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The Power of Infrastructure to Transform CRE

Roads, bridges, jobs, and commercial real estate values all benefit

Infrastructure forms the fabric of our daily lives and powers our economic prosperity. Buildings, roads, bridges, and communication networks are just a few examples of the vast web of systems that give us space to work, play, and learn. When these systems are maintained and functioning well, they enhance the value of a region’s commercial real estate, leading to increased occupancy and higher rents.

Room to grow

The U.S. has long struggled to properly fund and develop its infrastructure, which has resulted in traffic congestion, blackouts, and worrisome conditions for many bridges and roads. In 2017, the American Society of Civil Engineers gave the country a grade of D+, saying that $3.6 trillion would be needed by 2020 to get to an “adequate” level of infrastructure. This shortfall has a significant cost attached to it—every year, we spend 5.5 billion hours sitting in traffic, at a loss of $120 billion in time and fuel. Miami knows this problem firsthand, as it ranked as the 10th most traffic-clogged city in 2018, with the average local driver in the car 64 hours a year.

But there is hope on the horizon. Politicians of all stripes agree on infrastructure as a basic good, as do 75 percent of Americans as a whole. An increase of $18 billion a year would create 200,000 jobs and add $11 billion to the U.S. economy. CRE investors know this all too well—infrastructure is one of the top reasons people choose to purchase or develop a property. When roads, power grids, and sea-ports are running smoothly, the value of nearby CRE improves dramatically.

Lifts all boats

The benefits of an improved infrastructure across many categories that have great importance to CRE investors.

  • Access. If your building is easily accessible by well-paved roads, subways, and buses, or walk/bike paths, it will be easier to visit and to do business there. The tenants of this building, therefore, will be much more inclined to pay top dollar for rent.
  • Jobs. 14 million people work in positions connected to infrastructure, making up 11 percent of the U.S. workforce. These include truck drivers, train engineers, power grid technicians, and pilots.
  • Transit. Businesses located near public transit can charge 80 percent more rent than their more distant counterparts. In addition, the rise of rideshare and driverless automobiles demonstrates the need for thoughtful urban planning and well-paved roads. Case-in-point, the new Brightline train, which connects Miami to West Palm Beach (and, eventually, Orlando) is a hopeful counterpoint to the city’s traffic woes.
  • Energy. As renewable sources of energy grow and become more widely adopted, there are dozens of positions that come with them, such as those who install solar panels, and natural gas workers who need trucks, rails, and pipeline.

Major projects on the horizon

Many urban areas have heard this call to action and have projects already in the works:

  • Miami’s “signature bridge” will connect historic Overtown with neighborhoods that sit along Biscayne Bay, reversing an urban planning decision in the 60s that forced many families out of their homes to make room for I-95, and cut them off from the rest of the city.
  • Houston’s 180-mile beltway called the Grand Parkway will connect major employment centers and ease congestion in the notoriously car-heavy town.
  • Los Angeles’ public transit system is in for a major makeover, extending it’s Gold, Expo, and Purple Metro lines to the city’s west side and beyond.

Although the country as a whole still has a long way to go towards systemic infrastructure improvements, these initiatives show how individual communities can take steps to smartly overhaul their roads, bridges, and railways. CRE will be a chief beneficiary of this work.

Morris Southeast Group stands ready to help you take full advantage of this trend, with CRE expertise born from years of experience. For a free consultation on our commercial real estate investment or property management services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Long-Term vs. Short-Term Leases in a CRE Property

Which is best for you?

A lot has been written lately about thinking outside of the lease box, including exploring the possibility of short-term leases. One big reason for this conversation is the rise of pop-up businesses, and the short-term lease is a way of filling space that would otherwise remain empty.

Before jumping into the short-term lease market, however, there are a few things for both landlords and tenants to consider. In many cases, a long-term agreement may be a far better leasing option. As with most things in life, there are pros and cons to both types of leases—and here is the long and short of it.

