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The War Of The Tenants: How Landlords Can Broker Peace

Landlord can be another word for mediator

When most landlords and developers decided to enter the CRE marketplace, they probably had lots of reasons. Perhaps it was the chance to give back to a particular community, or to reap the rewards of a strong investment, or to provide a high-quality service that others can enjoy. Hardly any of them, though, thought that CRE would be an excellent opportunity to be a mediator.

Nevertheless, that’s exactly what they’re called to be when tenants are at war with one another. As more commercial tenants seek shared spaces and as retail tenants amp up competition for a population adapting to e-commerce, tenant conflicts have expanded beyond the multi-family housing arena.

And adopting some proactive solutions not only heads off potential conflict between tenants, it also comes in handy when a landlord has to take a firm stance.

A strong lease is the number-one tool

To head off any potential conflicts between tenants, a strong lease can set the proper tone from the beginning—especially in an environment where several tenants may be sharing everything, from adjoining walls and amenities to kitchens and parking.

The lease is the landlord’s chance to spell out specific rules that address two of the top concerns residential and commercial tenants have: safety and a peaceful environment. This is a chance to define expectations for tenant behavior and consequences for making threats against or harassing other tenants, as well as violating noise restrictions.

Get the balance right

Where commercial properties are concerned, especially those that house multiple tenants, landlords often try to achieve a sense of balance. This effort, though, has become more complicated in light of a sharing economy, where everything from offices to parking spaces are being used by more than one tenant.

When looking for new commercial tenants, it’s critical to have a full understanding of their business. This includes hours of operation (so that shared parking is achievable) to demographics (so that a yoga studio with evening classes is not next to a music venue) to not filling a complex with high-use tenants (so that customers have trouble parking, which results in their avoiding the complex … which results in a loss of revenue for tenants and the owner).

Develop a resolution policy

It’s especially helpful for landlords and owners to have a procedure to follow when mediating disputes. This guarantees that all tenants and their complaints are handled equally.

  • Consider creating a welcome package for tenants. This information can include basic information about living or working in a specific property, but it’s also a chance for the landlord to again spell out the expectations of good tenant behavior. This can include suggestions on how tenants can appropriately solve a conflict with another tenant on his/her own, as well as steps to take if the matter should escalate.

  • The welcome package should include instructions on how to file a complaint against another tenant with the landlord. Forms for such a complaint document can be included, with specific instructions on how and when to contact the landlord, owner, or property manager.

  • As the person receiving the complaint, there is a tremendous responsibility to respond in a timely manner. The tenant making the complaint wants to know that his or her concerns have been heard. This can be done with a return phone call, email, or letter to assure the tenant that you will investigate and that you take lease-violating behavior seriously. Each complaint, no matter how trivial it may seem, must be taken seriously.

  • At the same time, the landlord should contact the tenant named in the dispute to inform him or her of the situation. While the source of the complaint should remain confidential, this call is the perfect time to remind the tenant that violations of the lease—the landlord’s number-one tool—are grounds for eviction. A written summary of this interaction should be sent to the tenant in question.

  • It cannot be said enough times: document everything. This includes the initial complaint—using the complaint form in the welcome package or an online format—and logs and summaries of conversations and steps taken. This protects the landlord should the infraction result in an eviction and/or if there is future legal action as a result of this dispute.

  • Follow up with the tenant who made the complaint to ensure that the situation was resolved.

  • It may be necessary to conduct a face-to-face mediation with both parties. If this is the case, it is imperative for the landlord to remain professional and impartial. Both parties should air their grievances, and the landlord can rephrase these to help the parties understand that their concerns have been heard. The landlord can then produce documentation, such as the signed lease (there’s that number-one tool again) with the specific expectations for a safe and peaceful environment and the consequences for violating those expectations.

Being a commercial or residential landlord involves the art of mediation

Whether you’re a tenant or a landlord, being part of a dispute—either as a complainant or a mediator—can be messy, time consuming, and complicated. Morris Southeast Group’s property management services can assist in the mediation process. In addition, our tenant and owner representation skill set can help match your vision with the right property to prevent potential conflicts. 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 kenmorris@morrissegroup.com

The Importance Of Due Diligence In CRE

Doing your homework is part of the deal.

