Ep. 138 John McNellis: Retail and Multifamily Investors Won’t Want to Miss This Development Outlook

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Where is retail heading?

development outlookThis is a question we’ve gotten a lot lately from our listeners and investors. With the rise of online shopping through Ecommerce options like Amazon, we’ve been seeing some rapid tightening in retail development across the board. With big-box retail winding down and shopping center investments getting tight, many investors and developers are wondering what comes next.

Our guest this week is an expert on spotting development trends and cycles. John McNellis is a developer, speaker and author. Founder and President of Mcnellis Partners development firm, John has been developing a variety of real estate for over 30 years. Although retail and multifamily have been his primary asset classes, John has development experience in several asset classes.

This episode, John joins us to discuss the development outlook for retail and offers advice for investors looking to make the transition to development.

Development Outlook

  • Retail markets challenged throughout the U.S.
    • Over-building of retail
    • Influx of online shopping
  • Retail going through downsizing cycle
  • Industrial market seeing benefits from Ecommerce boom

Approaching Development

  • Residential: best to start with land and build up
  • Retail: finding a good tenant for anchor is best strategy
  • Risk-management is key to long-term success
  • Rule of thumb: look for investments that earn 2% above cap rate
  • Don’t build on spec

Transitioning to Development

  • Find an experienced partner when transitioning to large or mid-size multifamily developments
  • For first-time developers, find a broker in your area that specializes in the asset class you want to develop
  • Approach the public with a project before taking it to city officials

Investment/Development Advice

  • Development follows job growth
  • Urban Land Institute (ULI) is a great resource for developers

Resources

 

 

 

Ep. 136 Brian Willis & Gerry Tierney: Learn How Transit & Technology Changes Will Affect Your Property!

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automated transitTechnology is rapidly changing the way we look at the future. Innovations like automated transit are quickly nearing practical realities. In Tampa Bay, we’re seeing advancements in automated transit already, with the area being positioned as a proving ground for automated systems. Automation and other technologies will bring major changes to existing infrastructure.

No industry will be affected by these impending technologies more than real estate. From multifamily to retail, emerging technologies like automated transit will require an entire rethinking of real estate design and development. Urban planners, architects and developers need to consider these effects and start planning accordingly.

This episode, we discuss these changes on a local and national level. We look at what game-changing technologies are emerging and what urban planners and developers are doing to address these changes now.

Meet Our Guests

Tampa Bay sustainable transitBrian Willis is real estate attorney with Shumaker Loop & Kendrick. He is a leading advocate for integrated and sustainable transit in Tampa. Brian brings on-the-ground knowledge of the cutting-edge technologies here in Florida and how Tampa Bay is taking steps to integrate them into current real estate design and development.

 

real estate designGerry Tierney is an Associate Principal at Perkins + Will. Based out of San Fransisco, Gerry is a leading force for automated transit and mobility and adapting real estate design to suit these changing needs. He serves as the Co-Director of Smart Mobility Lab and has Collaborated with both UCLA – Berkeley and MIT in sustainability research.

Technologies Impacting Real Estate

  • Automated transit / autonomous vehicles
    • Autonomy integrating in public transit by 2020s
    • Subscription-based autonomous car ownership coming down the line

Future-proofing Current Real Estate Design

Urban planners, architects and developers needs to consider how current layout and designs will play into emerging technologies.

  • Adaptive Use
    • Big-box retail stores
    • Shopping malls
    • Existing parking structures
      • Vertical Parking vs. Horizontal
      • In-fill
      • Mechanized parking
  • Urban Design & Planning
    • Current developments built to accommodate automated transit
    • Changes to grid structure and street layouts
    • Rethinking asset classes
      • Industrial
      • Office
      • Multifamily
      • Retail

Resources

  • Contact Gerry at gerry.tierney@perkinswill.com or (415) 546-2933
  • Contact Brian at (813) 221-7165 or on Twitter @BrianWillisTPA

 

 

Ep. 123 Chris Nebenzahl & Doug Ressler: Tracking Investment Market Data Made Easy!

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Tracking Investment Market Data

tracking investment market dataFinding a real estate market that fits your investment goals seems to be getting tougher and tougher. With markets tightening up across the state, investors are starting to feel it. Now, more than ever, investors need to be tracking investment market data – looking for trends and analyzing data to find viable markets.

Investors may be familiar with Yardi for property management services, but did you investment market dataknow they also offer comprehensive market research and data software? This system allows real estate investors to track investment market data on a national level, or zero-in on specific markets and sub-markets.

This episode, we welcome from Yardi Matrix: Senior analyst and editorial contributor, Chris Nebenzahl, and research and data analyst, Doug Ressler. They discuss what investors need to know about tracking investment market data. They also offer up an update on Florida’s commercial and multifamily markets.