The power of the short-term lease

Generally speaking, short-term leases can stretch from one to 12 months. Anything longer than 12 months starts to creep into the long-term territory. A short-term lease is a more viable option in markets where there are tough eviction laws and where the demand for space is greater than availability, which means landlords have a larger pool of tenants from which to choose. This, in turn, means a property is more likely to remain occupied each time a short-term tenant leaves.

For the landlord and tenant, a short-term lease has several benefits. The greatest of these is flexibility. Because leases are short (and often have higher rents than similar long-term properties), the landlord is able to change terms and conditions, as well as the rental price, more often to meet his or her changing needs. At the same time, a short-term lease may make sense for a tenant who is—for whatever reason—unable to make a long-term commitment. This, of course, widens the pool of prospects for the landlord.

Short-term isn’t always a good thing

Of course, all of this doesn’t go to say that short-term leases are always an ideal solution. There are some key concerns that both landlords and tenants need to consider:

  • For the tenant, a short-term lease can be a little iffy, especially if they like the space and want to continue renting it, but the landlord finds a long-term tenant (to replace them) in the meantime. And tenants can expect to pay more with a short-term contract.
  • For the landlord, there are issues that need to be addressed each time a tenant leaves, such as advertising for a new tenant, checking references, and preparing the space for the new occupants. Because the old tenants often only have to give short-term notice, landlords—especially those who are not working with a CRE brokerage or property management firm—may find their time to accomplish these tasks flying by. The result may be a property that sits vacant.
  • Landlords will also find that ultra-short-term leases are not valued as high to lenders or potential purchasers of the asset; long-term leases are what provide stability for an asset, which usually translates to a higher value. This depends on the type of investment, however. For example, industrial vs. multi-family: in the latter case, a short-term lease is normal for apartment tenants.

The stability and challenges of long-term leases

By its name alone, the long-term lease indicates that both parties are willing to make a commitment for longer than one year, if not longer. For tenants, long-term-lease properties are less expensive than comparable short-term leases and are also easier to find. Landlords, particularly in markets where rents are falling, will want to offer long-term leases for stability and relatively assured income.

Commitment, though, comes with challenges. Once locked into a long-term agreement, tenants will have to stay or face significant consequences if they attempt to break the lease. Similarly, landlords may feel as if their hands are tied if they’re faced with a problem tenant, or changing market conditions mean they could be charging far more rent.

Finding the perfect lease

One way to help navigate leasing options is to work with skilled professionals who are adept at understanding the unique needs of landlords and tenants. Morris Southeast Group is that team. Additionally, we also provide property management services to help landlords and owners keep more of their time while keeping their properties occupied and tenants happy. To learn more about owner and tenant representation, leasing options, property management services, investment opportunities, and/or other services, 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.

Greener CRE Is Good For Business

Greener CRE Is Good For Business on morrissegroup.com

Sustainability is now a driving force in business and commercial real estate

It seems not a day goes by without a reference to climate change and the push for more sustainable efforts. While the idea of sustainability isn’t new, it has often been seen as a vague concept that’s simply “the right thing to do.”

According to a recent study by ING, though, sustainability appears to have moved up in priorities for the corporate boardroom. More and more companies, for the first time ever, now view sustainability as a growth engine and even a necessity. And in order to remain competitive and viable, CRE needs to take notice.

Key findings of the sustainability study

For the purpose of its 2018 report, ING interviewed 210 US-based finance executives, representing a broad spectrum of industries. Among the key findings:

  • Corporations with the most comprehensive sustainability framework saw increased revenue and better borrowing and credit-rating outcomes.
  • Companies using a sustainability framework were often the most engaged in meeting the needs of the 21st-century consumer, thereby ensuring survival and growth.
  • Despite these positives, more than half of the financial executives interviewed for the study reported difficulty in identifying sustainability-led business opportunities. Additionally, there is a definite need to better understand how sustainability can be applied to different types of businesses.

Translating the sustainability study to CRE

Although the ING study focused on sustainability and the corporate business model, many of the findings can easily be applied to CRE. In fact, all players in the CRE equation—from borrowers and lenders to owners and tenants—can benefit from adopting sustainable strategies for commercial, multi-family, and industrial properties.