When most of us were in elementary school, little did we realize that each time a teacher or a parent lectured us on the importance of doing homework, they were actually preparing us for … commercial real estate. Due diligence — really, just an adult word for homework — is an essential part of the commercial transaction process.

And just like the educational — or tearful, weekday-afternoon — debate over homework, many people wonder how much due diligence is enough? Perhaps, the best way to respond is with another question: Can there ever be too much due diligence?

Due diligence is your time

While true due diligence happens long before a transaction is started or a property is even chosen, in the simplest and most-conventional terms, due diligence is the process that occurs during the time period between a buyer signing a contract and making the decision to move forward with the purchase. It’s during this time that the buyer has the chance to conduct a full review of all data that relates to the property. The more thorough the due diligence process, the more informed the buyer will be in deciding to complete or cancel the purchase.

The actual time period fluctuates in accordance with the complexity of the transaction, however. And it’s possible to incorporate a due diligence checklist into the sales contract with a stipulation that the process will commence once the seller produces the last of the requested documents.

The key elements of due diligence

When it comes to creating a due diligence checklist, there are five basic areas that need to be addressed. These, in turn, can be adjusted to meet the needs of the transaction, the complexity of the deal, and other reasonable items that the buyer may require to make an informed decision.

  1. Probably the most obvious of the data to gather is information on the property. This includes: legal and physical descriptions, property type, current use, zoning, parking, the most recent title policy or title commitment, blueprints, engineering plans, recent surveys, easements, etc. This information is then cross-checked with public data. Any discrepancies should be thoroughly investigated. Be wary of any information that cannot be verified independently.
  • The guts of the property are just as important, if not more so, than its outer appearance. All systems — structural, electrical, plumbing, drainage, security, fire protection, elevator, gas, and heating and cooling — need to be inspected and evaluated. This is also a good time to understand how utilities are delivered and metered, as well as service-agreement terms.
  • When it comes to inspections, it’s an excellent idea to leave no stone unturned. It may be necessary, for example, to work with pest inspectors, engineers, and environmental consultants — to name a few. Additionally, it may be necessary to review building permits, violations, certificates of occupancy, and court cases.
  • If the property has one or more tenants, it will be necessary to gather all legal contracts made between that party and the seller. In addition to lease terms, it’s essential to review security deposits, rent schedules, utility obligations, and any sweetheart clauses, such as a lease extension deal. 

  • Finally, it’s time to talk about the financial health of the property and/or the seller. Information here includes copies of the three most recent years’ tax statements, assessments, property income and expenses, insurance policies and claims, and pending litigation against the property or the seller.

Due diligence is a team effort

Embarking on the due diligence process can be a daunting and overwhelming task. Failure to gather all information by the due diligence deadline can result in the buyer losing his or her deposit if they find something that requires them to back out of the deal.

Fortunately, you there are experts that can help you with this process. In fact, many other experts recommend working with an experienced team that can compile the information, present it, and then advise on the next step. Morris Southeast Group is that team. 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 kenmorris@morrissegroup.com.

Want a Killer Real Estate Investment? Follow the Art.

Where the artists go, higher property values may follow

South Florida is a region with artistic lifeblood pumping through its veins. From Wynwood and Little Haiti in Miami to FAT Village in Fort Lauderdale, creativity has lifted neighborhoods, boosted economic vitality, and changed lives. Mural art has long been a fixture of area communities, on both public and privately-owned buildings. This trend, once seen as a harbinger of neighborhood decay, has in recent years become a beacon for economic vitality and community engagement.

Real estate in particular has seen this trend as a great boon to property values, and a great advertisement for the communities themselves.

The art/commerce connection

Although developers and landlords had been talking up this trend for years, it wasn’t until 2016 that researchers in the U.K. used Flickr to prove the connection between public art and property values. Up until then, there wasn’t a reliable method of getting a tally of the amount of art in a specific area. They used the social media platform’s image tags and location data to track the locations of photos labeled “art” from London neighborhoods taken from 2004 and 2013. Each photo was coded with a geotag, providing authentic geographic information. They then overlaid residential property prices and watched them shift over those nine years.

The results matched the anecdotes that real estate professionals had been mentioning for years – neighborhoods with a higher concentration of art saw prices rise more than those with little or no art.

