Refi Roundup: Six Shopping Center Refinance Deals

Kenner, Louisiana. Strip shopping mall.

Fluctuations in the cost of capital serve to change the price of commercial property opportunity on a daily basis. Investors, owners, and brokers: here’s a handful of the recent refinancing deals for shopping centers culled from the national marketplace in commercial real estate:

(Photo credit: Wikipedia)

25. May 2016 by Wayne Grohl
Categories: Retail | Tags: , , , , | Leave a comment

Colliers: US Industrial Vacancy Lowest In A Decade


The newest US Industrial Outlook from Colliers puts Q1 2016 in its sights.  Bottom line: the news is good.  Q1 shows the lowest national industrial vacancy rate in over a decade.  Decline in industrial vacancy marked its 22nd consecutive quarter to arrive at 6.3%, which is 70 basis points lower than this time last year.

Although new construction is on the rise, the demand still outpaces new supply.  According to Colliers, construction completions added up to 60.1 million square feet of new supply in 1Q 2016, adding up to a near-record 0.40% of total inventory.  At the same time, 63.8 MSF of industrial space was absorbed, logging an eye-popping 9.6% increase over this time last year.

You can download a free copy of the information-packed report from Colliers “US Industrial Market Healthy Despite Headwinds” after the link.

20. May 2016 by Wayne Grohl
Categories: Industrial | Tags: , , , | 1 comment

Litigator Posts On Commercial Commissions Disputes

I spotted a substantial and interesting post at REJournals from Monte Mann, co-chair of the real estate litigation group at Chicago law firm Novack & Macey, LLP that may help illustrate some the legal theory behind some disputes over commissions in commercial real estate. Mann, a commercial real estate litigator practicing in Illinois for twenty years as well as admitted to the Washington DC bar, shares some thoughts concerning legal fights over commission money, including notions of “procuring cause,” a claim that brokers add weight to with every communication they make with and concerning prospects, properties, contracts and other pieces on the game board of the commercial real estate marketplace.

As always: never, ever, ever take anything you read at The Source as legal advice, and always, always, always seek qualified commercial real estate counsel!  

Mann on “procuring cause:”

In court, it is the broker’s burden to prove that he or she was the procuring cause of the transaction.  Typically, brokers will attempt to satisfy the procuring cause standard with evidence like correspondence between the broker and the owner, advertising and marketing materials for the property, and testimony establishing the broker showed the property to the prospective tenant or purchaser and/or negotiated the transaction.  Conversations between the broker and the parties to the transaction are often critical in these cases.  A broker may also prove that he or she was the procuring cause of a transaction with evidence that the broker provided the eventual buyer or tenant with information such as zoning regulations, tax information, and construction details.

A broker will not be considered the procuring cause of a transaction where the court rules that the broker’s influence on the transaction was only “slight,” the broker was initially involved for a short period of time, but another broker actually induced the buyer or tenant to enter into the transaction, or where the contract actually signed differs so greatly from the contract the broker originally was authorized to negotiate that the actual contract was beyond the parties’ original contemplation.

Read the entire post at REJournals after this link.

19. May 2016 by Wayne Grohl
Categories: Broker | Tags: , , , | Leave a comment

Avant-Garde Retail: The Eye-Popping Properties Of Best Products

Best Products store, Towson, MD, 1976 (Photo: SITE Studios)

Lost to the mists of time, Best Products was a successful national retail chain operating 169 stores in 23 states, filing Chapter 11 in 1991. Founded in 1957, Best’s retailing recipe was a precursor to today’s big box floor plan, but the chain was owned by persons of singular vision who refused to actually build big boxes to house their stores. Instead, they built eye-popping works of art.