  • The decision to have a property go green appears to have a positive impact on revenue, as well as a potential reduction in operating costs—and this translates into higher property values.
  • After the collateral property becomes LEED-certified or Energy Star labeled, CMBS (commercial mortgage-backed securities) loans can have a more than 30% reduction in default risk, as well as better loan terms.
  • Building characteristics and operational practices that impact the intensity of the property’s energy usage can also impact the risk of default. In other words, energy efficiency may start to play a more important role in the risk assessment process for new mortgages. This is similar to green tagging, a practice that is taking its place in European banks.
  • A changing demographic also means a changing attitude among potential tenants, many of whom place sustainable options at the top of their priority list. These generally fall into four categories: space design and integration (think co-work spaces and flexible design), wellness (natural lighting, proper ventilation, and environmentally safe products), resilience (a property’s ability to bounce back after a disaster), and solar energy.

Building a sustainable framework

The goal of sustainability is all about growth and longevity. That’s why there is an ever-increasing pool of green consultants to help bring businesses of all sizes. It only makes sense, then, that those sustainable goals—growth and longevity—can also be applied to CRE.

The professionals at Morris Southeast Group understand the importance of sustainability. As a staple of the South Florida community for 30 years, we have witnessed and experienced environmental changes, and stay abreast of those the future holds. We recognize the critical importance for owners and tenants to successfully prepare for and meet eco-challenges. To learn more about sustainability options, property management services, investment opportunities, and/or other services, 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.

Condo Sales Slump, Multifamily Rentals Soar in South Florida

The trend is in full force in luxury, workforce, and shadow markets

For years, condo has been king in South Florida’s real estate market. That title may now be in question, as multifamily apartments are rising in popularity, with more than 51,000 units under construction, in the planning stage, or proposed for development. With home sales continuing to slip and interest rates continuing to rise, many buyers are opting to rent rather than buy.

This shift may signal a major shakeup in the business, and CRE developers should be mindful of its potential consequences.

Multifamily rentals soar

In the first quarter of 2019, Florida had four markets, the most of any state, in the nation’s top 15 for multifamily rent growth:

  • Tampa/St. Petersburg (#5), with average year-over-year rent growth of 6.8 percent and 95.3 percent occupancy
  • Orlando (#9), with average year-over-year rent growth of 5.5 percent and 96 percent occupancy
  • Jacksonville (#12), with average year-over-year rent growth of 5.3 percent and 95 percent occupancy
  • South Florida (#14), with average year-over-year rent growth of 5.1 percent and 95.5 percent occupancy

And the local South Florida market as a whole is seeing high demand and low vacancies.

Why rentals?

Short-term rentals appeal to developers because they introduce a new kind of tenant who can broaden their potential market and bring down the possibility of vacancies. Thus, many condo owners have teamed up with short-term rental operators to attract renters and manage leases.

One flavor of new tenant is the tourist or business traveler, who, in cities like Nashville, encounter a dearth of traditional hotel rooms and a surplus of residential properties—hotel-style accommodations in a condo-size setting. In the Airbnb era, these travelers represent an essential market that is driving the multifamily rental boom and opening up a long-term solution for developers.

Traditionally, hotels want to provide amenities that compel their guests to stick around—health clubs, spas, coffee shops, restaurants—in order to maximize revenue. Short-term rentals have the opposite value proposition—residential properties are situated in real communities and encourage guests to venture out and support the local economy.

Multiple markets

There are several markets at work in this transition to multifamily developments that include rentals.

  • The luxury market. Rents are sky-high in much of South Florida’s wealthiest communities—over $3,000 in some areas. And many have raised concerns that luxury complexes like Florida East Coast Realty’s Panorama Tower have saturated the market and only contribute to the slide in condo sales.
  • Workforce housing. Many of these high-rent communities struggle to provide affordable housing to those who earn middle- and lower-level salaries in industries such as food service, education, health care, and the not-for-profit sector.