Creating community

A city with an abundance of art brings with it a sense of joy, pride, and fun. It takes blank walls and turns them vibrant, making the building and surrounding neighborhood a place far more livable and walkable. A structure that was simply a building with a corporate function – a bank, drug store, or insurance office – can become a local landmark, something that people travel to see, and want to live near.

With ecommerce taking a huge bite of the retail industry, local businesses have to create new reasons for people to unplug, put on their sneakers, and walk into their stores. Mural art can signal to potential customers that excitement and value live within a business’s walls.

Driving business

Public mural art has come a long way. From its radical roots as a form of vandalism-inspired protest to its current place of honor in museums, galleries, and at economic development board meetings, it is now recognized as a valuable part of urban and suburban centers. Art’s role as a brand ambassador has also been solidified, with corporate behemoths from Coca-Cola to Nike sponsoring advertisements in the form of original murals.

The funnel of art to dollars runs a fairly simple path: high-quality neighborhood art shows improvement in the area and attracts more artists. Funky, independent businesses follow, such as cafes, restaurants, and local retailers. Young, hip (and often newly-moneyed) professionals want to live where the action is and put down their own stakes. Realtors see the shift and raise prices accordingly.

One of Miami’s newest properties may very well be ground zero for this trend. Canvas Miami, a 37-foot tower with 513 condos in the heart of the city’s Arts and Entertainment District, was designed to be a literal work of art. Topping out at $630,000 per unit, the space boasts work ranging from freestyle to interactive chalkboard art. Amenities include pool decks, a yoga garden, squash fields, and a playroom for kids.

The team at Morris Southeast Group wholeheartedly supports the use of art to fundamentally improve the neighborhoods and larger economy of South Florida. For a free consultation or 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.

Technology vs. Relationships In CRE

Technology vs. Relationships In CRE on morrissegroup.com

Turning arm-wrestling into a handshake

For better or for worse, CRE is evolving thanks to technology. In a very real sense, the industry is a bit late to the technology table. While other industries have already experienced the growing pains of transitioning to and making use of hard data, CRE is just now beginning to understand and incorporate cutting-edge methods.

The move, though, does not come without some growing pains and the revelation of a CRE generation gap. One recent study found that less than 25% of CRE professionals over 45 believe the industry is lagging behind in adopting new technologies. On the other hand, 65% of those under 45 think CRE is falling behind.

The CRE generation gap

What’s becoming increasingly evident in the CRE industry is an issue that has already been negotiated in other sectors: a generation gap on technology that – depending on how it’s integrated – can easily become a rift that cuts into opportunity and profits.

For many older professionals, many of whom were teethed on cultivating personal relationships to get ahead, technology can be both overwhelming and an impediment to face-to-face interactions. Younger CRE workers, as well as the investors they hope to attract, were raised on technology. For some of them, even email may be as antiquated as the Pony Express.

Technology and people aren’t going anywhere

The truth of the matter is that technology isn’t going anywhere. In fact, it will keep developing and changing and – for better or for worse – we will have to incorporate it as a means of staying competitive and relevant. Kick and scream or applaud and cheer, technology will continue to revolutionize how we do business.

At the same time, there is no replacement for people skills. They are an essential component of any personal and professional interaction. The trick, though, is how to maintain the warmth of those relationships while making maximum use of cold, hard data – and that may be the CRE skill that keeps the industry thriving.

How rapidly times have changed

It wasn’t all that long ago that CRE was mesmerized by the use of drones and virtual reality to better present properties. At the same time, new technology is allowing organizations to gather and interpret data in order to gain new insights and develop more efficient means of interpretation and knowledge gathering.

Today, start-ups are developing software that can benefit real estate professionals, tenants, investors, capital seekers, brokers, and landlords. In addition, the Internet of Things (IoT) and smart buildings monitor energy usage, predict troubles ahead, and initiate real-time responses. Then, there are next-generation geographic information systems (GIS), which compile data to find the best locations for investors and companies. CRE professionals can leverage all of this information to make better predictions and recommendations for clients.

Where do people skills fit?

In our everyday lives, we can see how easily and quickly technology can disconnect us from one another. What used to be natural for us, now takes a little bit of effort and forethought so that we do not lose those connections.

It’s the same thing in our professional lives. While some markets may welcome the opportunity to gather real estate data on their own without the assistance of a CRE professional, it is exactly that professional who can answer questions, reach out, provide solutions, gather relevant data, notice trends, and make connections.

