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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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
There are two types of information to gather: the physical and the personal.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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:
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.
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.
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.
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.
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.
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.
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:
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.
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:
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.”
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.
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.
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.
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.
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.
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.
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.
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.
The process of negotiating a commercial lease can be extensive and exhausting, with several hazards to avoid. But a prospective tenant who has a basic understanding of the agreement and what they want in their lease has a great deal of leverage. It’s important to remember that when it comes to finalizing a CRE lease, everything is negotiable.
Landlords typically look to pass on expenses to their tenants. In a triple net (NNN) lease, the landlord will bill separately for taxes, insurance, or common area maintenance (CAM). A prospective tenant should pay special attention to which expenses your landlord expects you to be responsible for, especially as part of CAM. Since CAM is broadly defined, a landlord can include virtually any operating expense within this line item.
While negotiating a lease, you reserve the right to review the expense budget yourself, as well as which costs are incurred. Even if the rent is right, you can run yourself out of a good deal by failing to include exactly what you are responsible for paying within the lease during negotiations.
Negotiate and establish a cap on the periodic percentage increase in order to avoid unmanageable rent increases. This should be one of the first things you discuss with the landlord.
The exclusive use clause should include detail about the types of services your business will be providing or the types of products you might sell. From a tenant standpoint, the exclusive use clause should restrict the landlord from leasing any common or connected space to potential competitors. For example, if you are going to own a bakery in a shopping center, you want to prohibit your landlord from leasing other space in the shopping center to another bakery or like-minded business.
Typically, landlords will try to hold their tenants responsible for maintenance and repairs for any issues other than the roof, exterior walls, or parking lots. With this responsibility, a prospective tenant could end up having to replace old equipment such as the plumbing or air conditioning systems, which can be pretty costly. If the building is relatively old, you might want to consider getting the HVAC systems, plumbing, and electrical equipment inspected. If you find problems, it will provide leverage during negotiations. Do your due diligence, or find out the hard way.
If it’s not in writing, it didn’t happen. That’s why it is imperative that every detail negotiated is clearly explained. If a business needs signage, be sure the lease agreement doesn’t prohibit the use of signs that are visible from the street. The lease should also include assurance that expenses won’t increase within the first 12 months of occupancy. Additionally, there should be a discussion on subletting options. The tenant will only be able to find someone else to cover his or her rent, if needed, if an assignment or sublet clause is in place.
Even if you are a strong negotiator, you won’t want to go through negotiating a commercial real estate lease alone. A good broker is essential, as they will have the experience in the area to know what landlords have been offering and how they may try to negotiate with tenants.
For over three decades, South Florida businesses and investors have known Morris Southeast Group for its market knowledge, valuable insight, expertise, and resources to guide clients through the real estate decision-making process. To learn how we can help you find a commercial real estate lease you can feel safe with, 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.
If you’re looking at buying, selling, or signing a major lease on a commercial property, you likely want to get a property appraisal first. But before you do, it pays to understand a bit about how appraisals work, an appraiser’s responsibilities, and which type of appraisal might be best for your unique situation.
It’s important to realize that appraisers are publicly-licensed officials and that the actual inspection of a property is only a small part of the entire appraisal. Much of the process will involve looking through public records and other data to determine information like historical property prices and the suitability of a piece of land for future business use.
Therefore, any information you provide the appraiser will most likely be checked and verified multiple times for accuracy – so any misleading or inaccurate information will only slow down the appraisal process and reduce the appraiser’s trust in any further information that you provide.
Whether you’re looking to get your own property appraised in order to sell it or lease it, or someone else is looking to buy or lease your property and wants it to be appraised, you’ll likely need a good amount of documentation for the appraiser. This might include a property tax bill, income statements, drawings or plans of the property, and a variety of other information.
There are three types of reports that you can commission an appraiser to create: a restricted use report, a summary report, and a self-contained report. A restricted use report is the shortest and least expensive, but it can only be used by the client, so it’s of somewhat limited use if you are trying to sell a property. A summary report is slightly longer and costlier, but it can be used by anyone, and it is often the best option for someone trying to sell a property. A self-contained report is the longest and priciest, as it contains detailed analysis of the property – but it’s also rarely commissioned, as a summary report will usually provide enough information for most business purposes.
If you’re hiring an appraiser, it’s a good idea to tell them who the report is intended for, and why you want to use it before you begin the process. Commissioning the wrong report could lead to a significant waste of time and money, so it’s best to make sure you’re going in the right direction from the start.
More specifically, you also want to communicate with the appraiser what exact financial estimates or values you would like to get from the property appraisal process. For example, if you are interested in buying a property to start or relocate a business such as a store, you want to know the full value of the building and the property, otherwise known as the “fee simple interest.”
Comparatively, if you are considering signing an expensive lease for a business and you want to know what a fair rent price is, you’re more likely to want to know a property’s “leasehold interest.” These are just a few examples of the essential values an appraiser can calculate and another reason why full and open communication is the best way to get the most out of the commercial property appraisal process.
If you want to learn more about the property appraisal process or about how to effectively buy, sell, lease, or manage property in an ever-changing market, contact the commercial real estate experts at Morris Southeast Group for a free consultation. Our team can be reached at 954.474.1776, call Ken Morris on his cell at 954.240.4400, or email kenmorris@morrissegroup.com.
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