Home» Posts tagged "rent"

As Your Needs for Office Space Change, Understand the Role of a Tenant Representative

Posted on April 7, 2020 by Mike Kushner in Blog, Commercial Real Estate, Tenant Representative/Buyer Agent No Comments

The outbreak of COVID-19 hitting the United States has brought with it a tidal wave of challenges and uncertainties. This has been a wakeup call for so many businesses and individuals who must now struggle to adjust. Particularly for business owners who either own or lease commercial real estate such as a retail location, industrial space, or offices, the order to work from home and stay at home has drastically changed their need for brick and mortar space.

Whether it’s right now or once COVID-19 has passed, it’s highly likely that businesses in Pennsylvania and across our nation will have a drastic shift in their commercial real estate needs. In such times, business owners should be reminded that having a tenant representative on your side to represent you and negotiate for you as you reduce the amount of space you currently occupy, move to new office space, or change the terms of your lease is highly beneficial.

In an effort to help business owners understand how a tenant representative can be a benefit to them, and how this relationship works, we want to help answer some of the most common questions surrounding a tenant representative’s role. This first of which is “How do tenant representatives get paid?” Too often, the answer is confused with or lumped into the same category as how listing agents, who represent the landlord or seller, are compensated. But this is not necessarily the case.

What’s important to note is that exclusive tenant representatives, also called buyer’s agents, are unique in that they exclusively represent those looking to rent or buy commercial real estate. They never represent the landlord or seller, and for good reason. As you can imagine, that creates a conflict of interest which you can read more about here.

To answer the question regarding how a tenant representative/buyer agent is paid, here is a breakdown of important points to provide a clear explanation.

Typical Commission

The amount a commercial real estate agent receives on a commission is calculated as a percentage of the total commercial property sale price or lease value. The percentages are negotiated in the listing agreement. It’s important to note that it is illegal due to anti-trust laws to set a market or industry-wide standard for commission percentages, but on average most commissions range from 4% to 8%.

The variance in commission rates is due to a number of factors. In areas that have a surplus of office space, brokers may receive higher commission to entice tenants to particular properties. Brokers may also get varying commissions for office, retail and industrial spaces.

Co-Broke Commission – No Cost to the Tenant or Buyer

While tenant representatives/buyer agents provide their clients with incredible benefits, it’s important to note that the tenant/buyer is not responsible for a tenant representative’s/buyer agent’s fees. Properties for sale or lease that are listed with a broker specify a commission to be paid to the listing broker and shared with the broker representing the buyer/tenant. Landlords are the ones responsible for paying the fees. Most landlords have budgeted for the payment of commissions.

Although tenant reps/buyer agents are incredibly helpful for tenants/buyers looking for commercial real estate, their services also benefit landlords or their listing agent, as they help fill vacancies. Because tenant representatives/buyer agents allow listing agents to quickly turn over empty space, they are often willing to pay for their services. As a result, a buyer/renter can usually enjoy the services of a tenant representative without having to pay anything.

One caveat is that in very rare circumstances, landlords or listing agents may refuse to pay the tenant representative’s fees. Normally, this only happens when the tenant representative was not engaged from the very beginning of the tenant or buyer looking for space which can muddy the waters. This makes it all the more important to begin any commercial real estate search with a tenant representative on your team.

Advantages of Working with a Tenant Representative

If a real estate broker representing the landlord/seller encourages you to do a direct deal without a involving a tenant representative/buyer agent, proceed with extreme caution. The landlord’s/seller’s broker will likely tell you that you will save money by eliminating the tenant representative’s/buyer agent’s fees, but the truth is that the landlord/seller is likely to pay the same amount to their own representative even if you forgo a tenant rep/buyer agent. Plus, not having an agent to advocate for you during the negotiation process could mean ending up with a higher rent rate and less than favorable lease terms.

It’s important to have the knowledge and expertise of a tenant representative/buyer agent to guide you through the leasing/buying process and represent your best interests. A tenant representative/buyer agent can also make your property search less time consuming by showing you only properties that they know fit your criteria. Think of them as your tenant/buyer “concierge.”

Despite the fact that the landlord is responsible for paying the tenant rep/buyer agent, you should rest assured that the tenant representative/buyer agent is working for your best interests. This is because they don’t get paid until you find a great deal!

Has the impact of COVID-19 caused you to rethink the use of your commercial real estate spaces? If you need to downsize or renegotiate the terms of your lease, keep in mind how a tenant representative can be an advocate for your best interests.

[Online Resources] Real Estate, business, buy, buyers agent, camp hill, carlisle, central pennsylvania, Commercial Real Estate, common question, compensated, compensation, corporate, CRE, dillsburg, exclusive tenant rep, harrisburg, hershey, hummelstown, industrial, lancaster, landlord, lease, lemoyne, mechanicsburg, Mike Kushner, office, Office Space, Omni Realty Group, paid, pennsylvania, real estate agent, real estate broker, rent, retail, sell, tenant representative, york

COVID-19 and the Economy: Changes Coming to Commercial Real Estate

Posted on March 27, 2020 by Mike Kushner in Blog, Commercial Real Estate, Local Market No Comments

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

No matter where you go to consume news, you will be bombarded by anything and everything related to COVID-19. The impact of this novel virus on our world is impossible to fully understand or appreciate at this time. The term “unchartered water” is being used quite frequently and it couldn’t be more accurate.

