As consumer demand shifts towards faster and more convenient medical services many healthcare providers are taking a closer look at leasing retail space for medical office use. This can be a great strategy for medical office users however as they evaluate retail locations it’s important that they consider a few things. Retail Properties Infrastructure May Not Be AcceptableRetail shopping centers were built for the traditional retail tenant. The cost to build a retail building is less than a medical office building as medical office buildings require more infrastructure. Medical office users such as urgent cares, surgery centers, clinics, etc., have vastly different needs than a retail store. For example the mechanical, electrical, plumbing, and HVAC requirements may not meet medical office standards. Tenant MixA high traffic shopping center may look like a great location for a medical office however you need to evaluate the impact that the tenant mix could have to parking and getting into and out of the retail center. Do you want to be next to a major grocery store or next to a big box retail tenant that generates a ton of street and parking lot traffic? There are some benefits however those may not be not as desirable as a smaller retail strip center that has more convenient parking. As consumers focus more on convenience and less on the provider it’s important that you look at easy ingress and egress. Ideally you want to be located in a retail center with somewhat comparable tenants. Being next to a Planet K may give your medical office a negative image. Looks for locations that have tenants that you think your clients respect and use. ParkingConvenient parking is one of the main reasons you would consider leasing retail space for medical office use as this will enhance the patients overall experience. Easy in and easy out. Look for highly visible, smaller shopping centers in densely populated neighborhoods with above standard demographics. If you lease space in a large shopping center or big box power center your patients may have to compete for parking spaces and since those are mainly found on major thoroughfares getting to and from may take longer. Tenant Improvements Costs are HigherMedical office property owners are more familiar with the build-out requirements of medical users and typically offer larger tenant improvement allowances. Shopping center owners are not familiar with medical office buildouts and don’t typically provide as much allowance. Medical officer users have a great demand for landlord funded tenant improvement allowances which can make things challenging. Medical office buildouts typically range from $70 to $150 sf and this does not include FF&E. When negotiating a lease for medical use in a retail shopping center you may have to sign at least a 7-10 year lease to get an allowance equal to what you would from a medical office building owner. Lease ContractRetail lease contracts are different from medical office leases and fail to address the key components of medical tenancy. Most retail leases will be boiler plate and focus on retail tenants. Below are a few things to consider when evaluating a retail lease contract for medical office use. Permitted Use – there maybe a clause in the lease that does not allow medical use which would need to be stricken entirely. Medical tenants would also want to ensure that they can get an exclusive and that no other tenant has an exclusive that would prevent medical use. For example Walgreens or CVS may have an exclusive right to medical services. Power & Compliance – Some medical tenants may have higher electrical needs (e.g. X- ray machines, CT scans, MRI, and other diagnostic equipment) or back up generator needs so it’s important to ensure you have language that defines and allows this. Also, medical tenants have HIPPA and other standards to adhere to so make sure the retail shopping center contract addresses this in detail. Relocation clause – Its common for retail leases to have a relocation clause that allows the landlord to relocate them if needed. Because of the cost of a medical office buildout any relocation clause should be stricken from the lease. Liens – Many healthcare practices finance improvement costs as well as medical equipment and other FF&E. Therefore make sure that the landlords lien rights are subordinate to the tenants. Restoration – Some leases may have a clause that requires a retail tenant to restore the space to original condition before they move out. As a medical office user you want to strike this request. Privacy – Retail landlords typically negotiate the right to enter the space to show prospective tenants or ensure compliance with the lease and/or make repairs. Healthcare providers need to limit this access to exam rooms and patient record rooms. At the end of the day you need have a real estate attorney that specializes in medical office spaces review the lease. Healthcare providers have unique needs and before leasing retail space it’s important that you ensure the retail location can accommodate your current and future medical space needs. via Tumblr Leasing Retail Space for Medical Office Use
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If you have ever renovated a home you know that things almost never go as planned. Before you start your next house remodel consider the advice below from many homeowners that have been through the process. If you want to increase your chances of a successful remodel follow these guidelines!
