Home» Construction

Why Banks are Cutting Back on Commercial Real Estate Lending

Posted on January 17, 2020 by Mike Kushner in Commercial Real Estate, Construction, Guest Blogger, Local Market, Trends No Comments

Commercial real estate lending, the bread-and-butter business for many smaller and regional banks, could further decrease in 2020. The cause is a combination of a few different factors – intense competition from non-bank lenders and rising delinquency rates to name a few. Mortgage lending is also predicted to be impacted by rising interest rates and tight housing supplies in many major markets.

This trend is not new, but rather has been slowly creeping in for years. In 2017, U.S. banks reported that demand for commercial real estate loans weakened in the second quarter, though foreign banks reported strengthened demand. Furthermore, loan growth slowed to 4.2 percent in 2018, down from 5.6 percent in 2017, according to bank call reports and Federal Deposit Insurance Corp. data.

Why exactly are banks cutting back on commercial real estate lending? And should this call for concern that a potential economic downturn is in the near future?

Rory Ritrievi, President and CEO of Mid Penn Bank

To lend some expertise on this topic, Omni Realty Group turned to Rory Ritrievi. Rory has more than three decades of experience in banking, specifically in Pennsylvania. For the last 11 years, Rory has served as President and CEO of Mid Penn Bank. Under his direction, the bank has grown from $550 million in assets and 14 retail locations to over $2 billion in assets and 39 retail locations.

Throughout his banking career, Rory has gained deep insight into when and why banks provide commercial real estate loans – and when they do not. Let’s learn what he thinks is going on in the current market, and the pending economic impact.

Omni Realty: How has commercial lending changed in the last 5 years?

RR: In the last 5-10 years, we have seen, for the most part, a return to credit fundamentals that seem to have been abandoned in the years leading up to the Great Recession. Back then it seemed like almost any deal made sense to Bankers. Now, the focus has been returned to analysis of absorption rates, discounted cash flows, borrower experience, reasonable cap rates, and strength of guarantors.

Omni Realty: In your opinion, what are the main causes of these changes?

RR: Losses. Loan losses of 2008-2012 gave a renewed focus to bankers on the true meaning of credit fundamentals.

Omni Realty: What changes would need to take place in the commercial estate market, or economy as a whole, to further improve commercial lending?

RR: Lenders need to evolve their underwriting and analytics to keep up with the evolving demographics. Baby Boomers are aging out so there is a need for more senior housing, multifamily rentals, luxury apartments, and assisted living. Additionally, high student loan balances are making the need for affordable housing in urban areas more prevalent. There is also a growing focus on renewable energy and green spaces. Finally, work from home is more prevalent which challenges the demand for traditional office space. When we look to retail, the shift toward online decreases the demand for mall space, while increasing demand for warehouse space. And we can’t overlook technology. Bankers need to not only know about emerging technology that stands to impact the market, but they must embrace it as a highly valuable tool to help them “keep up.”

Omni Realty: What do you anticipate the trend to be for commercial lending in 2020?

RR: In my opinion, 2020 will be a positive year in the lending business, particularly in Central Pennsylvania. We are in a good credit cycle and the interest rate yield curve is in decent shape compared to last year. There are geopolitical issues such as the impact of the general election, instability in the Middle East, and trade with China but I do not believe any of those issues will halt the progress of our local economy in 2020. Challenge it, yes and maybe slow it a bit, but not halt it entirely.

Omni Realty Group thanks Rory for sharing this valuable information and helping us to further understand the factors impacting how banks view commercial lending. Though banks are, for the most part, treading lightly in the market since the Great Recession, it’s encouraging to hear their renewed commitment to credit fundamentals, and helping both individuals and businesses make well-educated lending decisions.

Amidst a year that will no doubt bring change, it’s important we remain aware of the lasting impact factors such as elections and geopolitical issues may bring to our economy, both immediately and for years to come. Rory provides sound reason as to why we should not fear such changes, but rather maintain confidence in the banking economy, particularly here in Central Pennsylvania.

Do you agree with these insights, or have others to share? We welcome your feedback in the comments below!

