Archive for the ‘Real Estate’ Category

In many of the smaller markets throughout the country, there are a lot of first time commercial real estate buyers. The St. George, UT Commercial Real Estate Market sees many of these buyers, and there are things that every buyer should consider.

When purchasing a residential home, whether it is for personal use or as an investment, the thought process is typically what kind of neighborhood is it in, how close is it to schools, shopping, churches, parks, etc..

Although some of those factors apply when purchasing a commercial investment, I would say that that confirming the rent roll may be one of the most items. In many cases, investors aren’t really purchasing a building and land, they are purchasing the income.

If you are using a lender, they will likely require a lot items to provide checks and balances. When purchasing with cash, you should be as tedious as a lender is, and make sure you go through the same checks and balances. Unfortunately, you may be sold a lot of “Blue Sky” with a tenant that has a 5 year lease in place, but if you don’t review all the documents, you might miss the fact that they have a 30 day out clause, allowing them to cancel the lease whenever they wanted to.

Some key items to look for is:

Size of Building and Land: Make sure that the size of the land and the building matches up with the county records. Also, make sure the suite sizes align with what are in the current leases.

Tenant Name: Make sure the name on the rent rolls line up with the names on the leases. If not, there may be a missing addendum which could contain critical information that you may overlook.

Rent Terms and Escalations: The last thing you want to do is purchase a building, and find out that the tenant/tenants are moving out shortly.

Face to Face with Tenants: One of the best ways to get an idea of how a tenant is performing, is to have a face to face with them. Don’t be worried about asking hard questions, like “How is business, do you like this location, do you have plans to move somewhere else when the lease expires?” The rent roll may tell you that the lease expires in 3 years, but a face to face may tell you that their company is going out of business soon, and you should be aware of that.

Operating Expenses: Confirm, Confirm, Confirm. Take a look at as many trailing years as they will give you. Don’t trust a pro forma provided to you by someone who is trying to make the property look as good as possible. You may see very little expenses for a couple of years, but a property inspection show you that it’s because they haven’t repaired the AC units in 4 years, or the asphalt has been neglected and needs to be resurfaced.

Trust your gut. If you read something in the pro forma, or see something in the marketing that doesn’t seem right, don’t be afraid to dig into

The delinquency rates for commercial mortgages continue to decline, according to the Mortgage Bankers Association. This a national trend and it is no different in the St. George Commercial Real Estate Market. Rewinding back a few years, a large portion of the available properties for sale were either short sales, or bank owned assets. There were more properties than buyers, and it greatly affected the prices of both for sale and for lease assets. Fast forward to September, 2015, and we are seeing positive trends for landlords/sellers. The market continues to improve, which means ask prices for both sales and leases continue to rise steadily. Consequently, there are much fewer commercial delinquencies.

Jamie Woodwell of Commercial Real Estate Research said, “Commercial and multifamily mortgage delinquency rates were down broadly in the second quarter, with highlights including the lowest 90+day delinquency rate on bank-held multifamily loans since the series began in 1993.”

We are seeing positive trends in the St. George Commercial Real Estate Market, which include lower vacancy rates, higher lease rates, longer lease terms, and less delinquency.

For any Commercial Real Estate Questions, contact Brandon Vandermyde at brandonv@naiutahsouth.com.

New Business in Ft. Pierce Industrial Park

Brandon Vandermyde of NAI Utah South represented Flog Industries in the lease of their new place in Ft. Pierce Industrial Park.
Flog industries manufactures custom jeep bumpers that can be purchased directly through them, as well as at a growing amount of dealerships. Their bumpers can house and protect wenches, aftermarket lights, and provide the jeeps with a custom and sleek look. Visit their website for more details: flogindustries.com

New York City-based real estate investor Zohar A. Cohen acquired 2,600 cares in Iron County, as well as the Grand Lodge at Brian Head for approximately $100 million.

New Business at Ft. Pierce Industrial Park

Industrial Brush Corporation, a designer and manufacturer of brushes used for food processing applications, opened its doors in Fort Pierce Industrial Park in August.

Expansion of the Fort Pierce Industrial Park has been approved by the city council. The 93-acre expansion of the park will make room for a “Business Park” That could accommodate light industrial and office spaces.