Every industry is wondering how this will impact their business, both immediately and long-term. The simple truth is that no one really knows right now. The best we can do is look to history to see how the world has reacted to similar pandemics, economic crisis, and panic. Though the world has not seen a virus causing a global shut down like we are seeing with COVID-19, we can anticipate the significant changes we may expect to see take right here in Pennsylvania. Here’s how commercial real estate is getting pulled into the fold.

Economic Uncertainty. With so much uncertainty in the stock market these last few days, people get nervous. Talk to anyone working in the financial services industry, and he or she will tell you that most of their time right now is spent talking people off the ledge of making panicked decisions. And their fear is not unfounded. After all, trillions of dollars in paper wealth have essentially evaporated.

As people watch their diminishing 401K balances, they feel rightfully uncertain. And if such uncertainty causes consumers to hit the pause button on spending, a ripple effect is bound to take place. When attendees avoid concerts, sporting events, movies, or restaurants, businesses suffer a decline in sales. Operations who supply these enterprises, such as the trucking, food, linens, security, novelties industries then feel the pinch as the ripples become waves of lost revenue. How does this relate back to commercial real estate? All of these businesses rent or own commercial real estate, meaning CRE gets pulled into the downward spiral.

Supply chain disruption. Here are the facts (changing daily), steel production is down 90% in China. Auto sales in Asia is down 95%. One of the Port of LA’s largest exports is auto parts. Couple these factors with the typical container cancellations during the Chinese New Year and you create an immense lag in product delivery which will ripple out to impact just about every other industry imaginable.

Whole industries have come to a sudden halt. Hotels, restaurants, construction businesses, retail stores – and this is hardly scratching the surface of the businesses across the Commonwealth mandated to shutter their businesses for at least two weeks – likely more. The ripple effect this will have immediately and well into the future is near impossible to quantify. It’s not unlikely that some businesses may fold as a result. If such businesses owned or rented commercial real estate, this is space that will be vacated. Additionally, a lull in new construction will decrease the amount of new space delivered to the market at least through 2020.

Interest rates. There is much conversation and reason to believe that we will soon see more favorable interest rates, making commercial real estate financing more affordable. The reason is that mass stock market sell offs will generate proceeds which must be invested. Typically, a safe harbor for this cash is short term instruments such as Treasuries. However, this needs to be taken with a grain of salt. On March 3rd, The Federal Reserve lowered the federal funds rate by ½ of one percent which was met with much applause. The truth is that this is irrelevant. The federal funds rate refers to the interest rate that banks charge other banks for lending them money from their reserve balances on an overnight basis. The hard truth is that the federal funds rate has no impact on ten-year treasury yields.

The Silver Lining – Despite the doom and gloom being predicted for many industries as the result of the spread of COVID-19, there are (at least) three reasons why commercial real estate should look to the silver lining in all of this. Here’s what they are.

#1. Some stock market investors fleeing the equity markets may choose to start investing in real estate. Why wouldn’t they invest in CRE? After the rapid downturn that’s transpired in the last few weeks, it only seems logical that some would say enough is enough I’m going to pull my money out of the stock market and invest it in a lower risk type of investment.

#2. Treasury rates have hit historic lows. On March 9th, the ten-year treasury bottomed out at 0.569%, rising to 0.981% by Friday, March 13. For comparison, a year ago, the ten-year treasury closed at 2.592% so the decline has been dramatic to state the obvious. Those of us who have debt, whether it is a home loan or loans on our rental properties, are going to benefit by refinancing debt with significantly lower interest rates.

#3. If there is increased demand for CRE and interest rates remain low, the logical result will be that capitalization rates will continue to compress even further than they are right now. This means that even if a real estate investor doesn’t refinance his rental properties, the value of his real estate will still go up as cap rates continue to compress. So bottom line is that those of us who have invested in commercial real estate will inadvertently benefit from this black swan event.

#4. It’s now a tenant’s market. The speed at which the market shifted from a landlord’s market to a tenant’s market can hardly be overstated. COVID-19 has effectively caused a collapse of U.S. office demand, which ironically comes after the market set a post-recession record just last year. For tenants who are hunting for new office, retail, or industrial space, chances are you’re going to be able to negotiate favorable terms and pricing.

In trying and changing times like these, I am very glad I chose to be an exclusive tenant agent representative/buyer’s agent for commercial real estate. I can still be an asset to my clients, whereas other forms of brokerage are more greatly impacted by the COVID-19 pandemic. During this historic time, I can serve my clients through subleasing, lease restructuring, and negotiating better deals based on current market conditions.

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

[Online Resources] Real Estate, advice, blog, buy, buyers agent, central pa, central pennsylania, Commercial Real Estate, coronavirus, COVID, COVID-19, COVID19, cpbj, CRE, crisis, economic update, Economy, industrial, interest rates, lease, Mike Kushner, office, Omni Realty Group, pandemic, pennsylvania, real estate market, rent, retail, tenant representative, treasury, united states

Beyond the Bio with Mark Disanto from Triple Crown

Posted on October 21, 2019 by Mike Kushner in Blog, Guest Blogger No Comments

For more than four decades, Triple Crown Corporation has shaped Pennsylvania real estate through construction, land acquisition, and residential and commercial property management. The company has built an impressive portfolio of properties ranging from warehouses, office and retail space, rental communities, and even vacant lots that can be developed into just about anything to need.

