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Can Your Old Building Become Smart with a Retrofit?

Can Your Old Building Become Smart with a Retrofit? on morrissegroup.com

Sure, why not? Why a smart retrofit may now be a good option

Consider the rotary phone. In a popular video on social media, young people are unable to figure out how to use the rotary dial, and there are now millions of people who will never understand the patience it took for the mechanism to complete a zero when dialing the phone. Once considered a technological marvel, the rotary phone is all but gone—except for relics housed in museums, sitting in your great grandmother’s house, or tossed on trash heaps.

Something similar happens in commercial real estate. Many of today’s new-construction buildings come with energy-efficient materials and pre-configured for modern technology, including the latest smart technology systems. And these features are very often at the front and center of any marketing efforts. Older buildings aren’t so fortunate.

Many could be on the verge of being declared obsolete—unless owners and managers undertake a smart retrofit.

Getting smart is affordable

For years, a technological retrofit was often seen as a very expensive and perhaps unattainable option for older buildings. Because of the cost, property owners wouldn’t see a break-even payback for years to come. Very often, demolition and starting from scratch was a more viable solution.

Times, though, have changed. Technology has improved, and there are more products and greater options available—so much so that owners, depending on the scope of the retrofit, can see a break-even payback in less than a year. At the same time, a smart retrofit keeps an older building competitive in a greener marketplace and more relevant to potential tenants. It also increases the property’s overall value.

It takes homework to be smart

No two smart retrofits are alike. Some retrofits can be as simple as upgrading Wi-Fi technology or as complex as complete overhauls of various operating systems. The scope of each one is determined by several factors, including personal vision, building needs, and how much of a financial investment owner wish to or are able to make. If there’s anything all experts in the field agree on, though, it’s that it’s important to do homework prior to initiating any smart retrofit. Typically, the primary goals are to increase a building’s energy efficiency and expand its features such as maintenance monitoring and security. This involves assessing the ways that increasing network connectivity and applying new technology can make these objectives attainable.

Gathering data is the best place to start. This effort includes conducting an assessment of tenant needs, gathering information on surrounding and comparable properties, and doing a performance review of currently operating and management systems within the building.

The combination of a review of two years’ worth of utility bills and an energy audit are critical in establishing benchmarks for how efficiently the building is performing. This process can also help isolate easy fixes—such as repairing leaks and replacing filters—or pinpointing systems in which the property is losing energy and, as a result, money.

Systems most likely to go smart

Once the homework is completed, a smart retrofit doesn’t have to be a full-building project. Working with an energy engineer, it’s possible to fine-tune the project to focus on key areas. Among the most likely systems to require a smart retrofit are: windows, elevators, lighting, HVAC, security, and adding submeters, so tenants can have greater control over their energy use. At the same time, many of these systems can be easily managed through software, computer monitoring, and wireless sensors.

If this still seems overwhelming, consider the task of smart retrofitting one of the world’s most iconic buildings: the Empire State Building in New York. Begun in 2009, the project—through a series of partnerships—zeroed in on key goals. The end result is an annual savings of 38% of the building’s energy and $4.4 million, and the standard now places the building, originally completed in 1931, among the world’s newest energy-efficient buildings.

Asking for extra help is also smart

While undertaking a smart retrofit can seem overwhelming, the Empire State Building and other smart retrofit projects have taught us that owners and managers don’t have to go it alone. In fact, it’s very often recommended to work with the guidance of real estate professionals, such as those at Morris Southeast Group. Our property management services, as well as our links with energy experts in the field, can help you formulate the best smart retrofit plan for your building’s needs. To learn more about how we can help, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Is Co-Living The Next Big Thing in South Florida Multi-Family Real Estate?

Is Co-Living The Next Big Thing in South Florida Multi-Family Real Estate? on morrissegroup.com

A recent real estate trend is performing better than expected

It seems as if everything today is ripe for sharing. From car rides to parking to workspaces, what was once considered private and personal is now open to a communal way of thinking. With this in mind, it really isn’t surprising that co-living is a recent trend in the multi-family housing market.