The MessyNessy post Lost Facades of the 1970s Anti-Walmart shows Best in its heyday — a collection of outrageous and provocative architecture that played with themes of destruction and chaos while somehow remaining inviting and successful. Best store facades had a merely casual relationship with right angles and gravity. Some portrayed the collapse of brick walls, some portrayed the lifting and tilting – as if made of cardboard and hoisted by the wind – of an entire store front measuring over 200 feet in width. And some invited forests into the floor plan, where trees grow to this day in one structure that survives today under new management. Maybe most surprising, these unforgettable designs were not clustered in the comsopolitan enclaves you might suspect, but were instead a national undertaking, with the chain headquarters in Richmond, VA.

For their vision, Best owners Sydney and Frances Lewis were awarded the National Medal of the Arts in 1987.  You can browse the entire collection of photos at the SITE Studios, who originated most of the designs.

(Photo credit: SITE Studios)


16. May 2016 by Wayne Grohl
Categories: Retail | Tags: , , , | 2 comments

Court: Office Depot-Staples Merger Shut Down

Office Depot Store #916 in Torrance, Calif.

Federal judge Emmet Sullivan has blocked the proposed $6.3 billion merger of Office Depot and Staples stores. The decision came in the form of an injunction against the acquisition, and was felt as a surprise by some observers on social media, who prematurely proclaimed the success of the deal.

The Federal Trade Commission sought to block the merger in Sullivan’s courtroom on the basis that the deal would be anticompetetive and would harm consumers.  Observers of the case noted that Sullivan’s attitude seemed to favor the merger early, or at least seemed to be critical of the FTC’s case.  From Bloomberg’s piece by David McLaughlin and Andrew M. Harris:

The decision caps Sullivan’s role in an often contentious proceeding during which the judge criticized the FTC’s handling of the case and frequently interrupted the questioning of witnesses for his own queries. That led some investors to become optimistic that he would allow the deal to proceed.

“Given some of the judge’s rulings during the trial, it was somewhat surprising,” Seth Bloom, an antitrust lawyer at Bloom Strategic Counsel. “This is another example of how one can’t make a judgement based on a judge’s comments from the bench.”

Staples Chief Executive Officer Ron Sargent said in a statement that the company was “disappointed” by the decision and that it won’t appeal the ruling. The company will instead focus on a strategic plan that includes trying to win mid-market business customers, exploring alternatives for its European operations, cutting costs and returning cash to shareholders.

Office Depot currently operates over 1,900 locations, Staples, over 3,800 worldwide. Bloomberg video on the case:


13. May 2016 by Wayne Grohl
Categories: Retail | Leave a comment

Secondary Market Multifamily Opportunities: The New Normal

Watching the commercial property markets at the national level is tough: trends in one corner of a region need to be placed into context with trends in others in order to form a coherent national picture. National players such as Fannie and Freddie (the GSEs) have lending policies that provide some of that context, but these too are subject to change as regulators and Congress attempt to put the brakes on the kind of systemic risk that torched everything in 2008.

A particularly good job was done this week summing up the above while framing the multifamily property marketplace in secondary markets.  A piece at NREIOnline by Geoff Smith and Jay Thomas, a pair of Managing Directors at commercial property financiers Walker & Dunlop, put the secondary real estate markets under a microscope and managed to expose some usable insights concerning causes and effects in the multifamily sector.

Of particular interest is the role of falling oil prices.  Energy production and employment in the post-meltdown world is what first attracted capital back to secondary market apartment plays. While falling oil prices have made these plays less attractive in oil-heavy markets, the appetite for secondary markets generally has only grown, and lenders have leveraged their familiarity with the earlier plays to move out into the country’s many other opportunities at secondary population levels. An excerpt:

While the demand for mortgages against properties in secondary locations has experienced strong growth over the past four years, key aspects of its character are experiencing historic shifts. One of the best examples of this is within the central region of the country, in cities like Oklahoma City, Okla., and secondary markets throughout Texas, where the availability of capital has been very strong because of the growth of the oil and gas industries. As those employment markets have grown weaker as a result of falling oil and gas prices worldwide, the mortgage market outlook in those areas is also waning, requiring a more conservative investment approach and allowing other previously less attractive secondary markets to take center stage.


