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Pedaling vs Parking: The Impact of Bicycling on CRE

The newest front in the green revolution is actually a win-win

By the looks of things, it appears as if the green revolution is spreading across South Florida, as well as the rest of the country, in the form of miles and miles of green lanes dedicated to bicycling. As an increasing number of cities redesign streets to include wider sidewalks and increased tree canopies, bike lanes are often used as a means of improving road safety, slowing down traffic, helping the environment, and improving overall community health.

There is, though, a casualty: street parking. For landlords and business owners, this can be a critical issue as they envision a loss of profits from bike lanes that are seldom used to full capacity. Preliminary studies, however, are indicating the opposite is true.

The battle for street space

When considering a street redesign, the argument often comes down to space. On the one hand, there is traffic congestion slowing down many primary and secondary roads throughout the region. In many cases, adding a bike lane means the elimination of a driving lane—and when many roads are already moving at a snail’s pace, is it even possible to move any slower?

At the same time, there is a growing call in many urban and dense suburban areas—where space is quite limited—for pedestrian-friendly thoroughfares. This often requires wider sidewalks to invite strolling. It also calls for slower traffic so pedestrians can safely cross, and in South Florida, hit-and-run accidents and casualties have become all too common.

Bike lanes, then, have become a go-to solution. Not only do they meet the demands of a more environmentally conscious population and the increase of citywide bike-sharing initiatives, but they also appear to be efficient at forcing drivers to slow down.

The concerns among business owners and landlords

As nice as that all seems, though, it does little to quell the anxiety of landlords and business owners. But there are ways to not only meet the challenges of change but to do so profitably:

  • Without a doubt, parking concerns are valid ones, but it’s also important to realize that businesses with street parking have always had parking issues. It’s actually quite rare for a customer to be able to park immediately in front of a specific store. Very often, he or she has to walk some distance to the store after parking—and this distance is often less than the distance in a parking lot to the front door of a shopping mall. In addition, the street redesign will encourage pedestrians to linger, and the walk from the car to store will increase foot traffic to other businesses along the street. And that’s a great thing.
  • Businesses can assist customers through the transition, using signage and social media to direct customers to nearby parking options. In addition, some business owners embracing the idea have discovered unique ways to reach out to new customers, including sales incentives for people who walked or biked to the store and placing bike racks on the new, wider sidewalk. Some developers are even redesigning building spaces to include biking amenities, such as bike parking and bike repair items.
  • Ultimately, for business owners and landlords, it comes down to the bottom line. While some cities experienced initial growing pains during the transition to bike/pedestrian-friendly streets, they have realized a profitable upswing as the population has learned to adapt to a new way of living, working, shopping, and playing.

    When New York City added bike lanes to two major streets, retailers saw a 50% increase in sales receipts. Seattle and San Francisco had similar results. Similarly, in one Memphis neighborhood, locals took it upon themselves to paint their own bike lanes. Within six months, commercial rents in the area doubled and all storefronts were full.

Bike lanes and SoFlo’s CRE market

If the professionals at Morris Southeast Group have learned anything over the years, it’s that CRE is a fluid creature. Changes come, changes go—and through it all, our team has successfully helped investors to not only meet the challenges but leverage them, as well. When it comes to bike lanes, it’s an idea whose time has come. Even pedestrian-heavy Wynwood is considering a redo that would include a 2.5-mile network of connected bike lanes.

To learn more about adjusting your property to a bike lane, property investment opportunities, and/or our 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.

Dockless Transportation Might Be Your CRE Property’s Next Great Thing

It’s convenient, cheap, and riders love it

For the consumer, it’s beautifully simple—rent a bike or scooter for as little as a dollar using a free app on your phone, pick it up at one of the numerous locations across your city, and drop it anywhere when you’re done.

Welcome to the era of dockless, urban transportation, the latest iteration of the sharing economy. Rather than shoulder the cost of car ownership, or sit in an Uber or Lyft on increasingly congested streets, some urban commuters instead opt to get around using such startups as Lime, Bird, or GoBike.

The appeal

The scope of the trend goes beyond scooters and bikes and includes motorized skateboards, e-unicycles, and electric tricycles. This marks a shift from the pricier and less-flexible docked systems which had previously been the standard in many U.S. cities. The non-electric, kick-scooter wing of the industry is also seeing growth.

