Flex Space is the Next Big Office Amenity

Let’s face it, the office hasn’t evolved much over the last 30 years. But a global pandemic certainly changed that. Faced with tenants seeking spaces that match their new working models, landlords are stepping up, offering office spaces that are designed, amenitized, and even leased in new ways.

Flexible leases, with lengths as short as month-to-month, make real estate decisions easier for tenants, many of whom are still trying to figure out their long-term workplace strategies. And leases aren’t the only new offering. Flex space brings additional variety to the office category, giving companies more options for what type of space they may need.

When most people think about flexible office space, they typically think of co-working, but the spectrum of flex office space has gone far beyond just communal, open office co-working spaces. Flexible office options work for any building depending on which space is available, where the building is located, and the type of tenant it attracts. Those traditional hot desks and meeting rooms rented by the day or hour are now joined by full-fledged event and collaboration spaces designed for gatherings of distributed teams and off-hour events. In addition, flexible office suites marketed to startups and small businesses are now accompanied by their more mature sibling, enterprise flex suites.

New target tenants for flex emerge

A growing subcategory of flex space is designed and marketed for larger companies. These 3,000-10,000 square feet enterprise suites typically offer a higher level of customization for the space itself, along with additional services that bring the company’s culture and brand to life without putting internal pressure on the tenant to do that themselves.

Big companies looking for supplementary spaces and companies growing faster than their corporate real estate footprint are ideal tenants for these spaces. Today’s flex offerings have matured to meet their needs, offering better IT infrastructure, elevated workplace experiences, and exciting amenities, time and cost-intensive aspects of having an office that tenants don’t have to manage anymore.

Investors are intrigued by this enterprise suite model because of its predictability to revenue projections. Enterprise suites typically have one-to-three-year lease terms vs. monthly leases for smaller co-working flex suites. This higher suite class is also leased to more creditworthy tenants, another check in the pro column for investors.

Enterprise flex suites give companies the agility to grow or shrink their office portfolios with less risk. But perhaps the bigger draw of these suites is offloading the pressure to curate in-office experiences that lure staff back to the office. Instead, landlords and asset management firms take on this responsibility when they offer flex spaces. They own their positions as experts in the new workplace, taking what they’ve learned across their portfolios to place more of a focus on experience, wellness, and collaboration.

Flex for any building

Rather than leasing space to co-working providers, landlords are investing in their own flex space offerings, diversifying what they offer to the market and their existing tenants. Right now, collaborative spaces are the biggest growth driver for flex space overall.

Melissa Schilo, Vice President of Account Management for Flex by JLL, explains, “We always knew that meeting rooms were complementary to an office or flex suite, but that category is now running its own race. The demand for collaborative meeting spaces has increased by 40 percent as companies look for thoughtfully created environments designed for collaboration.” These rooms (that can be reserved by the day, hour, or week by tenants or non-tenants) are perhaps the easiest entry point for landlords to enter the flex game.

Flex suites, dedicated spaces for a company to rent on a monthly or annual basis, are still in demand but need a bit of a makeover to thrive in a hybrid work setting. Instead of an open office set up for five or even thirty people with one or two small huddle rooms, that ratio of desks to meeting space within a suite might need to be close to a 40-60 split with added semi-private spaces for hybrid collaboration or small group working areas. In short, there will be more thoughtful spaces for people to work together, rather than solo.

In comparison, the cost of building out a traditional co-working floor dominated by hot desks and open spaces is more prohibitive. The conventional co-working revenue model isn’t as attractive to many landlords and investors, given its lack of predictability. However, it’s a promising option for buildings in prime, central locations for business travelers willing to pay a premium for easy access to amenities.

The importance of activation

Simply offering flex space isn’t enough to make it a viable revenue stream. It’s not like the Field of Dreams. Just because a building has it doesn’t mean people will want to work there. Creating a memorable experience that tenants and guests want to repeat is just as important as the space itself.

Activating a space is often referred to as the ‘art of placemaking,’ creating both a buzz and a community that gives a place its personality and purpose. Pre-pandemic, programming in offices often revolved around a few large events for tenants, but now, space activations are becoming smaller and more frequent, given people’s varied and sometimes inconsistent in-office schedules. Meghan Rooney, Vice President of Operations for Experience Management at JLL, says this programming approach is a win for building managers in terms of both budget and time. She says, “People aren’t looking for large-scale events. They’re looking for consistency. They want to feel that personal touch on a more regular basis.”

