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2019’s Commercial Real Estate Landscape

2019's Commercial Real Estate Landscape on morrissegroup.com

The pulse of commercial real estate in South Florida

Where do you go when you want in-depth information on commercial real estate? Right here to the Morris SE blog, of course. 2019 was an interesting year for CRE, from advances in Proptech and smart retrofitting and future-proofing trends to new uses for retail properties and emerging market opportunities.

 Take a look at the topics Morris SE covered last year:

Going Green

Going Green on Top: Heat-Mitigation Design is an Emerging Climate Solution

Greener CRE Is Good for Business

Multifamily

Is Co-Living the Next Big Thing in South Florida Multi-Family Real Estate?

Condo Sales Slump, Multifamily Rentals Soar in South Florida

Is the Condo-Hotel a Winning Combination?

Technology

The Latest CRE Gadgets & Gizmos in One Word: Proptech

Can Your Old Building Become Smart with a Retrofit?

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

4 Reasons to Future-Proof Your Property

Who’s Bagging Your Groceries? Robots!

Tech-Cities 2.0: South Florida a Rising Tech Star

Looking for a Building? Print It!

Tips and Tactics

CRE Insurance for Owners and Tenants in South Florida

Leasehold, Tenant, and Build-Out Improvements in CRE

The War of the Tenants: How Landlords can Broker Peace

The Importance of Due Diligence in CRE

Preparing for a Gas Leak on Your Commercial Real Estate Property

Filling the Neighborhood Strip Mall Calls for the Proper Mix of Tenants

The Power of Infrastructure to Transform CRE

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

What do Office Tenants Want?

Leasing Billboard Space on Your Commercial Property

Is Your Commercial Property Physically Fit?

Opportunity Zones & Commercial Real Estate in Florida: The Potential & Pitfalls

Start Now: Prepare Your CRE Property for Hurricane Season

Using Light to Attract CRE Tenants

Embrace Your Opponents: A Modern Approach to Nimby

5 Ways to Increase the Value of Your Commercial Property in 2019

Alternative Property Investment Opportunities: What Are Some Options?

5 Risks that Keep CRE Investors up at Night

Using Concessions to Lure Tenants to Your CRE Investment

Invest in Your Community, Not Just Your Property

A Property Management Firm Eases South Florida Landlord Headaches

Making First-Rate Investments in Secondary Markets

Trends

Can CRE Developers Solve Miami’s Affordable Housing Crisis

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

Parking in a Changing CRE Marketplace: Adapting & Futureproofing

Unused Golf Courses Are a South Florida CRE Opportunity

Are Multistory Warehouses on South Florida’s Horizon?

Hipsturbia: CRE’s Vibrant New Home?

Motels are so Cool, They’re Hot

Pedaling vs. Parking: The Impact of Bicycling on CRE

The Power of Pop-Ups on CRE in South Florida

Dementia Care May Be as Close as an Empty Box Store

What the National Climate Assessment Means for South Florida CRE

Is Your new CRE Opportunity in a Shipping Container?

Want a Killer Real Estate Investment? Follow the Art.

Can Tiny CRE be Big in SoFlo?

South Florida Business and CRE: The Magic of Miami

South Florida Business and CRE: The Magic of Miami on morrissegroup.com

Strong growth, an attractive lifestyle, and a great business climate in the Magic City

No one is quite sure how Miami came to be known as the Magic City. One suggestion says that it comes from its rapid growth in the 1940s. Another theory places the blame on Henry Flagler’s advertising campaign to hide the risk of malaria in the city’s earlier, swampier development days.

No matter the reason, there is no doubt that when all of the ingredients come together, there is certainly something magical about this city that sits on the southeast coast of the Florida peninsula. To better illustrate this, one only needs to look at the number of national lists in which Miami and the rest of the South Florida region come out on or near the top.

