In my other blog articles, I’ve shown how office condo ownership can provide significant savings over leasing. Here, I’d like to show how some office condos provide more savings than others. In this case, a $7 savings on condo fees provides the same benefit as purchasing for $100 per square foot less. On a 10,000 SF space, that savings can equate to $1 million.
Whether you own or lease, there are basically two components of occupancy cost:
(1)The net rent (leasing) or debt service (owning); and
(2) the operating expenses (leasing) or condo fees (owning) which for purposes of this discussion include real estate tax.
Looking at the office condos I am marketing at 901 Clint Moore Road in Boca Raton, the condo fees are $4.33 per square foot. Real Estate Taxes are estimated at $2.62. One of our primary competitors has condo fees that are over $11 per square foot, or over $7 more than ours. Their taxes run about $1 per sf higher than ours as well. The total difference is close to $8.50, but let’s use a conservative $7.
Assuming we borrow $180 per square foot for 25 years at 5% interest, our annual debt service would be $12.63 per square foot. Excel formula ( =pmt(0.05/12,300,180)*12 ) Add $4.33 in condo fees and $2.62 in taxes and we get a gross cost of occupancy of $19.58. (electric and janitorial are billed separately) By the way, the net rental rate on comparable space in the market is $15, well more than the debt service to a buyer.
If we borrowed at $180 per sf at our competitor’s property, our gross cost of occupancy increases from $19,58 to over $27. This is still well below the top rental rates in Boca Raton which in some cases exceed $50 gross. But the $7 savings should get your attention. You do get more amenities for the $7, but is it really worth it?
So how can $7 per SF save you $1 million? If we wanted to finance $100 in property cost at 5% over 25 years, our monthly payment would be $7.02 per square foot. Excel formula ( =pmt(0.05/12,300,100)*12 ) Therefore by saving $7 in condo fees, your cost of occupancy is the same as it would be if you payed $100 less per square foot for the property. If you were to purchase 10,000 square feet, that savings would be $1 million.
Insert your disclaimers here – your mileage may vary and this admittedly may stretch the bounds of logic. But the numbers certainly support the claim. Regardless of your interpretation, there are significant benefits to office condo ownership and even more benefits if your office condo has competitive condo fees.
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The EB-5 Visa Program has become a key source of capital for South Florida Real Estate Development. The program was scheduled to expire on Friday September 30, 2016, but was just extended through December 9 as part of the same Continuing Resolution bill that will keep the government funded through the same date. The program has created thousands of jobs and billions of dollars in foreign investment. But it has also been susceptible to fraud with investment funds going to affluent areas rather than underserved markets, and allowing rich investors to jump the line to gain citizenship. The extension does buy Congress a little more time to develop reforms to tweak the program so it can better achieve its intended goals.
Thanks to our friends at The Real Deal and The Master Brokers Forum, here is a look at South Florida EB-5 Investment by the numbers, showing the positive impact EB-5 has had on our community. Read More While the EB-5 program has it’s share of issues, there is no doubt that it is creating jobs and capital investment in our area.
Capital Business Solutions ranks among Florida’s leading Business Brokerage Firms and has affiliates across the globe. We represent buyers and sellers of businesses and commercial properties. We provide opportunities for your clients to enter the US via acquisition of businesses or commercial property under the EB-5 or E2 programs. Looking for a business to purchase? Are you looking for a way to get into the US through capital investment. Do you have a client looking to do so?