As recently as 2017, some predicted it to be a movement that would “shake the multi-trillion-dollar housing industry to its core.” While critics and proponents still debate the long-term success of co-living, there is no denying that the idea is causing tremors in the marketplace—and South Florida might soon feel the earth move.

What is co-living?

Co-living comes at an interesting time in the multi-family housing industry. Many see it as a solution in high-market-price urban areas where there is an oversupply of rental properties (many of which are luxury units), an affordable housing crisis, and a millennial demographic that has limited income and its own way of working, playing, and living.  

In exchange for lower rents, co-living provides tenants with smaller private spaces and shared common areas, such as kitchens, lounges, game rooms, fitness rooms, etc. In addition, many co-living buildings also have a community manager to help coordinate group activities, such as movie nights, workshops, yoga classes, lectures, and community dinners.

Co-living provides opportunity

Some of the harshest criticisms have labeled co-living as dorm or hostel living for adults. Taking into account that co-living developers try to create an “intentional community” by matching up potential tenants based on interests and activities, it’s easy to see that comparison.

Nevertheless, it’s difficult to refute the fact that co-living properties are providing a very viable option for Millennials (and aging Baby Boomers) who crave an affordable place to live in some of the most expensive metropolitan areas in the country. Typically, co-living properties are located in up-and-coming neighborhoods, have a strong link to public transportation, and are close to shopping, restaurants, and nightlife. Minimum lease terms generally run from six to 12 months, although some properties offer three-month leases.

Co-living surpasses expectations

As more and more properties have opened, developers and investors have discovered that many results are surpassing expectations. Ollie, one of the largest co-living developers in the country, reports that its co-living spaces are earning more money per square foot than traditional apartments.

Ollie should know. At its Long Island City, NY, building, the company split 169 of its 466 units into 422 co-living bedrooms and common areas, thereby creating the largest co-living property in the country. A two-bedroom unit there can be as little as 535 square feet, which can then be rented from between $1,260 to $2,200 per month. In addition to amenities such as Wi-Fi, furniture, and kitchenware, the rents also cover weekly cleaning services for common areas.

Co-living in South Florida

South Florida has several co-living properties, but 2020 looks to be a major year as several high-profile projects are scheduled to open:

  • Common Marti and Common Mariana, from Common developers, will provide a total of 65 units in Little Havana. The neighborhood was chosen for its walkability and its proximity to office space, retail, and Brightline.
  • Ollie is part of an upscale co-living project at Gable Station, a three-building, a mixed-use property in Coral Gables.
  • Fort Lauderdale’s X Las Olas, from PMG, will be a 650-unit, 41-story tower in the heart of downtown.

Co-living is especially attractive to young professionals and retirees who are interested in being social in expensive urban areas that offer an assortment of cultural and recreational activities. South Florida is that idea co-living market, and co-living may be a unique solution to the affordable housing crisis, as salaries have not kept pace with rents and property values.

To learn more about commercial real estate investments, development opportunities, or other property services, contact the professionals at Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Filling The Neighborhood Strip Mall Calls for the Proper Mix of Tenants

Filling The Neighborhood Strip Mall Calls for the Proper Mix of Tenants on morrissegroup.com

Success with South Florida strip malls requires a carefully selected blend

With the growth of the suburbs in the 1950s, strip malls often became a vital part of the landscape. Sometimes called village greens, they were the new downtowns for bedroom communities that didn’t necessarily have an actual downtown.

Over the decades, though, the strip mall’s reputation has waxed and waned. Sometimes seen as essential—but often seen as a necessary evil or even a symptom of suburban sprawl—there is no escaping the fact that strip malls provide two key necessities for consumers: convenience and service.