[Online Resources] Real Estate, analysis, banks, blog, building, camp hill, carlisle, central pennsylvania, commercial lending, commercial loans, Commercial Real Estate, Construction, construction loans, CRE, data, Economy, finances, gettysburg, guest blogger, harrisburg, hershey, industrial, lancaster, lemoyne, lending, loans, market, mechanicsburg, mid penn bank, Mike Kushner, money, new cumberland, office, Omni Realty Group, pennsylvania, retail, Rory Ritrievi, trends, united states, york

Central PA’s Growth in Commercial Construction Creating Workforce Challenges

Posted on December 19, 2019 by Mike Kushner in Blog, Construction, Local Market, Trends No Comments

With new commercial construction projects popping up all across Central Pennsylvania, it may appear as though it’s a great time to be in the industry. A demand for more commercial construction usually means businesses are growing or moving into the area, bringing with them jobs and economic growth. But there’s one looming challenge that stands in the way of this growth having only upside, and that’s the lack of commercial construction workers to take on this work.

According to Commercial Observer, this workforce challenge is not limited to the Central Pennsylvania region. Rather it’s a nationwide issue that could have wide-spread impact. A serious gap exists between the upcoming demand for labor and the number of available workers with the skills needed to fill those positions.

How does this gap in skilled laborers stand to impact the commercial real estate construction industry? And what, if any, solutions exist? For further input on this issue, Omni Realty Group turned to Dave Sload, President and CEO of ABC Keystone.

ABC Keystone was established in 1959 with the mission of advancing and defending the principles of free enterprise in the construction industry. Today, the organization is a powerhouse with 69 chapters and over 21,000 members. It is one of the leading organizations representing America’s business community and the construction industry.

“The construction industry is already in a critical state when it comes to finding skilled workers. They simply are not out there and it is forcing companies to pass on some projects,” says Sload.

Commercial construction companies being stretched so thin on labor that they decline work illustrates the severity of the labor shortage and the ominous threat it poses on the industry. The real struggle is construction spending is not predicted to subside. In fact, growth over the next two years is substantial.

According to FMI’s 2019 Industry Outlook, total construction spending in the Mid-Atlantic region, which includes Pennsylvania, New York and New Jersey, should increase 5 percent year over year, from $153.6 billion to $161.3 billion. It is predicted that this trend will hold in coming years, with anticipated spending increasing at a rate of 4.5 percent between now and 2022.

Combine this with the fact that the construction industry unemployment has dropped to an 18-year low, and you have the recipe for a sustained labor shortage that will lead to higher labor costs, longer project schedules, and inevitably quality and safety issues that will result from understaffed crew and under-qualified workers.

Sload adds, “Things will only get worse in the future. 40% of the construction workforce will retire over the next ten years. It will not be just the skilled workers we lose but also decades of institutional knowledge.”

Construction jobs are a cornerstone of our local economy, with thousands of well-paying jobs created every year. The latest job openings data from the Bureau of Labor Statistics suggests that since 2014, while the number of jobs openings has almost doubled, the number of hires has increased by just 14 percent. This underlines the fact that it is not a lack of jobs, but a lack of laborers to hire for such jobs.

Sload continues, “If that is not enough, this country is in desperate need of infrastructure legislation to update our highways, airports, wastewater treatment plants and water systems. Should an infrastructure bill pass in the range of what has been proposed, we would immediately be another 500,000 skilled workers short.”

All of this begs the question, “What is the solution?” Construction business owners and other hiring entities have started exploring all viable options for employing and retaining qualified workers. Possibilities include increasing and improving recruiting efforts; retaining qualified workers during periods of slow work so they are more readily available; investing in skills training and continued education programs; and working harder to nurture internal talent, especially to retain institutional knowledge.

While none of these solutions may be the “silver bullet” the industry needs right now, it’s evidence that the issue is not being ignored, and companies are willing to get creative and collaborative with whatever combination of solutions prove to move the needle.

Have you felt the impact of workforce challenges, either personally or within your business? Or do you have a different opinion as to how the commercial construction industry may address this issue?

Join in the conversation by leaving a comment below.

[Online Resources] Real Estate, abc keystone, building, central pa, central pennsylvania, commercial construction, Commercial Real Estate, Construction, development, Economy, employment, growth, industrial, jobs, office, Omni Realty Group, pennsylvania, retail, trends, unemployment, workers, workforce

How Opportunity Zones Could Impact Central PA Real Estate

Posted on December 26, 2018 by Mike Kushner in Blog, Commercial Real Estate, Construction, Guest Blogger, Local Market, Trends No Comments

Note: This article was published by the Central Penn Business Journal. Click here to read the original version.