At the heart of Triple Crown Corporation is its people. As part of the senior leadership team, Mark Disanto, the company’s CEO offers valuable insight into the industry, and the vision for the company. Mark has built a successful career from a blend of hard work, knowledge, and experience. But beyond his professional resume, there is a lot we can learn from Mark on a more personal level.

Take a look as Omni Realty Group goes “beyond the bio” and asks Mark for answers to questions you’re not likely to read on his Linkedin profile.

Omni: Describe a “typical” work day for you.

Mark Disanto: A typical day for me starts around 5:30 or 6:00 AM. I either exercise at home or play tennis in the morning. I am usually at the office between 7:00 and 8:00 AM and very rarely leave before 6:00 PM. Throw in a couple nighttime meetings with municipalities and extra time on Saturdays and in the evenings and the work week is usually 60 to 70 hours.

Omni: What is the best part of your job?

Mark Disanto: I have great flexibility in my job. I have time in the office. I have time inspecting job sites and looking at new acquisitions. I like the flexibility. However, the best part of my job is watching the company grow and seeing the new leadership expand the company both in the property management and construction divisions as well as our geographical footprint.

Omni: What has been the most difficult part of your job?

Mark Disanto: The continued regulation of our industry is probably the most troublesome and difficult part of our business. There are so many regulations in the building codes, the land development and subdivision codes, other state permitting processes, as well as federal regulations. None of these take into account the reasonableness of the burdens placed upon the builder and developer, cost versus benefit and time delays. We continue to hear about a shortage of affordable housing and the reason for this is strictly due to the regulatory environment we live in today.

Omni: If your career never took you into real estate, what else would you likely be doing?

Mark Disanto: I would probably be on Wall Street running a hedge fund and giving Ray Dalio a run for his money.

Omni: What has been your favorite Triple Crown project, and why?

Mark Disanto: I think I have two. The first was done about 17 years ago in Silver Spring Township. Georgetown Crossing was our first large apartment community containing 400 townhome and flat stack apartments. It is a beautiful property off route 114 in Silver Spring Township and our premier community. We still own it and will probably never sell it.

More recently Blue Ridge Village tops the list. This is an exciting mixed use community in lower Paxton Township that combines retail, commercial, apartments, townhomes and single-family homes along with a 32 acre park. This is a true livable, walkable community. The approval process was collaborative and respectful of the community and the Township. It took a lot of effort on our part, but I can assure the residents that this will be a premiere community that will significantly enhance the township.

Omni: What project has been your biggest failure or disappointment?

Mark Disanto: We bought a property out of market about 20 years ago at an auction and did not have sufficient due diligence completed upon it. When we went to the township for the first time it was like walking into a hornets’ nest. We eventually decided to cut our losses and re-sold the ground at auction for a loss. Out of the hundreds of developments and projects that we have done, we’ve only lost money on two deals. We are pretty proud of this.

Omni: What motivates you?

Mark Disanto: I just like to be engaged and like to see the company and the employees succeed. We set our strategy for three-year time frames and have quarterly meetings with our strategy review team and make sure we are all rowing the ship in the same direction. When everybody has purpose and they are all heading to the same goal line and supporting one another along the way, it makes for a very fun journey. I don’t need to work as hard as I do, I just have too much enjoyment with it to slow down.

Omni: Do you have any pet peeves?

Mark Disanto: I don’t think so. I get very frustrated when my volleys are not crisp on the tennis court!

Omni: When you’re not in the office, where can you most likely be found?

Mark Disanto: When I am in Harrisburg, it is usually with the family which includes the five grandkids, or working around the house and in the garden in the summertime, or in a tree stand in the fall trying to find the elusive big buck, or on the tennis court 2 to 4 days a week. If out of Harrisburg it could be anywhere in the world!

Omni: And finally, what career advice would you give to your younger self?

Mark Disanto: I would say, do not doubt your abilities. If you have an idea you want to execute then write it down and write a plan on how to achieve it. Review the plan both upstream and downstream with your staff. If you don’t have a staff, take it to people you respect and really try to poke holes in it. Once it’s well vetted, then work diligently and hard at it. A lot of people say this person was “lucky.” That’s usually not the case; a lot of strategic thought and hard work creates what people call luck.

Omni Realty Group thanks Mark for such candid and thoughtful answers to these questions. There is a lot of inspiration that can be found “beyond the bio” and on a more personal level. You can learn more about Triple Crown Corporation and its services by visiting them at https://www.triplecrowncorp.com or on Facebook and Twitter @TripleCrownCorp.