via Tumblr 30 Home Remodeling Ideas | Advice When Doing House Renovations
from Twitter https://twitter.com/AustinTenantAdv via Blogger Elise Mitchell thanks for following me on Twitter! https://t.co/DVb6FFn6V8 Commercial real estate market analysis is important to anyone involved in property markets: developers, users, investors, brokers, financial analysts, and government officials. Each has their own perspective and it’s important that you understand who the players are and what’s important to them. If you want to get deals done you have to listen to everyone’s needs and accommodate them the best you can, especially when buying or leasing commercial real estate in Austin, Texas! Developers must understand factors such as rent levels, construction costs, absorption, underserved markets, and the cost of capital to be able to make good decisions about where, when, how, and whether to develop. Users who plan to rent commercial real estate space need to know current quoted market rents as well as future rent increases, size space needed, and for how long they want to rent. Purchasers, both investors and users want to make sure they don’t spend more money than needed. Commercial real estate agents need instant access to market information if they want to be credible at representing tenants or landlords. Financial analysts need to be able use market data to determine risk vs return for their investors. Government officials depend on commercial market analysis to plan and forecast for future human resources and infrastructure. It’s important to analyze the market from different perspectives. Below are examples of each. Developer PerspectiveA developer needs to know that there will be demand for a building when it’s ready to occupy. Because development periods can last as long as 2 years or longer they need to know the demand for commercial real estate when they start construction and forecast demand at the time they complete construction. They must determine whether there is a shortage of supply of a certain kind of commercial real estate and whether there will be enough absorption at a rental rate needed to make a profit. User PerspectiveUsers of commercial real estate whether leasing or buying want to make sure they are getting space at the lowest possible cost. They must make decisions about whether to purchase, rent, or build, which means they must know market conditions such as land costs, construction costs, purchase prices, and rental rates. Users also need to determine whether lease terms in a particular market are flexible to meet changing space needs, the share of expenses that commercial tenants typically pay in a certain market, and how much rent they will have to pay if they want access to certain markets. Commercial Real Estate Agent PerspectiveBrokers need to stay updated on the market to be credible with their clients and prospects. A tenant representative who pay a higher rental rate than they have to will not survive long; nor will a landlord representative who leases space to tenants at below market rates. The best commercial agents keep a pulse on the market 24/7 and know what is available now and in the future. Investor PerspectiveMarket analysis is important to investors because they need to info to calculate the feasibility model. For new construction, information on rents and expenses comes from market analysis. For existing properties, assumptions about rents vacancies, lease expiration dates, etc come from market analysis. Investors also need market data to calculate their return on investments (ROI’s), the weighted average cost of capital, and capitalization rates (aka CAP rates). All the ingredients in discounted cash flow models come from market analysis. Financial Analyst PerspectiveFinancial analysts must understand the risk characteristics of a certain market to evaluate debt and equity investments. Markets supported by weak companies or by undiversified economies face more risk then markets that are more diverse with strong companies. Consequently the required rate of return must be higher in riskier markets than in less risky markets Government PerspectiveGovernment officials need to forecast and estimate future macroeconomic conditions in order to forecast and plan for future infrastructure and staffing. On a microeconomic basis, government officials often want something in exchange for granting development entitlements. If they have knowledge of market conditions they can make demands of developers. For example, if they know a developer has a great location and wants to build something they may decide to require off site improvements from the developer. Developers must also use market analysis to educate government officials about market conditions. If a government official is concerned about a lack of affordable housing and a developer can demonstrate a large gap between demand for and supply of housing, the official might be persuaded to approve a large new residential subdivision. ConclusionAs you can see each player in real estate has a different perspective and it’s important that you understand not only your needs but their needs. If you want to make deals happen in your market you have to know all the players and the impact that your project will have on them. via Blogger Different Perspectives in Commercial Real Estate Property Market Analysis Commercial real estate market analysis is important to anyone involved in property markets: developers, users, investors, brokers, financial analysts, and government officials. Each has their own perspective and it’s important that you understand who the players are and what’s important to them. If you want to get deals done you have to listen to everyone’s needs and accommodate them the best you can, especially when buying or leasing commercial real estate in Austin, Texas! Developers must understand factors such as rent levels, construction costs, absorption, underserved markets, and the cost of capital to be able to make good decisions about where, when, how, and whether to develop. Users who plan to rent commercial real estate space need to know current quoted market rents