Miami in the metrics

When it comes time to compile these lists, companies typically rely on data from the US Census Bureau and Labor Department, as well as other metrics that cover employment, population, education, and income. When these factors are all put together, the South Florida region—especially Miami—is consistently in the top tier.

  • According to the US Census Bureau, Miami is the second-fastest-growing city in Florida, just behind Jacksonville. Those same statistics also place Florida as the second-fastest-growing state in terms of housing units, with Texas in the top spot.
  • Wallethub, a personal-finance site, used 15 metrics to study 515 cities. Once again, Miami ranked second in the list of fastest-growing American cities. The same company—this time using 66 parameters—placed Miami as the number-four most-fun city in the country.
  • In yet another ranking, Miami—and the South Florida region as a whole—toppled New York City from the number-one spot as the best city for small business growth.
  • At the county level, North Miami surpassed Doral as the fastest growing incorporated city in Miami-Dade. In Broward County, Parkland took top honors.

What makes Miami magical?

When looking at the reasons why Miami is at or near the top of so many lists, the most obvious answers are climate, beaches, and palm trees. But there are a lot more, deeper factors working together to achieve these rankings:

  • The combination of Miami’s location and the instability in many Latin American countries are making the region very attractive for foreign investment. Location is also responsible for a bustling seaport and airport and a thriving hospitality industry, all of which have turned Miami into an international trade and travel hub.
  • Changes to tax codes in the Northeast have caused many businesses to look southward. Where Miami and SoFlo were once considered locations for corporate outposts, they are now prime real estate for corporate headquarters, especially in the hedge fund and financial industries. This fact alone seems to have helped stabilize the area’s economy, thereby easing the anxiety that all of this is just another boom-bust cycle. Companies and people are here to stay.
  • The Sunshine State’s consistent record of fiscal stability, a low overall tax rate, and no state income tax has resulted in consistent population growth. This, in turn, has led to a competitive, multi-lingual workforce and a strong residential and commercial real estate market.

Some areas could use still use a little more magic

Of course, all of this good news is tempered by some important issues that the region is addressing—but not as quickly as some would like.

  • Traffic congestion. While Tri-Rail and Virgin Trains have helped ease some north-south congestion, there is still much work that needs to be done for east-west travel, as well as city travel, light rail systems, and linkages.
  • Infrastructure. Recent sewage line breaks in Fort Lauderdale have highlighted the strain growth has had on aging infrastructure in the wider South Florida region—infrastructure that is in desperate need of upgrades and repairs.

Miami, magic, and Morris Southeast Group

The team at Morris Southeast Group has never been shy about its love for Miami and the entire South Florida area. That love is why we’ve worked, played, and raised our families here for more than 30 years. And it’s why we’re excited to connect clients to their ideal properties.

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.

What Could Brexit Mean For Your CRE Investment?

Searching for likely outcomes amid uncertainty

January 31 is the due date for Brexit to happen. Boris Johnson, Great Britain’s Prime Minister, selected that date as the date for his nation to divorce itself from the European Union, with or without a deal. The result, not surprisingly, is that those on both sides of the issue have varying predictions about the impact of the transition period—ranging from a slight blip to a collapse of the global economy.

While many of the issues will most likely be contained to Great Britain and other EU-member nations, investors in the United States are curious about what to expect when the Brexit pebble is tossed into the pond and the ripples or tidal waves arrive on American shores.

Brexit 101

From the moment of its inception, much of the UK was never really convinced that a coming together of European nations could work. In recent years, though, that uncertainty has grown, especially as additional countries were allowed to enter. There is notable skepticism from some analysts about Central and Eastern European nations that have not fully embraced representative democracy, and Southern European nations that are not considered fiscally disciplined.