[Online Resources] Real Estate, apartments, building, buy, camp hill, carlisle, central pa, Commercial Real Estate, Construction, CRE, development, harrisburg, hershey, industrial, investment, lancaster, land, lease, lot, mark disanto, mechanicsburg, Mike Kushner, office, Omni Realty Group, pennsylvania, real estate blogger, real estate development, rent, retail, sell, triple crown corporation, vacant, warehouse, york

Central Pennsylvania Office Real Estate Report for Q2 2017

Posted on August 14, 2017 by Mike Kushner in Blog, Commercial Real Estate, Local Market, Trends No Comments

Decrease in vacancy and recent record high for rental rates indicate a healthy demand for Central Pennsylvania Office Space.

Central Pennsylvania’s office real estate market should have very few concerns or complaints based upon its performance in Q2 2017. Three new office spaces were delivered this quarter, all of which are 100% preleased. As a result, net absorption continued to rise into the black by more than 50,000 square feet. Vacancy declined as did vacant square footage. Most noteworthy, the quoted rental rate jumped by $0.10 per square foot, making this quarter the highest quoted rental rate the market has seen since prior to Q3 2013!

In addition to these highlights, there is a lot more we can take away from the local office real estate market’s performance this last quarter. Here are the major actions that have taken place in Central Pennsylvania according to CoStar’s Q2 Office Statistics.

SELECT YEAR-TO-DATE DELIVERIES

Three new office spaces entered the market in Q2 2017 and they all made it to CoStar’s Select Top Year-to-Date Deliveries. The largest of the three is at 100 Millport Road in Lancaster. The 93,000 square-feet of B Class office space is 100% prelease. Next on the list for Central PA’s Q2 deliveries is the Goodville Mutual Expansion located in Lancaster. Goodville Mutual Casualty Company added on an additional 20,000 square-feet of Class B office space that is 100% prelease. Last but not least is the 13,000 square-foot Class B office space located at 40 Old Willow Mill Road in Mechanicsburg that is 100% preleased to Penn State Medical Group.

SELECT TOP LEASES

Of the Select Top Leases featured in the Q2 CoStar Office Market Report, just one lease from the Central Pennsylvania submarket made the list, but it did so at number 5. A large healthcare company, Centene leased the office space at 300 Corporate Center Drive, Harrisburg from Cushman & Wakefeld. The total space of the lease is 68,846 square-feet.

ABSORPTION

Net absorption is back on the rise, after taking a hit last quarter. In Q2 it was just 35,817 square-feet; now it is 88,814 square-feet. Though there is a long way to go to reach the recent record high of 421,430 square-feet that we saw in the beginning of 2015, we are at least headed back in the right direction. Considering three new buildings entered the market this month with a combined 126,000 square-feet of space, it’s a good indicator of market demand that net absorption rose.

OVERALL VACANCY & RENTAL RATES (ALL CLASSES)

This quarter, the market experienced a decrease in vacancy from 6.0% last quarter to 5.7% currently. This correlates with the decrease in vacant square-footage, down from last quarter’s 3,273,675 square-feet to 3,080,214 square-feet currently. Most noteworthy, the quoted rental rate has risen significantly, $0.10 per square foot in just one quarter. It now stands at $17.67 per square foot which is higher than it’s been since prior to Q3 2013. With only one building under construction, new space will not be entering the market anytime soon, forcing businesses to continue to use up existing inventory.

CLASS A TRENDS

Specifically looking at class A office space, vacancy is at 8.2% and the quoted rental rate is $20.80 per square-foot. The year-to-date net absorption is 20,217 square-feet, with 60,000 square-feet in year-to-date deliveries and 40,000 square-feet currently under construction.

CLASS B TRENDS

Specifically looking at class B office space, vacancy is at 5.5% and the quoted rental rate is $17.36 per square-foot. The year-to-date net absorption is 235,677 square-feet, with 126,000 square-feet in year-to-date deliveries. No new buildings are currently under construction.

CLASS C TRENDS

Specifically looking at class C office space, vacancy is at 4.7% and the quoted rental rate is $15.79 per square-foot. The year-to-date net absorption is negative 131,263 square-feet. This is a major drop compared to the other classes and the overall net absorption for the Central PA submarket as a whole. There are zero year-to-date deliveries and zero projects under construction for class C space.

What trend from the second quarter did you find most interesting or impactful to Central Pennsylvania’s office market? Share your opinion by leaving a comment!

Learn more from past market reports:

Central Pennsylvania Industrial Real Estate Report for Q2 2017

Central Pennsylvania Industrial Real Estate Report for Q1 2017

Central PA’s Office Real Estate Market Hangs on to Low Vacancy, Slows Down on Net Absorption

[Online Resources] Real Estate, 2017, buyers agent, carlisle, central pennsylvania, Commercial Real Estate, costar, harrisburg, hershey, lancaster, lease, lemoyne, market, mechanicsburg, Mike Kushner, new cumberland, office, Omni Realty Group, q2, real estate agent, real estate broker, rent, report, second quarter, space, statistics, tenant representative, trends, york

Central PA’s Office Market Sets Recent Records for Vacancy, RBA and Rental Rates!

Posted on October 19, 2016 by Mike Kushner in Blog, Local Market, Trends No Comments

At first glance, it didn’t appear like Q3 2016 held any exciting news for Central Pennsylvania’s office real estate market. No top sales, no major projects delivered and only a couple projects under construction. But as we dug a little deeper into the numbers, we found that this quarter claimed recent record highs for RBA and quoted rental rates, as well as a record low for vacancy rate.