as well as future rent increases, size space needed, and for how long they want to rent. Purchasers, both investors and users want to make sure they don’t spend more money than needed. Commercial real estate agents need instant access to market information if they want to be credible at representing tenants or landlords. Financial analysts need to be able use market data to determine risk vs return for their investors. Government officials depend on commercial market analysis to plan and forecast for future human resources and infrastructure. It’s important to analyze the market from different perspectives. Below are examples of each. Developer PerspectiveA developer needs to know that there will be demand for a building when it’s ready to occupy. Because development periods can last as long as 2 years or longer they need to know the demand for commercial real estate when they start construction and forecast demand at the time they complete construction. They must determine whether there is a shortage of supply of a certain kind of commercial real estate and whether there will be enough absorption at a rental rate needed to make a profit. User PerspectiveUsers of commercial real estate whether leasing or buying want to make sure they are getting space at the lowest possible cost. They must make decisions about whether to purchase, rent, or build, which means they must know market conditions such as land costs, construction costs, purchase prices, and rental rates. Users also need to determine whether lease terms in a particular market are flexible to meet changing space needs, the share of expenses that commercial tenants typically pay in a certain market, and how much rent they will have to pay if they want access to certain markets. Commercial Real Estate Agent PerspectiveBrokers need to stay updated on the market to be credible with their clients and prospects. A tenant representative who pay a higher rental rate than they have to will not survive long; nor will a landlord representative who leases space to tenants at below market rates. The best commercial agents keep a pulse on the market 24/7 and know what is available now and in the future. Investor PerspectiveMarket analysis is important to investors because they need to info to calculate the feasibility model. For new construction, information on rents and expenses comes from market analysis. For existing properties, assumptions about rents vacancies, lease expiration dates, etc come from market analysis. Investors also need market data to calculate their return on investments (ROI’s), the weighted average cost of capital, and capitalization rates (aka CAP rates). All the ingredients in discounted cash flow models come from market analysis. Financial Analyst PerspectiveFinancial analysts must understand the risk characteristics of a certain market to evaluate debt and equity investments. Markets supported by weak companies or by undiversified economies face more risk then markets that are more diverse with strong companies. Consequently the required rate of return must be higher in riskier markets than in less risky markets Government PerspectiveGovernment officials need to forecast and estimate future macroeconomic conditions in order to forecast and plan for future infrastructure and staffing. On a microeconomic basis, government officials often want something in exchange for granting development entitlements. If they have knowledge of market conditions they can make demands of developers. For example, if they know a developer has a great location and wants to build something they may decide to require off site improvements from the developer. Developers must also use market analysis to educate government officials about market conditions. If a government official is concerned about a lack of affordable housing and a developer can demonstrate a large gap between demand for and supply of housing, the official might be persuaded to approve a large new residential subdivision. ConclusionAs you can see each player in real estate has a different perspective and it’s important that you understand not only your needs but their needs. If you want to make deals happen in your market you have to know all the players and the impact that your project will have on them. via Tumblr Different Perspectives in Commercial Real Estate Property Market Analysis I am often asked how much a commercial real estate property is worth from clients interested in buying commercial property. My answer is it depends on your investment objectives, property type, and local market conditions. There are 3 basic approaches to estimating the market value of a commercial property: sales comparison, cost approach, and income approach. Each of these commercial real estate valuation methods has numerous variations so it’s important to apply the right approach based on the property type and market characteristics. Sales Comparison Approach to Market ValueThe sales comparison approach relates the value of a property to similar properties that are currently listed for sale or that have been sold historically. Realistically no two properties are identical so adjustments need to be made for the differences in the age, size, location, condition, building/land ratio, zoning, tax policies, date of sale, and other characteristics and conditions that would influence a property’s market valuation. Adjusting the comparables for each variance will allow you to select the values, giving greater weight to the comparables more similar to the subject property. The more similar, the more reliable they are considered. At the end of the day the sales comparison approach is the price a purchaser is willing to pay and the seller is willing to sell for in an open competitive market. The sales comparison approach works best when there are plenty of recent sales of comparable properties. The more properties that have recently sold makes it easier to find and select the most comparable. Income Approach to Market ValueThe income approach is is applied on income producing properties and is based on the premise that a relationship exists between the income a