Rather than interfering with relationships, technology can enhance those relationships and provide CRE professionals with a distinct advantage. It is imperative for individuals and the industry as a whole to stay up-to-date or risk becoming irrelevant.

At Morris Southeast Group, we understand the importance of good information, relevant technology that delivers, and the relationships that benefit us and our clients. It’s what has kept us evolving and moving forward for decades.

For a free consultation or to learn more about our property management 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.

6 Ways To Protect Your Investment During A Crisis

6 Ways To Protect Your Investment During A Crisis on morrissegroup.com

Today is the day to develop a sensible strategy

Stronger hurricanes. Tornadoes in areas of the country where they’ve never occurred. Terrorist attacks. Fires, floods, and earthquakes.

While it’s impossible to plan for every single crisis that can occur in this crazy day and age, it’s essential to plan for most of them. Very often, key preparations include many of the same items; so, when disaster strikes, property managers, owners, and investors will be prepared for a range of emergencies.

1. Compile important information

There are two types of information to gather: the physical and the personal.

  • Whether you’re the owner of a new structure or an older one, it’s important to understand the layout and systems within that building. That means knowing where the water shut-offs and gas mains are located, the various entrances and exits, stairwells and fire doors, electric panels, fire extinguishers and hoses, etc. At the same time, it’s important to make a list of names and numbers of people who need to be contacted to address any issues with these systems.
  • Another item at the top of the list is to compile a list of tenants and their contact numbers. If necessary, you may also want to have additional contact names for every tenant. Each tenant should also create similar lists of their employees, which can also be shared with you. These lists – names, numbers, and additional contact names and numbers – should be updated on a regular basis.

2. Develop relationships within the property and the community

As a building owner or manager, you’re now part of a community. As such, it’s imperative that you develop a relationship with some of the key members of that community, specifically the local police and fire departments.

One idea is to invite officials to your site and to take a tour. At that time, explain the security plans you’re creating and welcome any input they may have.

At the same time, tenants and their staff should know who you are before a crisis. Take time to listen to their concerns – say, poor lighting in the parking lot – and implement reasonable solutions. These are the same people who need to know and understand the security preparations you are establishing.

Now is the time to compile a list of trusted vendors, companies that can arrive after the all clear has been sounded to initiate clean up. You and your tenants want to return to business as usual as soon as possible.

3. Working with a security professional

Select a security firm and invite them for a consultation. This will often involve a tour of the facility to examine any weak spots, such as a propped open rear door, a poorly-lit stairwell, or a decoy security camera that fools no one.

It’s also a good idea to do a similar tour at night in order to make note of shadows cast by landscape lighting or shrubbery. These dark nooks invite trouble.

The security consultation – as well as with any discussions with local law enforcement – is also an opportunity to address procedural concerns. Among these items could be a stay-in-place plan to alert tenants that an active shooter is in the building; a lockdown procedure if there is a dangerous situation in the area; and an evacuation plan with tenants given a designated space outside of the building for their staff to meet. Here, attendance can be taken – and if anyone is unaccounted for, the authorities can be alerted.

Many security concerns can be addressed with technology. Some security services include 24-hour remote monitoring, motion-sensitive cameras, and even drones fitted with cameras to cover large areas, such as an industrial site. Do your research and ask questions.

4. The proof is in the details

Keep a detailed account of the particular crisis. This includes notes, names and numbers, a timeline, photographs, videos, voice recordings, tenant statements. These details will be important when lawyers and insurance representatives eventually get involved.

5. Media management

For some events, media will descend, opening up a new front in the management crisis. They may look for a statement from you or your representative – and the details you’ve gathered and preparatory steps you’ve taken will help you remain in control of the information gate.

6. Training

This is a lot to digest. When entering the CRE marketplace, many of these issues are items you thought you’d never have to consider. Your tenants feel the same way.

That’s why a safety and security plan, which will be distributed to your tenants and their staff, is only as good as the training people have. Ideally, training should begin at the top with you or a representative, who will then be able to instruct tenants. These tenants will then have the responsibility of training their own staff.

Morris Southeast Group provides comprehensive, professional property management that extends beyond the traditional functions of property management. We not only want to help you protect your investment, but we also want to ensure that your tenants are safe and secure.

