this rate, we would expet the inventory of properties above 10,000 SF to lease in about about 23 months, which is about half of the time we  would have expected last April.
Conclusion

I think that it is a little too soon to call the outlook rosy but things certainly look much better than they did 6 months ago.   Louisville has had some good economic news and the economy for the country has been improving.   I think that this is reflected in this activity.   What is harder to measure is business outlook.    On the street, I am still hearing a lot of worry among business owners.   A lot of deals are continuing to fall apart in the current economic climate and a lot of business owners are still trying to plan cautiously, asking for steep discounts and for short term leases.  Although things look better, I still recommend that Landlord keep their properties in top condition and keep them priced competitively.

Have a great day, everyone and good luck with your holiday shopping!  

Notes, Disclaimers and Other Info -

The information in this analysis came from the Kentucky Commercial Real Estate Alliance  (KCREA).   This information is maintained individually by the subscribing Commercial brokers and is not necessarily an accurate census of the activity.   It is only the information provided by the cooperating brokers and its accuracy is dependent on the individual brokers efforts to maintain their information.   Never-the-less, I think that it is a good indicator of the market at large.

ALSO, I am sure that my broker would appreciate me clarifying that the views provided here are my own and do not necessarily represent the views or opinions of Commonwealth Commercial Real Estate, its brokers, agents or employees (other than me of course)   You are welcome to present other opinions in the comments if you so desire.   HOWEVER, you are not welcome to make inappropriate or hateful comments.   Should I see any such comments, I will exercise my right to delete them.

AND FINALLY - If you know someone who would like some help with real estate, give me a call.  I work with Tenants, Landlords, Buyers, Sellers, and Investors.   I handle Office, Industrial, Land, Investment and Retail properties.   Heck, I can even hook you up with someone to help you with your residential real estate needs.    Give me a call, I would love to hear from you.

Thanks for reading! 

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

www.ccre.biz

Monday, December 12, 2011

Jefferson Pavilion - Development Parcels Adjacent to Jefferson Mall





For my property promotion today, I am looking for people that might need some land.  I have Three very nice Development parcels available adjacent to Jefferson Mall which are shaded red in the aerial shot above.   Features include –
  • 3 development parcels available –
    • parcel 1 - approximately 1.5 acres adjacent to GFS and Target - available at $375,000 / acre
    • parcel 2 – approximately 2.2 acres with frontage on Jefferson Blvd – available at $375,000 /acre
    • parcel 3 – approximately 16.5 acres adjacent to Target  - available at $175,000 / acre
  • Adjacent to Jefferson Mall home of more than 100 retail stores, including Macy’s, Dillard’s, Sears and JC Penney.   
  • Property already zoned C-2
  • All utilities are to site
The smaller sites would be great for smaller stand alone retail or office sites.   The large site could be a good site for a big box retail use, assisted living, or perhaps multifamily .     If you know of someone who might have an interest, please let me know or have them give me a call.  

Thanks so much for the help!  

BTW - If you need help with your real estate needs, give me a call.   I specialize in Commercial Real Estate and work with Landlords, Tenants, Buyers, Sellers and Investors.   I handle Office, Industrial, Land, Investment and Retail properties.   Heck, I can even hook you up with someone if you need help with residential property.   I would love to help if I can.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299


Friday, December 9, 2011

Economic Development Issues - the case of Amazon.com

This is an interesting article published by CoStar about Amazon.com.    While the issue of economice development funds is interesting in and of itself, Amazon like the rest of the e-tail industry is unhappy about state laws that require it to collect sales tax on on-line sales.    In this case, Amazon abandoned a $100,000,000 proposed facility that would have created 1,250 jobs in SC because the state did not pass a law to exempt Amazon from having to collect the tax.  

http://www.costar.com/News/Article/Amazoncom-Flexes-Real-Estate-Jobs-Muscle-In-Location-Decisions/128728

The practice of Economic Development is in my experience an uncertain science.    States and municipalities regularly compete for large projects that would create new jobs and provide stimulus to the economy.   The results are sometimes unpredictable.  

What are your thoughts on this issue?   Should the state be willing for forgo large tax receipts in exchange for the jobs and the investment in the community?   I think that it is an interesting question.

Have a great day, all.  

David

David W McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Europe's Woes - Bretton Woods Deja Vu

It is easy to criticize the governments of Greece, Spain, Italy, Ireland and all of the other countries facing financial difficulties.    From one perspective, they have had an extraordinary run.   They have passed overly generous programs which have increased their debts well above sustainable levels.   The other citizens of the European Union may feel resentment in that they have been having to foot the bill for these excesses.

Even though this may all be true, the Greeks and other financially strapped countries are being offered no palatable choices.   With their economies already in trouble, you can understand the populace wondering how they can possibly survive.    From their perspective, it is a little like the government showing up at the soup kitchens and telling the indigents that due to budget difficulties they are going to shut them down.

Looking back at the European Union, these difficulties should not be a surprise.    The European Union has never really been an economic union.   The politics of nationalism prevented that from being considered.   Instead, the European Union could probably have been called Bretton Woods 2.0.   Bretton Woods was a currency exchange system used by countries to determine exchange rates from 1958 into the 1970s.     Bretton Woods fell apart in the 1970s when it became apparent that aritficially setting exchange rates between currencies was unsustainable.  

By adopting a common currency without a centralized government with the authority to enforce the financial and economics policies, they had in effect simply set up another currency pegging system.  When the EEC was in a boom cycle, the problems could be overlooked.    When things began to turn bad however, the individual economies had no alternatives to deal with their problems.   If they had their own currency, they could have allowed it to revalue itself against the other currencies.   This would not eliminate their economic problems however, it would allow the effects to be softened.

On the other hand, if they had a true economic union with a strong central government, with a common tax policy and common policies on things like unemployment assistance, much of the EEC residents concerns about the fairness of the system would be minimized.  In the current system, it is easy to see how the citizens of the countries in trouble might feel like they are simply being discarded in the trash. 

Europe seems to understand this now and it appears that it will either move toward a more centralized continental wide government to manage the EEC or the Euro will fall apart as the individual countries abandon it.  