    Palm Beach County requires developers to portion a certain number of units as affordable housing. Fort Lauderdale partnered with European property investor Round Hill Capital to create The SIX13, a workforce multifamily housing project with rents far lower than average in the popular downtown area.
  • The shadow market. When condos don’t sell, they end up here. In 2018, Miami-Dade County alone saw over 2,200 shadow market leases, a fifth of all available units.

Morris Southeast Group closely monitors these and other multifamily housing trends and their effect on South Florida’s market—and we will continue to do so. As one sector rises, another often dips, and things could turn around for the condo market as they did well after the “glut” of condos that preceded the real estate crash in 2006-2007.

For a free consultation on our commercial real estate investment or property management services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

5 Risks That Keep CRE Investors Up at Night

From volatile markets to rising sea levels, the risks (and rewards) are real

Whether you buy a condo in a prime downtown neighborhood, makeover a house in a growing suburb, or sink your money into a commercial office space or apartment complex, real estate can be an essential part of an investment strategy. There are, of course, risks, and any smart investor does his or her homework before signing on the dotted line. But after some initial financial outlay, real estate can be a great way to generate passive income plus remain connected to the larger community.

Below are just a few examples of risks that any new or seasoned CRE investor should keep in mind, whether it’s their first purchase or their thirtieth.

Unpredictable markets

All markets have their boom and bust cycles, and real estate is no exception. Inflation, interest rates, and the economy at large all have a significant impact on a property’s value and prospects. While no one is immune to these ups and downs, the savvy investor keeps tabs on the markets and adjusts accordingly.

Buy when demand is hot and you risk selling when things have cooled down, and a similar cycle applies to varying interest rates. Likewise, purchase during a bear economy may allow you to sell high when the bull returns, but also risks that property remaining on your books and generating little-to-no income if a downturn persists.

The wrong type of property

Not all CRE assets are created equal. Each type of property has its own strengths and weaknesses, complicated further by your local geography. A few tips to keep in mind:

  • Apartments tend to have high demand, no matter the economic cycle, which makes them low-risk. But as a result, they can provide a lower return depending on how hot that specific market may be.
  • Hotels rely heavily on tourists and business clients and therefore may claim higher rates but also more risk, given the cyclical nature of the hospitality industry.
  • An office complex generally (though certainly not always) has less reliance on consumer demand and tends to rely more on keeping current tenants satisfied, but the ongoing cost of tenant improvements creates downward pressure on overall rates of return.
  • Industrial buildings are in high demand by tenants and investors in most major markets around the country, and as a result, the yields for this sought-after product type is generally lower as the pricing is pushed higher by competition. Industrial properties generally require less maintenance, management, and improvements but careful consideration should be given to the location and specific attributes—clear height, power, cross-docking, access, distance to major interchanges, and the major drivers of occupancy in that specific market area.

Whatever corner of the CRE market you occupy, knowing the risks of your particular specialty will manage performance expectations.

Risky locations

The old saying is true—when it comes to real estate, the key to success is location, location, location. It’s first and foremost in your mind when investing in CRE, whether you’re riding the wave of a white-hot neighborhood or placing a pioneer’s stake down on an as-of-yet-undiscovered block.

Both scenarios carry risk. Join the popular crowd at the right time and you’ll see many tenants and high rents; join at the wrong time and it may be too expensive and saturated. An up-and-coming neighborhood has lower costs and more space but also the potential for higher crime rates and less foot traffic.

A location’s rosy prospects can change in a heartbeat. For example, businesses near Chicago’s historic Wrigley Field learned this the hard way in 2015, when the venue mounted a new scoreboard that cut off their once fantastic view of the historic ballpark.

Unreliable tenants

For all income-property owners, tenants are necessary, if complex, part of a CRE investment. The risks here are fairly clear—late or unpaid rent, property damage, and rude or obnoxious behavior that drives current and prospective tenants away. Owners always have eviction as an option, but it takes time and money that has a negative effect on overall yields. Comprehensive tenant screenings are an effective way to mitigate this risk, and far cheaper than having to force out a tenant. A competent property management firm will help you manage the risks.


