LoopNet Commercial Real Estate Blog

Pricing a Commercial Listing in Today's Market

2010-02-05T08:51:00.000-08:00

In 2005, I wrote an article entitled “the Art of Pricing a Deal.” At that time, I stated the risks of overpricing a commercial property were that it ultimately led to a lower sales price and a loss of valuable time. Today, I have heard several theories that a property listing should be priced at 25-30% above its value, as a buyer wants to feel like he or she is receiving a steep discount. I think it’s time to dust off my old article, as properly pricing a commercial property listing is even more relevant today.

In the last two years, the average selling price of my commercial property listings has been under 12% from the original asking price. With today’s reduced asking prices, it would be even lower. Currently, I try and price my listings at even less of a spread: about 10% above where I expect them to trade. This seems to generate the most activity as buyers are focused on the best priced listings.

Pricing a commercial property right and taking an aggressive, proactive marketing approach will generate multiple offers today. The days of posting a sign on a commercial property and placing a NY Times ad are over, as the information must be sent out to the masses, the brokerage community, and online listing services such as LoopNet.

There are literally thousands of buyers waiting to pounce on the right opportunity. In this market, I believe buyers feel like there is safety in numbers- if someone else is bidding on it, the listing must be an opportunity. One such case is a former convent that we have under contract in Chelsea. We brought the property to market earlier in 2009 for $3.95m or $619/sf. We received a dozen offers early on between $2.5m-$3.5m. Then we had an asking price offer submitted. As soon as other buyers were made aware of the interest, two more asking price bids came in. Having multiple bidders is essential in any market, as without leverage it is virtually impossible to get a buyer across the finish line.

In all, buyers are willing to bid up to and above the asking price today. They are savvy enough to realize that the discount off an ask doesn’t necessarily equate to a bargain. Furthermore, they choose to focus on the properties priced well and overlook the rest.

What are you seeing in your market? I invite you to weigh in and share your commercial property pricing strategies.

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Guest Blogger: James Nelson, Partner at Massey Knakal Realty Services, New York
James Nelson has been involved in the sale of more than 150 properties with an aggregate value of over $1 billion since 1998. With the exception of the Founding Partners, he has been the company’s top salesperson for the last three years. Currently James is handling over 40 properties with an aggregate sales price of around $300,000,000.
http://www.masseyknakal.com/people/JNelson

LoopNet Offers the First Commercial Real Estate Search App for iPhone Users

2010-01-12T09:29:00.000-08:00

Want to be able to search for commercial property anytime anywhere? There's an app for that!

Download the FREE LoopNet iPhone App today.
(iTunes required)

We're ecstatic to be the first to offer CRE professionals easy access to all 745,000 commercial listings on LoopNet.com from anywhere at any time - with technology that suits their busy on-the-go lifestyles. The LoopNet iPhone App was just approved and is now available in the iPhone App Store making it the first Commercial Real Estate Search Application.

With just a tap you can now explore properties in your immediate area, filter through results, get driving directions to a listing and contact the listing broker.

LoopNet iPhone App features:

Location Finder: explore properties in your immediate area using the iPhone's built in GPS capabilities
Custom Search: filter results by price, building size and property type (office, industrial, retail, land, multifamily, etc.)
Driving Directions: use Google Maps to plot properties or email directions to a friend.

LoopNet's FREE Basic Membership lets you search hundreds of thousands of properties for sale and lease. Premium Membership delivers full access to the entire property database.

Check out the screenshots of the LoopNet iPhone App and let us know what you think.

Property Search

Map Search Results

Search Filters

Property Profile

Property Photo

Contact the Listing Broker

LoopNet Community Involvement... what a year!

2010-01-11T16:59:00.000-08:00

2009 marked LoopNet’s highest Community Involvement participation output to date! In fact, LoopNet employees logged more than 1,042 hours of service, benefiting more than 40 organizations through donations and volunteer efforts.

Here are some of our accomplishments for 2009:

Raised nearly $10,000 for the San Francisco and LA Regional Food Banks.