From the United States perspective, the survival of the European Union is probably less of a concern than the survival of the European Financial system. The recent volatility on Wall Street, I think is much about whether the European Banks can survive the fall of the Euro. Given the world wide recession that occurred in 2008 when the US Banking system faltered, it is certainly understandable that the US and the rest of the world would have concerns of a similar international financial upheaval.

Unfortunately, there are no easy choices for Europe.   We can only hope things go well for them.

With that said, I hope things are going  well for you too.   Have a great day.

BTW - If you need help with real estate, give me a call.  I would love to help.   I specialize in Commercial Real Estate and work with Buyers, Sellers, Landlords, Tenants and Investors.   I handle Office, Industrial, Land, Investment and Retail properties.  Heck, I can even hook you up if you need help with residential real estate. 

ALSO - I am sure that my managing broker would appreciate me clarifying that the views expressed here are my own and do not necessarily reflect the views of Commonwealth Commercial Real Estate, its brokers, agents, or employees (other than me, or course.)   If you would like to comment on these views, you are welcome to add comments.   What you are not welcome to do, however, is to make comments which are inappropriate or objectionable.   Should any such comments appear, I will exercicse my right to delete them.

Thanks, all.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Tuesday, December 6, 2011

Real Estate Mining & T Boone Pickens

When I graduated college in 1980, we were in the midst of another Economic slump.  That recession had double digit inflation, double digit interest rates, and double digit unemployment.   We were also dealing with an energy crisis which had led to a surge in oil and gas exploration throughout the country and really the world.     Oil prices were rapidly rising in response which was causing more problems with the economy.   As these prices rose and exploration became even more in demand, the cost of exploration and drilling also soared.

In this environment in the early 1980s, was the first time I ever heard of T Boone Pickens.   As far as I could tell, no one outside of Texas and perhaps Oklahoma had heard of him.   Mr. Pickens made the scene when his Oil and Gas Company, Mesa Petroleum began to make offers to buy much larger Oil and Gas Companies, including Citgo, Gulf, Phillips, and Unocal. 

At the time, people thought he was crazy.  But T Boone Pickens realized something that seemed to have escaped the market at large.    The value of the oil reserves of these companies at market oil prices exceeded the stock value of their companies.    In other words, as Mr. Pickens explained, it would cheaper to buy these oil companies than it would to actually drill for the oil.

Mr. Pickens successfully bought the assets of some oil companies but in most of the cases, his stakes in the companies was bought out at a large profit instead.    It also led to many mergers and acquistions between oil and gas companies for these same reasons.

That has always stuck with me.  It was a very astute and yet simple observation.  I can't help but wonder if when things turn around for real estate, and commercial real estate in particular if we could have something similar occur.   At some point in time, the value of the underlying real estate in Real Estate Investment Trusts could exceed the trading prices for the REITs.    If those prices vary significantly, we could see a similar market upheaval to the Oil and Gas Companies in the 1980s.

AND when and if we see this type of activity, it probably is a pretty good sign that the market has passed its bottom.

Just a thought.   Hope you have a great day.

BTW - If you want some help with any Real Estate needs, give me a call.  I would love to help.   I specialize in Commercial Real Estate and work with Buyers, Sellers, Landlords, Tenants and Investors.   I handle Office, Industrial, Land, Investment and Retail Properties.  Heck, I can even hook you up for residential needs. 

ALSO - I am sure that my broker would appreciate me clarifying that these views are my own and are not necessarily those of Commonwealth Commercial Real Estate, its brokers, agents, or employees.  (other than me, of course)  AND I probably should note that I am not a stock broker or investment counselor.    Those are questions for other professionals.    These are simply my opinions.  

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Thursday, December 1, 2011

NICE 21,000 SF Louisville Industrial Building for Lease - Property Promotion for the Day



2520 Ridgemar Court

My Property promotion for the day -

Looking for someone needing a nice industrial building to lease.   This is a very nice warehouse building with a meticulous owner who has kept it very well maintained.    It is available for lease immediately.     Let me know if you know someone who may have an interest.

Features of this building include -

  • 21,000 + Square Foot Industrial building
  • Approximately 4,000 Square Feet of Office
  • 1 drive in door and 2 dock doors
  • Ceiling height of 18 to 22 feet
  • Located in Bluegrass Industrial Park, home to approximately 850 businesses and employing approximately 38,000
  • Easy access to two Interstate interchanges on I-64 (I-64 @ Hurstbourne Pkwy and I-64 @ Blankenbaker Pkwy)
This is a very nice and very clean industrial building and did I mention that it is available immediately?    The owner would love to get a new tenant.  Please let me know if you know of anyone looking for about 21,000 SF of industrial space in the Louisville area.  

Thanks so much!  Have a great day.

BTW - If you need help with commercial real estate, give me a call!  I work with Buyers, Sellers, Landlords, Tenants and Investors.  I handle Office, Industrial, Land, Investment and Retail properties.  Heck, I can even set you up with help on residential real estate if you need it. 

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Wednesday, November 30, 2011

Blogging and Self Promotion

I have been blogging off and on now for about 7 years.   In the early days, I primarily started blogging because that was the advice being given by the National Association of Realtors.   I found that it could be quite time consuming and it was unclear to me how big the payoff was.   With literally millions of blogs, and perhaps tens of thousands if not hundreds of thousands of blogs on real estate, it was very unlikely that anyone would be finding me on-line. 

With that realization, I had a change of strategy.  Instead of writing to the public at large, I tried to write to a more focused audience.   My intended audience was commercial real estate in the Louisville, KY area.    This helped somewhat but again, it was very unlikely that someone would find my blog by googling anything associated with commercial real estate.   So I began to write pieces on commercial real estate in general, on my specific listings and on things in Louisville in general.   This allowed me to have marketing pieces available for people on-line which I could also print out for prospects when I had meetings with them.    There was some minimal action from search engines but I was able to direct my messages to my target audience.    

This year, I had a surprise when my readership surged in the Spring peaking in April with nearly 60 times the number of readers I had ever had.  I later discovered that Google had changed their search engine criteria to put more emphasis on blogs.   But I also discovered in looking at the numbers that my numbers increased noticably when the number of articles increased.  That may seem obvious but before this time, there was no consistency in the readership.