Opportunity Zones are being referred to as “real estate’s most exciting new investment vehicle,” but what are they and can they really live up to this title?

How this type of investment works and why it stands to be so beneficial is essentially this: capital gains are invested in Opportunity Zones, taxes are deferred, the basis is lowered, taxes are then paid in 2026 (at the same nominal value as in 2018), and after 2028 the Opportunity Zone holding can be sold with no capital gains tax due.

Better yet, there are very few restrictions on the properties in which one can invest. It’s estimated that there are $2.3 trillion worth of unrealized capital gains in the U.S. Even if only 15 percent of this is invested in Opportunity Zones, this will exceed the 2017 corporate income tax revenue and almost match the Medicaid spend of that same year.

The potential benefits don’t stop there. Opportunity Zones can also provide a tax deferral on gain that investors invest in a fund, and the elimination of gain in the new Opportunity Zone investment if it is held for more than 10 years.

This should paint a clearer picture as to why Opportunity Zones have real estate investors abuzz. To answer the most essential questions related to Opportunity Zones, and specifically how they stand to impact Central Pennsylvania real estate, Omni Realty has asked Silas Chamberlin to share his expertise and insight on this topic.

Silas Chamberlin, PhD is the Vice President, Economic & Community Development at York County Economic Alliance. Prior to joining YCEA in fall of 2018, he served as CEO of Downtown Inc. Chamberlin has also served as executive director of the Schuylkill River National Heritage Area, an organization promoting economic revitalization in five counties of southeastern Pennsylvania. And he has held leadership positions in the non-profit sector and state government. Throughout his career, Chamberlin has focused on helping communities leverage their unique assets to create opportunities for economic development and a higher-quality of life.

Mike Kushner of Omni Realty and Silas Chamberlin jump right to the meat of things starting with the local impact of Opportunity Zones, using the Greater York Area as a sampling.

Omni: How many census tracts in York County were approved for the Opportunity Zone program? And where?

Silas Chamberlin: York County has five designated tracts. All tracts are located in the City of York and are the tracts which encompass most of the city’s brownfield sites. Tracts in Hanover and Wrightsville were eligible for designation, but were not selected by the state.

Omni: Specifically, how will this program benefit the Greater York Area and how soon do you expect to see an initial impact?

SC: Opportunity Zones will attract additional investment to qualified projects in our five opportunity zones. The tax break should help draw investors’ attention to projects that have not benefited from private investment in the past. YCEA is a working partner to help identify viable projects within the zones to market to Qualified Opportunity Fund investors. We are also vetting the creation of local and regional funds focused on the city’s zones.

In theory, we could see funds begin investing in qualified projects at any time. Opportunity Zones are intentionally driven by the free market and individual investment decisions, so it is difficult to tell how much investment will end up in York. Observers at the national level have noted that there may be more private capital available than viable projects, so York should certainly position itself to take full advantage.

Omni: Are the tax breaks provided through this program enough to incentivize private investors and spur activity?

SC: The short answer is yes. But it would be inaccurate to view Opportunity Zones as a panacea that will turn vacant buildings into viable investment opportunities overnight. The most competitive projects will be those that are already viable without Opportunity Zone funds, but would benefit from additional investment.

Unlike New Markets Tax Credits or other popular programs, Opportunity Fund investments are unlikely to subsidize a project because the project must be able to grow in value and return an investment to the fund. YCEA’s strategy is to identify viable projects within Opportunity Zones and then use the designation to attract investors’ attention. We see this as yet another tool in our economic development financing toolbox.

Omni: Are there any drawbacks to the Opportunity Zone program?

SC: Opportunity Zones rely on a self-certification process for creating a fund, which means that investors have lots of autonomy. This also means that economic development organizations and municipalities may not always be aware of investments being made in their zones. Because the zones are distressed areas by definition, there is a higher risk that outside investment could change neighborhoods and business districts without any local engagement or controls. There are potential controls that could help guide development in Opportunity Zones—such as zoning overlays—but these tools are not yet well developed, especially in smaller cities.

Finally, there is the risk for disappointment. Opportunity Zones absolutely provide another tool to attract investment, but there is a risk in promoting them as transformational and raising the hopes of residents and developers that untapped capital will begin flowing into the census tracts that need it the most. While there is reason to be hopeful, the reality of matching qualified investors to viable projects may narrow the scope and impact of the tax break.

