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. 

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.

KNOXVILLE RETAIL SNAP SHOT

This morning Cushman & Wakefield | Cornerstone is releasing the third quarter results of the Knoxville retail market.  Its an interesting look at changes that have been made in the market in the last few months.  

RETAIL SNAPSHOT - KNOXVILLE, TN 3Q 2012  

The outlook for today’s retailers remains challenging as many find themselves confronted by reduced consumer spending and weak credit market conditions. New economic realities have resulted in a new order of buyers who are more price-conscious and careful about the discretionary purchases they make. The critical challenge for retailers under these circumstances will be delivering a compelling in-store experience that drives profitable growth in 2013. The one-size-fits-all approach doesn’t work for all shoppers – nor all locations. To grow, many retailers are shrinking, sometimes with smaller stores, sometimes by introducing smaller, more intimate and approachable locations within larger stores. 

RETAIL MARKET OVERVIEW    

The vacancy rate closed the quarter at 6.1%. Net absorption stands at a negative 348,579 square feet (sf). Rental rates increased slightly from the second quarter 2012 levels, ending at $11.31 per square foot (psf).

This summer, a South Carolina developer paid $1.7 million for a 4.4- acre site next to the Wal-Mart on Norris Freeway, and said it planned to develop a retail center for 10 tenants. Hibbett Sports recently announced that it will open a store at the site.

There were several significant lease transactions for the quarter including an 18,360-sf lease at 1665 E. Andrew Johnson Hwy. to Badcock Furniture (seller-represented by Cushman & Wakefield|Cornerstone). Also of note is the lease at 1115 N. Charles G. Seivers Blvd to United Grocery for 18,225 sf.

Several significant sales took place over Q3 12, including the closing of 640 Plaza (44,435 sf) for $5.2 million. Also, Goodwill Industries recently closed on a 45,178-sf neighborhood center in the North/Broadway submarket for $2.5 million. 

“The consumer hasn’t exactly thrown in the towel, which is encouraging because they’ve been battered and bruised in recent

months with very slow job growth,” said Millan Mulraine, senior U.S. strategist at TD Securities Inc. in New York. “We’re off to good a start in the third quarter. I do question the sustainability of the current level of spending. It can only be sustained if employment growth continues to accelerate.” 

OUTLOOK

“We have seen a major upswing in the Knoxville and east Tennessee retail market. With the new developments happening in West Knoxville, Oak Ridge, Halls and the growth at Emory Road, we feel very positive about new east Tennessee retail. National tenants are expanding into areas that had been previously underdeveloped and new anchors are moving into the area developments.”

-John Rebori, CCIM, Associate Director, Cushman & Wakefield | Cornerstone

If you want to see the entire report and stats please click on the link below.  

http://library.constantcontact.com/download/get/file/1104796466421-635/Knoxville_AMERICAS_MarketBeat_Retail_2page_Q32012.pdf 

Blogging Change....

Time to make a change to the blogging platform...

I know most of you are asking "Why change now?  You haven't blogged in a LONG time."  Its a simple answer: Time.  The hours required to write a long-form blog are just to overwhelming to put together a quality product that I want to put a companies name on.  So we are going to try something different. 

Instead of a weekly, long blogs we are going to try shorter, more frequent posts.  Sometimes it may be posted a few times a week.  Other times is will be once a week.  It just depends on what information is coming out that day.  There will still be quarterly market reports and longer posts but they will not be as often.  However, the quality of the product will still be among the best in the business. 

Stay tuned for more...

John Adams (@johnmadams3 on twitter) is a presenter at this weeks SIOR National Convention in Los Angeles.  John is an expert in commercial real estate technology, along with being one of the best brokers in the region.  You can follow his blog at www.johnmadams3.blogspot.com.  He will have more information from SIOR. 

Next month we will be at the Cushman & Wakefield Symposium in Las Vegas.  Again it will be a great opportunity to gather information we can use on the blog. 

Thanks for reading. 

As always, you can reach us at 865-450-8883 or www.cornerstonecres.com

Tremendous Industrial Property Opportunity- Knoxville

We don't often use this blog to promote specific properties but this was to good to pass up.   Cushman & Wakefield | Cornerstone is listing an ideal piece of industrial property in the Middlebrook area of Knoxville.  DCP Warehouse recently went under renovations and now has 94,200sft for lease.   