The Brexit issue is a divisive one for Europe, and it has turned out to be just as divisive on British soil. While EU-member nations will certainly feel the loss, experts generally agree that UK citizens will most likely absorb the brunt of the divorce, deal or no-deal. How long those consequences last is anyone’s guess. Among the key predictions are:

  • Trade deals and tariffs will all have to be renegotiated. Until this is accomplished, there will most likely be a shortage of various goods and merchandise, especially of those imported by Britain. This list may include food items, building materials, and medications.
  • Labor issues will have to be resolved. These include construction-labor issues since the UK relies on a pool of workers from Eastern European EU-member nations, and white-collar, European, non-UK citizens based in Britain.
  • Uncertainty about the EU. There is a possibility that other European nations may follow the UK’s lead and leave the EU, creating a sort of economic domino effect.

Post-Brexit CRE investments in the UK

Brexit has a history of being an ever-changing process, and the word at the outset of its execution is caution. The greatest worry is that the level of uncertainty will result in a decrease in demand for UK properties, falling prices, and a reluctance to enter the UK CRE market.

Additionally, the dust of transition will settle at varying speeds. Besides labor and building material shortages, there may also be changes made to safety and building codes and legal and tax regulations, as well as to the process of moving funds across borders. To help navigate these waters, it will be essential to work with a UK-skilled due diligence consultant.

While a cautious approach certainly sounds like a wise option in times of change, it’s also important to remember that potential opportunities also appear. When Great Britain leaves the EU on January 31, expect to see an increase in new deals and projects, especially as UK investors seek to partner with the US, Canada, India, and China.

Post-Brexit CRE investments in the US

The most volatile Brexit challenge that may impact US CRE firms is cross-border investment, especially if other EU nations either leave the union or re-examine their own policies as a result of policy changes in the UK.

That being said, the US CRE marketplace is expected to see more positive outcomes as a result of Brexit. The combination of chaos in the UK, the attractiveness of REITs and EB-5 investments, and continued low-interest rates translate into global investors seeking the stability and economic security found in the US commercial sector.

Investors must be proactive

When reading Brexit predictions and various what-if scenarios, it’s inevitable to have even more questions and concerns. Because the situation is uncertain now—and likely to remain so for the next several years—US and global commercial real estate investors should seek answers from a skilled team, like the professionals at Morris Southeast Group.

To learn more about investment opportunities 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 kenmorris@morrissegroup.com.

How South Florida CRE Is Addressing Climate Change

How South Florida CRE Is Addressing Climate Change on morrissegroup.com

A new way to invest in a weather-weary world

Not a day goes by when there isn’t some sort of mention of climate change and sea-level rise. Pundits may debate the validity of the science behind the issue, but Miamians and other South Floridians are becoming increasingly adept at wading and driving through flooded streets and sidewalks.

Businesses, too, keep a supply of sandbags on hand to protect their investment from flood damage, while neighborhoods have seen tidal flooding rise from an infrequent to a regular occurrence.

With more than $130 billion of US commercial real estate (CRE) located in the top 10% of cities most vulnerable to sea-level rise, the CRE industry is at looking at ways to help investors weigh the risks, prepare for the challenges, and make wiser investment decisions.

Investing at water’s edge

While experts are in no way recommending a mass sell-off of coastal properties, they are advising that if investors do not prepare today, their real estate values could be severely impacted tomorrow.

  • In 2017, the year of hurricanes Harvey, Irma, and Maria, damage to US properties hit a record high at more than $300 billion.
  • In 2018, from May to July, rainfall along the entire east coast was three times higher than normal.
  • In 2019, temperature records, including those throughout October in SoFlo, were shattered on a daily basis.

Because the real estate industry is especially vulnerable to climate change, the Urban Land institute embarked on a global study that looked at the issue and its long-term impact on property investment. Results indicate that meeting the climate-change challenge will require futureproofing structures and projects, as well as working with governments to develop proactive policies and plans.

Assessing the risks of climate change

When assessing the risks associated with a particular property, developers and investors generally rely on insurance data. But because insurers usually determine prices on an annual basis, long-term risk factors—such as those associated with climate change—are often not considered. It’s difficult for that industry to use actuarial science to charge for future risks that are as unpredictable as the weather.