This led me to an experiment.  I decided to make more consistent efforts at adding blog entries and also began to make efforts to promote the blog.  I also decided to broaden my topics to include other issues that are at least tangential to commercial real estate and also began to include some more personal notes about topics of interest to me.   To my surprise, by doing this the readership of my blog has been increasing every month since August.  In November, I had nearly a 50% increase in readership over October. 

I still have to consider the cost / benefit ratio in the amount of time I dedicate to these efforts but for now the experiment will continue.   The next step will be to consider how this might translate into contributing toward the bottom line and determine how I can measure those results.

Anyway, thanks so much for reading.   Hope you have a great day!

BTW - Speaking of results, if would would like to discuss the best way to have results on your real estate issues, give me a call.  I specialize in Commercial Real Estate and work with Sellers, Buyers, Landlords, Tenants and Investors.   I handle Office, Industrial, Land, Retail and Investment properties.   Heck, I can even hook you up with someone if you need help in residential real estate.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Tuesday, November 22, 2011

Super Committee Fail?

The deadline for the Super Committee to come up with 1.2 Trillion in budget cuts has passed without a deal.    While pundits are berating the committee and politics in general and the markets are reacting negatively, I believe that the winners in this entire process are the American people.

Who seriously believed that we would face any other outcome?    As soon as the committee was formed, several of the members immediately changed the goal from coming up with 1.2 Trillion in cuts to increasing taxes so that the cuts would not have to be made.   One member reportedly even proposed counting the "savings" from no longer being at war in Iraq as budget savings in order to avoid any serious cuts at all.   

Having a son who is a soldier, I have to admit, I am not exactly happy with what the automatic cuts are going toward.   Still, the reality of the situation is that no matter what is cut, someone is going to be unhappy.   And while we are hearing of doom and gloom, you have to remember that these cuts are over a 10 year period.   The reality of the situation is that the amounts left are not too far off from the budget amounts these same categories had just a couple of years ago.

I don't know about you but my family has not only had to manage without an increase for the last several years, we have had to cut back tremendously.  We all know that this is possible.  Yet somehow when Federal Government expenditures do not go up, the headlines indicate that we have a catastrophe.  

The truth is that given the politics of the situation, there is no politically viable way to make any real cuts in the budget.   If you doubt this, simply look  back at the budget impasse of the summer.   For all of the complaints and finger pointing at how unreasonable those wanting cuts were, they only managed about $7 Billion in cuts on the budget.  And while $7 Billion is a lot of money, it is a miniscule amout relative to the entire Federal budget.    (making me wonder, who really was unreasonable) 

The automatic cuts are not everything we need but it is a badly needed start.  

Just my opinion. 

BTW - If you need an opinion on Real Estate, give me a call.  I specialize in Commercial Real Estate and work with Landlords, Tenants, Buyers, Sellers and Investors.  I handle Office, Industrial, Land, Investment and Retail properties.   Heck, I can even hook you up on residential real estate.  Give me a call if you need help.

ALSO - I am sure that my managing broker would appreciate me noting that these opinions are my own and do not necessarily represent the opinions of Commonwealth Commercial Real Estate, its brokers, agents, or employees (other than me or not).  Readers are welcome to make comments and are welcome to disagree.  What is not welcome is inappropriate or offensive comments.  Should there be any such comments, I will delete them.

Have a great day, all!  

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY

Friday, November 18, 2011

Time to Revamp Minimum Wage Laws?

We are being innundated with bad economic news:  Budget problems, tax problems, and reportedly a historically high poverty rate in our country.   On the budget side, some are claiming that we simply do not get enough taxes from the wealthy and if only we increased their taxes, everything would be okay.   On the tax front, we are being told that the current tax system is really the problem and that perhaps a revamp of the tax code to a single tax rate is in order.  And finally we are told that the problem is the wages and that we need to focus on changes to eliminate poverty.

So why isn't the obvious solution raising the minimum wage to $250,000 per year?   Overnight everyone in America is wealthy and by default we go to a single tax rate tax system and everyone pays there fair share.  Budget Balanced.   Poverty Eliminated.  Tax Fairness Achieved.   Problem Solved.    Right? ...

Right now, you are probably thinking, "What an idiot!  There is no way that could work."   And you are right.   If we passed a law like that, we would cause huge economic turmoil.  Overnight, businesses would have to either raise prices outrageously in order to pay their employees or perhaps fire as many people as possible or declare bankruptcy.    We could expect hyperinflation, hyper unemployment or perhaps both.   AND it is also very unlikely to improve the wealth distribution in America in a positive way at all.

It is unclear what having a minimum wage accomplishes.   Normally, the legal minimum wage actually trails the market determined minimum wage.  So when a new minimum wage is set there is normally very little effect seen.   However, it is a different story if the legally required minimum wage exceeds the market OR if there is a downturn in the economy.    In those cases, we can expect to see the same mechanisms in play as our extreme example above, meaning increases in inflation and / or unemployment.

I don't claim to have all of the answers and I understand that in talking about those making minimum wage, we are generally talking about the most vulnerable in our society.   Still, one has to wonder how much we are helping this most vulnerable group if we are enacting laws that increase the costs of goods and services for them and decreases the number of jobs available to them.

With the US going on nearly 3 years of unemployment rates near 10%, I wonder what would happen if the minimum wage was decreased instead of increased.   People could still decide not to work for that wage.   But perhaps there would be some people who have been unable to find work who would welcome having a job.   

Politically, I do not think that this can happen.   Minimum wage laws tend to be politically popular. The public views them as their legislators looking out for them.   Legislators also seem to like them.  And there is at least the perception that in having a minimum wage, we have also created a floor for a minimum income.   In reality that is not the case.

Just my opinion.   Have a great day.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

BTW - If you would like an opinion or some help regarding real estate, I would love to help.  I specialize in Commercial Real Estate and work with Landlords, Tenants, Buyers, Sellers and Investors.   I handle Office, Industrial, Land, Investment and Retail Properties.     I am licensed in KY and IN. 

