Yes, You Need a Commercial Broker

Want to save money, time and aggravation?  Hire a broker!

There are literally dozens of variations of commercial leases; full service, gross, modified gross, NNN, NN, absolute net...you get the idea.  We will get into leases at a later date; but they are just one of the reasons you need to have a commercial real estate broker on your side when looking for space, negotiating a lease, or purchasing/selling commercial property.

Let me answer the first question most commercial brokers get asked when working with a client for the first time..."How do you (the realtor) get paid?"  While each case can be different, depending on the circumstances, in the Knoxville market it is standard business practice for the landlord to pay the commissions in a lease.  Hence, it doesn't cost the broker's client (the tenant) a dime to look for space. Commissions for property sales are similar to residential practices in that they are negotiated in the sale contract.


In the eyes of the state of Tennessee, and national groups like REALTOR, there is no difference between a commercial realtor and a residential realtor.  We all have the same licenses and took the same classes; it’s what we do with the license after it is earned that makes the difference.   Many commercial realtors earn designations that help educate them on marketing properties, helping clients make decisions on proper investments and the like.  Some you may have seen include CCIM (Certified Commercial Investment Manager); SIOR (Society of Industrial and Office Realtors) and CPM (Certified Property Manager).  These realtors have spent hundreds of hours in courses, and years in the field, to prepare them to meet their client's needs.

Two of the biggest reasons to use a commercial realtor are time and experience. 

Time is the one thing always seems to come up short.  Instead of spending your day driving around town looking for space that might be available (and hopefully in your price range) commercial broker have market knowledge and multiple interactive data bases at their fingertips to steer you in the right direction.  Say you want office space in west Knoxville; within minutes a commercial realtor can tell you what is available in that area, what it costs and the type of development in which the office is located.  The same can be said for retail and industrial space.  This way you can spend 15 minutes narrowing the list of potential spaces instead of three hours just trying to find out what is available and tracking down phone numbers.  

Commercial broker experience is what saves you money!  Any broker worth his salt will know the important details you need to help you make an informed decision.  Is this a new building?  If so, what kind of tenant improvement allowance will be included?  Is the rent abnormally high for the market and the economy (boy, does that really play a part now)?  What other kind of leasing incentives might the landlord provide? Should you lease or buy?

Commercial brokers will also have the experience to walk you through a lease (although most realtors are not lawyers and any lease should be reviewed by legal counsel prior to signing) to explain things like; force majeure, estoppel, operating expenses etc...

On the other side of the ledger, property owners can use the expertise of commercial realtors in much the same way.  Instead of spending your precious time looking for a tenant for your empty building a broker does it for you.   Commercial brokers are able to market the space via local and national data bases (basically a commercial multiple listing service), they can market the space through signage on the property and most importantly they talk to other brokers every day.  It helps them keep the pulse of the market; who is looking and how much space are they looking for. 

Commercial brokers can also help keep you apprised of market conditions.  Brokers are familiar with competing properties.  They know who is moving, who is downsizing, how needs to expand.  And a good broker knows what buildings are giving away the farm to find a tenant.  Commercial brokers are paid to know this information.  

Also important to owners is disposition of the property.  Better described as “What are you going to put in your pocket when you sell?”.  There is an entire CCIM course related to these transactions.  How should you price your property?  What kind of capitalization rates (cap rate) can the market withstand? What tax implications do you have when you sell it?  Experienced commercial brokers can walk you thru all these steps.

There are many more details that we can get into regarding commercial brokers.  The items above are strong evidence that an experienced broker is imperative to the success of your property search or ownership.

Cushman & Wakefield works on transactions like this every day. The biggest office and retail deals in Knoxville have been handled by nine brokers in our office.  Allow Cushman & Wakefield | Cornerstone help drive your next search. 

How Far Your Paycheck Goes, In 356 U.S. Cities

Knoxville's Low Cost of Living Makes Median Income Feel Like More 

Cost of living is a big factor when individuals and businesses make decisions on relocating their life or their operation.  So, how does Knoxville compare to other cities? 

The government recently released a data set that NPR used to provided a very interesting searchable graphic that provides some insight into how a city's cost of living compares with the average annual income. In the graph below, the left-hand side shows the annual income for typical, full-time workers in different metro areas while t he right-hand side adjusts that figure for the cost of living in each metro area.

The data used accounts for things that people actually buy in each city. For example, in places like New York City where car ownership isn't as common that cost would not figure into the data as much.

As the graphic shows, Knoxville is a less expensive place to live with a median income of $28,857 per year. However, thanks to a low cost of living it's like you are really making $29,873 per year.  Compare that to a city like San Francisco.  Their median income is $44,452 but the cost of living drags it down to $32,289.  Ouch--better stock up on Rice-a-Roni.

Just another reason why Knoxville is growing into a prime relocation destination.

Click here to read NPR's article and see infographics for other cities.