property produces (future benefits) and its value. The net operating income that an investor can predict will be generated for the length of ownership would be considered the future benefits. Two methods used to determine value based on income are the direct capitalization method and the discounted cash flow model. Direct Capitalization MethodThis method converts a one year stabilized net operating income (NOI) into a market value for the property. The formula is V = I/R. For example if you know the NOI is $50,000 and the asking sales price or sold price is $500,000 then you know the Cap rate is 10%. Then you compare the cap rates of all the comparable properties. Discounted Cash Flow ModelThis is a variation of the Cash Flow Model and used when uneven cash flows are anticipated. This model determines property value by discounting each years NOI and final sales proceeds to a present value (PV) The most likely to purchase income producing properties are investors which is why the income approach is the best choice to value non owner occupied properties. Cost Approach to Market ValueThe cost approach considers the current cost of rebuilding a property minus accrued depreciation (physical deterioration, functional obsolescence, and external obsolescence). This approach is based on the premise that a property’s value is influenced by the cost to produce a comparable property. The logic is that a rational and informed buyer would pay no more for an existing property than the cost to build a substitute property with the same utility. The cost approach is used most often when sales comparison data is lacking, the property has not been built yet, or the it’s a special use property with few or no comparable sales. via Blogger How to Value Commercial Real Estate Property I am often asked how much a commercial real estate property is worth from clients interested in buying commercial property. My answer is it depends on your investment objectives, property type, and local market conditions. There are 3 basic approaches to estimating the market value of a commercial property: sales comparison, cost approach, and income approach. Each of these commercial real estate valuation methods has numerous variations so it’s important to apply the right approach based on the property type and market characteristics. Sales Comparison Approach to Market ValueThe sales comparison approach relates the value of a property to similar properties that are currently listed for sale or that have been sold historically. Realistically no two properties are identical so adjustments need to be made for the differences in the age, size, location, condition, building/land ratio, zoning, tax policies, date of sale, and other characteristics and conditions that would influence a property’s market valuation. Adjusting the comparables for each variance will allow you to select the values, giving greater weight to the comparables more similar to the subject property. The more similar, the more reliable they are considered. At the end of the day the sales comparison approach is the price a purchaser is willing to pay and the seller is willing to sell for in an open competitive market. The sales comparison approach works best when there are plenty of recent sales of comparable properties. The more properties that have recently sold makes it easier to find and select the most comparable. Income Approach to Market ValueThe income approach is is applied on income producing properties and is based on the premise that a relationship exists between the income a property produces (future benefits) and its value. The net operating income that an investor can predict will be generated for the length of ownership would be considered the future benefits. Two methods used to determine value based on income are the direct capitalization method and the discounted cash flow model. Direct Capitalization MethodThis method converts a one year stabilized net operating income (NOI) into a market value for the property. The formula is V = I/R. For example if you know the NOI is $50,000 and the asking sales price or sold price is $500,000 then you know the Cap rate is 10%. Then you compare the cap rates of all the comparable properties. Discounted Cash Flow ModelThis is a variation of the Cash Flow Model and used when uneven cash flows are anticipated. This model determines property value by discounting each years NOI and final sales proceeds to a present value (PV) The most likely to purchase income producing properties are investors which is why the income approach is the best choice to value non owner occupied properties. Cost Approach to Market ValueThe cost approach considers the current cost of rebuilding a property minus accrued depreciation (physical deterioration, functional obsolescence, and external obsolescence). This approach is based on the premise that a property’s value is influenced by the cost to produce a comparable property. The logic is that a rational and informed buyer would pay no more for an existing property than the cost to build a substitute property with the same utility. The cost approach is used most often when sales comparison data is lacking, the property has not been built yet, or the it’s a special use property with few or no comparable sales. via Tumblr How to Value Commercial Real Estate Property
from Twitter https://twitter.com/AustinTenantAdv via Blogger Integro Roofing thanks for following me on Twitter! https://t.co/VzrRZRXcfs |
AuthorThe experienced commercial realtors at Austin Tenant Advisors specialize in representing the best interests of buyers and tenants in the Search, Selection, Negotiation, and Occupancy of Office, Retail, Industrial & Warehouse Space for lease, rent, or sale in and around Travis, Williamson, Hays, Bastrop, & Burnet Counties, which are the 5 largest counties in Central Texas. We serve the surrounding cities such as Pflugerville, Round Rock, Georgetown, Leander, Cedar Park, Lakeway, Bee Cave, Sunset Valley, Dripping Springs, Buda, Kyle, San Marcos, Burnet, Marble Falls, and more. Archives
November 2020
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