Also, I am sure that my managing broker would appreciate me clarifying that the views expressed here are my own and are not necessarily shared by Commonwealth Commercial Real Estate, its brokers, agents, or employees (other than me, of course.)   If you would like, you are free to make a comment and different opinions are welcome.   What is not welcome is inappropriate remarks and I will exercise my right to delete any content which I find objectionable. 

Tuesday, November 15, 2011

The Pursuit of Happiness

It seems that in American society, we are consumed with the pursuit of happiness, a curiously constitutionally guaranteed right. How we pursue happiness, is up to us. Unfortunately, there is no clear plan to attain it and no guarantee we will find it.

I know people who in that pursuit, have turned to feng shui, acupuncture, acupressure, tuning forks, crystals, rocks and magnets. They buy new clothes, go on trips, send their kids to expensive schools that they cannot afford. If only they could build a new kitchen, if only they could have new carpet, if only they could buy new furniture, if only they could redecorate, if they only had a better job, if only their spouse made more money, if only they could start a multilevel marketing business, if only they could live on the beach...

The list goes on and on.

We are inundated with images of perfect people supposedly living perfect lives in absolute bliss.

So, why is that that some of the happiest people I know, come from modest means? Some have never even left their state, let alone traveled the world.

The truth is that happiness isn't something you will find outside of yourself. I won't claim that people won't feel a temporary high when they get a shiny new toy, but that feeling will fade. There will always be a near infinite number of things you do not have, no matter how much money you make. If you always focus on what you don't have, you will always feel shorted.

Happiness is something only you can find for yourself and in yourself. It's more about being grateful what you do have than attaining what you do not have.

Someone else might be able to make you miserable, but they cannot make you happy. That is up to you.

Stepping off my soapbox AND hoping that you have a happy day.

BTW - If you would like to TRY to find happiness through real estate, I am willing to give you a hand. (smile)  I am licensed in KY and IN and specialize in Commercial Real Estate.  I work with Buyers, Sellers, Landlords, Tenants and Investors and handle Office, Industrial, Land, Investment and Retail Properties.

ALSO, I am sure that my Primary Broker would appreciate me clarifying that the views presented here are my own and do not necessarily represent the opinions of Commonwealth Commercial Real Estate or any of its brokers, agents or employees (other than me, of course)  You are of course welcome to disagree and present your own opinion if you would like.  HOWEVER, you are not welcome to make inappropriate comments and I reserve the right to delete anything that I beleive would be offensive.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Monday, November 14, 2011

What Marathon Training Taught me about Planning

Just a little more than a week ago, I finished my first marathon.   It was a thrilling experience largely due to the unbeleivable sense of accomplishment.    That said, I did not finish without some problems.   About mile three, I felt a hamstring start to heat up and by mile 5 and 1/2, my entire right leg was in full revolt, lit up from my rear end all the way down to my ankle.     At that point, I simply was not physically able to continue running and I had to stop and walk.   

My first thought was that I really wasn't sure I would be able to do another 21 miles.     As I walked, I considered my options and once I had a calm head, I realized that my training had prepared me to deal with problems during the race.  First thing to remember, it's not supposed to be easy, after all, it's a marathon.   Second thing to remember, in the months of training, I had similar problems and was able to work through them.   Third thing to remember, I never ever planned on winning the marathon, all I had to do was finish.  

After about a mile to a mile and a half, I tried a light jog and found that I could manage that.   A little while later, I found that  I could get back to a slow run but I slowed my overall pace by about 10% to 20%.   With these adjustments and a plan to run about 3 to 4 miles at a time followed by a half mile to a mile of walking for the duration, I was able to complete the marathon in 5:31:24.     Considering the difficulties I was having, I was thrilled with that time.

I never could have accomplished this at all without a plan. Starting out, I knew very little about marathons and even less about training for marathons.   Luckily, I knew a physical trainer who knew a lot about training and he put together a training schedule for me that lasted several months. 

I guess I could have put together some sort of marathon training plan on my own but I certainly would not have known the most efficient way to do it. Also, I'm not sure that a plan I put together could have prepared me for what to do if things went awry, as this plan did. I'm a pretty smart guy but that simply isn't my area of expertise.

Today, it seems that "do it yourself" is all the rage.   Everyone pumps their own gas.   Many people prefer to go through self serve check-out lines.   There are tons of books and videos and internet sites dedicated to helping us do things ourselves.    And while I have to admire a certain self reliance, I also think that (especially in my case), it can be easy to become a jack of all trades and master of none.  

We hear all the time about setting goals.   Setting this goal is crucial to knowing where you are going BUT to accomplish this goal, you have to follow up with a plan.   And sometimes, your best chance for success is working with someone who already has some expertise in this area.   For a physical challenge, it may be a physical trainer; for a business challenge, it may be a businessman or a CPA; for a legal challenge, it may be an attorney and of course for a real estate project, it may be a real estate broker.   Certainly, you may be able to do it on your own, but it may also be that your best chance for success is to have someone with that expertise give you a hand.  Food for thought.

Have a great day, all.  

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

BTW - if you need any help with real estate, give me a call.  I specialize in Commercial Real Estate and work with Landlords, Tenants, Buyers, Sellers and Investors.   I handle Office, Industrial, Land, Investment and Retail properties.  I am licensed in KY and IN.   OR, if you just want to shoot the breeze about marathon training, I am open to that as well.

Tuesday, November 8, 2011

Why Occupy Wall Street Matters

There are those, especially from conservative circles, that are quick to dismiss the Occupy Wall Street movement.  On the other hand, it would appear that the more liberal circles are trying to claim it for their own.   I am not sure that either of these approaches is wise.

After nearly 2 months, it is clear that the OWS is not simply a flash in the pan.  It is also clear that it has struck a chord and that there are a lot of people wanting to support it.  What is unclear is what OWS is really for or against.   There are those trying to co-opt the movement by claiming  that it supports their agenda but as far as anyone can tell, there is no real leadership and no clearly defined shared set of goals.