Donated 100 toys to children of The Edgewood Center of SF for the Annual Holiday Toy Drive; adopted 3 families for the Christmas holiday.

Cooked 515 pounds of homemade goodies (mashed potatoes, yams, stuffing, cookies, & macaroni and cheese) to feed 1200 homeless people for Thanksgiving in the Park.

Collected $3,000 worth of school supplies and funds for underprivileged school age children.

We are hoping to make 2010 an even better year!

LoopNet Success Story

2009-12-21T16:47:00.000-08:00

When Joe DeCollibus, with Miami Provisions, set out to lease a warehouse in Florida, he came to LoopNet to find the right property. By taking advantage of the numerous tools that LoopNet provided, Joe was able to save time researching and evaluating potential opportunities.

Setting up a Saved Search & New Listing Email Alert allowed Joe to easily stay updated on newly added listings that matched his search criteria - there was no need to log in and conduct a new search everyday. He was also able to research the local demographics for each listing, giving him additional information to make a more informed decision.

“LoopNet is helpful in so many ways. It is a great tool. I will never look for another property without the use of LoopNet. It allowed me to do all the necessary research to find the right property for me.”- Joe DecColibus

Do you have a success story you would like to share? Submit it today.

Oh, CRE: a holiday parody of the song "O Christmas Tree"

2009-12-21T08:47:00.000-08:00

Boy has it been a tough year. Let's hope 2010 is a lot better. Until then, check out this video and have a little laugh:

We're Upgrading!

2009-12-17T19:00:00.000-08:00

LoopLink 8.0 - More Leads. Faster Speeds.

There are a lot of enhancements getting deployed tonight, but one of the most exciting is our new version 8.0 of LoopLink.

LoopLink allows our customers to embed commercial real estate search functionality right into their own websites:

What's New with LoopLink 8.0?

Superfast - up to 5x faster!
Seamless - content appears using your own URL
SEO Benefits

Stay tuned for more details, or call LoopNet Corporate Solutions at 866-907-6415. Or leave a comment and tell us what you think.

Auto Repair Properties Could Be a Good Investment Despite the Recession

2009-12-17T16:34:00.000-08:00

Our economic recession has produced ill-effects for many industries; however, there are certain business types that are actually benefiting from the recession.

One such type is the auto repair industry, which has observed increased sales precisely because of the harsh economic climate. Despite the governments Cash for Clunkers program (or because of it), new car purchases are way down, forcing many car owners to pour their resources into maintaining their current vehicles. This has led to increased business for companies such as AutoZone, Advance Auto and Pep Boys.

For investors, auto industry friendly properties offer many advantages. These types of properties are often structured as triple net leases, ensuring the landlord doesn’t have to become involved in the day to day activities of the tenant. Furthermore the properties themselves are usually quite large and open to re-use and redevelopment.

Below are some useful tenant outlines of the aforementioned companies.

AutoZone

Net Lease Advisor reports that at BBB, AutoZone has the highest credit rating of all auto parts retailers mentioned above. It has witnessed growth as its same-store sales increased by 5.4% during its fiscal 4^th quarter 2009 and utilizes a variety of lease structures, including ground leases and simple fee sales. Ground lease locations are commonly structured on a 15-year term, with 10% rental increases every 5 years. An AutoZone fee simple sale is typically structured with a 20-year triple net lease. Typically, Auto Zone maintains properties with a rectangular building (usually 7,000 SF) on 0.80-1.15 acres of land.

Advance Auto

In Net Lease Advisor's most recent quarterly report, Advance Auto has seen sales increases of 7%. Moody’s and S&P have both improved their credit outlooks for Advance Auto accordingly (S&P has it at BB+). Net lease assets occupied by Advance Auto Parts feature attractive prices, generally trading between $1.0M - $2M. Lease agreements vary between 10 and 20 years in length, however a 15-year NN term seems to be most common Advanced Auto lease structure. Under a NN lease, the landlord is generally responsible for maintenance of the roof and structure. Some sites have been leased on an absolute NNN basis with no landlord responsibility. Their sites usually feature a 7,000 SF rectangular building on 0.75-1.25 acres of land.