It happens to even the most experienced CRE investors—expenses grow beyond expectations and/or vacancies are higher than you could have predicted, all resulting in an inability to meet your commitments. Foreclosure is a real risk in this scenario and the consequences reach far beyond one property. It will certainly impair your ability to get financing down the road.

Due diligence such as a thorough real estate market analysis can prevent such a drastic turn of events. Once you’re up and running, work to pay down the mortgage as quickly as possible—within the framework of the interest rate you are paying—and have a reserve fund at the ready to cover the slow periods and also unexpected tenant or common-area improvements.

Bonus risk (South Florida edition): climate change

Many areas of the country—South Florida chief among them—have begun to factor climate change into their risk assessments for new and existing CRE properties. While this risk is real, local governments in Miami, Miami Beach, and elsewhere, have been working on these issues for some time and are taking active steps to reduce risk and encourage investment.

Morris Southeast Group is confident that Florida will remain a vibrant CRE market, but risks are always a part of commercial real estate investing’s reward. For a free consultation on our commercial real estate investment or property management services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Using Concessions to Lure Tenants to Your CRE Investment

A few carrots are healthy for your CRE property

When it comes to commercial real estate, there are a few key issues that are of great importance to potential tenants: location, foot traffic, competitor tenants, rents, accessibility, and space size. Many tenants, though, may find several properties all ticking off the right amount of checks—and their decision may come down to exploring which landlord is willing to make some concessions.

At the same time, landlords and owners may be frustrated at not being able to attract any tenant to a vacant space that has been available for some time. Again, the answer may be to look at concessions that can suddenly make a property more desirable.

What is a concession?

In the most basic of terms, a concession is a compromise between the landlord and tenant, one that usually involves the landlord offering something as a “giveback” to get the tenant to sign the lease. Normally, concessions make sense in order to quickly fill a vacancy, at lease-renewal time, during a slow market, or when a property is first entering the market.

While a concession is often viewed as a cost to the landlord, that cost can be offset over the duration of the lease. In addition, before offering anything or everything, it’s imperative to research competitive properties, concessions that are working in similar properties, concessions that make sense for specific businesses, and ones that make sense in a changing marketplace.

What are some of the most common concessions?

Concessions come in all shapes and sizes, and many are changing with the times. Regardless of the concession(s) offered, though, it’s important to spell out the details in a strong lease document. Let’s look at some examples:

  • By far, the most common is to offer some sort of rent deal, such as first month free. This can either be negotiated as an actual first month free or by applying the discount over the course of a 12-month period. Similarly, rent discounts can also be offered to a strong tenant at the time of lease renewal. While some may interpret this as a huge giveaway, collecting a discounted rent is far more profitable than collecting no rent at all.
  • Available space may not be exactly perfect for a potential tenant. Shelving, tables, interior traffic flow may need to be adjusted—and some landlords are willing to increase the Tenant Improvement Allowance to between $20 and $50 per square foot.
  • Start-up and pop-up businesses are always looking for ways to get their feet in the door, but long-term leases often either don’t work or are too much of a commitment. Offering short-term lease options can help sway their decision.
  • Relocating a business to a new space can be an expensive undertaking—and for some ideal tenants, landlords have found it worthwhile to help offset those costs with a negotiated Move-In Allowance.
  • Amenities go a long way in the residential market, so it makes sense that they can go just as far in the commercial arena. Upgrades and services can include Internet access and speed, adopting green measures, designated parking spaces, security measures, landscaping, excellent maintenance and cleanliness of common areas, and even services for employees who bike to work.

Which concessions work for you?

Of course, each concession has its share of pros and cons for landlords and tenants. That’s why it’s important to work with a skilled team that not only knows the market but also knows the concessions that make sense—so both parties can lease happily. The professionals at Morris Southeast Group are that team, and have a winning record of representing owners and tenants in property searches and lease negotiations. To learn more about owner and tenant representation, property investment opportunities, and/or other services, 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.

What Do Office Tenants Want?

5 ways to evolve your available space

When “Mad Men” first aired, many viewers looked at it with an eye toward the nostalgia of office design. The show had cubicles and corner offices, executive bathrooms and gobs of square footage to fill. But modern office design and open plans happened, and—well – this isn’t Don Draper’s office anymore.