These space activations could be pop-up events that let occupants explore and connect with the building in new ways. For example, the Aon Center in Chicago holds “Breakfast with the Bees” events to let tenants interact with the beehives housed on the building’s roof and take home some honey harvests. Rooney’s team is also working with clients to experiment with underutilized spaces to see which activations gain the most traction with tenants, like turning a conference room into a meditation space or doing a series of food and beverage pop-ups in the corner of a lobby.

Green spaces, food and beverage options, or just space to rent for private events and meetings can also be made available for the broader community. Jacob Bates, Head of the Americas for Flex by JLL, emphasizes that, when done right, this type of placemaking has a powerful potential to extend the brand of the building beyond its own four walls. “Flex opens up the building to new customers, bringing spaces and experiences to the community, to the public. Suppose you can activate an amazing event space that was originally only built for the tenants. In that case, you’re not only creating new revenue streams, but you’re curating a new future tenant mix by going directly to the consumer,” he explains. These consumers, particularly those who work at large companies, are new to the flex game and come with more buying power and choice than ever before.

The pandemic has grown the demand for flexibility in the office. The increasing popularity of flexible options like collaboration spaces, flex, and enterprise suites is also turning landlords into advisors for their tenant’s workplace needs. Beyond the diversification that flex space brings to office buildings, it creates a model that allows companies to have a long-term, multistage relationship with their landlord. A tenant can grow from a one or three-person office to a flex suite, then an enterprise suite until they are ready to enter a traditional lease. A tenant can grow and mature within the new ecosystem of the building or the broader portfolio. And that is a true evolution of the role of the landlord.

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How a Mangled Supply Chain Led to an Industrial Real Estate Renaissance

Despite President Biden’s casual announcement that the COVID-19 pandemic has come to an end, the industrial real estate sector is still reeling from the virus’ impact. Bubbling geopolitical tensions, a mangled supply chain, and sky-high inflation continues to affect the market and for valuations of industrial properties. This is particularly true when it comes to properties that support the manufacturing sector.

The COVID-19 pandemic was so monumentally disruptive that manufacturing companies are clamoring to pull back their operations overseas and bring them closer to home. Whether it’s by way of re-shoring (where companies bring back their manufacturing services from overseas to their country of origin), or nearshoring (where businesses transfer work to regions geographically closer to their base of operations). Either way, industrial real estate is getting a reset after a decades-long trend of pushing manufacturing jobs overseas.

Bright promises and foggy data
America began its life as a titan of manufacturing, but by the early 1970s, manufacturers began outsourcing a sizable portion of their production to countries with less expensive workforces, like China. The allure of offshoring was so palpable that the McKinsey Global Institute touted it as a “win-win situation for the global economy” back in 2003. Yet over the past few years, the overreliance on offshoring began to show cracks.

As offshoring sharply increased in the 1990s, the American manufacturing sector employed more workers than any other sector in most U.S. states. Many of those jobs were lost to foreign competition.

U.S. manufacturing employment dropped from 16 million workers in 1993 to a little over 10 million by 2010 | Source: Centre for Economic Policy Research
It’s incredibly difficult to pin down the extent of the effects manufacturing plant closures had on commercial real estate values in the corresponding area. The direct impact offshoring had on American jobs is a good place to get an idea, but even that data is hard to come by. Even the Congressional Research Service struggled to find the exact answer in 2012. “The only regularly collected statistics on jobs lost to the out-of-country relocation of work come from the U.S. Bureau of Labor Statistics’ (BLS) series on extended mass layoffs,” the congressional report reads. The BLS series also couldn’t provide a clear answer because the data pool was extremely limited. “Since 2004, BLS has asked firms with at least 50 employees that let go of at least 50 workers in layoffs that lasted 31 or more days whether the firms moved the laid-off workers’ jobs out of the United States. Given the series’ exclusion of small companies and focus on large layoffs, it underestimates the number of jobs lost to offshoring.”

Even today, the U.S. still does not track the amount of jobs lost to offshoring. At most, the U.S. Department of Labor keeps count of the number of workers who petition for Trade Readjustment Allowances, or support payments for individuals who cited job loss as a result of foreign imports (after they’ve already exhausted their unemployment compensation). What we do know is that during Barack Obama’s second term as President, 209,735 petitions for trade allowances were filed. Despite vowing to keep manufacturing jobs on U.S. soil when he was ushered into the Oval Office, Donald Trump’s administration saw just slight improvement with 202,151 petitions.