This is part one of a three part series on office condominiums. With the economy improving and the office market on the rebound, office condominiums are once again making sense to corporate occupiers. The commercial condo market is a niche market consisting of only a small fraction of the entire inventory. Office Leftbank Condos generally gain popularity when rental rates are increasing and companies try to lock in their real estate costs. The market reached its peak in 2005-2007 as office vacancies declined to historical lows and rental rates escalated rapidly. As the economy hit the brakes in 2008, rental rates nosedived and leasing office space made more sense than owning. Fast forward to 2014 and we see vacancy rates declining, rental rates trending upward and office construction at a near standstill while interest rates remain historically low. At Brenner Real Estate Group, we are expecting an increase in demand for office condominiums and are considering converting Cypress Commons (pictured below), one of our investment properties to a condo. Here are a couple of our prime commerical condo listings in Fort Lauderdale and Boca Raton. Is the market ripe for a new wave of office condo conversions and new development?Continue reading →
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This is part 2 of our 3 part series on office condos. Click to Read Part 1: 5 Reasons to Reconsider the Office Condo Market
OK, I admit it, But I just couldn’t resist going with this title. With interst rates remaining historically low, property values still below peak levels and consumer confidence on the rise, business owners are asking once again:
Is owning my space right for my business ?
It should be noted that this comparison holds true for commercial condos as well as owner occupied buildings. It’s really not a simple answer. It involves an analysis of the business, the owner and the market. There are benefits to owning as well as leasing. It is ultimately your decision as to what is right for you. Making the right decision involves weighing the pluses and minuses of the two alternatives, something I call “prose and condos.” Continue reading →
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The third and final installment of my 3-part series on office condos (click for Part 1 and Part 2 on the Brenner Blog) was entitled “Does it Pay to Buy an Office Condo,” a detailed financial analysis of commercial condominium ownership. When I initially tackled the subject back in 2013, there was already a strong argument for ownership. But more recently, a potentially game-changing new financing program makes it virtually a no-brainer for many firms.
While the 90% financing available through the U.S. Small Business Administration provided the opportunity for many companies to own their facilities, the newly unveiled 100% program opens the door to ownership for many more. Continue reading →
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This is something I wrote for The South Florida Office Brokers Association (SFOBA) blog and also published on www.breg,net. Over 300 of the top Commercial Brokers in South Florida are SFOBA members. We share deals and information at our monthly meetings with an average attendance of around 70. We also have some great guest speakers and can pass along some useful information.
And for some shameless self promotion – you don’t need $340 million to own some great office space in Boca Raton. I have up to 18,000 square feet of great office condo space and you can own it for less than the price of leasing!
The South Florida Office Brokers Association meeting for June 2015 was held at One Town Center, the former Tyco building located within the complex now known as Boca Center. Our guest speaker Angelo Bianco of Crocker Partners told us that most locals still know Boca Center by its former name.
The iconic mixed-use complex located along Military Trail south of Glades Road in Central Boca Raton contains office space, a Marriott hotel, and upscale shops and restaurants. It has been used as a case study by the Urban Land Institute for excellence in a mixed-use project. The property was originally developed by Crocker and Company back in the mid-1980s and is still widely known by its original name, Crocker Center.
Over the years, the buildings were sold to Teachers Insurance and Annuity and Met Life. But over the last 12 months, Crocker Partners has invested more than $340 million in Boca Raton, reacquiring the shops and towers at Boca Center, The Plaza and One Town Center. Just north of Boca Center, Crocker also acquired the 277,000 sf One Boca Place, the longest and largest office building in the market. So even if Boca Center is not renamed back to Crocker Center, the running joke is that maybe the city should be renamed Crocker Raton.
What is not a joke is that Crocker Partners now controls 94% of the vacant Class-A space in the Boca Raton office market. According to Mike Erickson of CBRE, who leases the Boca Center properties for Crocker, “office rental rates north of $30 per sf triple net (which is over $40 including operating expenses) are the new normal in Boca Raton. Vacancies are down and construction is flat so we are going to continue to push rental rates.”
In order to justify the higher rental rates, Crocker Partners will be upgrading the properties to compete in today’s market. One Town Center will be positioned to continue to appeal to private equity firms. The Plaza, the black office tower anchored by Wells Fargo, will be modernized and positioned as an ultra high-end concierge building targeted toward upscale local tenants. It will be priced at a monthly dollar amount rather than per square foot.”A contemporary building with timeless appeal” said Bianco. All of the buildings will also offer valet parking.
