Pittsburgh Yards, a development project in Southwest Atlanta, announced the addition
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Tag: <span>commercial real estate</span>
“What is commercial real estate?”
Commercial real estate is an industry that is not necessarily widely known and promoted. Because of that, when some people hear the term real estate, they automatically think of a residential property. Most likely, the reason for this is because much of the population has either directly or indirectly experienced facets of the home-buying experience. On the surface, they may seem similar, but there are many, many differences between commercial real estate and residential real estate. Let’s talk about some of them. Welcome to your crash course – Commercial Real Estate 101.
“The main difference is…”
A property that provides a living space is considered residential real estate. On the flip side, a property that is exclusively used for business-related purposes with the intention of generating income, is considered commercial real estate. Commercial real estate is segmented into different niches to include retail, industrial, land, multi-family, mixed-use developments, and office. The performance of commercial property, including sales prices and new building rates, are often used as a measure for business activity in a given market or submarket.
“What is retail real estate?”
Retail properties are used to market and sell consumer goods and services. They range from shopping centers to individual stores and pop-up shops to big box stores like Saks Fifth Avenue and JCPenney.
“What is industrial real estate?”
An industrial property is a property that is used for the actual manufacturing of something. It can either be considered a factory or plant. These building types are usually zoned for light, medium, or heavy industrial. This includes uses such as warehouses, garages, and distribution centers.
“What is land real estate?”
Land is real estate property, less buildings and equipment, which is designated by fixed, spatial boundaries. Land ownership might offer the titleholder the right to any natural resources that exist within the boundaries of their land.
“What is multi-family real estate?”
A multi-family property is any residential property that contains more than one housing unit to include duplexes, townhomes, apartment buildings, and condominiums. These are some of the most common examples.
“What is mixed-use real estate?”
Mixed-use properties or developments combine residential and non-residential buildings. They can be a single building, multiple buildings, or an entire neighborhood. Mixed-use developments provide ample access to community amenities and foster community involvement.
“What is office real estate?”
Lastly, we have office real estate, which is what I focus on. Office properties are occupied for a variety of different purposes. Office users can engage in retail enterprises, services businesses, non-profit organizations, technology firms, etc. Office can refer to entire buildings, a floor, parts of a floor, or office parks such as Concourse Office Park in Atlanta, GA featuring the King and Queen towers. Office buildings are categorized by their height.
“How is a building defined by its height?”
An office building has less than 7 stories above ground level is classified as a low-rise building. An office building that has between 7 and 25 stories above ground level, is classified as a low-rise building. An office building that has more than 25 stories ground-level building, is classified as a high-rise building. Office buildings are further categorized by class.
“What is building class?”
Class A – Building classes range from A to C and are determined based upon the physical and locational aspects of building. Class A properties tend to accommodate users who need high-quality finishes and materials to attract a specific employee or customer. The building is normally located close to amenities and prestigious areas.
Class B – With class B properties, they tend to be more functional and probably will be highly efficient. They will be nice but cost-effect and sometimes building age considered when classifying a building. If the building has high-quality finishes but the design is kind of dated, the building could be considered a Class B.
Class C – Class C Properties have physical, functional, and economic obsolescence. They tend to be in less desirable areas they may not look very pretty, however, they normally have lower risk and can accommodate start-ups that need lower occupancy costs.
Georgia authorities began using the Georgia World Congress Center as a temporary hospital in April of 2020 to handle COVID-19 excess patients. The focus of the center is on the patients with mild to moderate coronavirus symptoms. Per Georgia Emergency Management Agency’s Deputy Director Mark Sexton, “The intent is to let the local area hospitals have a location where they can move the patients out that are beyond their most critical needs, and place them in this facility so we can let them complete their recovery. It looks like a hospital.” The governor has acknowledged that moving more patients with coronavirus to the GWCC would help to relieve the burden on state hospitals.
