NAICJ Blog

First Things, First - Focus on the Economy!

2010-03-29T14:54:00.002-04:00

A recent newspaper poll, dated March 24, 2010, indicated that Americans’ Number 1 Concern is the Economy – not Healthcare! Another survey published in the March edition of the National Real Estate Investor indicated that “poor sales” is the Number 1 Reason that companies are not hiring, and the Number 2 Reason is “government policy, red tape, and bureaucracy”. We have already seen that, after the recent passage of the “Healthcare Monstrosity” three major companies announced the downside for their respective businesses, as well as the costs of implementing the new requirements. Please click on the link to a five-page summary of “Healthcare Bill Information” for more information.

I believe, as the polls state, “First Things, First”! Pay attention to the economy, and when we get to the point where we are ready to begin hiring, we will see the effects of the healthcare bill. I know there are some who say regulations coming from the coming from the Feds are hampering our growth, but it is my contention that if we were all making more money, we would grow in spite of the problems being created by this administration.

Amendment 4 - A Potential Florida Disaster!

2010-01-22T14:05:00.002-05:00

Vote NO on Amendment 4! This ill-conceived amendment, that would force Floridians to vote on every comprehensive land-use change, would be extremely detrimental to Florida’s economy. As former Florida Governor, Jeb Bush, has stated, Amendment 4, or the Hometown Democracy Initiative (to paraphrase), is the best name for the worst possible idea!

This “vote on everything” amendment would, in effect, require the citizens of every county in Florida to cast a vote on each and every proposed change to their respective county’s Comprehensive “Master” Plan. And no government body or business entity referendum is exempt – not the smallest local government – not county School Boards – not hospitals - not parks – not roadway expansions - not even police or fire stations! In other words, every two years, Florida citizens would go to their respective polling places and be potentially faced with hundreds of referenda to their counties’ Comprehensive Plan! As a result, the cost of elections would skyrocket, state-wide job losses would be in the hundreds of thousands – and Florida can’t afford to lose even one more job – and businesses would look to other states for relocation or expansion of their facilities.

If Amendment 4 would have been in place in 2006, Tallahassee’s Leon County would have had 94 referenda on its ballot, and if Amendment 4 would have been in place in 2005, Orange County would have had 501 referenda on its ballot!

In 2006, the City of St. Pete Beach passed a similar local ordinance, and a recent article in “The St. Petersburg Times” states “A three-year experiment in St. Pete Beach shows land planning via referendum is a messy, unpredictable business that leads to higher government costs due to litigation and a stalemate when it comes to development.”

The logistics of this amendment will be expensive – and a nightmare! Please join Citizens for Lower Taxes and a Better Economy in fighting the Sierra Club – Special Interest Lawyer – Adult Entertainment Owners Interests – so that we can unite to defeat this dangerous legislation! A link to the “No on Amendment 4” website www.florida2010.org is also posted on our Home page.

Will the New Year be Happy - and Prosperous?

2009-11-25T11:35:00.002-05:00

As the Holiday Season approaches, the current mood within the commercial real estate industry is not overly optimistic, and the consensus is that 2010 will be much the same as 2009. Analysts are predicting more personnel fallout within the industry, but the hope is that by late 2010, the “table will be set” for a rebound sometime in 2011.

Generally, I agree with these predictions; however, I believe there will be deals to be done in 2010. The companies that have survived, and even prospered, during this recession will continue to conduct business; they will take advantage of an extremely “soft” commercial real estate market by relocating locally, regionally, and even nationally, but with little or no expansion.

NAI Commercial Jacksonville is currently representing at least three companies that are relocating, but not expanding. In all three cases, the companies found that by relocating now, they can operate more efficiently, cost-effectively, and with greater exposure to their target markets. Interestingly, two of these companies are relocating from another city, the third is relocating from within the Jacksonville metropolitan area, and there are more of these types of transactions on the horizon.

Finally, because the Jacksonville Office Market’s base lies within the financial services sector, its recovery will lag somewhat. But with no new construction planned for the foreseeable future, there will be enough blocks of vacant space and an available workforce to attract other companies to the marketplace.

Statistics vs. Reality - Truth from the "Trenches"

2009-09-22T14:02:00.002-04:00

These days, we are all hearing from the "experts" and the "Feds" that the recession is ending. But – do those of us out here "in the trenches" agree that this is true?