The dockless movement has much promise, and provides many amenities to city-dwellers and tourists:

  • A much-needed extension of public transit, dispersing bikes and scooters into neighborhoods where subways and buses can’t or won’t go.
  • The solution for quick, short trips where a personal car or Uber isn’t necessary, be it to the corner store or grandma’s house in the next neighborhood.
  • Convenient access, with simple apps and cheap rates.
  • Good for the environment—more scooters mean fewer cars on the road.

The complications of dockless transportation

While users rejoice at having a scooter or bike around every corner, it can be a little more complicated for cities and towns. Initially, entrepreneurs dropped these bikes where they pleased around a city and let customers come to them. But this has led to a number of concerns:

  • “Bike litter:” riders drop the bikes in the middle of streets, sidewalks, and on personal and commercial property.
  • Rider safety: helmet laws or best practices still apply to these vehicles but many riders, particularly tourists, eschew them.
  • Pedestrian safety: while electric scooters are legally confined to roads or bike lanes, riders sometimes opt for more convenient sidewalks.

Several South Florida municipalities such as Miami, Coral Gables, and Fort Lauderdale are working with dockless providers to address these issues and ensure safe travel conditions for all.

Landlords and owners want in

Investors and landlords alike see potential in the dockless transportation boom. It makes their buildings more accessible and welcoming, particularly when they’re perceived as a bit off the path from public transit.

And for residents who are elderly, have young children, or physical disabilities, bike or scooter-sharing can be a great alternative to driving or walking. Many scooters in particular are light-weight enough that a tenant or worker can bring them from work to home, even if that commute includes a ride on the subway or a bus.

CRE investors and managers considering adding shared transportation to their offerings should have a multi-faceted strategy:

  • Parking or storage zones. Be a part of the “bike litter” solution by providing a convenient place for people to drop their dockless vehicles. You’ll keep your own property clear and help solve a larger problem.
  • Smooth sidewalks and entryways. A level surface for riders reduces injuries and shows your commitment to tenant safety.
  • Proactive government cooperation. Petition your local municipality to add bike lanes, charging stations, and helmet lockers in the community.

CRE embracing transportation innovation

Proactive CRE investors will see the value of the dockless trend and, in doing so, provide access to their properties for a wide variety of new potential owners and renters. Considering the dueling statistics that the population of Americans age 65 and older is expected to double by 2030 and that a fifth of Americans are under 18, this proposition seems to be a win for attracting both ends of the age spectrum.

Morris Southeast Group keeps an eye on trends in South Florida and beyond that can impact commercial real estate investment and property management. 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.

Unused Golf Courses are a South Florida CRE Opportunity

Abandoned golf courses are prime opportunities for redevelopment—but be ready to get environmental remediation and community buy-in

When Tiger Woods won the Masters in April, golf course owners across the country hoped it would be “the putt heard ‘round the world.” The sport has seen a steady decline in interest since its heydays from the late ‘70s to early ‘90s. As a result, courses have been forced to close, and many homeowners—who spent top dollar for a home with a view of the greens—are now paying for an amenity that no longer exists.

Developers, meanwhile, have taken notice of these vast tracts of underused land. They are often the last available open spaces in heavily populated areas, and many are surrounded by affluent communities that were once paired with the course. The question, then, is: What can you do with the land, and how best to do it?

Site remediation is the greatest challenge to golf course redevelopment

The risk to redeveloping a golf course is what lies under the new development. Maintaining a perfectly manicured landscape requires an overwhelming amount of chemical fertilizers, pesticides, and herbicides. Over the decades, these chemicals build up in the soil and groundwater to levels that can be unacceptable for certain kinds of redevelopment. Be sure you’re prepared for strict environmental due diligence before flipping a golf course.

The type of development and zoning can make a difference in the environmental remediation required. Since many courses already had restaurants and shops, it’s relatively easy—in terms of zoning—to redevelop an abandoned course into a retail center where much of the land will be paved over. The same can hold true for industrial development on the property (although surrounding communities may oppose such usage).

Developing a golf course into residential space is the most challenging option but it’s also the most financially appealing. An 18-hole course is approximately 150 acres, which can accommodate 600 detached single-family homes. With the addition of townhouses and apartments, this sort of development can mean thousands of new residents.