With this in mind, it’s no small wonder that strip malls can arguably still claim a role as the town square. And boy, are they common in Florida; big and small cities alike.

What makes a strip mall?

Generally speaking, strip malls come in three sizes, each based on square footage and occupants:

  • Community centers range from 125,000 square feet to 400,000 square feet, and usually contain supermarkets, box stores, and large discount stores.
  • Neighborhood centers range from 30,000 to 125,000 square feet and may contain one supermarket and a mix of convenience stores (defined broadly as anything that provides a convenient service).
  • Strip centers are less than 30,000 square feet and contain convenience stores.

Attracting lucrative tenants to these centers is not always an easy task, especially since it’s often impossible to accommodate large, nationally known anchor stores. That being said, there are numerous prospective tenants. And creating the perfect blend of them requires flexibility and creativity, all while keeping a constant eye on convenience.

How to create the right mix in a strip mall

Unlike larger shopping malls, which are buckling under the strain of e-commerce competition, smaller shopping centers are able to provide a niche market for tenants who may be Internet-resistant or just service-oriented. These two traits are why consumers continue to need in-person shopping experiences—and strip malls.

Depending on space, the ideal combination of strip-mall tenants includes a mix of the following:

  • Health and beauty (hair and nail salons, day spas, barbershops)
  • Restaurants (it’s not so much about fast food, but more about casual and affordable dining)
  • Fitness (yoga studio, circuit training)
  • Service (dry cleaners, smartphone stores; medical and dental services are also a growing trend in smaller shopping centers)
  • Entertainment (like an indoor children’s playground)
  • A blend of the bargain and upscale boutiques

What do tenants want?

When considering the proper mix for a strip mall, it’s also important to understand what small-shopping-center tenants require. While some of these businesses may be part of a franchise, chances are that most will be privately owned. As such, they have a great interest in ease of access for potential customers to reach them, adequate and convenient parking, and good visibility.

Because strip-mall tenants are smaller operations, there’s also a strong need for high foot traffic, and a proper mix of tenants can help boost that number. One technique is to consider “co-tenancy,” understanding that certain businesses have specific peak times. By creating a balance, it’s possible to keep the parking lot full all day long so each of the businesses can flourish based on patronage patterns.

What can the owners provide?

In many ways, owners of strip malls need to be hands-on. A specific set of skills not only keeps each storefront occupied, but they also help to keep the shopping center relevant.

  • When it comes to rental agreements, don’t be afraid to be flexible and creative. Getting a strong tenant in could mean tenant-improvement allowances, early occupancy, a graduated rent structure, and free or reduced rent. It’s important to learn what works best for the tenant and for the owner.
  • It’s all about the details. Paying attention to landscaping, litter, signage, parking lot upkeep, night lighting, and other aesthetics can make current tenants happy and sway the decision of a brand-new tenant or one relocating from another strip mall.
  • Speaking of current tenants, potential tenants will definitely speak to them. A satisfied tenant can be a tremendous asset to an owner.
  • Consider upgrades. Perhaps there is an outparcel on the property that can be developed to house a single tenant with a drive-thru window.
  • As always, owners should never neglect their due diligence. It’s important to know and understand the credit and financial stability of a tenant, as well as their operating history and experience. If a tenant is a relocation from another strip mall, it’s a good idea to get a better grasp on their reasons for relocating.

Working with a strong team

To help the process go more smoothly, owners and tenants should work with a skilled commercial real estate partner. Not only can professionals help find the perfect location for a particular business, they can also assist in putting together a winning combination of them for a particular shopping center.

Morris Southeast Group has a highly skilled and knowledgeable team of pros for all of your real estate needs, either as an owner or a tenant.

To learn more about our services including property management and investment opportunities, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Can CRE Developers Solve Miami’s Affordable Housing Crisis?