The Bottom Line

Experts predict that after an initial wave of Opportunity Zone fund offerings in early 2019, there may be a pause that coincides with the issuance of additional regulations during which market participants will evaluate fund and project structures. After that, barring the rise of general economic headwinds, it should be full steam ahead for Opportunity Zone funds moving forward.

From a real estate perspective, Opportunity Zone projects need to be viewed as development projects because the requirement is to create new property or substantially improve property. To reemphasize Silas Chamberlin’s point, there is surely reason to be hopeful that Opportunity Zones will flow capital into census tracts that need it the most. But we must remain cautiously optimistic about how quickly and substantially this capital will come about. Much like anything related to real estate, and especially real estate investment, most outcomes remain at the mercy of the market and ever-changing government regulations.

[Online Resources] Real Estate, business, central pa, commercial, Construction, CRE, development, government, growth, harrisburg, jobs, lancaster, Mike Kushner, monety, Omni Realty Group, opportunity zone, pennsylvania, property, real estate investor, renovation, residential, silas chamerblin, tax break, taxes, york, york ounty economic alliance

Top Commercial Real Estate Projects to Impact Central PA

Posted on February 26, 2018 by Mike Kushner in Blog, Commercial Real Estate, Construction, Local Market No Comments

There is a lot of different commercial construction activity taking place in Central Pennsylvania. Looking at the top commercial real estate projects to be delivered in 2018, there are two retail projects and 4 Class A industrial projects that will enter the market, bringing with them new businesses, jobs and consumers. Let’s take a closer look at these top projects to better understand the likely impact they will have on Central Pennsylvania’s economy both now and into the future.

RETAIL

Lancaster County has two retail real estate projects under construction that are projected to have a significant impact on jobs and the economy. The anchor stores for each of the two projects are supermarket brands we have come to know and love – and ones that will surely attract consumers far and wide.

The smaller of the two projects is the Crossings at Conestoga Creek, located on U.S. Route 30 in Lancaster. The 90,000 square feet of retail space being developed will be anchored by Wegmans which will become the county’s second largest supermarket, trailing only Shady Maple Farm Market in East Earl, which is 150,000 square feet. With annual sales of $7.4 billion, Wegmans is the nation’s 32nd largest supermarket chain.

The Crossings, which sits on a 90-acre site between Toys R Us and the Lancaster Post Office, is being developed by High Real Estate Group. This new retail space will create a substantial number of jobs and attract shoppers from surrounding counties. The Wegmans store anticipates the creation of 500 to 550 new jobs, and they have already begun hiring for their grand opening in 2018.

Project at 206 Rohrerstown Road.

Lancaster’s Manheim Township has exciting news of its own as it prepares to welcome the grand opening of a Whole Foods market in 2018. The proposed $130 million Belmont housing and retail project includes the market, other retail stores and homes on farmland just south of Route 30.

Rendering of Belmont retail and housing project.

Anchoring the retail portion of the 110,508 square-foot project will be the 40,000-square-foot Whole Foods market. Additional tenants will be Two Farms, Inc. Panera Bread, Metro Diner, Fuddruckers, Citadel Federal Credit Union and Mod Pizza. The retail portion of Belmont will create nearly 1,000 jobs, while Belmont overall will generate millions of dollars in tax revenue for Lancaster.

INDUSTRIAL

Four new industrial real estate projects are also under construction in Central Pennsylvania. Though much larger in size, these spaces will have a slightly different impact on our local jobs and economy than Lancaster’s retails spaces.

The largest is the Class A industrial space located at 100 Goodman Drive in Carlisle. This is part of the Goodman Logistics Center Building 1. It was announced in August 2017 that the tenant for this 1,007,868 square-foot space will be syncreon, a global third-party logistics company headquartered in Michigan. From this prime industrial location, syncreon will have access to more than 40 percent of the population of the United States.

Project at 100 Goodman Drive.

Another Carlisle Class A industrial space soon to enter the market is the warehouse at 100 Carolina Way. This 805,600 square-foot space, currently not pre-leased, is located next to Keen Transport, U-Pack and ABF Freight. The third industrial construction project is the 738,720 square-foot space located at 112 Bordnersville Road in Jonestown (First Logistics Center – Building A). Situated in the heart of the I-78 and I-81 industrial distribution corridor, the industrial park is designed to accommodate two Class A distribution centers. The second space will be delivered in Q3 2018.