3 key steps to successful golf course redevelopment

While many municipalities may be eager to see something on this vacant land—and very willing to negotiate—there are some expensive and delicate items developers should be ready to address:

  1. As stated earlier, golf courses can accumulate a lot of toxic chemicals. A developer should work with an environmental consultant who is familiar with golf course remediation. A Phase I Assessment will include soil and groundwater sampling of tees and greens. If high levels of toxins are found, the consultant can recommend a Phase II Assessment.

    In the case of extensive contamination, developers may have to work with their state’s environmental protection department to create a remediation plan/timeline that may also include future monitoring. Once contamination has been corrected, development can continue.
  2. Any development is a NIMBY issue (i.e. “Not In My Back Yard”), literally, for surrounding golf course communities. It’s in the best interest of developers to work with those communities, be transparent, gain a better understanding of their concerns, and find mutually amicable solutions. Those solutions might include removal of toxins, the creation of a landscaped buffer zone, or a smaller golf course.
  3. Developers must also work with local water management agencies to close irrigation wells that were used to feed the green. These are no longer needed and can present environmental risks.

South Florida’s golf game

When it comes to Florida real estate, year-round golf has traditionally been a huge reason many people choose to reside in the Sunshine State. But while residential non-golf development has remained steady through the sport’s waning decades, a number of communities that once looked out over manicured greens now have a view of weed-ridden fields.

Many community members enjoy this wide-open view, whereas others would like to see the land become a public park. This can put a financial strain on cities to purchase that land, develop it into parkland, and maintain it, however.

Developers with vision and an ability to navigate city zoning and community wishes hold the key to smart and profitable golf-course redevelopment. The Morris Southeast Group team can help you create these new links for old links. To learn more about our property investment opportunities 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.

A Property Management Firm Eases South Florida Landlord Headaches

You and your tenants may sleep better when you leave the details to professionals

You’ve landed a prime property in a great location. On the surface, it seems like an easy, consistent revenue source that diversifies your portfolio and builds equity. And whether it’s residential or commercial, it can be tempting to take on all management duties yourself—this saves money and gives you confidence that every detail is just right. But a closer look at the details of what professional property management offers may lead you to a different conclusion.

Why consider a property management firm?

While property management may seem economical and fairly simple on the surface, there are a number of instances where hiring a manager may be the smarter course of action:

  • The number of units has grown (this is good!) but to a level that the landlord can no longer manage (not so good…)
  • The property is in a different city or state, or perhaps on another continent.
  • You need someone to handle day-to-day operations (simple maintenance, rent collection), which frees you up to focus on larger concerns such as marketing, staffing, and acquisition of additional units.
  • You need dedicated expertise in issues of rental law, including federal and state fair housing regulations.
  • You need someone with a deep understanding of both industry best practices and the local market, either through personal knowledge or a network of fellow professionals.

The cost for these services typically includes fees for basic setup, leasing, maintenance, and other management duties.

Maintenance services are a key element of professional property management

A property manager will be your eyes on the ground, making sure routine maintenance is in check and tending to emergency repairs that may be needed. A quality manager has a list of vendors which provide fair rates and service records. These vendors will share a vested interested in providing good service in order to maintain their preferred status with the management company.

Managing tenant relations

Your residential or commercial tenants will likely appreciate a management company that’s focused on their needs and not a landlord who’s spread thin with competing for career or business priorities. Best practices are to make contact about four times a year, updating tenants on the relative health of the property and any current maintenance or safety issues, and generally keeping open channels of communication.

Managers can also intercept and dispense with any frivolous complaints (loud neighbors, construction across the street, etc.) that will take up your time. And more serious issues must be addressed in a timely manner to meet legal responsibilities.

Rent and lease management

Property managers can handle arguably the most tedious and frustrating aspect of rental property ownership—collecting the actual rent. If the check comes on time in the mail or payment shows up automatically online, that’s great. But on those occasions when it doesn’t, you don’t spend hours tracking down tenants, enduring excuses, and possibly regretting the investment in the first place.

A management company can help set policy about late rent and oversee the process of warnings and, if necessary, eviction, that comply with state and local law. It can also enforce other terms of the lease, such as noise violations and unauthorized alterations to the property.