Florida Multifamily Overview

  • Rent growth and development strong overall
  • Focus on A + Super A properties
    • Urban living
    • Amenity-rich
    • Attracts millennials
  • Increasing demand for B + C properties, but limited supply
    • B + C properties seeing value-add opportunity
    • Sub-market level

Florida Multifamily Market Highlights

  • Miami and Orlando: 9000 expected multifamily developments for completion, 2017
  • Tampa: 7200 expected multifamily developments for completion, 2017
  • Development expected to crest after 2017
  • Rapid rent growth may pose affordability issues in Miami/SFL

Florida Commercial (Industrial/Self-Storage) Market Overview

  • Strong self-storage appetite
    • New focus on urban core
    • Close proximity to multifamily developments
  • Small cap rate compression
  • Renewed interest in mixed-use developments
  • Hotel occupancy slowing, but Orlando and Miami still strong

Tracking Investment Market Data with Yardi Matrix

Investor Resources and Contact

  • For more information on Yardi Matrix services and subscriptions, visit their website or contact Doug directly by phone at (480) 663-1149 ext. 2419 or email at doug.ressler@yardi.com

 

 

 

Ep. 121 Frank Hearne & Beverly Birkitt: Using Mitigation Banks for Wetland Development and Investment

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mitigation banksFlorida has a high density of rivers, lakes, swamps and marshes that are generally protected from development.  This has led many investors to wonder how much land is actually available for development. What many investors may not be familiar with is the concept of mitigation banks. Mitigation banks allow for the development of wetland areas that ordinarily would not be usable for real estate development.

Florida environmental lawSo what exactly is a mitigation bank? How does it function and how can they serve investors and developers? Our guests this week are two experts in the field of environmental law and the designation and use of mitigation banks.

Listeners should remember Frank Hearne. Frank is a shareholder for Mechanik, Nuccio, Hearne & Wester, P.A. He was also one of Invest Florida’s first guests! His firm is one of the state leaders in environmental and land law. Beverly Birkitt, of Birkitt Environmental Services, Inc., has over 35 yrs. experience in the environmental field, with a focus on wetland litigation and litigation banking.

This episode, Frank and Beverly cover the ins-and-outs of using mitigation banks for wetland development and investment.

Mitigation Banks

  • Spec wetland approved for future mitigation
  • Allows for more usable property for development
  • Exchange wetland set for development with wetlands that will be improved upon to compensate
  • Must be in the same hydrological zone as wetland to be developed (water basin)
  • State sets basin boundaries

Developing Mitigation Banks

  • Wetland landowners can develop mitigation banks
  • 100-10,000 acres usually
  • Market demand in wetland area is critical
  • Polk County strong mitigation bank market
  • Mitigation banks must improve, not just preserve wetlands
  • Mitigation bank credits based on evaluation of improvement, not land size

Hot Mitigation Bank Markets

  • Tampa Bay Basin
    • In need of freshwater wetlands
  • Coastal areas
  • Orlando/I-4 corridor
  • Former agricultural lands

Risks for Mitigation Banks

  • Feasibility
    • land, permitting, construction, management
  • ROI tough to predict

Contact

  • If you have land that you believe is eligible for a mitigation bank, let Beverly know! Beverly can be contacted through her website: www.birkitt.com or by calling      (813) 259-1085
  • For mitigation bank questions and for more info on other types of mitigation banks, contact Frank by email at frank@floridalandlaw.com or call (813) 909-7400.

Investor/Developer Resources

 

 

 

 

 

Ep. 110 Andrew Cohan: Investing in Vacation Properties through Branded Hotels

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investing in vacation propertiesFlorida, the dream destination. A vacationer’s paradise; the land of perennial sun and fun.

Florida has long been a favorite of vacationers. It has also been a favorite of those investing in vacation properties. Investing in vacation properties is a major market for Florida real estate investors.

We have discussed investing in vacation properties before. In ep. 39, we discussed investing in vacation properties using Airbnb, with Greg Bugay. This episode, however, focuses on the hotel market in Florida.

 

Who better to discuss that than Andrew Cohan?

Andrew Cohan is Managing Director for Horwath HTL, serving mainly Florida and the Caribbean. He is an expert on health and wellness resort properties and lends his expertise to determining optimum market demand for these types of properties.

This episode, Andrew discusses investing in vacation properties through branded hotels.