The biggest changes will involve the retail space,which will be re-oriented for street visibility. “Don’t turn your back on the street” said Bianco. The restaurant space at Boca Center will surround an open courtyard to COCcreate more of a synergy, and a gym and a spa will be added to the hotel’s lower 2 floors.
Plans also include the addition of multi family units to the project to capitalize on the current urbanization trend. The idea according to Bianco is to combine the upscale shopping experience of Miami’s Bal Harbour shops or Palm Beach’s Worth Avenue with the trendy local appeal of Delray Beach’s Atlantic Avenue.
Will Crocker be able to raise the bar on rental rates in Central Boca? Can they repeat their earlier success with an updated Boca Center? And will the City Council consider renaming the City Crocker Raton? We’d like your opinion.
Welcome to my personal blog space at Ken’s Trends. I’ve been active in the South Florida Commercial Real Estate Market for 30 years and blogging in various places since 2010. I thought it would be a good idea to be able to put all of my ideas in one place. I’ll be re-publishing some of my old pieces and adding new ones as we go. Stay tuned !
(Updated June 2022) That is actually the title of a Jimmy Buffett song, but here is my recycled 2012 article on Hurricanes in South Florida. My original title was “Five Things You are Most Likely toHear in the 2012 Hurricane Season.”
It’s hard to believe it’s been seven years since Wilma, (Now 17, this was written in 2012) but June 1 marked the start of yet another Hurricane Season. We’d normally start again at the letter “A,” except this year with two pre-season storms, we’re already at “C”. It’s anybody’s guess as to whether our luck will continue, but there is one thing we can be sure of. As soon as a storm even remotely threatens us, the media will be salivating over the next big story. After extensive research, we have come up with the five things you are most likely to hear in the 2012 hurricane season (still holds true in 2022).
1. “It’s Time To Hunker Down”
2. “We’re not out of the Woods Yet”
3. “The Cone on Your Phone”
4. “We Can’t Let our Guards Down Yet”
5. “Let’s Turn it Over to Bryan Norcross/Richard Knabb/Jim Cantore”
When a storm threatens we are always instructed to hunker down. But what exactly is hunkering? When the threat subsides, do we hunker up? It seems that the term “hunker” may have originated in the 18th Century from the old Norse Huka – to squat, and its cousins the Dutch Hurken and German Hokken. Funny, I didn’t realize they had hurricanes in Germany in the 18th century.
Another big one is “we’re not out of the woods yet”. Have you ever heard a newscaster in the midst of the storm say: “Jim, I believe we’re in the woods…” Of course, if we were out of the woods, we could turn off our TVs and the networks would take a direct category five hit in their advertising revenue. It’s important to separate media hysteria from fact. We must remember that the media has a vested interest in keeping us glued to our TV’s. Personally I prefer to get my information directly from the Hurricane Center at www.nhc.noaa.gov and pay special attention to the “discussion” which is an explanation of how the forecast was determined. Also a shout out to Mike’s Weather Page which has become my go-to source. Mike is more of a hobbyist than a professional, but he is all over social media he has some great links on his site, and I find him to be a voice of reason and accurate more often than not. Regardless, I’m sure we’ll hear “we’re not out of the woods yet” dozens of times in the coming months.
Dr. William Gray at Colorado State University predicts that 2022 will be an above average hurricane season with around 20 named storms, and 10 hurricanes, 5 of which will be major. This brings up the obvious question of what is the world’s foremost hurricane forecaster doing in Colorado? It may actually prove that he’s smarter than us. In the coming months, we can expect a few uneasy periods when we are “in the cone” of uncertainty which indicates the possibility of a hurricane strike within 120 hours.
Luckily, we now have smartphones to keep up with the latest information. WSVN, Channel 7 in Miami had a free text service when I wrote this article in 2012 which is now an app. This service is promoted as “the cone on your phone.” You’ve go to love it…or hate it. (Note the 2007 flip phone – you can now search “cone on your phone” or “WSVN Hurricane Tracker“.