Project at 100 Carolina Way.

Project at 112 Bordnersville Road.

The final Class A industrial space which is under construction in Central PA is the Ace Hardware expansion located at 139 Fredericksburg Road, Fredericksburg. With 225,875 square-feet of space, this expansion will turn the building’s existing space into a combined 1.1 million square-feet of distribution space located at Lebanon Valley Distribution Center.

Rendering of the ACE Hardware expansion.

As Central Pennsylvania’s warehousing and distribution industry grows through the delivery of these new buildings, to what extent do you feel this will impact our local jobs and economy?

Also, which of Lancaster’s two new retail spaces do you feel will gain more traffic – short term but also long term?

Join in the conversation by leaving a comment below!

[Online Resources] Real Estate, ace hardware, business, carlisle, central pennsylvania, Class A, Commercial Real Estate, Construction, CRE, distribution, Economy, expansion, growth, harrisburg, industrial, jobs, lancaster, lebanon, new space, pennsylvania, retail, shipping, space, supermarket, trucking, warehouse, wegmans, whole foods

New Construction in Central PA Predicted to Increase Office Space Vacancy

Posted on October 21, 2015 by Mike Kushner in Blog, Construction, Local Market, Trends No Comments

In third quarter 2015, the Central Pennsylvania submarket for commercial office space showed some positive trends for growth and demand. We have four projects under construction that will deliver more than 400,000 square-feet to the market within the coming year, with a majority of this space already preleased.

However, this promising news for the market is tempered by the fact that many tenants will vacate other office space within the Central Pennsylvania market to occupy these newly constructed office buildings. How will this impact net absorption and vacancy rates? Let’s first take a look at the data for third quarter 2015 and apply this toward what we can expect to see in the future.

Select Top Under Construction Properties

Currently four different commercial office properties are under construction in the Central Pennsylvania submarket. The Cornwall Health Center, located in Harrisburg Area East, broke ground in fourth quarter 2014 and is scheduled to be delivered in fourth quarter 2015. It has an RBA of 54,234 square-feet and is 100% preleased. The TecPort Business Campus – Building A broke ground this quarter and is scheduled to be delivered in third quarter 2016. It has an RBA of 7,590 square-feet. It is not preleased and its quoted rental rate is listed as negotiable.

Additionally, a Class A office space project is under construction at the intersection of Carlisle Pike and Hogestown Road. The two buildings that make up this project have a combined 259,000 square-feet of space are expected to be completed in spring 2016. Finally, there is Class B office space at 1250 Camp Hill Bypass that is under construction. Its 82,000 square-feet of space is 100% preleased.

Select Deliveries this Quarter:

Although four of the top 15 Select Year-to-Date Deliveries in 2015 were from the Central Pennsylvania submarket, just one was newly delivered in third quarter 2015. The Vista Plaza consists of three floors and 32,500 square-feet of office space. It is 45% occupied and is currently priced at $21.23 per square-foot. ECI Constuction, LLC completed the new addition to Vista Plaza on Manor Drive in Mechanicsburg, PA. The addition nearly doubled the original square footage of the building by adding a new wing to match the existing wing. Some of the current tenants include Duck Donuts and MS Consulting, Inc.

Rental Rates:

This quarter showed an increase in quoted rental rates. The current price of $17.14 per square-foot is a $0.07 increase from last quarter and the highest rate we have seen since prior to 2011.

Vacancy:

In third quarter 2015, the vacancy rate in the Central Pennsylvania submarket for office space decreased from 7.8% to 7.5%. The vacant square-footage also decreased from 4,120,331 square-feet to 3,962,599 square-feet.

Absorption and Demand:

With one more building being delivered to the market this quarter, the total RBA increased to 52,581,663 square-feet. Net absorption also experienced a substantial increase, more than tripling last quarter’s 50,466 square-feet to the 190,232 square-feet that closed out third quarter 2015. But take note, both net absorption and vacancy rates will soon be greatly impacted by the 400,000+ square-feet that will be delivered to the market in the next year!

Our Summary/Analysis:

Central Pennsylvania has four under-construction office space projects that have a combined 402,824 square-feet of space that is soon to be delivered to the market. As new inventory is added, with many tenants vacating existing space in Central Pennsylvania to do so, we can expect this to impact net absorption and vacancy rates significantly.