And while some people find it easy to blame Millennials for practically everything, there is plenty for which to thank them. Their place in the workforce and in executive and decision-making positions is certainly keeping the current office marketplace interesting. As work has often changed from a destination to an experience, property managers, owners, and developers are coming up with more and more creative ways to keep office space current and competitive.

1. Flexibility is at the forefront

The office space pendulum appears to be swinging toward a happy balance of open space and cubicles. One way to avoid expensive overhauls and re-dos that change with the design trend of the moment is to provide and market flexibility. Some properties have started to provide space-planning services to help potential tenants envision a floor plan that works and to help successful tenants adapt the space rather than seek a lease somewhere else.

2. Consolidate some areas

Part of that flexibility is reconfiguring floor plans to create common spaces. Because of technology and working remotely, many potential tenants do not require an abundance of square footage of their own, but they are willing to share space and services with other tenants.

3. Provide services and amenities

Many people wonder what happened to the 40-hour workweek. As a result, basics to everyday living—from picking up dry-cleaning to scheduling some gym time—often get squeezed out. That’s why some landlords are now offering a wide assortment of amenities, including concierge-type services, food options in the lobby, bike racks, rooms with showers and lockers, weekly or on-premises health and wellness experiences, and shuttle services to help bring tenants to public transportation centers. Creativity mixed with a tenant-interest inventory can go a long way.

4. Keeping people and place connected

It goes without saying—and yet, must be said over and over again—tenants require greater connectivity, especially as their dependence on technology grows, both in-house and remotely. Beyond speed and secure connections, connectivity also requires owners, managers, and developers to move the property toward smart technologies, and often green technology is part of this overall trend.

5. Maintaining a secure, safe, and clean environment

These basic items made the list because they’re the things few people ever mention on an office-space wish list—but they can be the first ones noticed when not done well. Common areas, including restrooms and stairwells, should be well maintained. At the same time, we also live in a time of workplace shootings, so steps can be made to ensure tenants and their employees are safe without feeling as if they’re imprisoned. This means lobby security and visitor protocols, as well as employee key card entrance for parking and building access.

The strength of working relationships

When it comes to marketing your building in order to attract a new and dynamic pool of tenants, a lot more can be said—such as the importance of a property’s first impression, as well as the availability and transparency of the landlord/owner. Because at the end of the day, tenant satisfaction comes down to strong relationships and the quality of the product.

The Morris Southeast Group team knows a lot about those things, because it’s how we conduct business. Our professionals can help you evolve your property to meet the challenges of a changing workforce.

To learn more about property investment opportunities, property management, and/or other services, 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.

Invest in Your Community, Not Just Your Property

Goodwill, happier tenants, and increased ROI will follow

When you invest in a commercial property, your responsibilities—and opportunities—go well beyond the four walls of your building or the boundaries of your grounds. You are now part of the community and it behooves you to embrace that responsibility and become involved. Fortunately, this can also provide a welcome boost to your reputation and your ROI.

Everything from property values to tenant relations stand to benefit from community engagement. Here are just a few of the ways you can get involved.

Incorporate charitable acts into your business

There are many ways to contribute to your community other than money, and there are many ways to connect with these opportunities. Here are just a few examples:

  • Real Estate for Rehabilitation. As your first tenants move into your new property, hit the ground running by encouraging them to participate in this program. It connects them to the local Salvation Army, who will pick up their unwanted stuff and sell it in their stores. This fosters immediate goodwill for you, your tenants, and this legacy charitable organization.
  • Give Back Homes. Put some hands-on work into the community with this group of fellow real estate professionals who build homes for those in need—in your town and around the world.
  • Knock on some doors. Encourage tenants and neighbors to donate to the local food bank by providing bags and offering to deliver them. It’s a great way to get some face time with community members and serve a greater good.