We are significantly more prepared as a community as a result of lessons learned from Francis, Jeanne and Wilma. Many gas stations and grocery stores are now generator equipped, we have stronger power lines and traffic signals and our communications system has been fortified by generators on cell towers. Many of us have installed shutters or impact windows and have purchased generators. The community is better prepared, but we can’t let our guards down yet! (hey, that’s #4 !)
Finally, when a storm threatens, we’ll see all the experts seeking their 15 minutes of fame. My first memory was Dr. Neil Frank who ran the National Hurricane Center from 1974 to 1987. He started a trend by taking his signature crewcut to a higher paying TV job. We still see former directors Max Mayfield, Rick Knabb and others getting national screen time. Maybe the current director Ken Graham will become the next media superstar.
But the undisputed King of Hurricane Season is still Miami’s Bryan Norcross. To long-time South Florida residents, Bryan is a true hero. Back in 1992 as weatherman on WTVJ in Miami, he took phone calls over the air and saved lives by telling people what to do as their roofs were blowing off during Hurricane Andrew. For that, the community will always be grateful. Bryan’s career skyrocketed as a result and he has gotten a number of network gigs and a spot on The Weather Channel. Unfortunately, he now realizes that the worse the hurricane gets, the better it is for Bryan Norcross. To me, it seems that Bryan now roots a little too hard for the Hurricane. I don’t have an actual transcript, but this is a simulated interview between Brian and former Hurricane Center Director Max Mayfield.
Bryan: Do you think this storm will hit South Florida Max: From our seven scientific models and analysis from NASA and a NOAA fly-in, we
are certain the storm will turn into the open waters of the Atlantic and quickly dissipate Bryan: But couldn’t it suddenly intensify and turn back our way? Max: Not going to happen Bryan Bryan: Isn’t there even a tiny little chance? Max: Sorry Bryan, you’re going to have to wait for the next one Bryan: Bummer
When the next big one comes, I’ll be watching Bryan Norcross, but please Bryan, tone it down just a bit. Honorable mention goes to the Weather Channel’s Jim Cantore. Whenever a storm threatens, it is Jim who has the unenviable task of reporting from the expected point of landfall. Somehow, he seems to enjoy it. A warning; if you look out into your front yard and see Jim Cantore, you know you’re in big trouble.
We hope you’ve enjoyed our somewhat lighthearted take on hurricane season. Please keep in mind that hurricanes are serious business and that you should always be prepared. In the event a storm threatens. Be prepared to hunker down – if we only knew what that meant. With six months of Hurricane Season in front of us we’re certainly not out of the woods yet. When in doubt, please check “the cone on your phone,” or Mike’s Weather page, but never, ever “let your guard down!” And do some channel surfing and I’m sure you’ll find Bryan Norcross. Finally, if you see Jim Cantore in your vicinity, it may be a good idea to find a windowless room in your house and hide under a mattress.
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Here is one of my personal favorites I wrote in March 2012 inspired by an article on Yahoo.
Those of us who use the internet to market our products understand how important it is to be number one on Google. Google is responsible for about two thirds of all searches on the internet the entire SEO industry (Search Engine Optimization) has grown out of finding the best ways to get your site to rank highly on Google searches. One of the best methods before taking the help of SEO companies like justseo.co.nz is to create fresh blog content even if it’s as silly as this. I’m always working to make sure that when you are searching for Office Space or Commercial Real Estate in the South Florida markets of Miami, Fort Lauderdale, Boca Raton or West Palm Beach Warehouse in Boca Raton, that kenstrends shows up near the top of the list.
Maybe it’s the language barrier, or maybe it’s just a strange coincidence, but apparently one man in France decided it was not as important to be number one on Google, as it was to do number one on Google! (if you know what I mean) Please note we do not condone public urination here at kenstrends, we are only the messenger. No reason to get pissed off while an entire nation gets pissed on… Not surprisingly, the article was published by our friends at Yahoo. Click here for the article.