It will be important to closely watch this data over the coming quarters as some of these large projects reach completion. As a result, we expect net absorption to drop back into the negatives. Also, we expect vacancy rates to rise as high as 8.1% (assuming no outside business move into the market or existing businesses expand which has not been the trend in 2015, but was in 2014). Quoted rental rates may also dip because of this increase in vacancy.

While new construction certainly has its benefits, adding this much square-footage in such a short amount of time to the market can have some not so desirable effects from the standpoint of landlords and sellers. On the flip side, businesses looking to move or expand within Central Pennsylvania should be encouraged by the larger and more competitive selection of space available.

How do you anticipate new office space construction impacting the Central Pennsylvania market into the future? Share your personal insights – or ask a question by commenting below!

[Online Resources] Real Estate, build, business, buy, camp hill, central pa, central pennsylvania, Construction, costar, cumberland, data, dauphin, Economy, facts, harrisburg, lancaster, landlord, lease, market, mechanicsburg, Mike Kushner, news, Office Space, offices, Omni Realty, pennsylvania, prediction, project, report, statistics, stats, tenant, third quarter, trends, york

As Office Property Nears Completion, Builder and Buyer Chime In

Posted on May 22, 2012 by mike.kushner in Blog, Community, Construction No Comments

Two months ago, we published an interview from the perspectives of both the builder and the owner of an office construction project in Harrisburg. The project is nearing completion and we thought it would be a good time to check in on their progress.

Here’s a follow-up interview with David Martin of Michael L. Martin, Inc. and Robert Beachy, property owner.

David Martin (Builder):

When do you anticipate completion of the property?

Our goal is to deliver the project the last week of May (after Memorial Day).

Has the recent rain impacted this project’s timeline at all?

The rain has hindered our progress this past week and is forecasted to do the same this week.

How else does weather impact the progress of constructing a property?

Rain can really slow down the progress at this point in the project. Typically this is the time when we are doing the exterior finishes like curbing, parking lot paving, sidewalks, etc. This work cannot be done while it’s raining.

Have any significant unexpected challenges arisen in this project?

There have been a few, some of them were related to constant changes being made to building codes and ADA requirements. Getting a sewer hookup to the property has been the biggest challenge on this project.

For you, what’s the most enjoyable part of the construction process?

For me, the entire process is rewarding. If I had to pick one part it would be the design phase. Creating a plan that works best for the client is a challenge that I enjoy.

Bob Beachy (Owner)

Is this property turning out the way you envisioned it when you began this project?

Yes, for the most part with some minor differences such as having to change some of our kitchenette cabinetry to comply with ADA guidelines. We had also hoped to have two windows in the basement but had to change it to one window because of the grade of the lot.

What do your existing clients think about the re-location?

No one has been in the space yet but clients that have driven by the building say it looks very nice and several of them commented about how nice the stone exterior looks.

What value would you place on the role of a commercial real estate agent in the process of completing a new build?

It was very helpful to have someone knowledgeable about the building process to advise us and who had prior relationships with other agencies and professionals that we needed to involve in our project.

Now that the property is near completion, what are you thinking and feeling about this experience?

We are pleased with how the project is turning out, but we’re also glad to be nearing the end!

What recommendations do you have for others who might be looking to build?

Spend time developing a thorough project budget with the assistance of a commercial realtor/developer. Know someone who has a lot of connections with other agencies and professionals. Be patient. Check on the progress of your project regularly. Hire a good builder with an excellent reputation.

[Online Resources] Real Estate, Bob Beachy, building, Central PA Real Estate, commercial buying, commercial lease, Commercial Real Estate, Commercial Realtor, Construction, CRE, David Martin, Going Green, landlord, leasing rates, Michael martin builder, Mike Kushner, NAR, office lease, Office Leasing, office leasing marketing, Office Space, office space camp hill, office space Harrisburg, office space in central pa, Omni Realty Group, planning and developing, rent office space, tenant advocate

Commercial Construction: From the Perspective of the Owner

Posted on March 21, 2012 by mike.kushner in Commercial Real Estate, Construction No Comments

We’ve been talking about construction for the past few weeks. Our first blog of this series offered steps involved in building and the importance of hiring a qualified commercial real estate professional to aid in the process. Two weeks ago, we discussed the pre-approval and entitlement process and last week we shared an interview with David Martin, who is managing a construction project in Harrisburg. This week, we talk with the owner of the Harrisburg property, Robert Beachy.