Finding new tenants is a service offered by quality management companies

Without reliable, productive tenants, the most beautiful property will sit idle and devoid of life. The process of finding ideal tenants can be unpredictable and frustrating—placing ads, screening applications, interviewing tenants, and coordinating on-site visits. A management company can take this onerous task off your plate or, at a minimum, significantly augment your efforts to ensure occupancy remains consistent.

Property management is a worthwhile investment for South Florida CRE

In the end, it’s crucial to understand the scope of responsibility inherent in property self-management. While there may be some up-front cost savings, the long-term time commitment and aggravation often tip the scales towards hiring an outside firm to do the heavy lifting. Morris Southeast Group provides comprehensive, professional property management that can make the difference between marginal and successful real estate investment. For a free consultation on property management services or commercial real estate investment, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

4 Reasons to Future-Proof Your Property

Connectivity, innovative use of space, and the environment top the list

In the modern age of disruption, no business is immune to the ever-increasing pace of change. Commercial real estate is no exception, and a current trend cascading through the industry is the concept of future-proofing—designing (or redesigning) your property to adapt to changes in the habits of renters and entrepreneurs, the shifting of our climate, and our communication needs in a 24/7 connected world.

South Florida has seen ample opportunities—and challenges—in future-proofing its CRE market. Tenant demand has soared in recent years, for example. This has turned developers’ attention towards the dilemma of how to mindfully increase urban density in a way that accommodates the as-yet-unknown needs of future generations.

Let’s take a look at four of the issues that are shaping the future of CRE:

1. Rethinking mixed-use real estate

If the future-proofing movement could be summarized in a single word, it might be flexibility. How we work, shop and live is in a near-constant state of flux which poses a challenge for property owners who need to make decisions—before a shovel even goes into the ground—about how their building will be used by tenants and the public. Thoughtful design can mitigate many of these variables.

A property’s relevance will be determined by its owner’s ability to change with the times, adapting to new kinds of tenants, new uses, and even a new climate. This has made developers rethink the traditional “mixed-use” property, where a building may have predetermined functions assigned to each space (retail, restaurant, residential, parking).

Instead, they are beginning to lean more towards “multi-use,” which may look a lot like the modern hotel, where the same space houses multiple functions such as conference rooms, mini-bars, fitness centers, business nooks, and overnight accommodations.

2. Adapting to shifting renter preferences and parking needs

Unlike tenants of years past, today’s residents are less concerned about the size of their units than the flexibility of the common spaces that accompany them. They are more inclined to take the party into the lobby rather than confine it to their apartments. Traditional fitness centers often remain empty or lightly used, leading some managers to repurpose the space to accommodate both exercise and coworking.

As Uber, Lyft, and public transit change the face of driving, the exact future of the parking garage is also changing and uncertain. In their current form, most underutilized garages only have second lives as storage facilities, but forward-looking designers can ensure that future parking structures have proper ventilation, lighting, and space for conversion into rental or office units. The top level of a garage has a multitude of uses, from a roof deck suite to an urban garden.

3. Connectivity is a priority for CRE

In an increasingly wired world, a near-universal demand of business and residential tenants alike is the high-speed Internet. Newer construction projects build this into their framework but older buildings face a challenge meeting this growing need. Nevertheless, it should rise to the top of the developer’s to-do list when courting occupants now and in decades to come.

Increased connectivity also necessitates increased cybersecurity. With dozens or perhaps hundreds of users online at once—and the rise of smart devices and the Internet of Things (IoT)—a network’s vulnerability increases. Maintenance crews and third-party vendors also need access, making attention to password protocols and multifactor authentication important for a safe online experience.

It also means higher electric bills. A generation ago, people owned few electronics and certainly had no need to charge multiple devices at once. From surge protectors to additional wall outlets, there are many quick fixes modern developers can make to accommodate tenant expectations.

4. Environmental stewardship must not be forgotten

Florida is no stranger to the environmental impacts of our ever-shifting climate and its CRE industry has noticed. State leaders have taken proactive steps to future-proof buildings and communities, particularly in low-lying coastal areas. In Miami, these include a $400 million government bond and a voter-approved residential tax to lessen the effects of storm surges and coastal flooding.