Together, these trends tell us that good things are happening within the local office real estate market, with numbers that continue to indicate growing demand. Let’s take a closer look at the highlights from Q3 2016 which we can use to analyze the current market and predict future trends.

Select Year-to-Date Deliveries:

CoStar’s list of Select Year-to-Date Deliveries includes two properties in Central Pennsylvania. Though none of these were delivered in Q3, it’s worth recapping that activity that has taken place so far in 2016. The Sterling Place Corporate Center in Mechanicsburg was delivered in Q2 with 129,000 square-feet of fully leased space. At 440 Walker Road, Chambersburg, 9,199 square-feet of space was delivered in Q1. Only 63% was preleased.

Top Under-Construction Properties:

Although no new properties were delivered in Q3, we expect to see at least one new office building delivered to the Central PA market in Q4. This property, located on Hogestown Road in Mechanicsburg, will add 129,000 square-feet of office space. It is 100% preleased.

Absorption and Demand:

Net absorption dropped this quarter by 70,917 square-feet. There has been a lot of fluctuation in net absorption from quarter to quarter and this continues in line with the trend. Total RBA did not budge from last quarter which was 54,902,624 square-feet. This maintains the recent record high that we reached in Q2, the highest RBA in Central PA since prior to Q4 2012.

Vacancy & Rental Rate:

Vacancy decreased again this quarter to a recent record low of 6.0%. This is the lowest vacancy rate we have experienced since prior to Q4 2012. As might be expected with a decrease in vacancy, we also experienced an increase in the quoted rental rate. Now at $17.30 per square-foot, this is $0.04 higher than last quarter and only $0.03 less than the recent record high of $17.33 we saw in Q1 2016.

Our Summary/Analysis:

All in all, Q3 brought positive news for Central Pennsylvania’s office real estate market. An increase in demand for space is driving down vacancy and driving up the price per square foot. New properties are at least 50%, if not 100%, preleased before they even hit the market. With another 100% preleased property expected to be delivered next quarter, we predict that 2016 will have a strong finish, indicating a healthy and growing office market.

Based upon the data for Q3 2016, what do you find to be most interesting or important? Share your insight by commenting below!

[Online Resources] Real Estate, analysis, business, buy, camp hill, central pa, Commercial Real Estate, Construction, cumberland, dauphin, demand, Economy, harrisburg, hershey, lancaster, lease, local, market, mechanicsburg, Mike Kushner, net absorption, new, office, Omni Realty, pennsylvania, property, rent, report, sales, space, trends, york

6 Lessons Learned from a Tenant Rep

Posted on July 18, 2016 by Mike Kushner in About Us, Blog, Tenant Representative/Buyer Agent No Comments

As the owner of Omni Realty Group, Mike Kushner has been exclusively practicing Tenant Rep/Buyer Agency since 1998, when he first established the company. Now, with almost 20 years of experience under his belt, Mike shares his top six most valuable lessons learned from his career as a tenant representative/buyer agent.

Everyone Deserves to be Treated with Respect

This lesson is so simple, yet so often overlooked. Any successful business owner, regardless of industry or size, should treat everyone they encounter with respect. The bottom line is that you never know how they may impact your business in the future. Employees, vendors, customers and anyone else can all serve as walking testimonials for your business – and you. Give them every reason to talk about how great you are to work with. Don’t risk having someone out there badmouthing their experience with you because of something that could have been prevented by treating them with a little more respect.

Never Take Your Reputation for Granted

Businesses balance on their reputation of service and the ethics and integrity of how they provide that service. I have always operated my business with an important rule in mind: We are the reputation we create. There’s really no way around it; you are the only one who can make or break your own reputation. Make every effort to protect it!

Do What You Say You Are Going to Do

Few things can destroy the integrity of the relationship that exists between service provider and customer as quickly as non-performance. Fail to deliver, and the customer will lose trust and become justifiably skeptical of future commitments. Furthermore, they will quickly move on to someone who will deliver

We Are Always Learning

Every day brings new experiences that broaden my understanding of this wonderful industry that is my livelihood. Keep your eyes and mind open to opportunities to learn. These can come in unconventional ways and at unexpected moments – don’t overlook them!

It’s Often Difficult for Tenants and Buyers to Spot “Double Dipping”

This lesson is very frustrating for an exclusive tenant representative and that is that tenants and buyers don’t easily see that a broker is taking advantage of them with a “double end” deal (i.e. collecting commission checks on both sides of their transactions). Also known as “double dipping” in commercial real estate circles, this practice is far more common that it should be.

Not only is it greedy and unfair, it’s insulting to the tenant or buyer to think that they aren’t smart enough to eventually realize what’s going on. The bottom line is that listing or selling brokers are salesmen. They get paid more if you lease in their listed building and are therefore incentivized to get you to do so. If you work with anyone who is not an exclusive tenant rep, you are not likely to see all the options truly available to you.

Business Should Review Their Lease Far More Often Than They Do

Most businesses only look at their leases every five years (or right before renewal). The truth of the matter is that real estate occupancy cost is a major expense for any business and should be reviewed on a regular basis, at least annually. Furthermore, the terms of your lease should provide for a lease audit to allow you to ensure that expenses being passed through to you, the tenant, are fair and accurate.