Miami Hotel Market

Investing in Vacation Properties through Branded Hotels

  • REITs
  • Condo-hotel units

Investing in Condo-hotel Units

  • Not a conventional, cap rate-type of investment
  • Unit investors typically earn about 40 percent back on investment
  • Owner, manager and developer of resort may be 3 separate entities
    • Investors need to know that circumstances may change over the investment’s life-time

Condo-hotel Draw for Developers

  • Quick exit, high return opportunity
  • Don’t have to worry about property management
    • Brand managers or non-brand managers

If you are looking to find out more about investing in vacation properties through branded hotels, you have more questions about acquiring a condo-hotel unit or you are a developer looking to transition to hotel/hospitality, you can contact Andrew directly by phone or email:

(305) 606-2898

acohan@horwathhtl.com

Ep. 102 Michele Pasquale: Deferring Taxes with Cost Segregation

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cost segregationFor real estate investors, it’s all about the bottom line. Investors are always looking at how they can save on costs and expand their cash-flow. While many real estate investors might be aware of certain tax-breaks that can be taken advantage of for investment properties, deferring taxes through cost segregation may be one that investors overlook. Institutional investors are probably aware of this tax advantage, but smaller, individual investors or those just starting out in real estate investing may be unaware.

For Michele Pasquale, the bottom line is helping investors to get more out of their properties. Michele is owner and managing member of Meridian Financial Solutions. By working directly with investor clients and through alignment with CPA firms, Meridian seeks to establish effective, long-term tax-planning strategies resulting in greater ROI potential for investors. Michele brings over 16 years of experience in real estate acquisitions and finance to help investors maximize cash-flow. This episode, Michele shares some things investors should know about deferring taxes through cost segregation.

Cost Segregation

  • Tax-planning tool to help investors defer federal income taxes
  • Allows property owners to accelerate depreciation, resulting in reduced taxable income levels
  • Cost segregation study identifies all construction costs that qualify for accelerated depreciation
  • Breaks costs into depreciation values of 15, 7 and 5 years, so they can be written-off in a shorter time-span
  • Dependent on size and property type
  • For buy-and-hold investors

Cost Segregation Qualifiers

  • T.V. outlets
  • Wiring
  • Distribution panels
  • Dated jacks
  • Sinks and drains
  • De-mountable partitions
  • Floor coverings

When does Cost Segregation Apply?

  • Buying, building or renovating a property
  • Investors can go back 10 years or more on existing buildings and catch up on past depreciation
  • Before building or renovating, factor in cost segregation studies into design plans
  • Tax-planning strategy for 1031 Exchanges and Estate Planning

Tax-deferral, Not Tax Elimination

  • Investors should be aware that costs segregation is a strategy for deferring taxes to increase cash-flow. Taxes are applied at sale.

Contact Meridian Financial Solutions at (561) 252-7282 for more info about cost segregation and get a free estimate for tax-deferral savings.

Ep 87 Tom Blazejack: Miami Real Estate Market Overview

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business-portraits-009Things are happening in the Miami real estate market… Well things are always happening in the Miami real estate market, but BIG things are happening right now. Miami has long been the focal point for real estate investors due to the density and scale of development and the investment opportunity for a variety of asset classes. Real estate investors all over Florida have looked towards the Miami real estate market as a forecast for current and future conditions throughout the state.

Tom Blazejack, of Blazejack & Company knows all of the ins and outs of the Miami real estate market. In addition to nearly 40 years’ experience as a real estate appraiser and analyst, Tom is also a native of Miami. Tom’s extensive appraisal knowledge of commercial and residential properties and intimate knowledge of the Miami real estate market make his consultation highly sought after by investors. This episode, Tom gives us an overview of the Miami real estate market, including development highlights and what investors should expect.

Miami Real Estate Market

  • 2011 purchase of Miami Herald building for $236 million marks return of market
  • Foreign investment and cash-heavy market
    • Foreign investors seeking stable properties to invest cash
  • Development spikes
    • New deposit requirements for investors and developers insures accountability
    • Lenders alleviating construction loan costs for developers
    • Projects moving quicker
  • Land price increases
    • Miami seeing $200-300/sqf on new commercial developments but even as high as $3000 in some prime locations
    • Residential continues to increase… up to $3/sqf in best projects
  • Emerging Markets
    • Development spreading into surrounding Miami
      • Little Havana, Wynwood, Coral Gables all seeing new projects
  • Major Projects

To contact Tom with for an appraisal consultation or for further analysis of the Miami real estate market visit his website. He can also be emailed at tom@blazejack.com

Ep. 86 Jonathan Moore: You Will Want to Know These Real Estate Development Hot Points!

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Real Estate DevelopmentReal estate development in Florida is currently in great demand. With real estate investors turning towards ground-up real estate development as an increasingly more viable means of investing, new projects are springing up state-wide. However, with increased pressure on real estate development and a construction workforce stretched thin, it is important to keep in mind key points if looking into real estate development as an investment goal.