North Miami has gone so far as to partner with the Van Alen Institute, a design-centric non-profit focused on urban improvement. Together, they aim to find creative solutions in the development of repetitive loss properties—vacant lots that are increasingly prone to floods.

South Florida CRE design for the future

Alongside flexibility, longevity is the other essential term in future-proofing your property. Make the building last, both in its structure and utility. It should stand strong and vibrant 20, 30, and 50 years from now. Thoughtfully designed now, for the future. Morris Southeast Group will work with you to develop a property that lasts for generations to come. For a free consultation on 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.

Is Your Commercial Property Physically Fit?

The wellness and self-care industry—and the tenants it brings—may be just the jolt it needs

In recent years, there’s been a lot of talk about the death of retail. Its demise may be overstated, but as more and more brick-and-mortar businesses succumb to e-commerce, there’s a growing concern that the trend will lead to an increase in vacancies and a decrease in tenants.

While retail discovers its footing in this new economy, there’s a new and quite profitable tenant in town. In both urban and suburban markets across the country, wellness facilities—shops that exercise the mind, body, and soul—are filling some of the CRE void as tenants in strip malls or as anchors in larger locations.

Younger consumers are at the healthy heart of the matter

The driving force in the $5-trillion-dollar self-care industry is the spending habits of Millennials and Gen Z. As gyms have morphed from rough and sweat-soaked to big and state-of-the-art, they’ve always had a place in communities. Younger generations accustomed to spending their money on experiences rather than material items, however, are steering a new trend in which smaller, boutique-style facilities are a perfect fit for small and mid-sized CRE vacancies.

A personalization trend also means self-care providers can be creative about what they offer clients. In other words, this isn’t your grandfather’s gym. It’s also not your grandmother’s spa. One location, for example, can offer high intensity fitness training, while another can offer spin classes, yoga, and manicures and pedicures.

A strong business model means a strong investment

Many of these newer wellness facilities are franchises, which tend to offer 10-year agreements for any entrepreneurs interested in entering the franchise field. As a result, many franchise tenants are interested in signing 10-year leases with two five-year options. The last thing a franchisee wants is to have a lease expire before the agreement does.

To further secure their financial success, many franchises offer monthly membership fees just like a traditional gym model. This  monthly recurring revenue (MRR) is a more secure, profitable bet than relying on the walk-in client who may walk in once and never again.

Fitness is proving to be a good fit for commercial real estate

When it comes to fitness providers, their flexibility is proving to be a good fit in both urban and suburban locations. In metropolitan areas, for example, consumers may opt to click and swipe for shopping, but they are much more likely to travel for the boutique fitness experience, often following their favorite instructors between franchise locations.

Meanwhile, in suburban strip malls, wellness centers are filling vacant spaces because they are an added convenience. People are able to work out, grab some groceries, and pick up the dry cleaning but keep the car parked in one location.

Considerations for the SoFlo owner/landlord

Of course, the greatest concern among building owners and wellness tenants is oversaturation. While there certainly seems to be enough consumers who are willing to purchase monthly memberships, it’s a good idea to explore what sort of fitness offerings already exist in a radius around a potential location. Armed with this knowledge, building owners can seek out or welcome franchise tenants that offer something unique.

To attract a tenant, some landlords offer reduced rental rates at the start of the operation, so the tenant can build up a client base. In urban areas, some franchises and landlords are working together on short-term leases to create pop-up wellness centers. The goal is to develop a strong tenant, because that inevitably leads to an increase in foot traffic to nearby businesses.

It goes without saying that wellness is good for people. At Morris Southeast Group, we believe that the same concept can be applied to the owner/tenant relationship and to the community as a whole. That’s a big reason why we do what we do. To learn more about property investment opportunities, and/or our 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.

Is The Condo-Hotel A Winning Combination?

If done correctly, yes.

The idea of placing condo units and hotel rooms under one roof or in separate buildings on the same property is not a new one. It was a big idea back in the early 2000s, but then the housing bubble burst, real estate prices tumbled, and long-anticipated projects never materialized.

In recent years, the concept has returned at a fevered pace, however—especially in South Florida, where a sunny lifestyle is bringing in owners and tourists alike. It’s a big reason why there are so many cranes rising above both seaside and downtown skylines in the region, from Miami to Hollywood and Fort Lauderdale to West Palm.