Pep Boys

According to Net Lease Advisor Pep Boys is beginning to see results from its strategic cost-cutting measures, which should improve the strength of their credit rating. Accordingly, it plans to open 20-40 new locations in 2010, demonstrating its improved market position. Pep Boys generally prefers to purchase their real estate, however over the past two years Pep Boys has sold a large number of their stores through sale-leaseback transactions. Using sale-leaseback transactions, Pep Boys generally signs 15-year absolute net leases, providing for either 1.5% annual bumps or 8% rental increases every 5-years. Pep Boys leases are absolute net leases. Typically, Pep Boys properties feature 17,000-22,000 SF buildings on 2+ acres of land. This creates advantages as it allows landowners to capture a significant amount of accelerated depreciation and the properties themselves have many opportunities for re-use or re-development.

As can be seen from above, though there is disparity in credit ratings of tenants, all auto parts retail companies are seeing success in this environment. With unemployment continuing to rise and forecasts projecting consumer spending to stay low, it seems likely new cars won’t be on people’s minds for a while. This should translate to continued success for the auto parts industry, making their net lease properties attractive investment opportunities.
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Guest Blogger: Calkain Companies
Calkain Companies, Inc. is a national, boutique commercial real estate firm, focusing on net lease investments, that provides brokerage and consulting services for both private and institutional clientele.

New Way to Edit Your LoopNet Listings

2009-12-02T10:47:00.000-08:00

The next time you edit your listing, you will notice some changes. We have revamped the edit listing functionality to make it easy to use. Before, it used to take multiple clicks to reach the edit listing page. Now, once you click Edit Listing, we take you directly there. You'll notice tabs going across the top allowing you to edit different aspects of your listing.

Click the Location Map tab to double-check the location of your listing on a map.

Click the Contacts tab to add contacts on your listing.

Click the Attachments & Links tab to add photos, documents, and links to your listing.

Click the Exposure Options tab to find out everything you can do with your listing like Showcase it on LoopNet, embed it on other web sites, email it out, and more.

That’s it for now. We hope you like it. Go to My Listings today and check it out. If you have any feedback, give us a call at (888) 567-7442.

Football Team Looking for a Home – 80,000 Fans Await.

2009-11-11T13:56:00.000-08:00

The Pontiac Michigan Silverdome is on the block and is accepting sealed bids for purchase. This 80,300 seat stadium comes with a number of notable milestones including the largest NFL arena, when opened in 1975, and countless Thanksgiving day games.

The opportunity is now yours to own this landmark stadium and host your own turkey bowl games.

http://Listing.LoopNet.com/16421265

The auction is being conducted by Williams & Williams in partnership with CB Richard Ellis on behalf of the City of Pontiac. Sealed bids are due tomorrow (November 12th) by 4pm Eastern.

MIT's Commercial Real Estate Index is Up For The First Time in Over a Year

2009-11-03T07:59:00.000-08:00

Transaction prices of commercial property sold by major institutional investors rose by more than 4 percent in the third quarter of 2009, according to an index developed and published by the MIT Center for Real Estate (MIT/CRE). The 4.4 percent increase in the transactions-based index (TBI) for the third quarter is the first positive price change in the index in over a year. “The big news this quarter is not just that the price index increased, but that transaction volume substantially increased for the second quarter in a row, reflecting the first increase in market sentiment in two years,” said Professor David Geltner, director of research at MIT/CRE. “One quarter does not a trend make, and we are still well below normal trading volume,” Geltner cautioned. “Nevertheless, this is the strongest sign of a bottom that we’ve had in two years,” he added.

View all the charts:

Read the full press release:

SNAP food stamp challenge

2009-11-01T16:05:00.000-08:00

This past week 13 LoopNet employees and some of their families helped to raise $605 for the Los Angeles Regional Food Bank. The pledge was to budget only $20 per person for 5 days worth of meals. In return, LoopNet would make a donation to the food bank in their honor. It was a tough task that took discipline and determination. There was a ton of creativity both with how people spent their budget as well as how they prepared their food. By the close of the week we had all learned to appreciate those takeout meals we take for granted as well as the lifestyle we are accustomed to.