Statistics are one thing, but the reality of the situation is another thing entirely. In my world – the world of commercial real estate – Q2 2009 financial results were not positive. Managed networks, such as NAI Global Real Estate Services, made small positive advances. Independently-owned real estate firms, such as NAI Commercial Jacksonville, prospered, and salespersons who shouldn’t have even been in the commercial real estate business in the first place, quit their firms in droves for the perceived “security” of salaried jobs – and that’s a good thing.

Because Jacksonville’s office market is dominated by financial services/business back-room/account reconciliation/service sectors, a lot of space is becoming available as these business sectors consolidate. These consolidations should lead to new real estate opportunities that can serve to kick-start a recovery.

If the recession is indeed ending, it means we have already "bottomed out", but because businesses have "figured it out", commercial real estate’s hard assets must be dealt with. We will be crawling along the "bottom" for a while longer.

Market Forecast - Partly Sunny with Storm Clouds Diminishing...

2009-08-11T09:12:00.002-04:00

Are we weathering the storm? I believe I see a trend developing! Many companies have now repositioned themselves to survive this downturn. Through layoffs, budget reductions, and overall just doing more with less, many firms are beginning to gain confidence that they will survive. Now that their “houses” are in order, they are beginning to think, once again, about profitability. To these companies, banks and lenders remain the proverbial “cloud” on the horizon. Many real estate experts concur that banks are failing to recognize that there are solutions available and work with owners who are “upside down” – or have negative equity in their properties. There is a lot of money on the sidelines of the distressed asset program just waiting to be utilized; however, banks are not willing to recognize that they have these distressed assets on the books and take the required step of “writing down” the asset in order to facilitate a sale. Lenders must begin to do this in order to bring an end to the commercial real estate recession.

As the “dog days” of August roll on, I foresee a continuing “flatness” to the marketplace tempered by an outlook that we may be slowly heading in the right direction.

Finally, if you are a tenant whose lease is expiring in 2009 and 2010, you are in the right place at the right time. Now is the time to enter the marketplace and explore your options. If you navigate to the “In the News” page of the NAI Commercial Jacksonville website, www.naicommjax.com, you can read about a large tenant in a healthy industry who, I can assure you, just made an excellent deal for themselves.

Summer 2009 Observations

2009-07-09T08:46:00.003-04:00

It has been a month since my first post, and it is interesting to note that a few of my observations have proven to be accurate. First, the larger commercial real estate corporations - that are losing money across the board - are putting their respective “houses” in order. Staff reductions combined with investor/shareholder offerings are working. Second, in New York City, an up-tick in leasing is being reported, because solid companies are beginning to take advantage of the “soft” market conditions – and so “the beat goes on………”

Commercial real estate recessions are problematic. Even when companies/people choose to “sit on their hands”, they have to move forward eventually or they will stagnate. The effects of this stagnation can be worse than the actual recession, and I always tell my clients that if they are able to take advantage of soft market conditions, they should act! Even though rates are down, adopting “a deal’s a deal” philosophy can generate cash flow and help to stimulate the local economy. For example, if a landlord commits to a lower-than-usual rate of return on a deal, there are many industries that will still benefit, i.e. contractors, subcontractors, architects, furniture salesmen, moving companies, electricians, IT companies, printing companies, etc…….

Before a commercial real estate recession can end, it must not only be impacted by those that can and do take advantage of the economic cycle, but it must also include those that understand that even a deal with a reduced rate of return is better than no deal at all……

Current Market Conditions

2009-05-20T12:00:00.005-04:00

Like the weather in Jacksonville on June 8, 2009 the current conditions are cloudy,stormy with potential clearing insite. Let's start with Commercial Brokerage houses, in general many commercial salemen jump off the bandwagon during troubled times and in Jacksonville this is happening. The larger corporate owned shops i.e. CBRE/JLL/C&W have restructured their operations, reduced commissions to their brokers,laid off salaried employees and cut expenditures anyway possible and they are still losing vast amounts of money. The independent owned and operated shops i.e. NAI/Colliers/Coldwell Banker cut expenditures anyway possible but the removal of Coporate Overhead makes being an independent attractive.

The property owners, fight to collect rent, must be willing to work with their tenants or they could lose them as well as facing renewals for their tenants that demand large rent reductions or they will relocate. Landlords with vacancies are aggresive and it forces other landlords to be agressive in renewals. Companies that are doing well and have strong financials can make some good deals and it doesn't matter if it's Retail, Industrial or Office. That's the stormy side, the clearing side is deals are being done, good companies are expanding and taking advantage of current conditions and space absorption is happening. NAI Commercial is taking advantage of the market and the conditions and is poised to weather the storm.