Check out the information below and let me know if you need additional details. 

Tremendous Industrial Property Opportunity

There is no warehouse of this size and type in west Knoxville.  The newly renovated DCP Warehouses are ready for immediate occupancy. 

Ideally located within two miles of both I-640 and I-40, DCP Warehouses has 92,400sft available.  This space can be divided into two 35,000sft bays and a 20,000sft bay.

Renovations: New lighting, dock seals, load levelers.

From a distribution standpoint, Knoxville’s location and easy access to major interstates allows drivers to reach most of the US population in less than a day.  The availability of DCP to get drivers on and off the interstate quickly allows for an even easier transition.

DCP Warehouses are also well appointed for manufacturing.  The buildings power systems can handle any need.

This stand-alone building has the following amenities:
Construction: Tilt-up concrete
Floors: 6-in reinforced concrete
Ceilings: 22ft clear-height
Dock doors: 9 w/load levelers
Drive-in Doors: 2
Parking Spots: 100 (plus the availability for more)
Power: 1000amp, 480 three-phase, 240 single-phase, 208 single-phase
Offices: Multiple
Utilities: City sewer, water, electric, propane, natural gas (available)

See attached flyer for more information.

For more information contact: 
Justin Cazana, CCIM  865-617-2989 / jcazana@cornerstonecres.com

N. Justin Cazana, CCIM
Principal | Broker
Cushman & Wakefield
Cornerstone CRES
6005 Lonas Road, Suite 220
Tel:       (865) 450-8883
Fax:      (865) 450-8953
Mobile:  (865) 617-2989

Two of Knoxville's most successful real estate firms join forces!

You can say you heard it hear first...


Beginning April 2nd, two of Knoxville's most successful real estate firms will merge to create the region's most comprehensive real estate services.  

Center Court at Lonas

The management and leasing divisions of Commercial & Investment Properties will combine with Cushman & Wakefield | Cornerstone to open a new office at Center Court on Lonas.  The transaction has been in the works for several months and things will come together next week when the new office opens its doors. 

With the merger of the two firms Cushman & Wakefield | Cornerstone now manages some of Knoxville's most prominent developments; such as Parkside Centre, Century Park, and Two Centre Square.  Cushman & Wakefield | Cornerstone adds 1.2 million sq. ft. of management to its current management and leasing portfolio of over 6.8 million sq. ft in middle and east Tennessee. 

There is no other firm in the region that can match Cushman & Wakefield | Cornerstone's reach, experience and knowledge on all sides of the real estate world.  The brokerage and property management staff designations include; Certified Commercial Investment Managers (CCIM), Society of Industrial & Office Realtors (SIOR), Certified Property Managers (CPM), Certified Shopping Center Managers (CSM) and members of the International Council of Shopping Centers (ICSC).

Cushman & Wakefield | Cornerstone's new offices

Cushman & Wakefield | Cornerstone offers a client centered approach for customized real estate solutions, not only locally, but globally.  The company offers services that address the consulting and strategic needs of businesses making critical real estate decisions. Cushman & Wakefield | Cornerstone leases and/or manages approximately eight million square feet of commercial property in Tennessee with offices in Nashville, Knoxville and Chattanooga.

Commercial & Investment Properties investment and development operations will continue as well.  The 40 year old company has been a stalwart in the east Tennessee development community since it was opened by Nick Cazana in the early 1970's.

“I am thrilled to expand our Knoxville operations with the high caliber and very professional team that Nick Cazana has built over many years. The combination of this property management platform and our existing brokerage operation enables us to serve all of our client’s needs seamlessly” says Warren D. Smith III, CEO of Cushman & Wakefield | Cornerstone.

For more information about Cushman & Wakefield | Cornerstone please contact us at 865-450-8883 or check out www.cornerstonecres.com

Lease vs Buy-- What to do, what to do?

Lease or buy? This is the question. Small businesses have difficulty raising capital - that's no secret. This difficulty (among other reasons) has caused many to look at leasing as an alternative financing arrangement for acquiring the use of assets. 


All types of leasing have become more and more attractive.

This lease vs buy analysis describes various aspects of the lease/buy decision. It lists advantages and disadvantages of leasing and provides a format for comparing costs of the options.