In short, working with a commercial real estate broker should be a pleasant and stress-free experience. If it’s not, you’re likely working with the wrong broker who isn’t putting your interests first. If nearly 20 years of experience has taught me anything, it’s that the people – not the property – are the priority.

Which of these lessons do you feel is the most important for running a successful and respected business? Share your opinion by commenting below!

[Online Resources] Real Estate, advice, broker, buyer agent, camp hill, central pa, commercial, dauphin, east shore, exclusive, experience, expert, harrisburg, hershey, industrial, lancaster, landlord, lease, lemoyne, lesson, life, mechanicsburg, Mike Kushner, new cumberland, office, Omni Realty, pennsylvania, professional, rent, renter, retail, space, success, tenant rep, tenant representative, west shore, york

Central PA Welcomes More Office Space, Rising Rental Rates

Posted on April 11, 2016 by Mike Kushner in Blog, Local Market, Trends No Comments

Overall, 2015 has proven to be an active and eventful year for Central PA office real estate. Six new buildings were delivered into the market with four more under construction. The vacancy rate rose slightly, but remains lower than it has been in recent years. Additionally, net absorption dropped by nearly 175,000 square-feet, though it still remains in the black.

How has this activity impacted the market? And how do we anticipate it will reflect on the local economy? Let’s first take a look at the numbers to help guide our predictions for the market’s performance in 2016 and beyond.

Select Year-to-Date Deliveries:

Six of the top 15 Select Year-to-Date Deliveries are within the Central PA submarket. Looking at just those that were delivered specifically in fourth quarter 2015, there are two worth noting. Coming in at number three on the CoStar list is the office building at 1250 Camp Hill Bypass. This building has an RBA of 82,000 square-feet and is 100% occupied. It broke ground in fourth quarter 2014 and was delivered one year later. Next is the Cornwall Health Center coming in at number five on the list. Located at 1701 Cornwall Road in Lebanon, this building has an RBA of 54,234 square-feet and is 100% occupied. This multi-million dollar project is estimated to bring a burst of new jobs to the area.

Vacancy:

This quarter, we saw the vacancy rate rise ever so slightly from 7.5% to 7.7%. This returns the market closer to where it began the year, but is still lower than where we were one year ago at this time when the vacancy rate was 8.0%. Still, the overall trend is a decrease in vacancy rates. Comparatively to 2013 and prior, the vacancy rates were consistently at 8.0% or greater.

Absorption and Demand:

Net absorption took a major hit this quarter, dropping from 189,032 square-feet in Q3 to 15,921 square-feet in Q4. This is the lowest the absorption rate has been since one year ago at this time when it was negative 90,015. Overall, absorption rates in the Central PA office submarket have been volatile and hard to predict, often increasing or decreasing by more than 100,000 square-feet each quarter and dipping into the red a total of five times since Q1 2013.

Image from CoStar

Rental Rates:

The quoted rental rates increased ever so slightly this quarter by $0.07 to $17.22. This continues a steady climb in rates that began at the start of 2013. Since that time, they have increased by a total of $1.11. This is also the highest rental rate we have seen in the Central PA submarket since prior to Q1 2012.

Image from CoStar

Our Summary/Analysis:

Looking to the future, we can expect even more square footage to be added to the local market in 2016 as four buildings, currently under construction, will be delivered between the first and third quarters. Combined, these new buildings will contribute 277,590 square-feet of office space. This will have an impact on nearly all aspects of the market including net absorption, existing inventory, delivered inventory and vacant square-footage.

As for the health and strength of the Central PA submarket, the seemingly ever-increasing rental rate is a sign that businesses are demanding more space and willing to pay for it. And with the majority of year-to-date deliveries and under-construction projects nearly fully occupied, new office space continues to be in-demand.

What fourth quarter 2015 market trend do you find most interesting or impactful? Share your insights by commenting below!

[Online Resources] Real Estate, 2015, 2016, absorption, analysis, blog, business, camp hill, central pa, costar, demand, development, Economy, facts, fourth quarter, growth, harrisburg, health, hershey, lancaster, lemoyne, market, mechanicsburg, Mike Kushner, new cumberland, numbers, office, Omni Realty, opinion, pennsylvania, rent, rental rate, report, statistics, trends, vacancy, york

First Quarter Yields Positive Net Absorption, Not Much Else for Office Space in Central PA

Posted on July 14, 2015 by mike.kushner in Blog, Local Market, Trends No Comments

If no news is good news, then the Q1 market report for Central Pennsylvania office space is very good news indeed. The waters remain calm – though not completely stagnant – for the local market.

With merely one year-to-date delivery and a vacancy rate that has only moved one-tenth of a percentage point or so since 2013, office space has been consistent and predictable. There are several important conclusions we can draw from the following data and how it relates to the current health of the market and predictions for future growth, but let’s first begin by breaking down the numbers and taking a closer look at the facts:

Select Year-to-Date Deliveries:

The Central Pennsylvania submarket has delivered one property so far in 2015. Located at 13 Adams Drive, Conestoga Oral and Maxillofacial Surgery will use most of the 10,000 square feet in this facility. The quoted rental rate is $22.58 and the building is 70% occupied.