As a result, a new analytics industry—one that merges climate science with business and policy decisions—is emerging. It allows real estate professionals and investors to become better informed and it’s rapidly becoming a part of the due diligence process.

In addition to assessing the physical risks to a specific property as it’s impacted by climate change, these analytics also include transition risks or those factors that will most likely occur as a result of climate change. These include:

  • An increase in disruption for tenants as weather-related events become more frequent.
  • Higher operational and capital costs as properties experience greater wear and tear due to extreme weather.
  • Higher taxes as cities and municipal jurisdictions cover protection costs. In Miami, for example, residents approved bond issues to raise their taxes to pay for pump station installation and raising sidewalks, roads, and seawalls.

Meeting the climate change challenge in South Florida

In case you haven’t figured it out, the Morris Southeast Group team fully believes that South Florida is worth fighting for—and it will meet the challenges posed by climate change. And we’re not alone.

In more and more projects around the region, developers are adding soil to raise the ground level beneath new construction, as well as investing in and incorporating climate-mitigation and adaptation technologies. These building-for-resilience strategies, in turn, help to lower operational costs while increasing the potential return on a CRE investment.

Speaking of resilience, it’s more than just a means of meeting the needs of a property. City leaders, for many reasons, want to ensure that their municipalities remain attractive for residents and developers.

In many regions, resilience strategies are taking center stage, and it’s important for investors to let policymakers know—on local, state, and national levels— that they’re interested in the issue and want to see action.

To learn more about these issues or Morris Southeast Group’s commercial real estate investment and property management services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Commercial Real Estate Trends For 2020

Commercial Real Estate Trends For 2020  on morrissegroup.com

5 key areas that will shape the new year and beyond

A television commentator recently claimed that 2020 isn’t a year. He did say, tongue-in-cheek, that it’s the name of a news show on a competing network. He also said it’s a word that defines hindsight and perfect vision—but not a year.

In commercial real estate (CRE), though, hindsight and vision are essential to determine the trends and cycles that will define the industry in 2020 (which is, indeed a year).

It’s no wonder, then, that as the calendar page has turned to a new year and a new decade, so many experts have offered their insights on the shape of things to come. Here are 5 of the top things that may be on the horizon:

1. Will the economy continue to expand?

At the moment, the United States is in the midst of its longest expansion in history. While there are national issues (constant talk of an approaching recession, a looming Presidential election and an impeachment process, and a slowing down of GDP) and global issues (Brexit and the potential for war), the steady strength of an expanding economy is expected to continue.

This could further expand job growth and consumer confidence. And, according to CBRE, these factors and Federal interest rate cuts are expected to have a positive impact on continued CRE growth.

2. Changing demographics

Just about everything that could be said about Baby Boomers (aging) and Millennials (blamed for just about everything) has been said, but it’s still worth noting that both generations will continue to have an impact on all real estate sectors. At the same time, Generation Z and a yet-to-be-named generation will also start to exert their influence on the CRE marketplace.

CRE opportunities are expected to meet the needs of longer life expectancies among Boomers and steady population growth that has already outpaced Japan and is expected to surge past Europe. Ground Zero for many of these projects will be seen in the Sunbelt states.

3. Property trends

A word often repeated in many of the 2020 predictions is “steady.” In other words, trends, especially as they relate to properties, will follow the same path seen in recent years:

  • E-commerce growth and competition will continue to steer the industrial and warehouse sectors.
  • Co-living and co-working trends, especially in urban markets, are creating greater consumer demand for flexibility and fluidity in those sectors.
  • Alternative properties, such as data centers and self-storage, will continue to grow.
  • Don’t be quick to ring the death knell for brick-and-mortar properties. While some sectors, such as retail chains, are struggling to keep doors open (thanks to e-commerce, by the way), others are in great demand. Among these are premium and necessity retailers, restaurants, and grocery and drug stores.