It is also clear that OWS is different from the movement which have occurred in other parts of the world.   In general, ignoring Oakland, the protests have been peaceful.  As far as I can tell, no one expects the OWS group to become violent.   It seems to me to be very different from the Arab Spring,

What is clear, is that there are a lot of people across the country who are unhappy, AND this includes more than just the OWS protesters.   I think that is why OWS has not died.  OWS is a tangible symbol of a country that is weary of difficult times.   For some that may be years of high unemployment, which resulted in someone in their family being laid off, perhaps multiple times.  For some, that may be years of war, where family members have been deployed or perhaps injured or killed.  For some, it may be the injustice of billions of dollars of tax bail outs which kept millionaires employed while some families faced foreclosure on their homes.  

Different parties may have different ideas as to the best way to resolve these hard times for our country but I believe that whoever leads us out of this morass will have to satisfy the country at large that they hear their concerns and understand their fears and pain in order to be successful.

Anyway, that is just my opinion.  You may of course feel free to disagree and you are free to post comments expressing your point of view.  What you are not free to do however, is to post inappropriate or offensive comments.  Should I see any such comments, I reserve my right to delete them.

Thanks, everyone. Have a great day and be sure to get out to vote today!

By the way, if you would like an opinion on Commercial Real Estate, I would love to help you.  I work with Landlords, Tenants, Buyers and Sellers.  I handle Office, Industrial, Land, Investment and Retail properties.  I am licensed in Kentucky and Indiana and I specialize in Commercial Real Estate.

ALSO, I am sure that my managing broker would appreciate me stating that the opinions presented here are mine alone and do not necessarily represent the opinions of Commonwealth Commercial Real Estate, its brokers, agents or employees (other than me, of course).  

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Thursday, November 3, 2011

Turn Around for Land?

There was a time when a Commercial Real Estate Broker could make a decent living selling nothing but land.   These days there has been so little Development that there has been very little demand for land.   As noted in my most recent KCREA 3rd Quarter Review, the little land which has sold has largely been smaller parcels which are not ready for commercial development.  

Lately, however, I have noticed lately that we are begining to have some interest in land again.   Consider the following:
  • Beginning in the Summer, I had some calls on some land that I have listed next to Jefferson Mall.  
  • I had some brokers calling who were working with some restaurants looking for possible sites in the county.   
  • Another site in the Jefferson Mall area is beginning development for what is rumored to be one big box retailer and 2 or 3 stand alone restaurants. 
  • I had a call from a broker working with an Apartment developer and an Assisted Living developer looking for sites.   
  • Zappos in Bullitt County reportedly is looking at a couple of 100 to 150 acre sites for their expansion
Although things are still a long way from where we were a few years ago, I presently have offers on two of my land listings.   I'm not sure that we have seen enough activity to call it a trend but at least there are some hopeful signs that a turn around in land could be coming.

By the way, if you need help with Land or with any other aspect of Commercial Real Estate, please give me a call.  I work with Buyers, Sellers, Landlords and Tenants with Office, Industrial, Land, Investment and Retail Properties.   I am licensed in Kentucky and Indiana.     I would love to help.

Have a great day, everyone.   Thanks!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Tuesday, November 1, 2011

Scary things in Commercial Real Estate

A normal individual might be scared out of their wits by seeing Paranormal Activity 3.  A Commercial Real Estate Broker however might be terrified by the following -

1.       Un-zoned Raw Land listings – Right now, these are some of the hardest things to sell in Commercial Real Estate.    Prices are down about 40% and buyers are not inclined to buy property that will require 9 to 18 months to rezone let alone property which has no utilities or infrastructure.   

2.       Desperate Sellers – While a motivated Seller might be a good thing, a desperate Seller is another story.   Desperate Sellers can be completely irrational.   They can be very difficult to deal with and can pose a much higher risk of liability.

3.       Bad Phase I Reports – Nothing can kill a deal like a bad Phase I Environmental Report.   It is normally just good policy to have a Phase I inspection on a commercial property.   When it comes back with a problem, everything can fall apart. 

4.       Unpaid Real Estate Taxes – This is often a sign that the property is distressed.   Distressed properties have their own set of problems which have to be addressed.   These transactions require extra care for all parties in order to be successful.

5.       Over-zealous Attorneys – It is always good advice to have your client run things past their attorney.  That said, sometimes good legal advice is not good real estate advice.   While you certainly want your attorney to protect you if he goes overboard, it can make it impossible to every finish the transaction.

6.       Bad Appraisals  – When a Seller immediately offers to show you their appraisal, that is usually a sign that they realize that it is overpriced and want to try to persuade you that it is not.    Bad appraisals create all sorts of problems.    I have seen appraisals that included square footage that on floors that did not exist and listed comparables that did not exist.   But once a Seller sees a high appraisal, it is nearly impossible to overcome.  
Certainly, there are other scary things.  Maybe you can share some that have happened to you.   Hope everyone had a great Halloween last night.    Let me know if you need any help with Commercial Real Estate.  I work with Buyers, Sellers, Landlords, Tenants, and Investors and handle Office, Industrial, Land, Investment and Retail properties.
Have a great day.
David
David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Tuesday, October 25, 2011

Publishing - Testing the Waters

Well, there are never enough hours in the day.    Although I find it to be a challenge to make time to work on my blog, I try to remain disciplined and keep it as a priority.    Blogging is one of those thing which takes a lot more time and effort than you expect.   

In trying to take it up a notch, it was recently suggested to me that I should contribute to some on-line magazines as well.    There are several out there, many with fees to join and many with a particular target market.    Being new at this, I decided that the best shot for me was to use a shotgun type approach and select one of the larger providers and hope that it would help me define my audience somewhat.  

So, about 10 days or so ago, I joined ezinearticles.com and began to submit some work.   So far, they have reviewed and posted 2 of my articles, both on commercial real estate.   It is exciting to be published by somebody else but it has also been a lot of work.  Now in addition to coming up with some material for my blog, I need to submit 10 articles to ezinearticles.com within 30 days of joining.  

Of course, in addition to the excitement of being published, my hope is that it will also make me more marketable to the community at large and also that all of these things together will inter-connect.   

I won't repost those articles here, at least  not at this juncture, but if you have a chance, go to ezinearticles.com and look me up and tell me what you think.  

Thanks, all.  I hope you have a great day!