The condo-hotel is an attractive brand for everyone

A driving force in many of these condo-hotel projects are international, easily recognizable brands, including Hyatt, Four Seasons, and Ritz-Carlton—to name a few. These brands are key components of project marketing strategies that satisfy a certain prestige mindset among potential owners and guests.

The trick is balancing the expectations of two different populations with the use of amenities and offerings. Very often, condo units are located above hotel rooms or in separate buildings on shared property, since owners are more likely to pay for the expansive views. At the same time, enhanced security systems provide owners with separate entrances and elevators while allowing them access to five-star amenities that travelers have come to expect from hotel brands.

Condo-hotels can be a wise move for developers

For property developers, a condo-hotel makes good financial sense. Rather than strictly creating hotels with fluctuating rental income, adding condos to the mix helps to offset some of the risk and costs. Condo-hotel risks are distributed among condo owners, and pre-sales can often help the developer recoup a portion of construction costs. The hotel portion as well as restaurants, meeting facilities, and retail space then continue to generate income after completion.

And if a brand gets on board with the project, condo units and hotel rooms could be given a premium price tag.

Condo-hotels built for success

When looking at successful condo-hotel projects, there are a few key similarities:

  • Although it goes without saying that location matters … it’s always a good idea to remember that, well, location matters. In South Florida, there are two key locations: overlooking the beach, where owners and tourists alike can enjoy seaside living, or in downtown areas, where everyone can enjoy an easy walk from the office to nightlife to culture to home/hotel.
  • Unit features continue to be an essential consideration, from materials used to square footage. Condo owners don’t want to feel they’re living in a glorified hotel room, while travelers want to experience luxury accommodations.
  • With competition, many condo-hotel projects are upping the amenities game. Among the offerings owners and tourists share are concierge and valet services, 24-hour food delivery, car service to and from the airport, spa services, bike rentals, housekeeping, tailor, and laundry services, gym facilities, and restaurants. Some buildings even allow owners to rent their condos when not in use and have them professionally managed.

SoFlo is a beautiful place to live and play

It really isn’t much of a surprise that South Florida is one of the top locations for condo-hotel combos. The team at Morris Southeast Group knows firsthand what it’s like to live and play here, so it makes sense that so many others want to make the move or simply travel to the area. To learn more about property investment opportunities and/or our 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.

Making First-Rate Investments in Secondary Markets

Smaller markets may yield bigger returns

While commercial real estate in major metropolitan areas remains in high demand and continues to command top rates, supply is limited and competition is fierce for the spots that do become available. Many investors are therefore turning their attention (and dollars) to secondary and tertiary markets. And with good reason—transaction volume in these markets soared from $2 billion in 2000 to $45 billion by the close of 2017.

Markets: A brief overview

Market definitions are fluid and can depend on the specific needs of a developer or investor, but there are general guidelines that can help professionals navigate the landscape. Population, job growth, capitalization rate analysis, occupancy rates, and the volume of sales and investment in a community are some of the traditional indicators in a market classification. Nontraditional indicators such as a region’s professional sports franchises or the number of direct flights may also come into play.

Out of the more than 50 metropolitan statistical areas (MSAs) with populations over one million and the 30 MSAs over two million, five to seven of them—New York, San Francisco, Boston, Los Angeles, and Washington, D.C., with Chicago and Seattle sometimes thrown in—are considered core markets. The “secondary” level includes places like Denver, Phoenix, and San Diego, with “third-tier” tertiary markets like Las Vegas, Pittsburgh, and Salt Lake City rounding out the list. Characteristics of this last category include a population of under one million, a mix of traditional and alternative economic indicators, and controlled but consistent job growth.

Why secondary and tertiary markets?