We pride ourselves on a high degree of personal accountability associated with each relationship. For a free consultation or to learn more about our property management 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.

The Road Ahead: How Uber, Lyft, and Driverless Cars Could Change Commercial Real Estate

The Road Ahead: How Uber, Lyft, and Driverless Cars Could Change Commercial Real Estate on morrissegroup.com

A look at the potential impact of disruptive technology and service

There’s a revolution on the road ahead and it’s picking up speed. Just a few years ago, order-by-phone car services like Uber and Lyft were a novelty. Today, they’re more like a necessity – so much so, that along with technological advances, the idea of driverless cars is no longer the stuff of science fiction. In fact, they’re coming.

With changes in the road ahead, it’s only natural for them to have an impact on nearly every industry, including the commercial real estate market.

More car services, less need for garages

First and foremost, with an increase of car services – either with a driver or without one – there will be less of a need for building tenants to lease parking spaces in garages, no matter if that garage is beneath an office building or in a nearby location.

As a result, revenue garnered from parking spaces will decrease for the landlord. Rather than paying a monthly fee for a space, commuters and tenants will likely direct their money toward affordable transportation plans.

In addition, developers will have a chance to redirect their commercial investment funds. Instead of budgeting for garage space, dollars could be spent in other areas of the building, such as an enhanced lobby, security systems, or expanded office space.

The shift in commuter behavior and the lobby

When more commuters arrive to work via Uber, Lyft, or a driverless car, the question for developers is what to do with the front of the building. Fewer tenants will enter the building from the garage. Instead, the front of the building will become even more of a hotspot.

Landlords and developers will have to address morning traffic flow so there isn’t a jam at the start of the workday.

Similarly, at the end of the workday, building lobbies will become a hive of activity as tenants and commuters congregate to catch their waiting car. The front area of buildings may have to feature a holding pen for arriving vehicles, while the lobby may have to look more like an airport terminal with shops, cafes, lounges, bars, and charging stations to keep commuters occupied and entertained until their ride home pulls up. In addition, these areas could generate additional revenue.

What to do with all that space?

Inevitably, there will still be diehard drivers who will need a place to park – but what about all of the additional square feet now available for something else? According to Commercial Tenant Resource, today’s ratio of 3-4 spaces per 1,000 square feet of office space could potentially drop to 0.01 spaces per thousand. This is where creativity and ingenuity will have to take the wheel.

For starters, on-premises garages could be designated as holding pens for car service vehicles, or something more. Retail space? Gyms? And let’s not forget about parking garages, very often located in prime locations. They – or the property on which they stand – can be repurposed, perhaps as a combination of commercial and residential real estate.

Navigating the road ahead

Morris Southeast Group is excited about the road ahead and the changes and challenges it will bring to the commercial real estate marketplace. For a free consultation on how you and your current or future properties can keep up with the changing times, you can reach our team at 954.474.1776, or call Ken Morris directly at 954.240.4400 or via his email, kenmorris@morrissegroup.com.

5 Apps That Are Revolutionizing the Commercial Real Estate Industry

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Learn how to use your smartphone or tablet to help find and manage commercial real estate

With mobile Internet access having overtaken desktop access in 2014, according to comScore, it’s no surprise that apps are becoming more popular for all professions – including the commercial real estate industry. These apps allow both investors and agents to perform much of their work right from their mobile devices. Gone are the chains that once tied most working professionals to their desks.

The top commercial real estate apps

The following are a few of the most popular and effective mobile apps that are changing the way that we all do business in the commercial real estate industry:

  • LoopNet Commercial Real Estate Search – If you’re looking for a commercial property to buy or lease, LoopNet offers a Commercial Real Estate Search App that is available on Android and iOS devices. It grants easy access to more than 800,000 commercial real estate listings from anywhere utilizing LoopNet’s sophisticated search options and filters.
  • Yardi CRM Mobile – With Yardi CRM Mobile, users can access all of their Commercial Property Management data while on the move, helping brokers and other commercial real estate personnel to better serve their clients.
  • Visual Lease – This tool offers an easy to use, web-based lease management platform that is accessible across all mobile devices. Visual Lease gives brokers and investors a one-stop spot for complete lease management and administration.
  • Angus Mobility Platform – Angus Systems has been providing mobile work order solutions since 2000. Their platform is supported on all mobile devices and allows property management teams to manage work orders between managers, supervisors, vendors, and tenants. The Angus Mobility Platform allows real estate professionals to cut down on the massive amount of paperwork that has been synonymous with tracking work orders for decades. Tenants and business occupants can place service requests from any Android or iOS device and easily follow the status of these requests.
  • Property Capsule – With Property Capsule, commercial real estate agents can access their leasing portfolio from any mobile device to show potential tenants. Agents can display detailed information about their listings, such as floor plans that automatically change based on new tenant information, automatically-generated flyers, and much more. Property Capsule also gives agents one place to store pertinent information such as property photos, plans, property data, and important documents. In turn, when any information changes, it’s automatically updated everywhere.