Can CRE Developers Solve Miami’s Affordable Housing Crisis? on morrissegroup.com

New ideas are working to save an affordable city

Don’t be fooled by the number of cranes rising above the skylines of many South Florida cities. While their presence certainly indicates a building boom in the region, it also highlights a problem that is hiding in plain sight—an affordable housing crisis.

According to a recent report from the Miami Urban Future Initiative, a joint project of Creative Class Group and FIU’s College of Communications, Architecture, and The Arts, Miami and much of South Florida’s tri-county area are facing a severe problem: the lack of housing affordability brought on by high housing costs and low wages.

A closer look at the affordable housing crisis in Miami

Miami certainly isn’t alone in having to deal with an affordable housing crisis; cities across the nation are also facing the same dilemma, to varying degrees. But all too often, the topic is the pink elephant in the room. We know it exists and we know it’s bad, but a discussion of low-income housing can ignite a NIMBY (“not in my backyard) debate involving neighborhoods that don’t want solutions in their area.

Not talking about it, though, not only perpetuates the problem—it makes it worse. That’s a big reason discussing “Miami’s Housing Affordability Crisis” is important. It gets the dialogue started. Although the picture it paints of the South Florida community isn’t always pretty, it is certainly significant:

  • On a global ranking of least affordable large metro areas, Miami ranks 7th.
  • While housing prices have rebounded since the Great Recession, wages and income have not kept up.
  • Six in 10 employed adults are considered housing burdened, spending more than 30% of their income on housing. This statistic places Miami in the top spot on a national list of metro areas. Further complicating this issue is that more than half of the area’s workforce are low-income service workers, and therefore face the greatest challenge.
  • The crisis is both geographically and racially concentrated, with minority populations having little income remaining after paying for housing.
  • Housing in the region is expensive, putting Miami on a par with Washington, DC. Salaries in the two cities, though, are not the same—which the places Miami 2nd on a national list of cost-burdened homeowners and 1st on a national list of cost-burdened renters.
  • More than in other cities in the nation, climate change and sea-level rise have the potential to only make the crisis worse.

CRE investors and developers can make a difference

Nevertheless, things aren’t all gloomy. In fact, the affordable housing crisis is creating a challenge and CRE developers and investors are working to meet it head-on. In recent years, more investors have expressed an interest in purchasing buildings that are part of an affordable housing program or are at a market-based low-value rather than starting such a project from scratch. Original development projects are simply too expensive.

While some of these for-profit investors are interested in raising rents, a majority is content to keep the rents relatively low. “Affordable” can also be a smart business practice. Generally speaking, affordable housing properties tend to be fully occupied and provide a dependable, consistent, and steady income. For many investors, low-income and affordable housing can even be a safer bet than a class A apartment building—as demand is continually strong.

Local solutions making a difference

For a better look at what’s happening on a local level, consider the 16 Corner Project in Miami’s Overtown community. There, a joint effort between a private real estate developer and the city’s Omni Community Redevelopment Agency resulted in the successful rehab of a 1950s apartment building.

The partnership was a cost-sharing marriage that combined development skill with agency financing, which resulted in high-standard, low-income housing—and the developer is still able to see a profit.

Additionally, the University of Miami’s Office of Civic and Community Engagement developed an online mapping tool that has identified more than 500 million square feet of vacant, unused, and under-utilized land across Miami-Dade. Much of the land is located along transportation hubs and is ideally suited for low- and middle-income projects. The tool, known as Land Access for Neighborhood Development (LAND), is easy to navigate, free, and updated every two weeks.

Looking for South Florida possibilities

When it comes to CRE investments, a lot of time is spent talking about and searching for those big-ticket items—pristine properties and big returns. The truth, though, is that all properties and all housing needs have value. Because, when done correctly, they provide for all members of the community.

The pros at Morris Southeast Group believe in the South Florida community. It’s why we live, work, and play here. It’s why we love it here.

To learn more about affordable housing property investment and development, property management services, or other investment opportunities, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

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