There are many reasons to consider investing in these smaller markets that will have an impact on both your budget and long-term prosperity:

  • There’s less opportunity in major markets. Many developers find themselves all but priced out of New York, Los Angeles, Chicago, Boston, San Francisco, and Washington, D.C. In tertiary markets such as Orlando and Austin, prices (and costs of living) are lower due to less competition—and populations are growing.
  • Eighteen is the new 24. While the “big six” mentioned above are valued as 24-hour cities, 18-hour cities like Denver, Nashville, and Portland are growing in popularity with renters and owners across generations.
  • E-commerce is a huge economic engine. The continued rise of digital retailers has pushed industrial production into secondary and rural areas, spawning healthy economic growth.
  • They are more stable during a downturn. And therefore, more appealing late in the investment cycle.
  • It’s easy to overlook them. Many investors are boxed in by traditional schools of thought and may miss the opportunities inherent in these markets.

Before you build …

While it can be tempting to jump into secondary or tertiary markets with both feet, it’s important to do your homework and make sure each region is a good fit for your investment needs.

Economics at a glance don’t tell the whole story. It’s important to look at a market’s individual traits and put them side-by-side with national trends. There are also factors outside of traditional drivers that can have a big impact on a region’s fortunes. Denver without cannabis or Orlando without Disney are far different investments than naked numbers may show on paper.

Finally, a dose of reality is always helpful. The growth of these markets can’t last forever and in the event of another economic downturn, be prepared to pivot should the local economy take a dip.

Invest early, be patient

In the words of hockey legend Wayne Gretsky, “skate to where the puck is going, not where it has been.” Early investors in secondary and tertiary markets may find a great opportunity where others haven’t yet ventured. Morris Southeast Group is proud to serve South Florida—one of the nation’s most vibrant and exciting secondary markets—and hope you will consider partnering with us. For a free consultation on property management services or commercial real estate investment, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Are Multistory Warehouses on South Florida’s Horizon?

A new concept may provide a solution to the need for warehouse space. But it has its own challenges

For several years now, we’ve all heard how e-commerce is changing the retail landscape. As consumers continue to click to shop, there is a greater expectation for rapid delivery. For e-retailers, that means establishing local distribution centers, most likely using vacant warehouse space or newly built facilities close to urban centers and airports.

At the moment, in locations like Miami-Dade where population is dense and available space is sparse, that formula seems to be working. But e-commerce shows no sign of slowing down and more distribution space will be needed. And the solution may involve looking upward.

Is it time for the warehouse of the past to go?

Today’s warehouse usually comes in one size: sprawling. Very often, these structures took advantage of open land on the outskirts of populated areas. They were designed to be cavernous structures, a holding place for goods stacked to the height of the high ceiling, able to manage forklift maneuvering and trailer deliveries.

In places like Miami and other densely populated urban markets, the outskirts have disappeared. This lack of buildable land has increased its value, which in turn has led to rent increases in buildings that already exist.

New tenants are shopping for space

At the same time, the tenant base has changed. In the past, most tenants would be content with 20,000 to 30,000 square feet of warehouse space but with a changing marketplace, many tenants are now seeking ten times that amount. And some experts predict there are about 10 years of available square feet remaining.

While a decade may seem like a long way off, the impact of Miami’s unique predicament is already being felt. Rising rents are encouraging potential tenants to shop for better deals, and many of these can be found north of Miami-Dade. Both Broward and Palm Beach counties tend to have lower rents and more space available, and both are close enough to Miami-Dade to still be able to provide efficient and rapid delivery.

The multistory warehouse: a potential solution with challenges

Miami is seen as a potential market for the multistory warehouse, and although it does seem to solve a problem, it also runs into a few challenges that are uniquely American. Typically, multistory warehouses are located in dense areas. As a result, their design often involves tighter turns on ramps and in aisles, as well as loading and unloading areas on each of the floors.

At first glance, this doesn’t seem like much of an issue—until one considers the size and length of the typical American tractor trailer, a mainstay of the nation’s delivery of goods. In Asian and European cities, this wasn’t too much of an issue since they already use smaller trucks that are easily maneuverable in tight city streets and on warehouse ramps.

In America, big trucks could bring urban traffic to a standstill which could delay the movement of goods, which could then eat into profits. While smaller trucks and vans could solve the issue, developers and potential tenants may see compact vehicles that transport less product as inefficient, too risky, and too expensive.

Why it’s important to consider a multistory future

Generally speaking, multistory warehouses are a new concept. As a result, initial rents would be higher, and the tenant would need to feel especially secure that the investment would be worth the return. That being said, can the Miami-Dade market afford not to look at warehousing solutions for the future? At Morris Southeast Group, we have always felt it’s important to look ahead in order to meet the CRE challenges and changes that are sure to come, from multistory warehouses to using  virtual reality to prepping for climate change. To learn more about property investment opportunities and our 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.