Why did you decide to build rather than lease or buy existing space?

Our counseling practice has been interested in owning our own building for a number of years. We have been leasing space for a long time and were interested in owning a building in order to build some equity. We looked at numerous existing buildings before deciding to build so that we could design and configure the space exactly to our needs and specifications.

For you, what role does Mike play in this process?

Mike has played a pivotal role for us throughout the entire process, from making the decision to own rather than lease, to looking at existing properties, to deciding to build our own building. Since we had never done this before, Mike’s experience was invaluable in shepherding us through the project. He made contacts for us with other individuals including our builder, engineer, banker and township officials. He has kept a watchful eye on the project from start to finish. It has been very helpful to have someone we could trust representing our interests from the start.

Did you select the builder for the project or was that something coordinated by the commercial real estate agent?

Mike introduced us to our builder, someone he had worked with on other projects and felt would be a good match for what we were planning to build. However, we had the final decision about which builder to use for our project.

How did you choose location for the building?

We were aware of a lot that had been for sale for a number of years in the location we wanted to build in. We chose the location because it was close to our current location and provided easy accessibility for our clients.

Is there anything else you would like to tell us about your experience?

We want to reiterate the appreciation we have for Mike’s assistance with our building project. He has been available to us answer our questions, help clarify our confusion, and provide encouragement when we have needed it.

[Online Resources] Real Estate, Bob Beachy, building, Central PA Real Estate, commercial builder, commercial buying, commercial lease, Commercial Real Estate, Commercial Realtor, Construction, CRE, Dr. Robert Beachy, entitlement, Going Green, Michael L. Martin Inc., Mike Kushner, NAR, office lease, office leasing marketing, Office Space, office space camp hill, office space Harrisburg, office space in central pa, Omni Realty Group, Pennsylvania Commercial Information Exchange, planning and developing, pre-approval, rent office space, role of commercial realtor in construction

Commercial Construction: From the Perspective of the Builder

Posted on March 14, 2012 by mike.kushner in Commercial Real Estate, Construction No Comments

David Martin

Now we have a chance to look at a ‘build in progress.’ Today’s blog features an interview with a builder who is managing a construction project in Harrisburg. Next week, we’ll talk with the owner about the same property in order to gain perspective from both sides.

Below is an interview with David Martin of Michael L. Martin, Inc.

What percentage of home building, commercial building and renovation makes up your business?

Currently renovation/remodeling/additions make up 75 percent of our business; the other 25 percent is commercial.

What makes Michael Martin Builders different than other builders?

Quality, integrity and value engineering go into every project. We put a lot of pride into our service.

How have the economic conditions affected your industry?

Like most in our industry, we’ve had to adapt to the market. We have gone from building custom homes to performing renovations, building additions, finishing basements, remodeling homes and small commercial jobs.

Pennsylvania adopted a $650 million energy bill was passed in 2008, giving builders access to several grant and loan programs. Have you been able to access these funds for ‘green’ building?

We have been able to pass on tax rebates and discounts to clients on heating systems, windows, etc.

Briefly tell us about the process of constructing a property such as Dr. Beachy’s.

The process involves designing a building that is functional for the client. Once the design is agreed upon we execute a contract and obtain the necessary permits. Construction is a 4-5 month process for a building such as theirs once we have obtained the permits and begin.

Is there anything unique or memorable about Dr. Beachy’s property? For example, something that made it different from other properties?

Each project presents new and exciting challenges, some bad and some good! The Beachy’s is a smaller scale commercial project that is much like building a Ranch home.

Do you have a date for the completion of this job?

We will complete this building sometime in May.

How does your business work with a commercial real estate professional, such as Mike Kushner of Omni Realty?

We rely on and appreciate the work of those like Mike Kushner. Mike was extremely helpful in getting us this project.

If you were to relocate today, would you prefer leasing, buying, or building office space? Why?