David

David W McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Parkway
Louisville, KY  40299

A note about me - I specialize in commercial real estate and live and work in the Louisville KY area.  I am a license real estate broker in Kentucky and Indiana and work with Buyers, Sellers, Landlords and Tenants for all type of commercial real estate.   Let me know if I can help you.

Friday, October 21, 2011

Thoughts on Occupy Wall Street

On one level, I can identify with the participants of the Occupy Wall Street movement.   In recent years, I have been outraged as companies like Enron, manipulated markets to make a buck, or as companies like AIG, rescued by billions of dollars of taxpayer money paid themselves huge bonuses and went on luxury trips on the taxpayer's dime.    As thousands of people lost work in the recession and thousands of businesses failed, the government didn't offer to bail them out.  Against this background, the arrogance of taking giant bonuses and making snide comments about how they deserve them, is especially bitter.

That said, I want to come to defense of corporations and business in general.   In Louisville, we are very lucky to have the corporate headquarters of Humana, Yum Brands, Papa Johns International, Brown Forman, and Kindred Healthcare, all of which employ thousands of people.   We are also lucky to have UPS, which in addition to employing thousands more also attracted additional jobs to the area as companies like Linens and Things and Amazon built distribution centers in our area because of the proximity to the UPS World Port.    Ford has two plants here and recently announced plans to add approximately 1700 jobs.    These jobs will create additional jobs as Ford Suppliers get to expand along with the new production.    We are also lucky to have GE, which announced a new appliance to be built here in Louisville.   

I am sure that there are some that I have overlooked but the point is that these corporations have invested billions of dollars in our community and have given jobs to tens of thousands if not hundreds of thousands people here.   Besides simply providing employment, many of these companies have also contributed to community programs such as Metro United Way, Habitat for Humanity, Project Warm, the Fund for the Arts, the Kentucky Derby Festival, and Thunder over Louisville just to name a few.  They also made it possible for us to build some community projects such as the KFC Yum Center and Papa John's Stadium.

I know that a corporation is not a person and certainly corporations are not perfect.  However, I for one would like to thank them for investing on our community and giving our friends, neighbors, and family members jobs.   

Have a great day. 

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

I specialize in Commercial Real Estate and am licensed in Kentucky and Indiana.  I work with Office, Industrial, Retail, Investment, and Land Properties.   I work with Buyers, Sellers, Landlords, Tenants and Investors.    If you would like some help with Commercial Real Estate, let me know.  I would love to help.

Tuesday, October 18, 2011

Google Wars

You may be surprised to know that David McCoy is a fairly common name.    That never occurred to me until I went to college and found myself living in the same dorm and almost directly underneath a David Mark McCoy.   Luckily, he went by Mark although we would sometime get each others mail.

If that didn't make an impression, when I went to University of Texas at Austin for my MBA, my first wife Margaret and I were surprised to find that the Law School had a David McCoy married to another Margaret McCoy. 

This became an issue again a few years back when I started to use Social Media and for the first time tried to become aware of my presence on the internet.    I found that Facebook and LinkedIN both had dozens if not hundreds of David McCoy.   Likewise, there are several David W. McCoys.   Accordingly, in order to separate myself so that my friends and clients I chose David W. McCoy for LinkedIN and David Wade McCoy for facebook.   

The goal of this is to be aware of what is on the internet about me AND to do what I can to make myself findable if someone is looking for me on-line.   There are scores of things people advise to improve these statuses.   I use Twitter, FB, LinkedIN and I blog, all of which are supposed to help my on-line presence.   The other thing I do is from time to time, I google myself to see what happens.

After a couple of years, I have discovered that I still do not rank on a search of David McCoy and I probably never will.   There are just way too many David McCoys.    I do very well with a search of David Wade McCoy, or David W McCoy, Louisville, or David W McCoy, MBA.  And I absolutely rule if the google phrase is David W McCoy, Realtor - having nearly the entire page (nearly 8 entries).  But of course, those are very specialized searches that are probably unlikely for Average Joe to use.  The goal has therefore become to do well with the search of David W McCoy.  

With a google search of David W McCoy, I have managed to be on the first page,  SCORE.  In fact, I have shown up at many as 5 times on the first page and even landed in first place on one or two occassion.   But also in the process I have discovered my two primary nemeses - David W. McCoy, managing vice president of Gartner Fellowship Emeritus; and David W. McCoy, CPP, MBA.   These gentlemen are always vying with me for king of the google search and they both routinely score above me.

I have no idea if these gentlemen are aware of me at all but I am keenly aware of them.   While they do not know it, I am actively trying to displace them for those top positions.   BUT until I do, please don't stop reading after the first couple of entries.    If you google David W McCoy, more than likely I will show up on the first page but maybe not until the third or fourth entry. (smile)

Have a great day, all.  

By the way, if you searching for information on commercial real estate, you might want to look me up.   I am a licensed commercial real estate broker in Kentucky and Indiana and I work with office, industrial, retail, investment and land properties.   I work Buyers and Sellers, Landlords and Tenants.  I would love to help.    

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Friday, October 14, 2011

Quantum Business Center - New Office Listing



I have a new Office Listing which is perfect for companies needing smaller affordable office space.   The offices are on the second floor of the Quantum Business Center in Bluegrass Industrial Park.   Some of the features of these offices include: 
  • Large Windows throughout
  • Lots of parking available adjacent to the building
  • Easy access to I-64 via Hurstbourne Parkway interstate interchange
  • Sizes ranging from as little as 584 Square Feet up to as large as 3,328 square feet.   
  • Located in Bluegrass Industrial Park, home to more than 850 businesses employing more than 38,000 people
  • Very affordable rates
Let me know if you know of anyone looking for affordable office space.  I would love to show them around.  

Have a great day, all! 

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Parkway
Louisville, KY  40299

Tuesday, October 11, 2011

Louisville Commercial Real Estate 3rd Qtr 2011 Review of Leasing

In my previous post, I examined YTD Commercial Real Estate Sales through 3rd Quarter 2011.   In this post, I will examine YTD Commercial Real Estate Leasing.

The Numbers

According to KCREA (Kentucky Commercial Real Estate Association), 299 total leases were reported from January 1, 2011 through September 30.    Because of privacy concerns, the dollar amount of these leases is normally not available.     This equated to an average of 7.7 leases signed per week.