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This was a concept I came up with in 2010. We changed our focus from a building full of tenants to a community of companies. We used the concept to build a pretty nice portfolio of a million square feet of commercial space. Much later, a company called WeWork leveraged this concept into a $20 billion valuation…
In my 11 years as Vice President of Leasing and Acquisitions, our corporate tagline has been “A Portfolio of Office, Retail and Industrial Properties.” We’ve made a subtle change in our tagline, but this reflects a significant change in our focus. Our new tagline is “A Community of Office, Retail and Industrial Properties.”
A tenant networking breakfast in our building courtyard in 2012. That’s me in the blue shirt.
With a portfolio, the focus is on return on the real estate investment. That involves minimizing cost while maximizing revenues. On the cost side, there is the temptation to cut corners and reduce expenses, but you simply cannot take that approach and expect to maintain tenant loyalty.
We realized early on that a relationship-oriented tenant-driven approach was the key to our success. By providing an attractive work environment, excellent service, and responding to tenants as their space needs change, we have always outperformed the market and developed long term mutually beneficial relationships with our tenants.
But in today’s challenging economy, we have realized that we have to be something more, and we are now taking that concept one step further. The concept of community has long applied to the residential market, but not to the commercial market. People like to live and share with like-minded neighbors, which enhances their quality of life and gives them roots in their community.
In traditional office settings, major corporations are stacked one above the other, which doesn’t do much to facilitate a sense of community. We believe our properties are different. We cater to a local upscale entrepreneurial clientele. A majority our tenants are local professionals or family businesses with less than ten employees. The person you meet on the elevator is generally not some mid-level manager, he or she has probably the owned of the business for 10 years or is related to the owner.
Not sure if these guys read my blog, but they leveraged this concept into a $20 billion valuation.
We believe the opportunity for our tenants to interact with like-minded entrepreneurs and share business opportunities provides tremendous value for our tenants and for our properties. If the CPA in Suite 107 refers a client to the Financial Planner in 1122, that may generate enough revenue to pay the Financial Planner’s rent for the year.
Our mission for 2010 and beyond is to facilitate the sense of community among our tenants, create business opportunities and add value to our buildings through these activities. Technology will play a major role. The explosion of social media like Facebook, Twitter and YouTube gives us an outlet to tell our story and exchange valuable information through words, pictures and video. But there is no substitute for face to face interaction. Toward that end, we are facilitating tenant events, small group meetings and encouraging one on one meetings between tenants.
This is a new concept in commercial real estate and we are in the pioneering stages. We are actively seeking contributions and feedback from our tenants as it is truly an interactive effort. For our community concept to work, it takes leadership from the landlord and cooperation and effort from the tenants. We believe that the effort will be worthwhile in developing business for our tenants which in turn helps to keep our tenants profitable and provides incentive for them to stay with us long term. You will be hearing our marketing and social media specialist who will be spearheading this effort to create “A Community of Office and Warehouse Properties”
Looking at the office condos I am marketing at 901 Clint Moore Road in Boca Raton, the condo fees are $4.33 per square foot. Real Estate Taxes are estimated at $2.62. One of our primary competitors has condo fees that are over $11 per square foot, or over $7 more than ours. Their taxes run about $1 per sf higher than ours as well. The total difference is close to $8.50, but let’s use a conservative $7.
If we borrowed at $180 per sf at our competitor’s property, our gross cost of occupancy increases from $19,58 to over $27. This is still well below the top rental rates in Boca Raton which in some cases exceed $50 gross. But the $7 savings should get your attention. You do get more amenities for the $7, but is it really worth it?
Luckily, we now have smartphones to keep up with the latest information. WSVN, Channel 7 in Miami had a free text service when I wrote this article in 2012 which is now an app. This service is promoted as “the cone on your phone.” You’ve go to love it…or hate it. (Note the 2007 flip phone – you can now search “cone on your phone” or “