Office, retail and industrial building leases are very common. A building lease is usually written for a specific term and will provides that:

• Periodic payments be made,
• Ownership or possession the building or space reverts to the landlord at the end of the lease term,
• The tenant  has a legal obligation to continue payments to the end of the term, and
• The tenant agrees to maintain space (however there are different types of leases that have the landlord maintain the space, this is typical in office leases).

You may also hear leases described as net leases or gross leases. Under a net lease the tenant responsible for expenses such as those for maintenance, taxes, and insurance for the building. The landlord pays these expenses under a gross lease. Net leases are typically found in retail and industrial buildings.  Gross leases are found in office buildings.  Many of these topics have been covered in previous blogs.  Check them for specific details. 

Advantages of Leasing:

The obvious advantage to leasing is acquiring the use of an asset without making a large initial cash outlay. Compared to a loan arrangement to purchase the same office space, a lease usually

• requires little to no down payment, while a loan often requires 25-40 percent down;
• Spreads payments over a longer period (which means they'll be lower) than loans permit; and
• Provides protections against the risk of obsolescence, since the tenant can leave the building at the end of the lease.

There may also tax benefits in leasing. Lease payments are deductible as operating expenses if the arrangement is a true lease. Ownership, however, usually has greater tax advantages through depreciation. Naturally, you need to have enough income and resulting tax liability to take advantage of those two benefits.

Finally, there is one further advantage of leasing that you probably hope won't ever be of use to you. In the event of bankruptcy, claims of the landlord to the assets of a firm are more restricted than those of general creditors.

Disadvantages of Leasing:

In the first place, leasing usually costs more because you lose certain tax advantages that go with ownership of an asset. Leasing may not, however, cost more if you couldn't take advantage of those benefits because you don't have enough tax liability for them to come into play.

Obviously, you also lose the economic value of the asset at the end of the lease term, since you don't own the asset.

Further, you must never forget that a lease is a long-term legal obligation. Usually you can't cancel a lease agreement. So, if you were to close a business that leases space, you might find you'd still have to pay as much as if you had used the office space for the full term of the lease.

Look Before You Lease:

A lease agreement is a legal document. It carries a long term obligation. You must be thoroughly informed of just what you're committing yourself to. Find out the landlord's financial condition and reputation. Be reasonably sure that the lease arrangements are the best you can get, that the offices space is what you need, and that the term is what you want. Remember, once the agreement is struck, its is legally binding.

The lease document will spell out the precise provisions of the agreement. Agreements may differ, but the major items will include:

• Payment amount,
• Term of agreement,
• Who is responsible for maintenance and taxes,
• Renewal options,
• Cancellation penalties, and
• Special provisions.

There are other details to consider if you want to buy; interest rates are at an all-time low.  Lenders are interested in owner/occupied properties and can get aggressive with their rates.  However, the underwriting requirements are stringent and the down payments can be large, unless you are doctor.  Lenders love doctors.

If you are looking for more information about leasing vs buying please contact Cushman & Wakefield Cornerstone at 865-617-2989 or myself at jcazana@cornerstonecres.com

Justin Cazana, CCIM

The Seven Mistakes Tenants Make When Leasing Office Space

It seems simple...set out a plan and execute the plan.  Works in just about every aspect of business.  But you have to know the details to actually create the plan.  Bert Rosenblatt and Anderw Stein of ITRA Global came up with an impressive list of details you don't want to miss when you are looking for office space.

1. Lack of Planning. Believe it or not, many tenants aren’t clear on what exactly they need. If you’re out looking for ten thousand feet but you actually need fifteen thousand, you’ve got problems.

Have an architect do a space program and figure out how much space you really need.
A lot of architects will do this for free as a favor to your tenant rep broker. Between a good architect and a good broker you can get clear on things you might not be thinking about, like floor load capacity – do you have a safe or a lot of equipment – then you need reinforced floors.
Do you need extra electric to your space? Have special telecom needs? Knowing these details up front will save you time, money and aggravation down the road.

2. Lack of tenant representation. We could write an entire article on the benefits of using a tenant representative but suffice it to say there’s really nothing better than hiring one to be on your side. A broker understands the ins and outs of the market; they can negotiate for you, and best of all, can narrow down the buildings that would be best for your particular business. Their know-how and advice are indispensible, and they can prevent you from making some major mistakes which you will pay for down the road. Such is also the case with an attorney. Many tenants hire lawyers that don’t specialize in commercial real estate – this is a mistake. Like your tenant representative, you need an attorney that understands the monster that is commercial real estate.
 