Q4 Poll Results: When will the Market Recover?

2009-10-28T19:53:00.000-07:00

More than 1,000 LoopNet members completed our October 2009 poll on the Q4 commercial real estate market. Based on our findings, in the last three months respondents have grown slightly more pessimistic about the timing of recovery in transaction volumes; expect that prices will continue to fall relative to current levels; and believe that access to affordable debt financing is the largest barrier to a recovery. See the PowerPoint below for more details.

Timing
In our last survey, run in July 2009, a solid majority (66%) expected the volume of commercial real estate transactions to rebound in 2010 or earlier, while only 1/3 expected the recovery to wait until 2011 or later. In the Q4 survey, that number has decreased to just over 50%, while there has been a sharp increase (to 46%) in those expecting the recovery to wait until 2011 or later. Nearly 1 in 5 are expecting to wait until 2012 to see a recovery.

When cut by role, investors are slightly more pessimistic, with a median expectation of recovery timing that is approximately one quarter later than that of brokers or owners.

Pricing
Despite the declines in pricing seen over the past quarter, respondents’ expectations for future pricing declines remain almost unchanged from the last survey. At the beginning of Q3, 52% of respondents expected to see future declines of 11% or more. At the beginning of Q4, that number is 53%. This suggests that future expectations of cash flow and value have continued to deteriorate, preventing pricing from stabilizing even after the declines in Q3.

All three groups surveyed—investors, brokers and owners—expect pricing to drop. Owners are the most optimistic, with nearly 20% saying prices have already bottomed. While this may suggest some continuing issues with the bid-ask spread, the average expected price declines are within a few percentage points across all three groups.

Obstacles
All three groups cited access to debt financing as the most significant obstacle to completing transactions, but this reason was weighted significantly more heavily by brokers and owners than it was by investors. Investors, by contrast, were relatively more likely to pin the blame on asking prices being too high and uncertainty about future cash flows.

What are your impressions? Does this data match with your expectations? What are you seeing in your local markets? Please comment and let us know.

LoopNet Commericial Real Estate Survey -

Top LoopNet Trends in Los Angeles

2009-10-26T08:00:00.000-07:00

The average asking price per unit for multifamily property on LoopNet in Los Angeles County had a slight uptick in the third quarter. The 0.89% increase, marked the first time in four quarters that prices did not decline.

Last month, an article in The Wall Street Journal Online reported the sale of The Gallery at NoHo Commons, a 438-unit apartment complex in North Hollywood, for $96 million indicating that deals are available in the multifamily sector. To be fair, the article also highlighted several risks related to investing in multifamily, namely the drop in transaction volume nationwide and the potential that apartment vacancies continue to decline if the economy doesn’t rebound.

But the article goes on to say that:

Opportunities for such higher returns in apartments have begun to attract some investors who previously retreated to other perceived safer investments such as Treasury bonds after the recession hit. … Apartment buildings are clearly producing higher returns than they used to. In 2007, the so-called capitalization rates of apartment buildings, derived by dividing a building's net operating income by the price paid, were 5.8%. Today they have risen to 7.1%, according to Real Capital Analytics, a New York real-estate research firm.

But some people think a recovery for apartments is likely in 2011. If the job market stabilizes in 2010, younger workers are likely to be the first to be hired back because they are cheaper to employ, the theory goes. Since many of those people are renters, that is going to drive the apartment recovery, says Victor Calanog, director of research for Reis. (Read the Full Article )

So what do you think? Does this signal the end of the price decline or was it just an anomaly? Share your thoughts.

"Last month I set a company goal of 100% Advisor adoption of social media." - Kevin Maggiacomo, CEO of Sperry Van Ness

2009-10-22T16:51:00.000-07:00

Read the entire interview from Real Property Alpha. Have you adopted social media?