4. Due diligence and data continue to take center stage, in new ways

No matter if a CRE transaction involves a single party or a group, and no matter if a CRE project is small or grand, there are risks. As a result, due diligence is a must—and that simple fact cannot be stressed enough, particularly as we move into 2020 and beyond.

A key tool aiding due diligence is the gathering and use of data in all areas—from the state of a building’s operating systems today and how they are expected to perform tomorrow, to funding issues and the impact of climate change on specific properties in specific locations. And this last item is expected to become a larger one as we move into this decade.

What hasn’t changed and won’t? A well-informed CRE deal is still far likelier to be a strong one.

5. Digitization

At the start of the 21st century, most people in the developed world were terrified of Y2K and the potential collapse of the global economy. Twenty years later, globalization, urbanization, a changing workforce, AI, and the IoT have transformed CRE. That’s why the findings of Deloitte’s recent survey of 750 CRE executives in 10 countries are so interesting.

While most respondents rated tenant experience as a top priority, the majority had not truly addressed the digital tenant experience. To that end, expect investors, owners, managers, and landlords to embark on a smart building, mobile app odyssey to meet tenant demands while improving efficiency and performance.

2020 trends that work for SoFlo

When you look at these trends through a South Florida lens, the region appears to be headed in the right direction. As a Sunbelt state, Florida has already witnessed an increase in population, a building boom, and an embrace of co-living and co-working environments.

At the same time, there are large tracts of industrial and warehouse spaces, as well as climate-change-mitigation technologies that are being incorporated into new construction and retrofits. To learn more about these trends and what Morris Southeast Group can do for you in the coming year and beyond, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

What Investors and Developers Need To Know About EB-5 Investment

What Investors and Developers Need To Know About EB-5 Investment on morrissegroup.com

The impact of changes to the EB-5 program on commercial real estate investment in South Florida and beyond

For developers, one of the keys to seeing a proposed project completed is sufficient capital. At the same time, investors are looking for the right projects with the best potential returns on their investments—wherever those investors are from. Enter the Immigrant Investor Program or EB-5.

A brief history of EB-5

Created by Congress in 1990, the program was designed as an incentive for foreign investors to help stimulate the US economy through capital investments and job creation in exchange for green cards and eventual US citizenship. In its early years, the program was practically dormant. But during the Great Recession, when banks were reluctant to approve construction loans, EB-5 was able to help fill that void.

Mixing immigration with money, it’s no wonder the EB-5 has, over the decades, seen its share of criticism. While some have seen this as a green-card-for-cash initiative that favors wealthy investors, others view it as a highly beneficial job (at least 10 jobs per project) and investment program that’s good for the US economy.

Changes to EB-5

Nevertheless, the Obama and Trump administrations have each taken a very critical look at EB-5, with each making its own set of recommendations and changes. In July 2019, the Department of Homeland Security (DHS), which oversees the program, released its latest rules:

  • At the core of EB-5 are targeted employment areas (TEAs), which are determined by unemployment rates. For TEA investments (high unemployment), the minimum investment is $900,000, up from $500,000. For the non-TEA projects, the minimum investment amount is $1.8 million, up from $1 million. While these increases were made to account for inflation, the higher minimum amounts may shrink the pool of potential foreign investors.
  • The Office of US Citizenship and Immigration Services and DHS will now designate TEA areas. In the past, this was left up to the individual states. While some projects may no longer qualify as being located in a high-unemployment area, the change is meant to stimulate job growth in the newly defined and targeted areas.
  • When an immigrant investor files an EB-5 petition, he or she receives a priority date, which is the date the USCIS receives that petition. In essence, this is the investor’s place in the green-card line. In the past, the immigrant would receive a new priority date each time a new EB-5 petition was filed. With the current change, investors can retain their first priority date.
  • The final regulation is designed to clarify the technical and procedural issues as the immigrant investor files an I-829 petition, which must be submitted within 90 days preceding the second anniversary of when he or she received conditional resident status. Additionally, the regulation clarifies which family members can be included in the principal investor’s petition and who must file independently. The change is meant to bring the EB-5 green card process in line with the current USCIS green card process.