3. Lack of document inspection. Leasing an office space means a whole lot of paperwork. One of the most common mistakes tenants make is that they’re not careful enough with what they sign. Everyone should read the documents – you, your attorney and your broker.

Further, the ownership documents need to be vetted too. Make sure your space is legally zoned for commercial purposes and for your use in particular, and that it conforms to various safety codes and is built in accordance with the prevailing rules and regulations.

4. Rent and security deposit. Before agreeing to the monthly rental, many people do not benchmark similar properties, and end up paying rent through their nose. It is important to compare similar office properties and find out the going market rent in that area before entering into negotiations with the owner. This is Real Estate 101 for tenant rep brokers. Hire them - they know what they’re doing. However, if the owner of the office space seems to be in a tearing hurry to rent out his place, you can always negotiate with him and save yourself some money.

5. Not checking lease terms. A tenant must read and understand the lease terms carefully.  

Are you comfortable with the notice period? Let’s say the landlord has the right to relocate you to another floor or space in the building (something that is common for smaller deals) – how much notice do they need to give you?

What if the lease says 30 days? Can you really pack up and execute a move of both your physical stuff and your technology in 30 days? Probably not.  Do you have a sublet and assignment provision? Is it fair?

6. Underestimation of negotiating leverage. Tenants have a tendency to think that the landlord is all-powerful, but that’s not the case. Ultimately, a landlord is in a service business, and his business is to keep his building full. If this means he has to negotiate with his tenants to fill his spaces, he will. 

7. Too little time. Tenants drastically underestimate how long it takes to renew a lease or to move. Depending on how much space you have and how complex your technology is, it could easily take 8- 12 months to negotiate your deal.

As always, the professionals at Cushman & Wakefield|Cornerstone CRES can help you through these steps.  Feel free to contact us at 865-617-2989 or jcazana@cornerstonecres.com



Bert Rosenblatt and Andrew Stein are principals of Vicus Partners, LLC and the ITRA affiliate for New York City – Downtown. Bert Rosenblatt can be reached at (212) 880- 3747 ext. 6619 or at brosenblatt@vicuspartners.com. Andrew Stein can be reached at (212) 880-3747 ext. 6620, or at astein@vicuspartners.com 

 

Industrial Space in the Knoxville Market

Knoxville is a bit different when it comes to the industrial/warehouse/distribution market.  Because of the market’s proximity to so many major interstates, I-40, I-75, I-81 and being so close to major cities like Charlotte, Atlanta, Nashville and Cincinnati, you would expect more of a distribution presence.  But that is not the case.  While there is about 32 million square feet of what would be considered industrial space much of it is dated and not the new high-bay space required by top-flight tenants.

DCP Warehouse- Knoxville, TN

What do you need to look for?  It varies just like retail and office, but functionality often replaces locations on the priority list (as long as the location is not to bad).

Space Attributes

A wide range of storage alternatives, material handling equipment and software exist to meet the operational requirements of a warehouse space type.  Intergration of these features is essential. Warehouse spaces must also be flexible enough to adapt to future operations and storage needs.

Functional / Operational

• Use of Space: Warehouse space types are often designed with higher bays to take advantage of vertical storage. Utilization of space is maximized while providing adequate circulation paths for personnel and material handling equipment such as forklift trucks.
• Power and Utility Requirements: Differentiate between spaces that require power and utilities, and those that are for storage only. Depending on the goods being stored and handling equipment required, there may be a need for well-distributed power and utility lines throughout the space. Attempt energy-efficient lighting when possible. Warehouse spaces typically include one floor drain for every two bays of storage, as well as sand and oil traps on waste lines.
• Loading Dock: Warehouse space types are typically designed with one electro-hydraulic dock leveler per every five truck bays.
• Fire Protection:  New buildings sometime are built with an ESFR sprinkler system that allows each sprinklerhead to put out almost 100 gallons of water per minute!  These are few and far between in Knoxville.  In fact, DCP Warehouse installed Knoxville's first ESFR system in 2008.
• Special HVAC: Provide proper ventilation under all circumstances. Plan for 100% exhaust from storage areas with paint, petroleum, aerosol, or other minor amounts posing moderate hazard storage conditions.