The Exponential Growth of Social Media - In Real Time

2009-10-21T09:09:00.000-07:00

From Gary Hayes, creator of this widget:

More about the Count - I quickly built and coded the app based on data culled from a range of social media sources & sites at the end of Sept 2009. The design will be finessed and I will be adding extra functionality (such as week, month & year lookahead/backs plus dynamic data input).

The social web has exploded in the last year and below are some of the key data points that the ‘Gary’s Social Media Count’ is based on (many will be updated!).

20 hours of video uploaded every minute onto YouTube (source YouTube blog Aug 09)
Facebook 600k new members per day, and photos, videos per month, 700mill & 4 mill respectively (source Inside Facebook Feb 09)
Twitter 18 million new users per year & 4 million tweets sent daily (source TechCrunch Apr 09)
iPolicy UK – SMS messaging has a bright future (Aug 09)
900 000 blogs posts put up every day (source Technorati State of the Blogosphere 2008)
YouTube daily, 96 million videos watched, $1mill bandwidth costs (source Comscore Jul 06 !)
UPDATE: YouTube 1Billion watched per day SMH (2009)- counter updated!
Second Life 250k virtual goods made daily, text messages 1250 per second (source Linden Lab release Sep 09)
Money – $5.5 billion on virtual goods (casual & game worlds) even Facebooks gifts make $70 million annually (source Viximo Aug 09)
Flickr has 73 million visitors a month who upload 700 million photos (source Yahoo Mar 09)
Mobile social network subscribers – 92.5 million at the end of 2008, by end of 2013 rising to between 641.6-873.1 million or 132 mill annually (source Informa PDF)
SMS – Over 2.3 trillion messages will be sent across major markets worldwide in 2008 (sourceEverysingleoneofus sms statistics)

LoopNet Trends in Los Angeles

2009-10-15T10:22:00.000-07:00

Q3 2009 LoopLocal Insight Reports were recently released for 39 markets nationwide, showing sales trends for each of the five major property types. Today we checked out asking prices for industrial listings in Los Angeles County on LoopNet and noticed a decline of 12.4% since Q3 2008 and 3.6% since Q2 2009.

According to the Institute for Supply Management's most recent national Report on Business "Economic activity in the manufacturing sector expanded in September for the second consecutive month, and the overall economy grew for the fifth consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®."

When will these early indicators start to impact industrial property values, rents and deal volume in LA? What about other markets? Is the industrial property market different from 6 months ago? If so, how?

The Institute for Supply Management's full national Report on Business can be found here:
http://www.ism.ws/ismreport/mfgrob.cfm
http://www.ism.ws/files/ISMReport/ROB102009.pdf

New "Distressed Assets Investor" Newsletter From GlobeSt.com

2009-10-13T16:36:00.001-07:00

This new monthly digital newsletter from GlobeSt.com is devoted solely to the distressed assets marketplace providing field-level guidance on the acquisition and disposition of distressed assets in all regions, all sectors and all values.

Check it out if you haven't seen it yet. Lots of good articles.

Read the Oct 2009 Premier Issue (Adobe Flash required)

LoopNet Makes Its Search Faster

2009-10-09T03:21:00.000-07:00

The next time you run a search, you should notice a significant improvement in speed.

Updating LoopNet Tonight

2009-10-08T19:06:00.001-07:00

It's that time again when we stay late at the office to roll out some new enhancements to LoopNet.

We're super excited about tonight's release. More about it in a few hours.

It's going to be a long night but we've stocked up on what looks like every energy-boosting-but-extremely-unhealthy snack we could think of to get us through it.

Anyone ever try Easy Cheese on a Twinkie?

New Submarkets For Lease Listings

2009-10-08T18:40:00.000-07:00

After a bunch of research and conversations with brokers across the country, we're pleased to introduce new submarket, market and region classifications for LoopNet lease listings.

Run an advanced search for lease, to search for properties by the new submarkets.

If you're currently marketing a property for lease on LoopNet, we've reclassified it into the new submarkets. Edit your listing to see what submarket it is in. You can also change it to a nearby one if you find a better match.

