Most discussions about climate change and South Florida focus on sea-level rise. The topic is one of the major concerns when predicting storm surges during hurricane season, and it’s a regular headache for more and more residents during periods of King Tide.
Temperature is less frequently one of the region’s climate change talking points—even though South Florida is coming off one of the warmest summers and autumns on record. For many, the feeling is that it’s supposed to be hot here. But is it supposed to be this hot?
A recent study from the Urban Land Institute, Scorched: Extreme Heat and Real Estate, took an in-depth look at the causes, concerns, and cures for the Urban Heat Island Effect, a very real phenomenon in which asphalt and cement absorb heat during the course of the day and then radiate that heat throughout the evening. The result is a marked heat difference between downtown and rural areas. In turn, this can have a negative impact on the environment, the economy, and public health.
In many areas of the country, the loss of green space for the sake of development has played a huge role in raising temperatures. The good news, however, is that CRE development is playing a larger role in cooling things off. Designers and developers around the country are incorporating cutting-edge heat-mitigating technologies in their new projects.
Among these are the creation of green roofs; gardens in the sky that can reduce a building’s energy consumption and stormwater run-off while improving sound insulation and filtering out pollutants. They also help reduce urban temperatures.
Although it’s far easier to incorporate a rooftop garden at the start of the design process, existing buildings can also participate in this greener solution—one that is considered a high-impact temperature reduction strategy. There are, though, a few things to consider:
Embracing heat-resilient technologies comes with unique challenges but also significant rewards for CRE developers and investors, especially in the areas of new project development, marketing, and operations.
There is little doubt that South Florida is hot—in terms of temperature and the real estate market. And Morris Southeast Group recognizes the immense value of finding sustainable and ethical solutions that also enhance ROI. Our professionals can help you brainstorm smart, green CRE options and connect you with leaders in the field.
To learn more about what Morris Southeast Group can do for you, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at firstname.lastname@example.org.
There’s an old song, made most popular by an Ella Fitzgerald/Louis Armstrong duet, in which the singers lament the differences in how they each pronounce the same words differently. One says “to-may-to,” while the other says “to-mah-to.” As they compare their words, the two must decide if they’re going to overlook their differences or call the whole thing off.
It’s sort of the same thing with leasehold, tenant, and build-out improvements—three terms that kind of mean the same thing. Pretty much, that is. There are subtle differences, and it’s important for landlords and tenants to understand the nuances. Because, like Ella and Louis, no one wants to call the whole thing off.
In commercial leases, the three terms are industry-specific ways of describing the same idea: improvements and modifications to a structure in order to prepare for a new tenant.
The scope of these improvements is determined by several factors, including if space was previously occupied, the age of the building, and how closely aligned the previous tenant’s business is to that of the new tenant. Modifications can include everything from lighting and plumbing systems to security and Wi-Fi to reconfiguring the space inside and out.
The differences between the terms become more apparent when examining which party—landlord or tenant or both—is overseeing the work and who will be paying for the improvements. For both parties, this is a critical part of the lease negotiation process and the secret is in the details.
To assist both parties, there are several standard tools at their disposal.
Although there is a definite excitement to moving into a newly remodeled space, it’s important to not get distracted by that excitement. Problems will arise. Delays will occur. To that end, it’s critical that both parties fully understand the tenant improvement project, the costs, and the penalties if either party is unable to fulfill its obligation.
One of the easiest preventative measures is to attach a detailed improvement plan to the lease, including a description of building-standard materials and finishes. At the same time, there must also be a timeline for not only the progression of the project but also a date when work is to be completed—and the consequences, should either party miss that deadline.
At the end of the day, it doesn’t matter how one says “tomato.” It’s more important to work with a team that is as skilled with the subtle nuances of tenant improvement provisions as it is with the details that are designed to protect the financial assets and business goals of landlords and tenants. Morris Southeast Group is that team.
To learn more about owner and tenant representation and what Morris Southeast Group can do for you, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at email@example.com.
The humidity was thick this past July 6, very typical of summer weather in steamy South Florida. The combination of heat and a Fourth of July holiday weekend meant that business was a little slow in a Plantation, FL, shopping plaza. Fitness buffs were still getting in their morning workouts, however, and coffee drinkers were enjoying their lattes. And according to authorities, someone opened a natural gas valve in a closed pizzeria where the tenant had vacated the premises in December 2017.
Over the course of four hours, more businesses opened, parking spaces were occupied, and natural gas filled the space of the closed pizzeria. When the air conditioner clicked on, an electrical spark ignited the gas, creating an explosion that blew out walls, shattered windows, and crumbled ceilings. Debris rained down on customers inside of the various retail spaces, as well as on those walking through the parking lot. An ordinary summer day in a shopping plaza was anything but.