Join local networking organizations

Networking is key to establishing and maintaining positive relationships with your neighbors and the town at large. Join the local Chamber of Commerce and attend events hosted by local service organizations, such as the Rotary, Lions, or Kiwanis clubs. They have their finger on the pulse of the community and can direct you to other opportunities to get involved. Local chapters of the Ronald McDonald House, the Boys & Girls Club, and various other groups are also great resources.

Support your local schools

Parents hold the key to a community’s good will. They are perhaps the most invested and the most vocal about their experiences, good and bad. What better way to engage this constituency than by helping your local PTA or PTO with fundraising, volunteering, or marketing, services which are nearly always in demand. Promote their events in your building and encourage your tenants to step up as well.

Get your tenants involved

Speaking of tenants, they are your most powerful tool and the most direct expression of your community involvement. Engage them in these efforts and you’ll have a better relationship with them and have a greater impact on your town. Organize neighborhood “shine” days where you collect trash or plant flowers along your street, as one example. Come the holidays, boost your efforts to collect food for the local pantry, and make your corner of town the pride and joy of the community with decorations and giveaways.

Give back, get back

These are just some examples of ways to become involved in your community. Commercial real estate investors in South Florida and beyond have innumerable outlets for finding causes and organizations that enable them to give back to the community. And the practical impact—beyond doing what’s right— is that all of them have great potential to bring positive attention to you and your property:

  • If you have empty units, people will be more likely to fill them.
  • Need something from the local zoning board? They will be more inclined to quickly provide it.
  • You’ll build valuable connections with local contractors, tradesmen, and other useful service providers.

In short, community investment is not only a moral imperative and a great way to improve where you live or work—it has real ROI. We call that a win-win … win!

Morris Southeast Group is a champion of community engagement. For a free consultation on our commercial real estate investment or property management services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Leasing Billboard Space On Your Commercial Property

Why looking up is looking good for CRE

As soon as people had something to sell, they knew they had to advertise in order to draw in customers—and a business was born. From the outside walls of barns painted with images of fresh corn to LED digital displays turning night to day in Times Square, billboards have evolved and always managed to find a place in the American landscape.

Outdoor off-premise advertising became so popular and numerous that billboards were eventually considered a blight—and many cities and jurisdictions created a list of rules and regulations to contain their spread. Despite the pushback, though, they have remained a way to generate additional income from a rooftop, wall, or empty plot of vacant land along a heavily traveled road.

The billboard does not belong to the property owner

When it comes to renting space, most commercial property owners are familiar with the traditional leasing agreement they have with tenants. Rent is paid for a piece of the overall building, while the landlord retains ownership.

That isn’t the case with billboards. The property owner owns just that and only that—the property, whether it’s the roof, an exterior wall, or a plot of land. Sign companies own the actual billboard and, as owners, they then lease that space to advertisers. Unlike tenant rents, which are calculated by square footage, billboard leases are usually a fixed price that’s tied to the consumer price index and/or revenue generated by the billboard. In other words, property owners can expect a 10%–18% return. Digital billboards are even more profitable.

Things to consider before entering the billboard arena

Before exploring options to have billboard structures placed on the roof or exterior wall of your building, or on some land along I-95, there are a few things to consider.

  • Not every location is perfect for a billboard. Sign companies need to look at some data, such as traffic count, lines of sight, and demand and audience profiles. In addition, they also need to protect the visibility of their sign for their clients. This is done through a kick-out clause in the lease agreement. Simply stated, visibility that becomes obstructed through the owner’s alteration of the building, a third-party construction project, or road relocation are grounds for lease termination.
  • Many billboard lease agreements also contain hands-off provisions. The building owner cannot dictate the content on the billboard. About the only way content is controlled is if it violates any sort of law or local codes.
  • The sign company retains rights to not only assign leases, but to also sell the billboard to another company.
  • Since the sign company is responsible for billboard maintenance, property owners must grant “reasonable access.” When on top of a building, for example, this means allowing access to the roof. For a billboard placed along a major thoroughfare, things can become more complicated, since access is usually achieved by driving from the street (rather than from the highway) and then through the property. In addition, the sign company must also have access to electricity sources for lighting, though it would be responsible for utility payments.
  • As stated earlier, local governments have made it more and more difficult for billboards to find a place. As a result, existing locations are even more valuable for sign companies.

