Road Kill: Tenant Trough, Part 1

Driving gives me an opportunity to think about what I am doing, some of the challenges we are facing in the buisness and how my clients can weather what I call “The Tenant Trough.” Rather than simply tool down the long and winding road, I have decided to utilize my drive times by engaging in a little Commercial Real Estate Road Kill.

The following video was shot on a recent drive to Phoenix and is the first of what I hope will be a regular feature entitled CRE Road Kill. In this installment, I am addressing what I call the Tenant Trough, what it is the problems it creates for owners. In Part 2 I will talk about solutions…stay tuned.

Merriam-Webster defines “trough” as follows:

  • a long and narrow or shallow channel or depression (as between waves);
  • the minimum point of a complete cycle of a periodic function;
  • the low point in a business cycle


Donald Teel is a Senior Associate and Principal with Arizona Commercial, an Arizona commercial real estate brokerage and property management firm, headquartered in Prescott, Arizona. Need more information? Please call 1-877-777-9100 or, if you prefer, you may email Donald Teel

Break from the Pack Marketing Models

the lone wolf 200Traditional commercial real estate marketing seems to be experiencing erosion.

Why?

Because many of the old models don’t work well in an increasingly collaborative world where people want to have a relationship and role in the creation of their investment outcomes, that’s why.

How is your property being marketed? How quickly can you turn the message and communicate change to thousands of people in a moment of time? These are huge questions for property owners.

In the marketing of your property are you running with the big dogs or licking with the pups? How can you break from the pack in 2010 and beyond enabling you to run with the big dogs?

Meet the Puppies Lickin’ and Playin’ on the Porch

When it comes to commercial real estate marketing, there are pups on the porch lickin’ and there are big dogs in the fields runnin’.
[Read more…]

Is the President Ignoring Commercial Property?

President Barack Obama

President Barack Obama

Many experts are predicting further declines in commercial property values and performance, at least through 2009 and some are looking for recovery as late as the fourth quarter of 2010.

The Obama Administration has been funneling billions of dollars into lending institutions and dedicating billions more to the housing industry and its hoped-for recovery. This begs the question, is the President ignoring the problems now surfacing in the commercial property sector of the economy?

The short answer is yes. The longer and more complicated explanation may lie in understanding the fundamentals of the lending and insurance industries as they are the prime note holders and owners of much of the nation’s commercial real estate.

Although commercial property value declines are now underway in almost every property category, lending institutions may be free to use TARP and other funds to shore up the ailing commercial market.

A high percentage of commercial real estate owners (estimates are between 40% and 80%) will find refinancing difficult from 2009 through 2012 as 3 and 5 year note calls begin to kick-in and owners face a new set of qualifying requirements designed to reduce lender risks in commercial property lending.
[Read more…]

Property Performance Analysis

McCormick Place - Prescott, Arizona

McCormick Place - Prescott, Arizona

Post Sponsored by Donald Teel

What is the current state of commercial property ownership, user potential, performance and values in the Prescott, Arizona area?

Where is the commercial real estate market headed in 2009 and beyond and what should property owners be doing to focus on property performance going forward?

At Arizona Commercial, we believe it is critically important for owners of commercial property within the tri-cites of Prescott, Prescott Valley and Chino Valley to consider executing a thorough “Property Performance Analysis” or PPA, based upon changes taking place in the general market but especially with respect to changes taking place in commercial mortgage lending.

The Myth of Immunity

The tri-cities commercial real estate market is not immune from the impact of the economy on property performance in larger metro markets such as Los Angeles and Phoenix.

The local commercial market is directly impacted by the strength of the general ecomomy, unemployment, housing and most importantly, lending.

The decline in residential property values, a slowdown in new construction, the reversal of commercial appreciation rates and unemployment are all contributing to changes in the performance of all segments of the commercial real estate market.

Listen to a podcast about this topic:[audio:https://commercialwebpage.com/wp-content/uploads/2009/05/az_comm_ppa.mp3]

Property Performance Analysis

Arizona Commercial is currently engaged in conducting “Property Performance Analysis” (PPA) with commercial property owners as a FREE service designed to guage an owner’s financial objectives, the current financial performance of a property and the short and long term financing needs associated with the property.

Because we anticipate new challenges to commercial property performance as a direct result of the general conditions of the economy we think it imperative that owners assess their property performance situation sooner rather than later, and that they develop a sound financial plan going forward.”

Jim Pullaro – Broker, Arizona Commercial

Arizona Commercial’s PPA includes an assessment of and owners’s financial objectives measured against the quality of tenant mix, correct property use, lease performance, operating cost analysis, mortgage situation and estimations of user demand through 2010, with specific recommendations in each category.

Arizona Commercial’s PPA is like a property physical, in a sense. It measure the critical components related to the health of a commercial property and sets forth prognosis and treatment before problems begin.

Listen to a podcast about this topic:[audio:https://commercialwebpage.com/wp-content/uploads/2009/05/az_comm_ppa.mp3]

Refinancing and Replacing

Commercial property owners and investors are keenly aware of the need for quality “R and R” or, refinancing and replacing. These are the two keys to perpetuating long term performance.

Lenders are currently tightening requirement for new commercial loans and refinancing. Qualification requirements are more stringent and under-performing properties or, select segments (property types) within the commercial real estate market are finding it more difficult to secure financing.

A PPA can signal issues fan owner may face before they become critical and assist with pre-planning for mortgage refinancing, property replacement or, both.

Commercial real estate investments require monitoring, adjustments and sometime immediate changes in order to keep them performing. A PPA can flag areas where an owner can and should make adjustments in order to keep performance healthy.

Until recently, many properties were performing as a result of a strong demand and easy financing. Therefore, many owners ignored or postponed the need for regular property analysis. In today’s economy there is no guarantee that a property will appreciate or perform without careful “hands-on” attention and management of the components of performance.

Listen to a podcast about this topic:[audio:https://commercialwebpage.com/wp-content/uploads/2009/05/az_comm_ppa.mp3]

Email Donald Teel for a confidential Property Performance Analysis or, if you prefer, call him at 928.777.8100 and if you are out of state call toll free to 877.777.9100.