EB-5 advice for developers and investors

Very often, EB-5 is considered an immigration program—but that doesn’t even begin to scratch the surface. It is, in fact, so much more than that and it’s constantly evolving. As a result, developers and investors have to be aware of the changes and be willing to adapt to them.

  • EB-5 is actually a security. And as a result, it is heavily regulated and full of financial complexities.
  • EB-5 is often thought of as a means to acquire quick funds for a project when it’s really a slow-money concept. As a result, not all projects are suitable for EB-5 investment.
  • While the EB-5 interest rates are low, they are rising. In addition, foreign governments have their own regulations and fees when monies are transferred across borders.
  • As part of the investor’s due diligence process, they will require a developer’s strong history of completing other EB-5 projects and possibly request tours of those sites.
  • Because of political and economic turmoil, Latin America has surpassed China in EB-5 demand. At the same time, gateway cities, such as New York, Los Angeles, and Miami, continue to be attractive locations for EB-5 interest.

It’s important for all parties to work with a team skilled in the nuances of EB-5. Morris Southeast Group is one such group. And because of our reputation in South Florida, we are especially skilled at building the EB-5 bridge between Latin America and the SoFlo region.


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 Latest CRE Gadgets & Gizmos In One Word: PropTech

The Latest CRE Gadgets & Gizmos In One Word: PropTech on morrissegroup.com

Now more than ever, your investment is in your hands

In the world of CRE, 2019 may be remembered as the year PropTech became a key buzzword in the industry’s vernacular. Short for property technology—or using information technology to research, purchase, sell, or manage the property—the concept has moved out of the residential market and into the commercial one.

For anyone watching from the sidelines, it can be an overwhelming (or daunting) scenario. There are many products currently available, and with investor interest, more are on the way.

Data is the bottom line

At the core of PropTech is data: collecting it, analyzing it, and utilizing it. But the term generally applies to several elements:

  • Software, like property portals and platforms, is used to improve property research and management, as well as to streamline communication between all parties involved with a specific property or project.
  • Hardware includes the tools that gather the data, such as sensors and drones. According to one estimate, over a trillion sensors will be connected to the Internet by 2022, and this Internet of Things (IoT) network will be collecting all kinds of data from building systems and energy efficiency stats to foot traffic to weather patterns. One company has even developed sensors to be placed on cranes at building sites to better understand and prevent expensive delays and extended deadlines.
  • Materials, such as bricks to act as batteries for solar panels and climate change-mitigation products, and manufacturing, such as 3D printing, are also key elements.

The new kids on the PropTech block

The latest additions to the PropTech industry are start-ups. At the moment, there are countless start-ups around the country competing for billions of dollars in investment capital. At the same time, big names like Amazon and Google are jumping into the CRE PropTech arena.

While smart technology is pretty much a staple when it comes to new construction or repurposing older buildings, the increased amount of data and financial interest in PropTech are pushing next-generation development to the fringes of the CRE imagination in several key areas:

  • Expect greater use of drones, not only for capturing footage of properties from the air but also for data collection. More and more drones are being used to capture real-time progress on construction projects, as well as to map them.
  • With all of this data, someone—or, rather, something—has to sort through all of it to develop predictive analytics. Enter Artificial Intelligence (AI). While already responsible for virtual reality tours and filtered property searches, future AI will only be enhanced by areas such as biometrics, bots (for 24-hour customer support), geolocation tech (to better predict trends for specific properties in specific locales), and to oversee IoT technology that manages building systems’ usage and maintenance.
  • While today’s AI devices are designed to act intelligently, Machine Learning (ML) devices are a form of AI that is intelligent. By feeding data to ML devices, they will be able to learn for themselves.
  • In general terms, a platform is a means to digitally facilitate communication between individuals or groups of people. Think of it as a public ledger of data without the middleman. Blockchain, a platform that was instrumental in the cryptocurrency craze, is beginning to gain a foothold in the real estate industry, especially as it pertains to lease transactions, property acquisitions, maintenance records, and due-diligence processes for both full and fractional property sales.