Generating CRE income outside and in

When it comes to commercial property generating income, most investors are well aware of primary sources—but secondary and tertiary sources, such as billboards, open up a whole new stream. At the same time, digital technology advances are expanding profit opportunities to interiors like the advertising possibilities in elevators and lobbies. At Morris Southeast Group, our professionals are uniquely qualified to help you make the most of your investment. To learn more about property investment opportunities, property management, and/or other services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

E-Scooters: Boon or Burden to Cities and Commercial Real Estate?

Cities have a love/hate relationship with these two-wheelers

Once an oddity only seen in America’s tech centers, e-scooters have now become near-ubiquitous across the U.S. and around the globe. From Columbus to Nashville, Lisbon to Paris, these two-wheelers are taking over the urban world as we know it. Startups like Lime, Bird, and Scoot once had the field to themselves, but are now being muscled around by transit giants Uber, Lyft, and Google Maps, who all want a piece of the action.

But it isn’t all sunshine and roses. While they can have some concrete benefits, scooters are often divisive—pitting residents against each other, adding fuel to the already tense relationship between tech companies and municipalities, and, if used recklessly, unsafe.

The Pros

  • A solution for “transit deserts.” E-scooters provide a viable transportation option for areas out of the reach of public transit. And in areas that do have buses and subways, scooters can be a useful solution to get you that last couple of miles—too short for a car, too long for a walk. For residents of smaller cities like Nashville, TN or Scottsdale, AZ, scooters may mean that having a car is no longer a requirement to live there.
  • More affordable than a car. Scooters provide accessibility at very low cost—typically around $1 to unlock and 15 cents a minute after that.
  • Eco-friendly. By reducing the need for a car, at least for the kind of short trips that are the most common, e-scooters can bring down emissions, save money, and reduce the number of automobiles stuck in traffic. Scooters also use far less energy than cars and public transportation.
  • Supplemental income. Scooter companies often hire locals to round up and charge their two-wheelers overnight.

The Cons

  • Town/tech conflict. Entrepreneurs and municipalities have been at odds almost from the start as this innovation has arrived in cities. Startups would simply drop scooters wherever they pleased; opting to apologize later, rather than ask permission. Many cities—including some in South Florida—initially pushed back, but are now working with these companies, rather than fighting them.
  • Unreliable technology. Many models have short battery life and don’t do well with repeated exposure to rough terrain, bad weather, and the grind of city streets.
  • Dockless chaos. By many accounts, the dockless nature of these two-wheelers creates a free for all with scooters left in the middle of streets and sidewalks, in buildings and on private property. Riders are known to zoom along pedestrian walkways when they are required to stay on bike paths or streets. Which leads to…
  • Safety concerns. Scooter injuries are on the rise, and many riders don’t wear helmets. In 2018, nearly 250 people reported to the ER in Southern California with scooter-related head injuries, bruises, bumps, and broken bones. Twenty-one of these folks weren’t even riding a scooter, rather tripped over or were hit by one.
  • Eco-friendly? While there are tangible benefits once the scooters are on the ground in cities, the process of getting them there is fraught with environmental issues. Bird sources its bikes from China and ships them in containers, which produce a growing percentage of global CO2. In addition, the lithium battery needs to be replaced every 300 to 1,000 charges. Unless your town has a means of processing these batteries, more shipping is required.
  • Vandalism. Los Angeles and San Francisco have both seen scooters vandalized in a variety of “creative” ways.

Scooters seem to be good for cities and CRE, despite the hurdles

The verdict in South Florida is generally positive. Cities like Miami, Fort Lauderdale, and Coral Gables are partnering with startups to roll out these programs safely—although Fort Lauderdale beach has banned them for the summer. Morris Southeast Group is well aware of the key role efficient and cost-effective transportation plays as part of successful commercial real estate and property management in South Florida. For a free consultation on our property management services or commercial real estate investment opportunities, call us 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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