Vacancy and Availability:

Vacancy has remained nearly unchanged throughout First Quarter 2015. Only one new building was delivered contributing 10,000 square feet of office space. Vacant square-feet fell ever so slightly from 4,266,826 in Fourth Quarter 2014 to 4,219,233 this quarter. This moved the vacancy % just one-tenth of a point down to 8.3% – a rate that has remained relatively unchanged since Fourth Quarter 2013.

Absorption and Demand:

In First Quarter 2015 we did see net absorption move back into positive numbers. Ending Fourth Quarter 2014 at negative 88,815 square-feet, this number jumped to 57,593 square-feet which is the highest for Central Pennsylvania since Fourth Quarter 2013.

Rental Rates:

The quoted rental rates for First Quarter 2015 rose $0.03 to an average rate of $17.18 per square-foot. While this increase in price is not a huge jump, it was enough to push the quoted rental rate in the Central Pennsylvania submarket to the highest it has been since Fourth Quarter 2011.

Our Summary/Analysis:

The Central Pennsylvania submarket has seen very little growth over the last 15 quarters. Total rentable building area (RBA) has increased by only 1.2%. The vacancy rate has averaged 8,4% (with a high of 9.2% and a low of 7.5%) and rental rates have averaged $16.78 per SF (with a high of $17.42 per SF and a low of $16.26 per SF). Although the economic indicators are improving, we don’t expect any significant new construction growth. Vacancy and rental rates should remain stable

How has office real estate in Central PA personally impacted you? Or how does this compare to the First Quarter you experienced in your own local market? Join in the conversation by commenting below!

[Online Resources] Real Estate, absorption, business, central pa, central pennsylvania, commercial, costar, Economy, first quarter, local, Mike Kushner, office, Omni Realty, q1, rent, report, space, vacancy

4 Risks of Working with Real Estate Brokers Who Represent Both Buyers and Sellers

Posted on June 10, 2015 by mike.kushner in Blog, Tenant Representative/Buyer Agent No Comments

It is a safe observation based on over 30 years of real estate practice that the vast majority of consumers – in this case real estate buyers/tenants and sellers/landlords – do not understand the concepts of “agency.” One might also observe that a significant segment, if not most, of the licensed real estate practitioners do not completely understand the concepts of “agency.” This is not so much an indictment of real estate licensees as it is a statement on the twisted, awkward and convoluted nature of agency laws that have been imposed on our industry by our esteemed governing and regulatory bodies.

The Real Estate Licensing and Registration Act (RELRA) requires that consumers be provided with a Consumer Notice at the initial interview or meeting. Instead of boring you with an explanation of the entire Consumer Notice, I am going to tell you about the most important part:

Buyer Agent (or Tenant Rep): As a buyer agent (or tenant rep), the licensee and the licensee’s company work EXCLUSIVELY for the buyer/tenant even if paid by the seller/landlord. The buyer agent (or tenant rep) MUST act in the buyer’s/tenant’s best interest, including making a continuous and good faith effort to find a property for the buyer/tenant, except while the buyer/tenant is subject to an existing contract, and must keep all confidential information, other than known material defects about the property, confidential.

What does all this mean? If you are buying or leasing commercial real estate you want a Buyer Agent/Tenant Representative to represent you. Here are four risks that you don’t want take:

Risk #1: Your broker will be representing two opposite interests

When you think about a tenant or buyer and a landlord or seller, each has a need that is opposite of one another. Everyone involved also wants the best deal at the best price. This is where the inherent conflict exists. A real estate broker cannot equally represent both parties’ interests while negotiating hard. A better deal for one party means a lesser deal for another party. Someone will always play second fiddle. Do you want to risk this person being you?

Instead, look for a real estate broker who only represents clients like you – either a tenant/buyer or a landlord/seller. Not both.

Risk #2: You may be pushed into an option that is not best suited for you

The second risk of working with a real estate broker who does not exclusively represent one party is that you may not be presented with all of the options available to you. For example, you are looking for office space and your broker represents several landlords who have office space available. You are likely going to be pushed toward choosing from these properties first before they show you outside properties with which they have no association.

While this makes perfect business sense for your broker, it doesn’t benefit you in the same way. You deserve a broker who will exclusively represent your interests as a buyer/tenant and do all the research necessary to find your ideal property – beyond their own internal client book.

Risk #3: You will not have your broker’s undivided time and resources

You are not likely to ever be your broker’s only client (unless business is exceptionally slow). A good broker will try and dedicate adequate time to meet your needs in a timely fashion, but a broker who represents both sides will have even less available time for you. In addition to fielding your questions, requests and negotiations, they will also be juggling the same from the landlord or seller with whom they want you to sign the deal. .

Ensure your needs will made a priority by working only with a broker who exclusively represents you as a buyer or tenant.

Risk #4: You will get a “Jack of All Trades”…but a master of none

As mentioned in the introduction of this article, for some industries it is an advantage to be a “Jack of All Trades.” In real estate, however, specialization if critical for remaining unbiased and motivated to only work in the favor of one side of the negotiating table. A similar example would be a lawyer. Would you want to be represented by someone in court who was advocating for your case as well as the person arguing the opposite side? The same is true when selecting your real estate broker. You don’t want a mediator; you need someone who is completely free to take your side and negotiate 100% in your best interest…and this is a an exclusive tenant representative or buyer agent.