Are you taking advantage of the technology that helps drive commercial real estate?

Whether you’re a tenant looking for a new office space or a real estate investor looking for your next deal, stay up to speed with the latest mobile apps catering to the commercial real estate industry. These tools can help secure a favorable lease, find the next great real estate investment, and stay on top of your current portfolio.

If you’d like a bit of assistance when it comes to marrying technology and commercial real estate, don’t hesitate to reach out to the agents at Morris Southeast Group today. We’ll be happy to sit down with you to discuss your search for commercial space and show you how leveraging technology can help you get there.

To set up an appointment for a free consultation, contact our team today at 954.474.1776, or you can reach Ken Morris on his cell at 954.240.4400 or at kenmorris@morrissegroup.com.

How Builders, Investors, and Developers are Using Building Information Modeling (BIM) Software to Make Smarter Choices

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BIM models help reduce risk, cut inefficiencies, and streamline the development, design, and construction process

For most construction companies and architectural firms, 3D building modeling is now the norm. And each year, more and more companies are taking advantage of the range of benefits from employing Building Information Modeling (BIM) software.

BIM software allows all stakeholders to get a more integrated and in-depth look into a building, so that they can foresee and correct potential errors and problems before they occur, easily and quickly make changes to designs, and more easily share designs and information between multiple parties simultaneously.

BIM software integrates a variety of data sources into a single model

Today, the data available about construction sites goes far beyond traditional land surveys. Tons of digital data, including satellite, aerial, and drone imagery and video, digital elevation information and LIDAR topographic surveys, laser building scans, and many other types of information are now compiled and analyzed at the beginning of the building design and construction process.

Considering that all of this diverse information exists and is being used, it makes sense that it should be seamlessly incorporated into a building model – something that’s impossible with traditional 2D drafting. This data helps designers, construction managers, contractors, and clients better understand the environment and land they’re building on, so they can make better informed choices at every stage of the development process.

BIM models can help attract buyers or investors to large real estate development projects

2D drafts and models are great, but there’s just something about 3D models that can make viewers feel like a building is truly coming alive. That makes BIM an amazingly effective tool when trying to attract early-stage investors to a real estate development project. In addition to helping potential investors visualize a construction or renovation project, a comprehensive 3D model created with BIM software demonstrates that the developers have a detailed design plan that can likely soon begin construction when funding is fully acquired. This also allows potential investors with a design, construction, or engineering background to investigate any potential problems, issues, or concerns with a building’s design in an entirely new way.

In addition to attracting early-stage investors, a great 3D model can help attract potential early-stage buyers or tenants, especially for large multi-unit residential real estate projects. A flat, 2D image may not be enough for a potential buyer to part with tens (or hundreds) of thousands of dollars for a down payment or early stage list reservation fee. A 3D model, especially one that has been colorized and accurately detailed, can help bridge the gap between drawings and a physical model, and in many cases, can be more realistic than a physical model – especially once a 3D video or interactive 3D tour has been created.

BIM modeling can improve collaboration, facilitate conflict resolution, and potentially improve a building’s energy performance

Throughout the development and construction process, there are a variety of stakeholders present in the process, all of whom need up-to-date information about the progress of the project and any updates to its design. BIM modeling has the benefit of being incredibly easy to update, as well as allowing the ability to to track and reverse those changes if necessary. Additionally, BIM models, especially when combined with cloud-based software and storage solutions, can be accessible anywhere in the world. So whether you’re working with a glass installation company in Miami or a bank in Bangkok, interested parties can be given access to detailed 3D models with just a few clicks.