Working together to make PropTech work

While there is no predictor of which technologies will have staying power and what their exact influence will be, one thing is certain: technologies, as exciting as they are, must be able to work together. For example, IoT sensors will gather data for AI to analyze and apply. Without one, the other can’t reach its full potential.

The same could be said about people. Without good relationships, successful CRE investment is a lot harder, if not impossible.

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.

Alternative Property Investment Opportunities: What are Some Options?

Sometimes it pays to think different—or more specific—in real estate

If the 21st century has taught us anything, so far, it’s that the rules have changed. What was once considered inconceivable at the dawn of the millennium is now a reality. Livable, walkable downtown development is surging, shared workspaces and telecommuting are givens, and ridesharing, scooters, and on-demand food delivery are a smartphone swipe away.

It makes sense, then, that the traditional boundaries of commercial real estate are also expanding in new and alternative directions—or breaking down into smaller segments. Individual investors and REITs are no longer confined by the large multifamily, retail, office, or industrial boxes.

1. Niche housing

Investing in housing has long been a tried-and-true way to enter the real estate marketplace. In recent years, though, things have gotten a lot more personal, with owners and landlords eager to market properties to very specific tenants. There’s something for everyone.

  • Mobile homes have long catered to those who are unable to afford a down payment for a single-family home and some “luxury” mobile home parks have started to become more common. Mobile homes are also an opportunity for someone new to CRE investing or who doesn’t have a lot of capital. While profits may be smaller than those in higher-priced CRE properties, the affordability makes it possible for someone to develop property investment and ownership skills in an area with low competition.
  • On the opposite end of the housing spectrum is corporate housing. Very often, companies having to do regular business in locations away from the home office need mid- to long-term accommodations for employees. To keep costs down, they would rather avoid pricey hotels while providing employees with a home-away-from-home experience. While leases can be either short or long term, the goal is to make an attractive property financially attractive for the tenant.
  • With college enrollment continuing to climb even during slow economic periods, students are facing a housing crisis. On-campus dorms are crowded and run-down, while off-campus housing can be expensive—and this, in turn, has given birth to a larger student housing marketplace. Investors are purchasing multi-family properties close to college campuses and offering clean and affordable accommodations with shared social spaces. Anyone investing here should be prepared to manage first-time renters who lack references; their parents; and significant wear and tear on the property.
  • While Millennials are front and center in many of today’s discussions, Baby Boomers are the gift that keeps on giving. In this case, it’s through a seniors housing trend. The scope of that population spans those approaching retirement to significantly older individuals—and this translates into everything from active adult communities to assisted-living facilities to nursing homes.

2. Medical office buildings

In addition to seniors housing, an aging population—along with an increase in outpatient treatment—is also creating a strong demand for medical office buildings. Sweetening the prospects for investors is the idea that medical office tenants tend to be stable, long-term occupants and the need for patient care remains strong no matter the economic climate.

3. Self-storage

In recent months, there’s been the talk of a looming recession. Whether or not that economic downturn gets here is anyone’s guess, but it’s always wise to look at opportunities that have historically done well in lean years. Self-storage properties are often that investment. In good times and bad, people need to store stuff—and interest appears strong across economic classes and market locations.

4. Data centers

Demand for data grows each day, and there is no indication that will ever slow down. As a result, storage—the size of the cloud and the buildings that store the physical servers that support it—has to grow. That’s why data centers are predicted to be strong performers. While they can be considered a riskier investment because of the increase in competition and capital commitment, the business model has performed well even during slow times. 