[Online Resources] Real Estate, building, Central PA Real Estate, commercial builder, commercial buying, commercial lease, Commercial Real Estate, Commercial Realtor, Construction, CRE, David Martin, entitlement, Going Green, Michael L. Martin Inc., Michael Martin Builders, Mike Kushner, NAR, office lease, office leasing marketing, Office Space, office space camp hill, office space Harrisburg, office space in central pa, Omni Realty Group, Pennsylvania Commercial Information Exchange, planning and developing, pre-approval, rent office space, role of commercial realtor in construction

Before You Build: What You Need to Know about the Pre-Approval and Entitlement Process

Posted on March 7, 2012 by mike.kushner in Commercial Real Estate, Construction No Comments

If you’re a homeowner, then you know what if feels like to be a first-time homebuyer. You know that buying a home is a massive undertaking. And you probably learned a few things that made it a lot easier to go through the process a second time.

But what if you’re looking to be a first-time builder of commercial real estate? How do you avoid making rookie mistakes that could derail your first attempt to enter such a complicated industry?

A critical early step is to acquire proper entitlement. Entitlement is a legal process that allows you to obtain pre-approvals for the right to develop property. These pre-approvals help you to ensure the project’s feasibility while up-front guidelines that help avoid costly mistakes.

The pre-approvals include areas such as zoning, rezoning, obtaining permits and easements, determining the availability of utilities and developing or redeveloping roads. You should be prepared to discuss your project with the municipality’s Planning and Development Department and meet requirements such as hearings, compliance with codes, a land review and approval of your site plan.

To make your project timely and cost-effective, you should consider hiring an experienced professionals such as architects, structural engineers, legal council, developers, project managers and consultants that can help you overcome the unique challenges of your project. You can help streamline your project by ensuring these professionals are familiar with the local jurisdictions in which you’re building.

For more information, contact The Pennsylvania Commercial Information Exchange, an online community for commercial real estate in Pennsylvania. In addition, the National Association of Realtors offers free commercial real estate monthly webinars.

At Omni Realty Group, we provide personalized service that will help you complete the project of your dreams. For additional information on commercial construction in Central Pennsylvania, call us at (717) 657-5833 or visit us online at Omni Realty Group.

[Online Resources] Real Estate, building, Central PA Real Estate, commercial builder, commercial buying, commercial lease, Commercial Real Estate, Commercial Realtor, Construction, CRE, entitlement, Going Green, Mike Kushner, NAR, office lease, office leasing marketing, Office Space, office space camp hill, office space Harrisburg, office space in central pa, Omni Realty Group, Pennsylvania Commercial Information Exchange, planning and developing, pre-approval, rent office space

Looking to Build? We can help!

Posted on February 29, 2012 by mike.kushner in Commercial Real Estate, Construction No Comments

At Omni Realty Group, we value quality over quantity. That’s why we’re the go-to firm in central Pennsylvania for highly personalized service and a full-range of commercial real estate support. In other words, we choose to limit our volume of real estate transactions so that we can handle your every real estate need from start to finish.

And whether you’re a buyer or you’re looking to lease property, there’s even better news: buyer agency and tenant representation services are often free to you – most of the time, these costs are paid for by the seller.

We have the expertise to guide you through any commercial real estate situation. Over the next four weeks, we’ll provide insight on building a new facility for your commercial venture.

If you’re looking to build, our experienced staff can assist you in planning and determining adequate financing for your building requirements. We can also help you identify potential building incentives, grants and loans.

For example, if you’re looking to “go green,” it’s good to know that Pennsylvania adopted a $650 million energy bill was passed in 2008, giving builders access to several grant and loan programs. Additional incentives involve tax credits of up to 30 percent on renewable energy such as solar, fuel cell and wind technology.

We also ensure that you take all of the proper steps in getting your project underway. For example, it’s important that you first acquire proper entitlement, a legal method of obtaining pre-approvals for the right to develop property. Some examples of entitlement include zoning and rezoning, obtaining permits and easements, availability of utilities, landscaping and development or redevelopment of roads.

We’ll discuss more about commercial building in the weeks to come. Our blog posts will include more information on the entitlement and pre-approval processes and we’ll also feature interviews with a commercial builder and commercial buyer.

In the meantime, for more information on commercial construction in central Pennsylvania, or to schedule an appointment, contact us by phone at (717) 657-5833, or online at Omni Realty Group.

[Online Resources] Real Estate, building, Central PA Real Estate, commercial builder, commercial buying, commercial lease, Commercial Real Estate, Commercial Realtor, Construction, CRE, entitlement, Going Green, Michael Martin Builders, Mike Kushner, office lease, office leasing marketing, Office Space, office space camp hill, office space Harrisburg, office space in central pa, Omni Realty Group, rent office space