BIM models also have the benefit of being an excellent conflict resolution tool, and can often help sidestep conflicts in the first place. In construction, a lack of quality communication is the underlying issue that leads to many misunderstandings, conflicts, and similar issues that can significantly undermine a project. And of course, conflicting and/or outdated plans can greatly exacerbate any miscommunications that occur. BIM provides a single 3D model that everyone can view at the same time and edit if needed, helping various stakeholders get on the same page about doing what’s best for the project.

BIM software has yet another benefit: It has the ability to run simulations that can estimate a building’s energy efficiency by calculating factors such as the amount of sunlight that will reach different sides of a structure during different times of the year. This information can be incredibly valuable to designers and developers, who can then make subtle changes that can greatly increase the energy efficiency of the project based on simulation data.

To learn more about BIM software and other solutions that can make the commercial real estate construction, development, and investment process faster and more efficient, contact Morris Southeast Group today. To set up an appointment for a free consultation, contact our team today at 954.474.1776, or you can reach Ken Morris on his cell at 954.240.4400 or at kenmorris@morrissegroup.com.

South Florida Is Working – and Commercial Real Estate is Paying Attention

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A look at job growth in the area and its impact on the real estate market

There’s a lot to be happy about as the New Year begins, according to the Greater Fort Lauderdale Alliance, the primary economic development organization in Broward County. At the end of 2016, job growth was up in the Ft. Lauderdale – Pompano Beach – Deerfield metro area. In fact, the region’s jobless rate was 0.2% lower than the state rate, which stands at 4.8%.

The news is certainly good and welcome. And its impact on commercial real estate, along with other trends, merits closer examination.

A look at the numbers

At 4.6% in November 2016, the unemployment rate in Broward County saw an overall real percentage point decrease of 0.2% from the previous year. The area also gained a significant number of nonagricultural jobs:

  • Non-agricultural jobs increased by more than 30,000 jobs, a nearly 4% increase.
  • The region led the state in the trade, transportation, utilities, manufacturing, and information sectors.
  • The region had the second highest annual job growth rate in the professional and business services, education and health services, and government jobs.

More money in the pocket

With more money being earned, more consumers have money to spend on things like mortgages and rent. That’s good news for the residential market.

Also predicted to reap these rewards is the industrial market. With the growth of e-commerce and guarantees of next-day shipping, there is a greater need for warehouse facilities to house goods.

According to a recent article in the Miami Herald, “trends in the industrial sector – comprising warehouse and logistics space – are a far better barometer of our local economy’s well-being.”

South Florida tenants have leased almost 19 million square feet of warehouse space over the past three years. More than 4 million more square feet is expected to come on line in the coming year, a sign of consumer activity, stability, and population growth.

And now for this commercial message

While all of this news seems encouraging – and it is – for those with a vested interest in commercial real estate, the growth is tempered with an asterisk.

Yes, greater job growth means companies are either growing or more smaller businesses are getting off the ground. Some might assume that would indicate a similarly growing need for more and/or larger office space and higher rents. But several outside forces may affect the commercial market, including:

  • Open floor designs mean a smaller footprint for office space.
  • Telecommuting also indicates offices do not need as much space to accommodate a large staff of employees who arrive on a daily basis.

According to Marc Miller, JLL Florida Research Manager, “A tightening and more expensive marketplace may slow growth for Class A office space, which in turn will benefit the Class B/A segment. Given the uncertainty surrounding monetary/fiscal policy from Washington, continued turmoil in closely-tied Latin American markets, and general economic sentiment that expansion is coming to an end, 2017 could likely be the last year of modest strengthening in the office market.”

A balanced view

This doesn’t mean there will be a complete shutdown of commercial development, especially in the South Florida region, and specifically because of this year’s job growth. In fact, 500,000 square feet of new office space in downtown Fort Lauderdale is currently planned.

Negotiating the coming year in commercial real estate will require knowledge, skill, and well-informed decisions. Morris Southeast Group, a South Florida leader in commercial real estate, can help you at every step of the way.

To set up an appointment for a free consultation, contact our team today at 954.474.1776, or you can reach Ken Morris on his cell at 954.240.4400 or at kenmorris@morrissegroup.com.

5 Steps to Find Your Next Commercial Real Estate Investment

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Develop your selection criteria and invest with profit in mind

When it comes to finding the perfect commercial real estate investment, there are a lot of factors to account for, including your financial goals, your budget, your location, your risk tolerance, and a variety of other considerations.