Recently, with coronavirus hospitalizations growing to record-breaking highs, Governor Brian Kemp is reopening the facility after it closed on May 16. When it was initially opened, it was in anticipation of an expected peak of cases around April 26. The peak never fully developed, however, and the hospital was broken down. The state reported a single-day record high of 4,484 new cases on Friday, and the alternative care facility was contracted back into use, with an expected addition to the infrastructure of nearly 100 ICU beds.
As 82% of Georgia’s critical care beds are in use, hospitals are rapidly reaching capacity. Emory Healthcare claims hospitalizations of COVID-19 patients have tripled in the past two weeks. The state, in addition to the care facility at the Georgia World Congress Center, has sent mobile care units to Albany, Rome, Gainesville, and Macon.
While more and more hospitals are approaching maximum occupancy and cases continue to increase, it seems that for quite some time we may not hit the peak. Per Governor Kemp’s office, “The state is coordinating and paying for increased staff at dozens of healthcare and long-term care facilities across Georgia. We are supplying personal protective equipment, working with local leaders, and projecting future needs in accordance with the Department of Public Health’s guidance at every turn.” If we keep going in a similar direction, we will leave coronavirus in the past and move forward with a stronger, safer, healthier future.
GMA New Headquarters and Renovation Project
On February 1st of 2019, the The Georgia Municipal Association, Inc. (GMA) began soliciting proposals from firms interested in providing professional architectural services for the construction of a project known as the Georgia Municipal Association New Headquarters and Renovation Project, located in Atlanta, Georgia, consisting of a new building, a parking deck, and a renovation of an existing building. New South Construction broke ground on new downtown Atlanta headquarters at the top of 2020. Truist financed the project.
On Monday, January 27, 2020, the GMA held a groundbreaking ceremony for the new four-story, 27,000-square-foot building. The building brings GMA much needed additional office space, and will include a five-story, 146-space parking deck to directly connect three (3) floors of the building. The new building will include a first-floor conference room for GMA Board meetings and other functions for a capacity of 140 people. The fourth floor of the building will feature a roof-top terrace large enough to accommodate up to 200 people for special events. The existing 24,000-square-foot building, The Burgess Building, will also be renovated and connected the new building via a beautiful courtyard. The new building is scheduled to deliver in December 2020, however, the pandemic may affect the timeline. Not unlike a bulk of what has happened this year, this project is history-making.
Downtown, My Home
I wanted to take a different route and talk to you guys more on a personal level about business. This year has been quite tumultuous for most people, including myself. My story is the same. Only the details are different. I think we all came into 2020 believing the turn of this decade would bring magic and wonder in the form of new opportunities…but all we’ve really seen is chaos. Who would have thought the world would end up on this path? My own journey through this has been interesting. I’ve been at three different brokerages in my career and, alas, I finally found my home. In mid-March of this year I started working as a tenant representation broker at my dream brokerage, however, my first day was the day they shut the offices down for the pandemic. It was an eerie feeling. I found myself sitting in the lobby waiting to be called upstairs and, despite that the building itself is 41-stories tall and there’s a waiting list for the parking deck, I was the only one there besides concierge and the cleaning crew. I wasn’t sure how to feel or what to expect, but I certainly didn’t think I’d be writing this blog post 3 ½ months later from my home office.
Navigating the commercial real estate industry is tough enough but when you add a pandemic plus rioting, it tends to complicate things even further. It also doesn’t help when the bulk of the rioting took place in your chosen submarket of focus. Since things are unsafe on so many levels, I usually only leave my house to buy groceries and to take clients out on tours, but I made an exception last week. A client needed assistance with site selection, so I had to venture out to my submarket of choice. I decided to bring my son, a future broker, along with me so he could take notes and get some exposure and real-life training. I thought it would be great to take him to my favorite taqueria before we got to work. I found some street parking and we started our walk to the restaurant. As we turned the corner to get to the street we were looking for, my heart sank.
Am I really not getting tacos today??