Determine the type of space you’ll need. Have a good grasp on requirements for phone, broadband data service, HVAC, gas, water and electricity. You’ll want enough power to provide adequate lighting and operate necessary equipment. Take all your needs into consideration when looking at space: storage for raw materials and finished product, a production area or assembly line, ceiling height, column spacing, dock-high or drive-in truck access, signage, offices and rest rooms. Think about proximity to freeways for access, as well as public transportation, parking requirements and, possibly, rail access.

Try to develop a preliminary layout that takes into account all aspects of your operations. The layout should include utility connections for each piece of equipment. With this information, you can determine what type and how much space you’ll need.

As far as Knoxville is concerned there are dozens of small/medium warehouses (less than 40,000sft)  available but fewer of the larger size (+40,000sft ).  In fact only seven can be found on the MLS that exceed 80,000sft.  Doesn’t seem like much does it.

For comparison, Columbia, South Carolina (with a metro area only 50,000 more that Knoxville) has three million more square feet of industrial space. Birmingham, Alabama has 123 million square feet of industrial space.

There is space out there.  It just depends on what you are looking for.  Cushman & Wakefield|Cornerstone CRES can help you find it. 865-617-2989 or jcazana@cornerstonecres.com

Resources:  Whole Building Design Guide (WBDG.org), Grubb & Ellis, Graham & Co.

The Power of Social Media

This month's CCIM Magazine, Commercial Investment Real Estate , included an article about the use of social media in gaining clients in commercial real estate (and it includes a few comments from yours truly).    

     While the immediate return on investment can't be calculated the prospects for growth are    

    enormous.   A link to the entire magazine is listed below. Enjoy

Build Your Business 

Through Social Media

Looking for new clients? You’ll find them online.

by Dennis LaMantia

Commercial real estate is all about relationships. So the industry's interest in social media — a venue where relationship building is turbocharged — should be expected.

"We have gained several clients because of the exposure we received through Facebook," says N. Justin Cazana, CCIM, principal at Cushman & Wakefield|Cornerstone CRES in Knoxville, Tenn. Cazana is one among many CCIMs who have used the social networking site as an effective business development tool.

As social media becomes a more integral part of business development, commercial real estate professionals are getting results by incorporating Facebook, Twitter, and other platforms into their marketing strategies. A social media presence can increase the likelihood of being found by new clients, establish professional credibility, and streamline communication. Although social media is free, it does require time to learn and maintain. So what's the return?

Quantifying the Value

"Learning about social media and setting up my profiles took a lot of time," says Chad Gleason, CCIM, of Real Estate Investment Services in Kent, Wash. Although it can be an efficient tool, there is an opportunity cost for overcoming the initial learning curve, refining messaging, learning new programs, and staying current on existing ones. And high-profile gaffes by celebrities and politicians remind users of the potential risks of participating in social media.

Given this risk and opportunity cost, commercial real estate professionals — people who rely on models and analysis for decision making — are naturally interested in measuring social media's return on investment. "It's hard to determine," says Greg J. Vollman, CCIM, of Apartment Investment Realty in Cincinnati, voicing a common sentiment among CCIMs.

Even Fortune 500 companies are still finding their footing in social media analytics. Ford Motor Co. recently launched a $95 million marketing campaign that included a Facebook page, but the company still had difficulty determining the value of the interest it generated. "They can give you Likes," Scott Kelly, Ford's head of digital marketing, told The Wall Street Journal, referring to the Facebook feature that allows users to provide quick, positive feedback. "But the question is, What is the value of those Likes?"

"It's too early to establish an ROI on the time I invest in social media," says Shawn E. Massey, CCIM, partner at The Shopping Center Group in Memphis, Tenn. "My goal was to increase exposure and keep my name in the retail community during this slow period. Based on that, it has worked very well."

However, one concrete form of measurement is new business. Cazana — whose company has four Facebook sites, three Twitter feeds, and two blogs — has gained several new clients as a result of social media. Daniel Palmeri, a senior associate at Colliers International in Las Vegas, uses LinkedIn to locate potential clients and connections to them. "This has resulted in a far greater success rate than a cold-call," he says. He attributes three closed deals to social media. Gleason says that 40 percent of his deals can be linked to social media connections, which gives him a larger presence in the market and a larger pool of lease tenants.