Sadly, 22 people were injured. In addition to the injured, the explosion has had a tremendous impact on the surrounding commercial real estate. Within days, many of the buildings impacted were determined to be unsafe. To date, only 8 of 25 that operated prior to the explosion have been able to re-open, and some customers have expressed fear about returning to the plaza. Owners of the shopping center, while vowing to rebuild, are facing huge logistical challenges as they work with local building officials and engineers to create a recovery/rebuild timeline.
In many ways, the consequences of the explosion can be felt very far from South Florida. For landlords and owners around the country, it was a wake-up call to take a look at their own properties, operating systems, and responsibilities.
When it comes to owning and/or managing commercial real estate, it’s imperative for owners to protect their tenants, visitors, and investment. That’s common sense, pure and simple. To accomplish this, though, there are several proactive steps to take today that could very well help you tomorrow:
Preparing for what may or may not happen can be a daunting—albeit necessary—task, and it’s not something that you need to do alone. The team at Morris Southeast Group can assist you in reviewing insurance coverage and lease terms, and our property management services stay on top of scheduling maintenance and repairs, as well as coordinating emergency preparedness training. To learn more about what Morris Southeast Group can do for you, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at firstname.lastname@example.org.
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.
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.
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.
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.
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 email@example.com.
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.
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.
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.
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.
South Florida has several co-living properties, but 2020 looks to be a major year as several high-profile projects are scheduled to open:
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 firstname.lastname@example.org.
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.
Generally speaking, strip malls come in three sizes, each based on square footage and occupants:
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:
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.
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.
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 email@example.com.
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.
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:
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.
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.
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 firstname.lastname@example.org.
When it comes to parking, people generally have a lot to say—and when asked to comment on the state of it, they usually turn to words like “headache,” “necessary evil,” or some words this blog can’t repeat. Let’s just say that it’s safe to say that most people loathe parking, especially in crowded cities. Along with traffic in South Florida, it’s very often a big downside of time spent behind the wheel.
And that’s actually a little disappointing (bear with us). Because in today’s rapidly changing CRE landscape, parking is actually kind of an exciting topic, with new challenges leading to some cool new ideas.
A combination of increased residential and commercial properties in congested downtown areas, a changing demographic that telecommutes and sees little need for car ownership, shared workspaces, advanced automotive technologies, and ride-sharing options are all coming together to change parking needs.
The result is parking garages that are strangely both over-crowded and under-used, depending on the hour and/or the day of the week. Further complicating matters are future predictions that parking garages will become very close to obsolete. To meet the challenge, there are two general courses of action: meeting today’s needs and future-proofing for tomorrow.
All too often, parking garages are somewhat of an afterthought in CRE—which is odd, since in many cases, they are actually the first impression many visitors have of a building. They are, in a sense, the true lobby. And as such, they often need to step up their game.
To help make parking more convenient and personal, some garages have created reception areas, valet services, parking assistance technology (such as LED lights for drivers to easily locate available and handicap spaces, and digital signage of available parking on each level), automotive detailing services, designated areas for taxis and ride-sharing vehicles, and improved lighting and security.
In addition, many garages have established shared parking arrangements with neighboring businesses. The needs of the businesses involved help to determine how best to establish this parking partnership. For example, a commercial business may need parking spaces during the workday, while another—a restaurant, perhaps—needs those spaces in the evening. Sensors, counters, and other technologies can help negotiate overlap times.
Developers and architects now sit at a crossroads when it comes to parking garage design. Municipalities want either a minimum or a maximum number of spaces, while many predictions point to a future in which parking will be a thing of the past. One report, for example, projects that those five years old and under will not get a driver’s license.
To meet this challenge, more and more garages are being designed with an eye toward futureproofing so they can be easily converted into other uses. This means level rather than graded floors, ceiling heights that meet office and residential standards, openings that can be easily fitted for future window placement, and open shafts that can someday house ductwork and wiring.
Around the world, the future is here. The repurposing of parking garages is already happening, from Wichita, KS, where a parking garage was converted into an apartment building, to London, where one became a hub for small businesses. Making preparations now not only helps a building project stay relevant for a longer period of time. It’s also cost-efficient in the long term, as it costs far less to repurpose than it does to demolish and start from scratch.
While parking may not become completely obsolete anytime soon, predictions indicate it could significantly diminish in relevance. For developers, investors, and owners, it’s a smart idea to keep an eye on parking trends. In the present, adequate and convenient parking keeps visitors and tenants satisfied. For the future, it keeps the CRE property relevant and profitable if one plans to hold the property for many years.
The Morris Southeast Group team has already seen the struggles malls have had in meeting the challenges created by e-commerce. When it comes to the future of parking garages, it makes sense to prepare today so they remain adaptable.
To learn more about parking solutions and requirements, 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 email@example.com.
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.
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.
The benefits of an improved infrastructure across many categories that have great importance to CRE investors.
Many urban areas have heard this call to action and have projects already in the works:
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 firstname.lastname@example.org.
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.
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.
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:
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.
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 email@example.com.