You’ll also want to factor in the specific neighborhood of a potential investment, it’s square footage, the size of the lot, the condition of property (and the cost of any necessary renovations or repairs), the number of units or potential units, the cap rate, the potential cash flow, and the potential for future appreciation. Once you consider and develop a list of your specific requirements for each of these factors, you can use them as a ‘filter’ to eliminate properties that don’t fit your specific preferences.

Keep in mind that when looking for a property, the amount you pay is likely to be the most important gauge of whether the investment ends up being profitable in the long run. An investor can do everything right, but if they initially overpay on a commercial real estate investment, they have significantly less chance of making money from it. Conversely, if an investor finds an amazing deal, it will be much easier for them to weather unexpected surprises like vacancies or serious repairs while still turning a decent profit.

1. Do in-depth research

After developing a basic concept of what type of commercial real estate properties you’d like to consider purchasing, and your pricing and profit parameters, it’s time to begin initial research. Much like when looking for homes and residential properties, there are many options available in the South Florida area online that can narrow your search and help you get a feel for the market.

2. Use “The 50% Rule” to help estimate potential operating expenses

The 50% rule states that 50% of your rental income will be spent on property and business operating expenses not including your mortgage payment. These might include vacancies, taxes, repairs, fines, insurance, management, and other unforeseen types of costs that may occur.

To get an estimate just how much profit you may be able to get from a commercial real estate investment, divide your estimated rental income by two, and then subtract mortgage costs. Whatever is left over is likely to be a good estimate of your monthly profit.

3. Use “The 2% Rule” to estimate potential rent requirements

The 2% rule states that monthly rents should add up to 2% of the purchase price of a property. Therefore, it’s important to research local rent prices to ensure that they aren’t significantly lower than 2% of the property’s purchase price. While it may be difficult to get 2% in some areas and neighborhoods, as long as potential rents are close to this, the property is likely to have good investment potential.

Keep in mind that both the 50% rule and the 2% rule are simply good estimating tools – and you should run through all potential costs of a property with a trusted accountant, financial advisor, or real estate specialist before making any decisions.

4. Investigate properties in person

No matter how good a property looks in paper or online, it’s essential to visit a property in person to make sure there are no hidden problems or issues. A property might look like a great investment from afar, only to have issues with insects, mold, water lines, gas line leaks, asbestos, or other serious issues that may not be apparent until a close inspection is conducted.

Sometimes, a problem with a property may be what’s being developed nearby – and if a highway, prison, noisy factory, or a toxic waste-producing facility is being constructed nearby, it could seriously lower its value, along with any potential rents you might receive if you decide to purchase it. Of course, you can often find information on the area nearby the property from Google Maps or other resources, but it’s still a good idea to check in person – as you might not be able to view any construction projects that have been started recently.

5. Consult with lawyers, financial advisors, and real estate experts for advice

After looking at your investment needs and analyzing properties, you think you’ve finally found the perfect match. But you should wait a bit before making a final decision. Especially if the project is large or will require a large amount of your capital to purchase, you’ll want to get some outside opinions to make sure that there are no unknown legal or financial problems with the property.

Specifically, you want to hire a lawyer to check out the property’s legal history and to ensure that the seller is legitimate and actually owns the title, and the title is clean. You should also speak to an accountant and a real estate broker/consultant who can give you expert advice on the potential profits and costs you may incur by purchasing. Finally, if you’re unsure of the true value of the property and want further clarification, you may want to hire an appraiser to inspect the property.

When it comes to investing in commercial real estate, preparation is key

If you’re thinking of investing in commercial real estate, it pays to do your homework. Purchasing a piece of commercial real estate is like purchasing a business – so it’s essential that you pay a good price, calculate all potential profits and expenses in-depth, and strive to avoid any costly, unexpected surprises.

At Morris Southeast Group, we pride ourselves on understanding the ins and outs of commercial real estate investing; and we can provide you the expertise to make good choices when it comes to choosing, managing, upgrading, or selling your investments. To learn more about commercial real estate investing in South Florida, contact our team today at 954.474.1776, reach Ken Morris on his cell at 954.240.4400, or email kenmorris@morrissegroup.com for a free consultation.

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