"When I get a call from someone I connected with through social media, I know my social media campaign is effective," says Martin Barkan, CCIM, CRE, senior vice president of First Property Realty Corp. in Beverly Hills, Calif. Barkan is working on several transactions that originated from connections on Facebook, LinkedIn, and his blog. "These transactions with new clients took six to 12 months to develop after the initial contact, but I believe the return on the investment will be exponential over the next two to three years. I'm certain this will be the single biggest market visibility and client growth platform in my business."

Being Found

Candice A. Donofrio, owner of Next Wave Real Estate Investments in Laughlin, Nev., gained referral business using social media. After reading a commercial real estate blog post, she found the author's Facebook page through a Web search. After commenting on the author's Facebook wall, she received a phone call from him about a business opportunity, which she referred to a colleague in Las Vegas.

Donofrio's story is an example of how social media can help with inbound marketing. Prospective clients are searching the Web for information about potential business partners, and LinkedIn, Twitter, and Facebook profiles and updates are often top results when an individual's name is searched.

"When someone searches for me, my LinkedIn page, Facebook business page, and Twitter profile are at the top of the results," Barkan says. Social media sites give users privacy settings to control what parts of their profiles appear in search engines. But it pays to have some information available to the public, especially if it's business-related. A recent Pew Research report found that 92 percent of adults use search engines to find information, making it the most common online activity, along with e-mail. Creating a social media profile can help commercial real estate professionals be found online, and it gives their peers a convenient way to communicate with them.

I'm There. Now What?

The initial aversions to social media are being replaced by questions about how to best calibrate and integrate social media into a broader marketing strategy.

Integrating social media into a marketing strategy doesn't have to become a part-time job. Palmeri limits his social media use to an average of 30 minutes a day. Other interviewees worked effectively with even stricter time limits. Third-party sites like Seismic, TweetDeck, and HootSuite improve efficiency by allowing users to update multiple social media profiles from one site. Using these time-saving tools, "I am able to update my Facebook and Twitter profiles with material from my blog with one click of the mouse," Barkan says.

An initial decision also needs to be made about how "social" social media should be. Users like Palmeri don't mind mixing business and personal information. "You need to express a little bit of your personality, which gives insight into who you are," Palmeri says.

Gant B. Hill, CCIM, president and principal broker of Venterra Realty in Louisville, Ky., also chooses to share personal information alongside business information. "I don't mind mixing the two," Hill says. "It creates character and makes you more approachable, but never take either to the extreme."

Facebook and Google+, Google's social network, allow users to have it both ways. Facebook users can create a group of business friends and share only certain updates with that group. Google+ offers similar functionality with its Circles feature.

For those looking for more separation between their business and personal lives, the solution is to create different profiles for each. "People who want to communicate their professional information to their personal network can simply post the relevant information in both places," says Jeffrey B. Pollock, CCIM, principal at Pollock Commercial in Atlanta.

What to Share

Sharing information about recent transactions, insights into local market observations, or trends in certain property types can help establish credibility among peers and potential clients. "People are looking to us for information, and we use social media to provide news about properties and tenants that have come to the market," says Cazana.

LinkedIn is a particularly good platform for such information. For example, Bob Rein, CCIM, associate vice president of NAI REOC Austin in Austin, Texas, posted a series of LinkedIn updates to attract investment from his home state of Arizona. What started as a single post about Austin market trends turned into series of 10 posts. A prospective client saw the posts and contacted Rein, suggesting they work together when an investment opportunity arises.

Finding business-related information to share can sometimes be as easy as repurposing existing content. Barkan takes advantage of the low incremental resource cost of social media by repurposing blog and newsletter content on Facebook and Twitter. Businesses and individuals without blogs can still create a social media presence by finding quality industry information and sharing it with their followers. CCIMs can share insights by applying CCIM education concepts to current commercial real estate news.

Other sources of business-related information include quotes from industry events, reactions to other users' posts, product reviews, and more. A little bragging doesn't hurt either. "I used LinkedIn to announce earning my CCIM designation, and my profile views went up significantly as a result," Rein says. His connections congratulated him on the accomplishment and asked for information about the designation.