It was as if I wasn’t aware of all the rioting that took place there. Maybe on some subconscious level, I momentarily blocked out what happened in order to enjoy that moment of walking to my favorite Mexican restaurant with my son. I’m not sure what it was exactly, but when I saw at all those amazing restaurants boarded up, I became deeply sad. Knowing destruction is one thing. Experiencing it is another. Then I thought about my career. “How am I going to navigate this storm?” I couldn’t let myself get down in front of my son, so I decided to discard the bigger gloomy cloud and focus on the smaller one. “Am I really not getting tacos today??” Even though it looked like a boarded-up ghost town, I decided to start walking down the street anyway. Right as I was about to apologize to my son about the food, I saw two college students walk out of the restaurant. The joy I felt was immense (nowadays, it’s all about the little things)!
My first thought was, “Yay…I get food!” My next thoughts were about hope.
Going into that taqueria and ordering the same thing I have always ordered from the same man for the past 4 years gave me hope. It renewed my belief that there is always a positive outcome if you try hard enough. It showed me that even though there may be barriers in life right now, beautiful creations are still cooking within those walls, even if you can’t see it. It reminded me that I can find some peace and stability in this, and you can too. All you have to do…is keep walking anyway.
Downtown Atlanta is shaking some trees
I heard about the sale of the CNN Center last night and I cannot stop thinking about it! The CNN Center, located in Atlanta, Georgia, is the headquarters for CNN and other WarnerMedia companies around the world. WarnerMedia, deeply rooted in the Atlanta culture, made the bold decision to sell the CNN Center and relocate operations to its newly renovated Techwood center. The change will not be immediate, and employees will remain at their present location for quite some time. This makes sense considering WarnerMedia unveiled a commissioned mural portrait of Turner at the building park late last year.
WarnerMedia plans to sell and lease back the CNN Center for at least five years in an effort to raise capital. Desroches has been working for some time to determine the highest and best use of the CNN Center and, he and his team, have ultimately decided the best course of action is to sell. Furthermore, many of CNN’s most popular, have moved to New York City.
Only time will tell…
Opened as the Omni Complex in 1976, the CNN Center has been a tourist attraction for decades, providing behind-the-scenes tours that allow an inside look at how live broadcasts are created and transmitted globally. CNN has occupied this building since 1987, when Ted Turner moved the network from the original Techwood campus. The center featured the Omni Hotel and a large food court and gift shop. On May 29th, protests over George Floyd’s death at the hands of police turned violent, resulting in damage to the exterior of the building and some part of the interior. The famous CNN sign, located at one of the main entrances, was damaged too but was fixed the next day.
It may seem that the protests sparked the decision to sell, and although the announcement was made only one month after the initial damage, that’s not the case. The decision to sell the property was made to cut costs has been in the works for years. The plan was set in motion after AT&T purchased Time Warner. Perhaps rioting and disruptions were unpleasant catalysts setting the plans into immediate action, or it was initially been projected for this time frame. Pascal Desroches, CFO of WarnerMedia, suggests that the existing CNN Center could be repurposed from an office building to have more emphasis on retail and mixed-use. That could be an amazing addition to the downtown submarket.
Over its 30+ year presence in Atlanta, the CNN Center has had a major impact on the city. Just a few years ago, in honor of the founder, the road that runs in front of the building was renamed “Ted Turner”. While they aren’t turning their back on the city, the move will displace a significant number of WarnerMedia’s 6,000 Atlanta personnel. Because of the ongoing pandemic, we probably won’t see the effects of the relocation for quite a while. Who knows? The move may very well be for Atlanta’s benefit. Only time will tell.
You are a successful business owner and everything is booming in your world.
Your current location has been good to you but your client base has grown dramatically. The past few years have afforded you a great proof of concept but you know you could offer your clients more. You know you need a new atmosphere and better location to best serve your clients. Where do you start? How do you accomplish that?