Thinking outside of the box in SoFlo

When it comes to thinking outside of the CRE box, the professionals at Morris Southeast Group cannot think of a place that’s more creative than South Florida. Whether it’s converting a warehouse into an artist hub or developing a vacant lot into a state-of-the-art housing rental property, everything seems to be achievable here.

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.

CRE Insurance For Owners And Tenants in South Florida

Who needs what and why

When it comes to commercial real estate, owners and tenants have at least one thing in common: both want to protect their investment. To that end, insurance is a necessity—but all too often, it becomes the elephant in the room. Everyone knows it’s there, but few ever want to talk about it because it’s overwhelming, confusing, and somewhat negative at a time when everyone is energized about positive possibilities.

Ignoring the insurance issue, though, can mean very expensive and legally complicated consequences for both parties. On the other hand, understanding what’s required can prevent lots of last-minute scrambling and help develop a smarter business plan. Here, then, is a rundown of who needs what and why.

Insurance needs for the CRE owner

The trick with insurance is creating a balanced plan that is fiscally sound and provides appropriate coverage. To that end, it’s imperative for the investor to consider what sort of coverage works best for each specific property. Property along the coast, for example, has different risk factors than one located further inland or in another part of the country.

First and foremost at the top of any insurance list are fire insurance and liability insurance. From there, depending on the needs of the owner and/or the property, other insurance plans can be added:

  • Flood insurance, especially if the property is located in a designated flood zone or if flooding is an issue in the property’s location.
  • Terrorism insurance in case the property is a terrorism target risk.
  • Builder’s risk insurance if the property is vacant or mostly vacant and will be renovated.
  • General contractor insurance if the owner will act as the general contractor and pull his/her own permits for the work.
  • Workers compensation insurance if the owner plans to hire on-site employees, such as maintenance workers.

Insurance needs for the CRE tenant

As important as it is for the owner to protect the entire physical property, it’s equally essential for the tenant to provide coverage for the actually leased space. Commercial renters insurance generally covers damage or destruction to property caused by fire, vandalism, and most weather-related issues. This property can include office and manufacturing equipment, inventory, and business records.

From here, a tenant can look into additional coverage, some of which are identical to that carried by the owner, such as worker’s compensation and flood insurance policies. While not mandatory, some owners may require the following options:

  • Business liability insurance not only protects the tenant should a customer become injured on the leased property, but it also protects the owner. Because the owner does not want to be held responsible for the tenant’s mistakes, he/she may ask to see the tenant’s certificate of liability insurance at the time of the lease signing. No certificate, no lease.
  • Business interruption insurance assists the tenant in paying bills, including rent, if the business is not generating income for a variety of reasons, such as theft, vandalism, or even sewer/water line repairs by the city.

Ensuring you’re insured correctly

The last thing anyone wants is for the elephant in the room to destroy an investment or leasing opportunity. Whether you’re new to the CRE market as an investor/owner or a tenant, it’s important to work with a team of professionals who are acutely aware of commercial properties and their insurance needs for specific locations. With more than 30 years of experience in South Florida, 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 kenmorris@morrissegroup.com.

Going Green On Top: Heat-Mitigation Design is an Emerging Climate Solution

Going Green On Top: Heat-Mitigation Design is an Emerging Climate Solution on morrissegroup.com

Commercial real estate is a cool key player in new green solutions

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?

CRE can help cool things off

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.

Things to know before going green on top

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:

  • A structural engineer first needs to evaluate the load capacity of the roof, since rooftop gardens are quite heavy. A watered garden with a 6” soil depth can weigh up to 40lbs. per square foot.
  • In addition, the waterproof integrity of the roof also needs to be evaluated. The last thing any owner wants is to install a rooftop garden and then discover that there is a leak beneath the soil—or that the membrane was damaged during installation.
  • Working with a rooftop garden designer, owners and landlords can decide the type of garden, the plant selection, any safety issues should the public have access and alternatives if a full garden is not an option.

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.

South Florida’s coolest solution

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 kenmorris@morrissegroup.com.

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