Social media is about building relationships, and in the U.S., that relationship building is mostly occurring on Facebook. The site dominates among social media platforms. U.S. Internet users spend 16 percent of their online time on Facebook, according to Citi Investment Research and Analysis, a figure that has steadily increased over the past few years. Businesses are recognizing the importance of going where their customers are. Booz & Co. recently reported that 94 percent of the businesses surveyed view Facebook as one of their top three social media priorities, followed by Twitter with 77 percent and YouTube with 42 percent. The same report found that 96 percent of companies plan to either allocate substantially or somewhat more resources to social media.

Part of the appeal of Facebook and other social media sites is their reach. Social media provides an opportunity for businesses to reach outside their customer contact lists to a much bigger audience. "The more I grow my social media presence the more my inbound marketing increases, which has been essential to growing my business," says Barkan, who like other CCIMs, is finding that making sense of social media makes business sense.

Dennis LaMantia is interactive marketing manager at the CCIM Institute.

http://www.ccim.com/cire-magazine/issues/janfeb12?current

The Wonderful World of Retail...how to pick it

Wow!  Talk about a tough market to get into.

Opening retail operations in these economic conditions is a 50/50 proposition.  The unsteadiness of the economy has many people worried but you have to hedge your bets against some very opportunistic lease rates.  Still, the rent costs should be a very small percentage of your budget and certainly not the decision maker into whether or not to open new store. 

Finding the ideal space in the ideal location

I will let individual business owners make thier own decsions about the economy, but there is a plethora of retail space available all over Knoxville.

Almost every center from Strawberry Plains to Turkey Creek has some type of space available.  Some property owners are in more dire situations than others.  A older center may not have the debt service of new construction so the owners may not be as motivated to deal.  But some centers that were once asking $28.00 per square foot in popular location are down below $20.00.  Those are pretty serious concession.

Even if you are getting a “deal” there are many details to consider before choosing a location.

1.   Of course, Location, Location, Location: Walk in traffic is the best way for a new retailer to be discovered. Spend time in the neighborhood, learn the flow of traffic, the demographic, etc.

2.    Type of space: What side of the street is the space on? Do you get afternoon sunlight? Is the space deep and dark? Is there a lot of wasted square footage in the space? Notice as much as you can on the first tour and make sure to come back several times at different times of day.

3.    Neighbors/competitors: What businesses are located in the area?  Will their customers see value in your merchandise or service? Ask other merchants about the pros and cons of the area.  

4.    Crime:  Being in a neighborhood that is gentrifying or potentially has some crime issues can be acceptable for an office, but potentially disastrous for a retail outlet. Your most valuable asset is your inventory and although insurance will help make up for losses, it is a major distraction from your business. Do a little research and see how many police reports have been filed within a mile of your potential location.

5.    Parking: How far away are the nearest parking areas? Do your customers need parking or will most of them be walking to your location?  The ability to have your customers park close by and affordably is extremely important.

6.    Signage: How big of a sign do you need to attract attention? What are the regulations of the landlord or the city as it relates to signage? Make sure to check out the neighbors and ask them how they got through the system if the regulations limit what you are hoping to do.

7.    Foot traffic: How busy is the street during the daytime? How busy is the street during evening hours? What types of people seem to be walking around? Is their a bus stop or school nearby. Take note of who walks by and what percentage of people seem to be window shopping because the more people looking the higher likelihood you’ll find a new customer.

8.    Brokers: Most shopping centers will have a broker to negotiate the deal…you should too.  They are experts in finding you the proper space, picking out the details and getting you the lease you need.

Potential hidden cost:  NNN Pass thrus.  We have discussed these before.  Shopping centers are not trying to hide these numbers from potential tenants but they are calculated differently than rent.  They are CAM (common area maintenance), taxes and insurance; also know as pass-throughs or NNN charges.  They are different at every center.  Some NNN charges are as low as $2.50psf in older centers or neighborhoods.  NNN charges in lifestyle centers such as Turkey Creek can be between $5 and $8 per square foot!  In many cases these charges are passed through directly from the property owner to the tenant without mark up.  But they can still add a considerable amount to your monthly rent check so pay attention to these.

Basically, if the time isn’t right don’t force the issue.  Find a good broker who is experienced in the field to guide you along and make the decsion when all the pieces fit properly. 

Cushman & Wakefield|Cornerstone CRES manages and leases more than 400,000sft of retail space in the Knoxville market.  If we can be of assistance please let me know so you business has the proper headstart. 

www.cornerstonecres.com   //  865-617-2989   //  jcazana@cornerstonecres.com

Justin Cazana, CCIM