Hipsturbia: CRE’s Vibrant New Home?

How hipsters as well as many other fleeing city-dwellers could remake the suburbs

From Brooklyn to Boca Raton, the once ultra-hip urban core of America’s cities now finds itself beyond the reach of many of the professionals who helped make it so desirable. These former residents are fleeing big metropolises in search of affordable rents and mortgages, safe schools, and open space. But they still crave the comforts of urban life—walkable neighborhoods, vibrant food and culture, access to the city—and, where these features don’t yet exist, they may bring these qualities with them.

This migration marks a new take on the move by an earlier generation, which left cities out of fear for their safety due to rising crime rates. Now, city dwellers are leaving because they simply can’t afford to live there.

Neighborhoods shift

This shift has become a large enough trend that some realtors now specialize in it. One realtor spends much of her time moving New Yorkers out of New York (85 percent from Brooklyn alone), to “laid back” villages and towns in Westchester, along the Hudson River, and in suburban New Jersey—areas once thought of as boring bedroom communities.

The youngest (and largest) generation makes up a significant portion of those making this move. According to global real estate company CRBE, approximately 103,000 more millennials ages 25 to 29 moved out of cities than moved in, and 167,000 more ages 20 to 24 did the same.

Granted, some of this migration can be attributed to underemployed young professionals moving back into their parents’ basements – but a significant portion moved to find a more affordable lifestyle. And it doesn’t stop with millennials. The numbers for Gen X are even more striking: 660,000 more fled cities than settled in them.

Where are they going?

Yes, these young professionals are heading to the suburbs. But not just any ‘burbs will do.

No sprawling neighborhoods with few sidewalks surrounded by causeways clogged with big box stores. For these former urbanites, a healthy mix of affordable housing, locally-based food culture, and cultural literacy are necessary ingredients to complement the leafy-green streets. Towns like Irvington and Hastings in New York, Homewood, and Berwyn near Chicago, and Doral and Plantation in South Florida have stepped up to fill the bill.

Developers have noticed. Many towns within striking distance of the Big Apple have significant building projects underway and in the planning stages:

  • Westchester County saw a seven-fold increase in rental units from 2015 to 2018.
  • The value of new developments in Yonkers grew 50 percent from 2015 to 2016.
  • New Rochelle is in the midst of a $4 billion redevelopment plan.
  • White Plains, Sleepy Hollow, and Ossining are among the towns undergoing similar growth.

What do they want?

In short, these new transplants want the best of urban life, through a suburban lens:

  • Schools. Educating children in urban schools can be a challenge. Suburbs often have fewer students per teacher, and more resources on hand.
  • Walkable downtowns. Former city dwellers are setting up shop on main streets across suburbia, transforming downtowns into havens for artisanal chic.
  • Vibrant food culture. Like their shopkeeper counterparts, restauranteurs and mixologists are bringing the farm-to-table aesthetic a step closer to the farms themselves.
  • Access to the city. Many of the new and upcoming building projects are known as “transit-oriented developments” and are placed squarely in the path of commuter stations.

South Florida is seeing the CRE shift

While much of the focus of the “hipsturbia” movement has been focused on places like New York City, South Florida is no stranger to the trend. Some CRE developers have increasingly turned their attention away from downtowns like Miami, West Palm, and Fort Lauderdale to put down stakes in the likes of Doral, Plantation, Sunrise, and Boca Raton. Indeed, 64 percent of new construction in South Florida has moved to these suburban markets.

Chief among the reasons for this shift are workers reaching their breaking point on commute times and traffic congestion. On the developer side, land costs are significantly less, sometimes by as much as $10 to $15 a square foot.

Make no mistake, the vibrant urban cores of our cities aren’t going anywhere. But just as a rising tide lifts all boats, the suburbs are now seeing a real share of that vibrancy come to their communities. We at Morris Southeast Group are excited to see where this trend leads and are ready to work with you on your CRE project, no matter the locale. Call us at 954.474.1776 for a free consultation on commercial real estate investment or property management services. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.


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