Leasing Data breaks down as follows: (note: figures are 2011 YTD figures through 3rd Qtr)
  • Industrial Leases:  98 transactions totaling 779,929 SF; Avg leased area 7958 SF; Median leased area 3,862 SF; Avg asking rate for Industrial Space $3.44 per SF
  • Office Leases:  104 transactions totaling 266,374 SF; Avg leased area 2,561 SF; Median leased area 1,640 SF; Avg asking rate for Office Space $16.12 per SF
  • Retail Leases: 96 transactions totalign 324,533 SF; Avg leased area 3,381 SF; Median leased area 1,950 SF; Avg asking rate for Retail Space $9.82 per SF
(A note about KCREA figures - Information on KCREA is provided by and maintained by the individual brokers.   The accuracy of the information is dependent on the individual brokers keepign their information current.    Also transactions outside of the members of the KCREA community will not appear.   Accordingly, while this information is useful, it cannot be considered to be a complete and accurate census of Lousiville Commercial Real Estate activity.   Never-the-less, it is probably the best information available and I believe that it is still very useful in examing the Louisville Commercial Real Estate market.)

(side note on dollar value of leases:  From existing data, it is difficult to estimate the dollar amout of leasing activity.    If we were to use the average asking price and the square feet leased, we could come up with an estimate of approximately $4.3 Million for Office, $2.7 Million for Industrial, and $3.2 Million for Retail.   However being based on asking prices, you would have to assume these figures would be high.   Also, this estimate would assume basically 1 year leases.  In today's market, several leases may be one year but historically, they tend to be longer and information on KCREA is not complete enough to give us this insight.) 

What this means

The thing that sticks out to me is the size of the leased area.  In every category, there is a big discrepancy between the average size leased and the median amount of space leased.    This indicates that each category has a few large transactions that comprise the lion's share of the activity.  Looking at the median numbers, we see that more than half of all of the Industrial transactions were for less than 4,000 SF; more than half of the Office transactions were for less than 1,700 SF and finally more than half of the Retail transactions were for less than 2,000 SF.  These are very small transactions especially when we consider that the transactions involving smaller spaces also typically involve shorter lease terms.  

As with Sales, the other important thing to consider here is the amount of inventory.   Presently on KCREA, there are approximately 11,000 listings.  (this includes both lease and sales listings.)  Inventory has increased significantly over the last couple of years.    As with sales, with only 299 leases recorded YTD, it would take years to clear out all of the existing inventory.   The successful Landlords will recognize that they MUST do everything possible to be in the top 5% to 10% of listed properties, in condition and price.

Crystal Ball

If we were to base our predictions for the future on the figures we have seen to date, one would expect another difficult year in Commercial Real Estate leasing.   My experience and word on the street however may indicate that we will have some positive news in the works.
  • Office - For the first time in many years, many of the larger Tenants have been looking around for Office space.   These larger leases can take quite a while to finalize but several deals are already rumored to be in their final stages.   These should begin to show up in the figures in the next 6 months or so.  
  • Industrial - Industrial Leasing has been fluctuating somewhat but if manufacturing continues to recover, we can expect this to improve as well.   The Industrial sector should benefit tremendously as Ford and GE add several thousand new manufacturing jobs they have announced. 
  • Retail - With retail, I have been seeing some of the retailers beginning to look around again and while some leasing seems to be occurring, activity in this sector seems to be trailing Office and Industrial.   Most of the activity seems to be smaller retailers with very few big box deals being done.
Apparently with that, I have overheated my crystal ball as it is getting cloudy.   Time will tell.

If you would like some help divining the future of your commercial real estate or if you need help finding some property to lease or buy, I would love to help.   Give me a call or shoot me an e-mail.

By the way, I am sure that my managing broker would appreciate me clarifying that the opinions expressed here are my own and do not necessarily reflect those of Commonwealth Commercial Real Estate, its staff, employees, agents, or brokers (other than me, of course).  If you have another opinion and would like to express it or ask a question, please feel free to post a comment.   I welcome other points of view, although I do not welcome inappropriate comments or language.  In those cases, I reserve the right to delete them.

Hope you have a great day.

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Thursday, October 6, 2011

Louisville Commercial Real Estate 3rd Quarter Review of Sales

With the 3rd Quarter of 2011 behind us, I decided to do some market analysis of the Commercial Real Estate market here in Louisville.  Here is what I found.

The Numbers

According to KCREA (Kentucky Commercial Real Estate Association), 161 total sales were reported from January 1, 2011 through September 30, 2011.   These sales had a dollar amount of approximately $75,923,496.   Average transaction size was about $471,575. This translates into approximately 4.1 sales transactions per week. (note about numbers:  Obviously duplicate transactions, transactions with incomplete data and transactions with obvious errors were omitted when calculating these figures.) 

Sales Data breaks down as follows:  (note: figures are 2011 YTD figures through 3rd Qtr)
  • Industrial Sales  31 transactions totaling $34,488,500;  Avg building size 48,749 SF; Avg Sale Amount $1,112,532; Avg Sales Price / SF $22.82 / SF; Avg asking price $22.18 / SF
  • Multifamily Sales - 22 transactions totaling $5,723,600; Avg building size 14,004 SF; Avg Sale Amount $260,164; Avg Sales Price / SF $18.58; Avg asking price $40.66 / SF
  • Office Sales - 33 transactions totaling $13,482,000; Avg building size 8,937 SF; Avg Sale Amount $408,545; Avg Sales Price / SF $45.71; Avg asking price $78.34 / SF
  • Retail / Shopping Ctr Sales - 42 transactions totaling $12,162,750; Avg building size 5,370 SF; Avg Sale Amount $289,589; Avg Sales Price / SF $53.93; Avg askign price $70.40 / SF
  • Special Purpose Sales - 11 transactions totaling $2,245,100; Avg Sale Amount $204,100
  • Vacant Land Sales - 22 transactions totaling $7,821,546; Avg tract size 34.96 acres; Avg Sale Amount $355,525; Avg price paid per acre $10,169 / acre; Avg asking price $42,689 / acre.
What this means

The striking thing to note is the prices.  Without a frame of reference, this may not mean much but the prices are down in almost every category.   Comparing the sales prices to the asking prices gives a better picture of the market at large.   Industrial prices while low seem to have stabilized with asking prices essentially equal to the sales prices being paid on average.     Sales prices on Office and Retail however are off considerably from asking prices.   More than likely this indicates that most of the properties being sold are distressed properties.   Land is a slightly more complicated beast but with an average sales price of around $10,000 per acre, this indicates that there is still very little development going on.   Land which sells in this price range typically is more rural or agricultural and more than likely does not have commercial zoning, utilities to site or other infrastructure necessary for development.