Have you worked with a real estate broker who represented both tenants and buyers as well as landlords and sellers? Was your experience good or bad? Share your story by commenting below!

[Online Resources] Real Estate, advice, broker, buyer, buyer agency, buyer agent, camp hill, CCIM, central pa, commercial, conflict of interest, danger, exclusive, guide, harrisburg, industrial, information, lancaster, landlord, lease, mechanicsburg, Mike Kushner, moving, negotiation, office, Omni Realty, owner, pennsylvania, rent, renter, renting, retail, risks, seller, space, tenant, Tenant Representation, warning, york

6 Signs You Are Using the Wrong Commercial Real Estate Broker

Posted on April 21, 2015 by mike.kushner in Blog, Office Leasing, Tenant Representative/Buyer Agent No Comments

Moving your business to a different location or bigger space is a critical decision that will have a profound impact on both your employees and your bottom line. To help navigate this tricky process, you need a commercial real estate agent/broker who is experienced, creative and professional.

Unfortunately, people often find themselves stuck with an agent/broker that lacks these essential qualities or who simply isn’t a “good fit.” As a result, they risk making a bad real estate decision or no decision at all – and their business suffers the consequences.

If you are currently working with a commercial real estate agent/broker – or you will have to at any point in your future – take note of these red flags that will help you identify whether the agent/broker is fit to best serve you.

Your agent/broker doesn’t make you feel like a priority.

Your agent/broker should promptly and professionally answer your phone calls and email within a reasonable amount of time. He or she should also go the extra mile for you, seeking out options that are outside-the-box, to prove that you are not just another potential “deal” but a person whose business has unique needs.

If for any reason you doubt that you are a priority for your agent/broker, you need to address this with a conversation. If not resolved, you should take your business elsewhere and work with someone who makes you feel like more of a priority.

Your agent/broker offers little advice.

People who are good at their jobs are not afraid to offer sound advice and observations to those in need of help. Why else would you work so hard to become skilled at something if not to use those abilities? If your agent/broker is not offering you advice and guidance in a transaction, then something is not right. Either he or she is too inexperienced to know what is going on or the agent/broker is not particularly helpful by nature. Regardless, you need someone who is helpful and can exercise leadership in this process.

Your agent/broker represents both buyers/tenants and sellers/landlords.

Your commercial real estate agent/broker should be looking out for the best interests of you and your business – and no one else’s. The unbiased advice and specialization of one-sided representation are just a few of the benefits of working with an agent/broker who exclusively represents tenants and buyers.

If you are working with an agent/broker who represents both buyers/tenants and sellers/landlords, even the perception of bias should be enough to make you question whether the properties her or she is showing you are best suited to your needs – and not just a property owned by a landlord/seller he or she represents.

Your agent/broker has not earned their Certified Commercial Investment Member (CCIM) designation.

The CCIM designation is conferred by the CCIM Institute, a commercial affiliate of the National Association of REALTORS®. This designation requires 200 classroom hours and is similar to college graduate-level education. If your agent/broker has earned a CCIM, you know that he or she is committed to the commercial real estate industry, is staying current with changes and trends and has the advanced education to better serve you throughout the entire process. Additionally, CCIMs are bound to the strictest ethical guidelines and standards of practice in the industry today.

If you are not working with a CCIM, you can’t be guaranteed that your agent/broker has this same level of commitment, knowledge and expertise as one who does.

Your agent/broker leaves a bad first impression.

When you meet your commercial real estate agent/broker, take first impressions seriously. Not only are they a good indication of personality and professionalism, this is the same first impression that other landlords/sellers will be greeted with as he or she represents you in potential deals.

Look for an agent/broker who is organized, well put together, confident, but friendly and overall, likeable. These qualities will make it a pleasure working with him or her and these are also qualities that will represent you, the tenant, well when it comes to negotiating leases.

Your real estate agent/broker is a “poser.”

Not all real estate agents/brokers are created equal. Residential real estate agents/brokers, sometimes known as Realtors, are qualified to sell houses and other small residential dwellings but are not usually qualified to give advice regarding commercial property. Residential agents/brokers normally have little knowledge of and experience with commercial properties. This lack of expertise will end up costing you both time and money as well as increase your legal liability. And likewise, a commercial agent/broker may not be the right choice to represent you in selling or purchasing a house, as they are not usually experienced in such matters.

When beginning your commercial real estate search, carefully select an agent/broker that is uniquely qualified to advise you on commercial real estate with a tenant or buyer’s interests in mind.

Do you have experience working with a commercial real estate agent/broker – good or bad? Share your story and what you learned from it by commenting below!

[Online Resources] Real Estate, agent, bad, broker, business, buy, buyer agent, camp hill, central pennsylvania, commercial, growth, harrisburg, industrial, lancaster, lease, location, mechanicsburg, moving, negotiate, office, own, realestate, red flag, rent, retail, signs, space, success, Tenant Representation, wrong, york