It sounds like you a need a tenant representation broker. A broker will find you a great new space and negotiate you a killer deal. That sounds simple enough, right? Let’s delve in a little deeper. Read on for your “no-cost-to-YOU” solution for getting a better space.
#1: YOU are the first priority
A tenant rep will have great relationships with many landlords and listing brokers. As a result, this will lead to a smooth transaction for you. Tenant representation brokers work on your behalf. They have no obligation to landlords or the buildings they present. It is their legal, fiduciary responsibility to you to evaluate buildings, locations, and leases without any bias. Additionally, they will not promote one building over another. Tenant representatives will work to position your deal in the marketplace. They will also leverage the best possible transaction both qualitatively and quantitatively. They will help your bottom line.
#2: Evaluating commercial real estate is a full-time career
In order to accurately identify lease opportunities, significant time and work goes into the process. This is time that you, like many professionals, don’t have to spare. Tenant representation brokers will determine your unique office needs and engage the market. They will analyze all alternatives and negotiate terms. Ultimately, they will find you an office space that meets your business needs. This process will ensure that you make the proper real estate decisions while paying attention to your operations.
#3: We focus on what we know so you can focus on what you do
Rather than taking time to educate yourself on the commercial real estate market, a tenant representation broker will do that for you. They can manage everything from needs assessments, parking requirements, zoning restrictions, and as well as establishing timelines and the lease execution. The decisions you make now will impact the efficiency, productivity, and profit of your organization. A tenant representation broker is sensitive to that.
#4: Tenant reps help you to determine what’s best
Defining and analyzing your business objectives will help you determine what you need in your office space. A tenant representative will apply consideration to your budget and future growth. Do your projections include expansion? Do your employees need to be near public transit? Do you need all offices on glass? Is walkability a major factor for your business model? A tenant representation broker will know all of the right questions to ask. This will help to determine the right commercial space for you.
#5: Tenant representatives have numerous resources…seriously
Searching for new space on your own can be frustrating. It is difficult to get an accurate idea of what’s available in the commercial real estate market. Many websites that have out-of-date or incomplete information. It may even be hard to get a listing broker to call you back! A tenant representative will have the most inclusive list of commercial real estate options in the market. Tenant reps have access to exclusive commercial real estate databases, industry relationships and knowledge of off-market options. This enables tenant reps to give you a variety of quality options that may not be possible to acquire on your own. If you don’t believe me, try calling a few numbers on the “For Lease” signs and see how things go. You’ll see that I’m right!
#6: Tenant Representatives will handle negotiations
Going through the negotiation process can be overwhelming. Having a tenant representative who knows the market and is exclusively representing your interests is important. They understand the need to capitalize on timing and market conditions. They will apply negotiation techniques to create the most leverage on your behalf. This will help you receive the best lease terms possible without the stress of negotiating alone. Lastly, they know the tricks of the trade which will help you.
For instance, if the market price for milk is $3.06 per gallon, you will pay $3.06 for that gallon of milk from the grocery store. If you are a vendor, you could go directly to that distributor and negotiate a much lower price point. As a vendor, you have more negotiation power. Distributors deal with vendors. HMOs deal with doctors. Landlords deal with tenant representation brokers. It’s as simple as that. Landlords will always negotiate with tenant representation brokers on your behalf. They do so because they trust the tenant rep to qualify their client before bringing them to the space. This saves the landlord a time by not having to qualify the prospective tenant upfront.
Tenant representatives can get you a ton of other incentives. Some include free rent and a break on the rental rate. They may even be able to get you more concessions!
How Much Is It Going to Cost Me?
On a final note, remember when I said you can get your space at no cost to you? Let me clarify! Tenant representation services are free because the landlord pays your representation for you. I know that sounds super crazy but that IS how this crazy thing works. The landlord sets aside a budget for representation when he/she acquires a commercial property. Whatever that budget is, is typically split down the middle. Half goes to the landlord’s representation and the other half goes to the tenant’s representation.