Our Research team has been working with local brokers across the country to come up with these the new submarkets, markets, and regions. But we realize that you may disagree with the classifications. If you have any feedback, please let us know. We intend to keep updating this information until we get it perfect.

Video: LoopNet Marketplace Real-Time Activity Stream

2009-10-08T15:00:00.000-07:00

Thousands of people search LoopNet.com every day for commercial real estate for sale or lease. If you visit our offices, you'll see a large LCD screen on the wall that visualizes 1) where people are searching from, 2) where they are searching, and 3) where they are viewing listings... all in real-time! This video only captures 1 minute of activity on a Thursday afternoon from the 920,000 visitors to LoopNet every month. Kind of mesmerizing, isn't it?

Has YouTube, Twitter, Flickr, or a blog strengthened your business? Tell CIRE magazine

2009-10-05T11:10:00.000-07:00

Has YouTube, Twitter, Flickr, or a blog strengthened your business? Tell CIRE magazine
Commercial Investment Real Estate magazine is looking for CCIMs who are active on YouTube, Twitter, Flickr and other social media platforms to provide feedback for an upcoming feature article. Has your blog or Facebook page helped you connect with a client? Have you used YouTube or Flickr to spark a deal-making opportunity? If you’re reaping the professional benefits of these tools — or if you remain skeptical about their effectiveness — we’d like to hear from you. Please send a brief but detailed reply to rrosfelder@cciminstitute.com.

The Road to Recovery: Commercial Real Estate

2009-09-25T11:26:00.000-07:00

The commercial real estate industry is now expected to linger in recession through 2011, with recovery beginning in 2012, according to a recent survey released by Price Waterhouse Cooper. Rather than affecting all asset classes at once, the recovery will take hold in different segments at varying times. This most likely relates to the level of distress within each segment, as more distressed assets will take longer to recover.

First through the gate is predicted to be the multifamily property sector, which will begin to see recovery in 2010, with progress continuing through 2012. Next, the industrial and office real estate sectors will see recovery emerge in 2011 but not truly take hold until 2012. Finally, retail properties, dragging its feet through the door, will observe “slight recovery” in 2012. These predictions are precisely what one would expect to see in the market. As people regain their footing, shelter will undoubtedly be first priority, followed by office space as more people go back to work and finally retail as people begin to spend again.

Interestingly enough, 2012, the year commercial real estate is forecasted to see an industry wide recovery, is also the year $153 billion of CMBS loans come due. This creates a seemingly unlikely coincidence, as defaults are projected to be prevalent amongst those maturing loans. In-fact, according to Deutsche Bank, $100 billion of those loans (around 65%) will default, creating a crisis.

How a recovery and crisis can simultaneously exist within the same industry is a little hard to fathom but there is a chance the market will see this as an opportunity rather than a threat. If the industry truly is on stable footing by 2012, perhaps the appetites of buyers will be large enough to absorb those defaulted properties. If not, the year earmarked for recovery could be marred by a financial tempest.

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Marshmallow Hole in One!

2009-09-23T14:41:00.000-07:00

Last week LoopNet attended the ASVB (Association of Silicon Valley Brokers) annual golf tournament at the Cinnabar Hills Golf Club in San Jose, CA.

Over 200 local commercial real estate professionals came together to participate in the 18 hole tournament!

As a hole sponsor, we had the opportunity to mingle with local brokers and other professionals while they teed off in our marshmallow contest. Although having fun seemed to be the theme of the day, several brokers were successful in hitting a marshmallow hole in one! Not only was it great opportunity for brokers to network in their local market, but they were also golfing for a charitable cause. Overall it was a great day on the course!

2009-09-17T16:33:00.000-07:00

On September 16th LoopNet employees sprinted to the finish line to help support the YMCA of San Francisco's Kids to Camp Program. Over 20 LoopNet employees joined about 300 other Bay Area companies to take on a 3.5 mile course which ran throughout Chrissy Field to complete the JP Morgan Chase Corporate Challenge .

The JP Morgan Chase Foundation made a donation for each entry that was ear-marked specifically for Camp Jones Gulch, situated on 930 acres in the Santa Cruz Mountains.