It is safe to say that the availability of debt and equity capital for secondary markets has successfully “come back,” with cap rates and acquisition prices now at or above their pre-recession levels for most commercial real estate asset classes. While at the height of the recession, between 2008 and 2011, many industry players and investors remained firmly on the sidelines of acquisition activity within the multifamily market, eventually this turned into cautious “toe dipping” back in, first in primary, then in secondary markets. This, in conjunction with low interest rates, resulted in compression of cap rates, and spurred the influx of new construction projects in non-primary markets.

Check out the entire piece here at NREIOnline.


10. May 2016 by Wayne Grohl
Categories: Property | Tags: , , , | Leave a comment

Survey: CRE Lending Trends

The NAR Commercial annual report Commercial Real Estate Lending Trends 2016 is now available for free download. The 31-page overview of the national commercial property markets includes a great many leading and trailing indicators that situate the commercial property markets in the wider economy.  Wondering what sector added the most jobs in 2015?  (It was business and professional services.)  Like to know the total CRE closed transactions in ’15?  $534 billion, says NAR research partner Real Capital Analytics.  Interested in the national average for a commercial real estate deal in 2015? $1.8 million.

You can get this overview for free in two ways.  Download a PDF using this link, or peruse the report clicking on the image right below in this page.  Happy reading!


05. May 2016 by Wayne Grohl
Categories: NAR Research | Tags: , , , | Leave a comment

You’ve Got Mail (But Who Really Sent It?): The Risks Of Online Financial Transactions

Still running your brokerage or property management business on an AOL email account? Law blog JDSupra Business Advisor has something to say about that decision. In an April 27th post “AOL, Dropbox, And The Big Uh-Oh,” a story is told by data security-focused attorney Drew Sorrell concerning the purchase of a New York apartment, and how it went wrong during a trip down the intertubes. (Despite the headline, Dropbox is not involved in the story.)

A New York couple brought suit against their former law firm because it used an America Onlineaccount to transact firm business.  If you are my age you probably remember that AOL and “You’ve got mail!” were the future—back in 1990.  Well, now AOL is culturally a relic of the past and occasionally I still run across someone who is using an AOL account for their email.  Usually, I silently judge them as technological dinosaurs (don’t tell me you don’t do the same thing).

Well, it turns out that this law firm and its AOL account were being used to help a couple purchase a $19.4 million cooperative apartment in Manhattan. Hackers had breached the firm’s AOL account and were monitoring its email traffic.  The hackers then used the account to pose as the attorney working on the deal to direct the clients/couple to deposit $1.9 million by wire transfer into a hacker-controlled account. The hackers were kind enough to send the buyers/clients a receipt for the funds. 

Once the fraud was detected the couple was able to recover all but $196,200 (plenty enough to still ruin my day).  While this is a brand new suit, it should be warning enough. So, what are the lessons learned here?

As a business technology observer, I’d offer that there’s nothing very special about AOL email addresses when it comes to risk of data security – committing millions of dollars of transactions over insecure email can go badly wrong no matter what service you use.

While you can read the entirety of the post and the lessons learned, let me interject with the usual disclaimer: Take nothing you read at The Source blog or really, at any blog, as legal advice.  Always, always, always get advice from qualified real estate counsel.

Source: AOL, Dropbox and the Big “uh-oh” | Lowndes, Drosdick, Doster, Kantor & Reed, P.A. – JDSupra

Photo credit: BusinessInsider

02. May 2016 by Wayne Grohl
Categories: New Technology | Tags: , , , , | Leave a comment

When An Apartment Complex Anchors A Baseball Player’s Contract

English: KC Royals player George Brett bats du...