Jonathan Moore, AIA is president and founder of InVision Advisors. His firm offers owner’s representation and project consulting services for owners and investors, architects and contractors during real estate development. As owner’s representatives, InVision Advisors takes a comprehensive approach to real estate development deals handling day-to-day and overall project oversight. As an experienced architect, Jonathan brings a unique insight to his knowledge of the real estate development industry. This episode, Jonathan discusses hot points for investors to know about real estate development.

 7 Real Estate Development Hot Points

  • Sub-contractors
    • Markets state-wide are saturated with work
    • Sub-contractors control velocity of development
    • Artificial inflation caused by over estimation of construction costs
  • Communication
    • Problems frequently arise due to lack of communication
    • Loss of face-to-face time and on-site meetings contribute to communication breakdown
  • Land Quality
  • Construction Quality
    • Large loss of construction force from mid-2000s recession
    • Current construction force stretched thin over spike in development
  • Unrealistic Project Expectations
    • Make sure all involved parties are in agreement over project deadlines
  • Scheduling
    • Scheduling oversights complicate and potentially ruin deals
  • Mitigating risks
    • All real estate development deals have inherent risks
    • Hold parties accountable for actions
    • Thoroughly research deal
    • Partner or work with experienced real estate development investors

To contact Jonathan about the services offered by InVision Advisors or to discuss more about real estate development, visit www.invisionadvisors.com or call 813-784-3146

Ep. 55 – Brian Bandell: Update on the South Florida Real Estate Market

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3657aafSouth Florida has always been in a class apart from the rest of the state in terms of real estate development. The South Florida real estate market has lead the state in real estate investment and growth. Despite it’s ups and downs the South Florida real estate market has historically been a market indicator in terms of development and investment activity. South Florida’s unique positioning and heavy influence of foreign investment makes this market an interesting and dynamic one.

Brian Bandell is a senior journalist with the South Florida Business Journal covering real estate, transportation and logistics. For over a decade, Brian has served the South Florida business community. With an expert ear for news, Brian gives us a brief, but detailed overview of the South Florida real estate market and what is in store for future developments in the area.

  •  $7.5 billion in construction starts in Miami and South Florida
    • Condominium/Multi-family
    • Retail
  • Developers/Developments
  • South Florida economy driven by tourism and foreign investment
    • Heavily dependent on international markets
    • Strengthening of USD may adversely affect South Florida investments
  • Miami moving towards transit city
    • Metrorail connects major points in Miami
    • Metromover connects Downtown Miami
    • Trirail connects Miami to West Palm Beac
    • All Aboard Florida rail project will connect Miami to Orlando
  • Issues
    • Commuting is still difficult in South Florida for those who don’t live near transit stations or commute by car
    • Development in South Florida does not represent demographics
      1. Developments are for high-end/luxury spaces
      2. Middle-income bracket job growth not suited to high-end developments
    • Rapid rent increases
      1. Multi-family rent increases: 8.8% in Miami-Dade, 7.1% in Broward and 5.8% in Palm Beach
      2. Weekly wage increase: 2%

To find out more about Brian’s work with the South Florida Business Journal visit their website

In addition to his journalistic successes, Brian is also a published author of fiction! Look for his books on Amazon

 

Ep. 52 – Real Estate Development is a Big Part of All Aboard Florida Rail Project

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john_guitar_final_3-24-2015For those who haven’t heard, All Aboard Florida is a high-speed rail project connecting Miami and Orlando via Fort Lauderdale and West Palm Beach. The project is slated for public use in 2017.

The project will have a major impact on transit in South Florida and Central Florida. The rail project will also have a profound effect on real estate development in the state. John Guitar, Senior V.P. of Business Development discusses All Aboard Florida’s interests in stations and transit-oriented real estate development.

  • 4 million sq. ft. rail transit
    • Miami
    • Orlando
    • Ft. Lauderdale
    • West Palm Beach
  • Utilizing privately owned space in F.E.C. “Flagler Corridor”
  • High-speed Transit
    • 79-110 mph
    • 125 mph (with no grade crossings)
  • Miami
    1. Retail
      1. 200k sq. ft. real estate development for Downtown Miami Station
      2. Servicing local and commuter traffic
    2. Office
      1. 2 Developments planned: 200k sq. ft. & 100k sq. ft.
      2. Accessible locations for commuters
  • Ft. Lauderdale / West Palm Beach
    • Several retail and residential plans in works for future development

To contact John with questions regarding All Aboard Florida’s real estate development and leasing opportunities or to find out more about the project visit the project website www.allaboardflorida.com

www.miamicentral.com

All Aboard Florida – Economic Story