The other part to consider here is the amount of unsold inventory.   Presently on KCREA there are nearly 11,000 listings.  (this includes both lease and sale listings).   This inventory has increased tremendously over the last couple of years.   With only 161 sales this year, you can see that it would take years to eliminate all of the existing inventory.    The best advice continues to be that if you are selling property, you HAVE to do everything possible to have it in the top 5% of listed properties, in condition and in price. 

Let me know if you have any questions about this article or about commercial real estate. 

Have a great day!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299

Monday, October 3, 2011

Louisville Call Center - My busiest listing - Lease news


I am pleased to report that we have leased a major portion of my Louisville Call Center listing.   The deal which is now official with the new tenant moving in, has been in the works for quite some time.   Although I am sure that the details of the deal will be common knowledge shortly, I do not have permission from my client or the tenant to release any of this information.    

What I can tell you is this, the third floor of this building is still available for lease.  This is an extraordinarily cool building - 
  • Third floor consists of 59,000 Square Feet contiguous space
  • 18 inch raised floors
  • full generator back up for the entire building
  • full uninteruptible power sources for IT equipment
  • approx 750+ cubicles in place
  • the building has parking for 1,100+ cars
This has been an extremely active listing from the very beginning.  Given the amount of activity and ongoing interest in the building, our client is only looking for full floor users for the remaining space.

Anyway, it is a good day when you get to lease or sell a client's property.  

Have a great day!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY

Friday, September 23, 2011

Taxing the Rich

During the Presidential Campaign of 1988, our first President Bush, famously promised no new taxes.  In fact, I believe his words were:  "Read my lips!  No, new taxes!"  After the election, the Democratic congress convinced President Bush that there would be dire consequences without tax increases.  He relented on his promise, which many believe led him to lose the election to Bill Clinton in 1992.    

Like the tax increases being proposed today, the taxes were supposed to only fall on the rich so that the ordinary man (or woman) would not face undue hardship with additional taxes.   So in 1990, one of the taxes proposed and passed was on yachts.    Congress reasoned that only the rich would be buying yachts and therefore, only the rich would suffer the effects.

What happened instead was the that tax nearly killed the ship building business in New England.  The wealthy who had previously bought yachts, simply starting buying them in places like the Bahamas where there was no tax.   So not only was it ineffective in producing additional tax revenue, it created tremendous economic problems to an entire industry and put many hard working middle class people out of work.

Presently, in the national debate on taxes, President Obama is repeatly pushing to increase taxes on the rich.   Those opposing the measure are being depicted as not caring about the poor and only standing up for the rights of the rich.    History suggests otherwise.    If you don't believe me, ask the men and women who lost their jobs in the ship building industry in the 1990s.

Wednesday, September 21, 2011

Commercial Property Analysis - Case Study

Well, after all this is suppose to be a real estate blog.  So, for now, I thought I would step out of my arm chair economic advising / political role and throw some real estate at you.  

I recently was asked by a prospective client to analyze and list their property.  I thought I would present this as sort of a case study.   My analysis and recommendations follow:

Property and Market Analysis

In reviewing sales data, I was unable to find a single property like theirs which had sold in their area in the last 2 years.   Given the change in the financial climate, I do not trust any comps older than that.    I did find two units like theirs which were on the market for sale

Checking out the leasing market for the property, there were several possible options in the area with some 32 other similar options within a mile of the property.

Looking at the market stats, our commercial real estate information exchange (KCREA) showed 29  Industrial Sales, 86 Industrial Leases, 30 Office Sales and 94 Office Leases for our entire area YTD.    On the day of the analysis KCREA showed 219 Industrial Sales Listings, 337 Industrial Lease Listings, 254 Office Sales Listings and 771 Office Lease Listings.   Looking at the amount of inventory and the rates of sales and leasing, it would take more than 64 months to sell all of the sales inventory and it would take more than 49 months lease all of the lease inventory.

Property Recommendation
 
With this amount of inventory and competition, it is critical to position property in the top 5% or 10% of the properties on the market in price and condition in order to move it.   

I advised the prospective client to price the property below the offering price of the two similar properties in the area, which had not sold AND to be aggressive in pricing, terms and property condition in order to lease it.

Client Response

In spite of the analysis, the owners insisted on a listing price approximately $70,000 more than I recommended (and to put this in perspective - about 33% above the recommended price)   And while they were happy enough with the suggested lease rate, they insisted on not less than a 3 year lease and property to be taken "as-is."   Also, they insisted that any commission I earned in leasing the property should be refunded to them in the event someone decided to buy the property.

Result

When all was said and done, I passed on taking the listing.   In my opinion, the property would not sell at that price.   Accordingly from my perspective, the most I could reasonably expect to make would be a commission on a lease, which in this case would have been a small amount anyway.  Then on top of that, the owner wanted me to rebate that commission if I managed to sell it after all.

There have been times earlier in my career when I would take a listing and list it at a higher than recommended price thinking that I would satisfy the client and we could adjust it later.  My experience has been that this doesn't help anybody.   If the property is priced too high, you often cannot even get anyone to look at it.  And while I certainly want my clients to be happy, any project I take on has to make sense for me from a business perspective.  The bottom line is that if there is no way for me to earn any money off of the deal, it isn't something that I can afford to waste time on.  

Well, with that out of the way, I guess I want you to know that I am still taking listings.  If you have property that you would like me to take a look at, let me know.   I specialize in Commercial Real Estate and am a licensed real estate broker in Kentucky and Indiana.  I would love to help!

Thanks, all.   Have a great day!

David

David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY  40299