George Brett, Kansas City Royals, 1980

I stand before you as an unapologetic, lifelong baseball nut, proud to announce that my Chicago White Sox stand today atop the American League behind excellent pitching and regular outbursts of offense courtesy of Todd Frazier, Melky Cabrera and Adam Eaton.

I hear you ask: great, but what in the world does baseball have to do with apartment complexes?

If anybody would make the connection, it would be yours truly.

Come with me to Kansas City. Rewind to 1987. There we will find Kansas City Royals legend George Brett facing contract negotiations with the team’s then-owner, apartment developer Avron Fogleman.

Brett, a twelve-time All-Star third baseman, is just past the peak of his twenty-year career and commands a salary among the highest of his day – over $2 million.

But there’s a very unique wrinkle in this deal: it’s an apartment complex in Nashville called Country Squire Apartments, developed by Fogleman. Still standing today, this 1,100 apartment complex was completed that year.

Amazingly, equity in the project, plus a buyback agreement, served as a source of compensation for Brett and his teammates Dan Quisenberry and Willie Wilson.

The NYT’s Murray Chass wrote in 1987 on the deal:

The contracts, which are linked to Fogelman real-estate projects in Nashville and Memphis, where he lives, are probably the most difficult in baseball on which to place a value. The amount of money the players will receive from the real-estate deals makes them so.

Assessing the contracts on the best information available, however, the three Royals will be among the 10 highest-paid players this year. The values of their contracts for 1987:

Quisenberry $2,293,509 Brett $2,205,000 Wilson $1,935,296 In salary alone, Brett will earn $1.5 million, Wilson $1 million and Quisenberry $800,000. But there are those real-estate deals. Brett’s contract is tied to Country Squire Ltd., a 1,100-apartment complex in Memphis that is scheduled for completion this summer. Quisenberry’s and Wilson’s financial packages are tied to Stewart’s Ferry Ltd., a 700-apartment complex in Nashville that has recently been completed.

Brett is guaranteed a minimum cash flow of $1 million from Country Squire until December 1991. At the third baseman’s choice, the Royals will buy his 10 percent interest in Country Squire for $2 million.

Both the term and the nature of these development-equity driven contracts are very unique both to baseball and to apartment development — but in one sense, it was just another day in the marketplace, matching value in one place (third base) to value in another (Memphis).

Photo credit: Wikipedia

29. April 2016 by Wayne Grohl
Categories: Apartments | Tags: , , , | Leave a comment

Los Angeles Buildings Targeted For Earthquake Refit

English: Los Angeles skyline and San Gabriel m...

Brokers, property managers and landlords of Los Angeles: be aware that an updated list from the Los Angeles Department of Building and Safety (DBS) has arrived. The list identifies thousands of buildings that may potentially require earthquake retrofitting, including those sporting “tuck-under parking” designs and other popular constructions that are especially susceptible to collapse in earthquake conditions. The list contains over 23,000 addresses.

Buildings that are most vulnerable have been identified with the following criteria:

  • Consist of 2 or more stories wood frame construction
  • Built under building code standards enacted before January 1, 1978
  • Contains ground floor parking or other similar open floor space

How Do I Get The List?

You can get to the list in two ways. The Los Angeles Times has published a searchable website that you can use after the link.  You can also obtain the entire list by request to the DBS by contacting the LADBS Custodian of Records at (213) 482-6770, or email

Soft Story Construction Targeted

In October 2015, Los Angeles passed an ordinance requiring retrofitting for “non-ductile concrete and soft-story wood frame” buildings. According to law blog JD Supra, inclusion on the list does not mandate retrofitting; it requires only that building owners within one year of receipt of formal notice from DBS prepare a structural analysis showing whether their buildings meet the earthquake standards promulgated in the ordinance. Further, appearance on the list does not constitute notice, says the JDSupra piece penned by Tetlo Emmen and Alfred Fraijo.

Photo credit: Wikipedia

28. April 2016 by Wayne Grohl
Categories: Construction | Tags: , , , , | 1 comment

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