Why would a landlord do such a thing, you ask? A landlord is willing to pay a tenant rep’s commission because he/she feels confident that they are bringing a viable tenant to their establishment. They are willing to pay for that. I know it’s weird and I don’t make the rules…I just play by them. If you are looking for office space, I’m more than happy to point you in the right direction. I hope you found this helpful!
Resist the Urge
You are driving in your car and you see a “For Lease” sign on the building. You happen to be in the market for space and you want to call for more information. Logically, that makes the most sense, however, the phone number you see is for the building owner’s representation. If you do not have your own representation, the situation can quickly become unfavorable for you. You are one of the lucky ones if you DO know you are dealing with the competition but, unfortunately, many business owners aren’t even aware of the conflict in the first place. They simply see a desirable building and call the number none the wiser. Resist the urge to call the number on the “For Lease” sign. Instead, take down the number and the broker’s information and give it to you tenant representation broker.
This is when the tenant representative rides in on the white horse and forsakes all landlord allegiances to represent only the tenant in commercial real estate transaction. Tenant representation has taken root in corporate America, where space users seek out tenant-only brokers and tenant-only brokerage firms have grown in response to this demand.
Get Exclusive
Tenant representation brokers are commercial real estate brokers who work exclusively for the tenant and never represent the landlord. The tenant representative role developed in response to the conflicts of interest that were, and still sometimes are, rife in the industry. They are now a universally embraced, specialized sector of commercial brokerage, with a broader range of services focused on the unique needs of a tenant such as space planning, construction management, lease renewal consulting, site search, financial analysis and strategic negotiations.
Risk of Conflict
There is a very real risk of working with a broker who has blatant conflicts of interest. It is in your best interest to be intentional when searching for a broker who only focuses on tenant representation. In the old model, the landlords and their brokers held all the cards. The tenants were merely a means to an end. With the advent of tenant representation, the industry is waking up to the reality that the tenants actually hold all the cards, because the tenants pay the rent. In truth, landlords are utterly dependent on the rent tenants pay as their sole source of income. Unfortunately, many tenants don’t realize they hold all the cards and have all of the power. A good tenant representation broker will enlighten you on the leverage you actually do have.
Got Tech?
The implementation and advancement of technology is spreading like wildfire across many industries. Commercial real estate is right in line with the craze. There are so many new and exciting technologies popping up all over the place. This is giving tenants more power over their commercial real estate search. Technology is majorly affecting how tenants search for office space as well as their commercial real estate portfolio management.
Is Your Broker a Techie?
If you are working with a technologically savvy tenant representation broker, you could have a serious advantage. Today’s technology avenues can afford you the option to research properties as well as the property owners online. A broker can educate yourself on what the market is doing in terms of average rental rates. They can also determine what areas are the most walkable, which buildings have the most amenities, as well as where your closest competition lives.
It’s a Full Time Job
Finding the perfect office space is a time-consuming venture. With access to advanced technology, your tenant representative may be able to present you with virtual walk-throughs. They can also give you floor plans that you can manipulate to your specifications. Additionally, drone footage can give tenants the ability to explore the exterior of a building and neighborhood without ever walking away from the computer. This is especially helpful for out of town or international clients.
Save Me Money
Once you have found the perfect office to lease, technology can make your ongoing expenses more affordable. Smart technologies including SMART thermostats can provide tighter control over energy expenditures. Advances in telecommunications make it easier for employees to work from home. This can reduce your square footprint and bottom line. Businesses can take advantage of highly efficient LED lighting fixtures which can further conserve energy. Lastly, many buildings in your central business district are LEED certified offering energy efficiency throughout the entire premises.
Get Organized
If your company has a portfolio of leases, technologies such as commercial real estate databases and CRM’s can easily help keep things organized and accessible. The utilization of cloud severs, document management, and video conferencing software can aid to facilitate virtual meetings with your tenant rep broker, attorney, and if needed, the landlord. You can also share lease drafts and other documents using these technologies in a streamlined, efficient, and effective way.