KNOXVILLE RANKED AS A “MILLENNIAL MAGNET” BY USA TODAY

KNOXVILLE RANKED AS A “MILLENNIAL MAGNET” BY USA TODAY

High national rankings keep rolling into Knoxville.  USA Today recently put Knoxville on its list of “Millennial Magnets”, a list ranking cities that have more 20-somethings than teens. These cities—rooted in high education, technology and development—are serving as new kinds of cities, born from deep demographic shifts and built from the power of technology. Knoxville, like many of the other cities listed, were traditional college towns that attracted students who then left after graduation for work. However, Knoxville has become a post-college town.

The region has long been known as ‘Innovation Valley’ by regional economic development agencies due to the concentration of scientific and technological assets that surround the area, as well as business sustainability efforts. The availability of high wage jobs for educated individuals at places like Oak Ridge National Laboratory, Y-12 National Security Complex, The University of Tennessee and numerous recession-proof healthcare industries surround the area make those that come for an education more likely to stay.

Ranked 6th by Forbes magazine among Best cities for Jobs, the area is #1 in green job growth according to the Brookings Institute. By combining technological resources with the Knoxville area’s central location, the region is competing for top level jobs and job creators in the expanding green industry.

According to the ACCRA cost of living Index, Knoxville’s cost of living is well below the national average, and either competitive with or lower than each of its southeastern competing cities like Memphis, Nashville, Charlotte, Raleigh, and Columbia.

These things, combined with a thriving cultural, educational and recreational landscape make Knoxville a major player as a growing city full of future business leaders.

Student of the (CRE) Game

The largest gains in the commercial real estate market in Knoxville over the past year have been in multi-family.  More specifically, in student housing.

Projects are popping up all over downtown and west Knoxville with a focus on Fort Sanders and now Sutherland Ave.

In 2013, Rick Gentry, Cushman & Wakefield | Cornerstone's multi-family specialist, closed two of the largest student housing transactions in the market.  He talked to WBIR about the explosion in the segment.


Student-housing Explosion in Knoxville

Click on the link for the story.

Knoxville Earns Another Big Ranking

Following accolades from magazines like Forbes and Inc.; the Milken Institute is pushing Knoxville as one of the best - performing metro areas in the country.   See the story below from today's Knoxville News Sentinel. 

Last week Forbes ranked Knoxville second in the US in the "Happiest Place to Work" list.  

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Knoxville's employment renaissance has caught the eye of a prominent think tank.

The Milken Institute, a nonpartisan research group based in Santa Monica, Calif., on Thursday released its list of the country's best-performing metro areas.

Knoxville came in at No. 25 among the 200 largest metros, jumping 33 spots compared to 2011.

The Milken index measures job, wage, and technology performance to compile its rankings — with employment growth weighted most heavily — but does not use quality-of-life indicators such as commute times or housing costs.

The Knoxville area garnered particularly strong marks for job growth between 2010 and 2011.

The local economy has shown signs of strengthening even since the Milken Institute conducted its analysis. In the final weeks of 2012, a trio of industrial companies announced expansion plans that are slated to add more than 300 jobs in the area.

That list includes Italian tile-maker Del Conca, which said it would build a $70 million plant in Loudon County that would create 178 jobs.

Rhonda Rice, executive vice president of the Knoxville Chamber, noted Thursday that Knoxville's best performance came on the most recent statistical measurements and said 2012 saw even more of an increase. "We're very optimistic about good things on the horizon here for the Knoxville region," she said.

Knoxville had the highest ranking of any large metro area in Tennessee. Nashville was listed at No. 27, Chattanooga at No. 80 and Memphis at No. 99.

The country's top-ranked metro area was San Jose, Calif., followed by Austin, Texas, and Raleigh, N.C.

Las Vegas, Modesto, Calif., and Lakeland, Fla., were ranked at Nos. 198, 199 and 200 on the list.

Technology is a wonderful thing...most of the time

Yes, technology is a great...cell phones, emails, cameras.  Everything in our life is recorded and we are always available.  Of course the down side is ...Everything in our life is recorded and we are always available.  But this is about one certain type of technology and how it can help those of us in the commercial real estate world.  Its simple and great for exposure (not the Rep. Anthony Weiner type of exposure).

Recently I took my iPad3 out for a test run to see what I could us it for to create marketing videos for properties we represent.   It was truly shocking how quickly it came together.

I spent a total of 45 minutes shooting videos and taking pictures at three buildings.  With in an hour of getting back to my office I had created my first movie and uploaded it to YouTube (check it out http://www.youtube.com/watch?v=yCw0KhDdvt8).  I didn't even have to read any directions or take a tutorial on iMovie.  I just that easy.

Continuously I am impressed by how quickly the world of marketing commercial projects is changing.  Everyone needs to keep up.

The real estate tax information you don't want to hear about...

Postponing closings are always inconvenient but some are more painful than others.
Yesterday we postponed a transaction and don't think it will close until January.  But this is more than just a delay in closing, there are SERIOUS tax implications.

The new year brings new taxes.  A change in capital gains taxes, as well as ordinary rates (and don't forget the special Medicare tax on investment income of 3.8%.  I doesn't effect a closing directly but will effect the sellers tax return).

All together the delayed closing will increase the tax burden to the seller by $600,000!  Needless to say, negotiations are on-going.

Work hard for your clients in the last 61 days of the year.  Get those deals closed.