Even with murky hard data, the loss of American jobs to offshoring was a grievance aired in the political arena, and from the communities affected, it’s easy to see why. Not only did these layoffs damage U.S. workers, they also hurt entire local economies, causing mass exodus in some cases. From a real estate perspective, total community dismantling is not exactly a good omen for business.

And then, of course, COVID happened.

Traumatic supply chain injury
The pivot to offshoring in the name of fast-paced growth and profit left the manufacturing sector incredibly vulnerable to a global pandemic, showing that the model of greater distance comes with greater risk. Due to its long-standing reliance on manufacturers in Asia, American manufacturing became overly dependent on imports, which completely backfired as the global supply chain spiraled out of control and crippled what remained of the domestic supply chain.

Results of the U.S. Census Small Business Pulse survey. From May 31-June 6, 2021, 36 percent of small businesses reported delays with domestic suppliers | Source: Whitehouse.gov
“COVID was a wake-up call,” said CNBC commentator and former hedge-fund manager Ron Isana during the National Association of Realtors C5 Summit. “We’re seeing companies move from a just-in-time model to a just-in-case model.” Isana is certainly not alone in the opinion that supply chain vulnerability casts offshoring in a harsh light. The National Association of Manufacturers, the largest manufacturing association in the United States, recently released their Third Quarter 2022 Outlook Survey which showed damning evidence that supply chain issues will continue to plague manufacturers even after the threat of the COVID-19 virus has been mitigated. It’s clear that the global supply chain exposed market inefficiencies, but savvy commercial real estate professionals know how to exploit market inefficiencies to their benefit.

Tactical reshoring
Brewster Smith, Senior Vice President of Supply Chain Solutions at Colliers, told me that the COVID-19 outbreak brought home to American manufacturers the hazards faced by offshore business ventures and how dependent they are on the global supply chain to get their goods back to domestic markets. “The supply chain disruption of 2021 taught us that our national supply chain is too dependent on manufacturing capacity in one part of the world that is too far away,” he said. “Re-shoring will help regionalize and/or localize the availability of supply for critical goods that will restore our supply chain resiliency.”

Agreeing with Smith, many companies are either planning to, or have already, recalibrated their operations by transferring their operations that had been moved overseas back to their home base, also known as re-shoring. Last year, more than 1,800 companies re-shored their productions, according to a report from the Reshoring Initiative, a non-profit organization dedicated to reigniting the manufacturing business in the U.S. Businesses want to expand or move their facilities more quickly and with less capital outlay than in the past, evident in the record spike in companies looking to pull their business back.

Smith maintains that the businesses which manufacture commoditized goods will remain overseas, but businesses that churn out goods with intricate production processes (which require a skilled labor force) are more likely to yank productions back. After all, shorter supply chains streamline demand data, improve the efficiency of inventory data, and ultimately improve order reaction times.

But even after the massive reckoning from the global supply chain’s downfall, total re-shoring is not exactly viable for a lot of industries that really would benefit from having their operations much closer to home. The use of foreign manufacturing can be a huge liability for the U.S. drug supply. Pharmaceutical drug manufacturers are not able to pick up and return so easily. Even though prescription drugs and medical devices are highly complex products that require an exceptionally skilled labor force to make them, re-shoring pharmaceutical manufacturing is an endeavor of extremely high costs because biopharmaceutical facilities are subject to hyper-specific regulatory requirements. But even so, there is a strong case for pharmaceutical manufacturers and other industries where re-shoring is too cost prohibitive to reevaluate the local manufacturing strategy and figure out how to improve supply chain resilience and control exogenous vulnerability. The answer? Nearshoring.

Nearshoring to you
Nearshoring and re-shoring are similar concepts that involve businesses positioning their operations closer to the point-of-sale, but nearshoring is the compromise between offshoring and sourcing a local team. The idea behind nearshoring is simple: while maintaining the advantages of being in, say, the U.S., some functions are moved to accessible regions which have lower operational costs, like Mexico. A nearshoring location must have affordable property occupancy costs, adequate transportation connections to the capital and other important business hubs, and a competent labor pool. When compared to a pure reshoring strategy, nearshoring can yield more favorable results, primarily because supply and production risk can be diversified, partners with specialized skills and knowledge can be chosen to complement existing capabilities, and businesses can benefit from more favorable tax and regulatory structures while more clarity is still lacking in the U.S., as CBRE is seeing in Monterrey, Mexico.

Repurposing existing facilities for manufacturing has drawn a lot more interest from manufacturers. The companies of manufacturers are likewise seeing more upheaval and disruption. Additionally, if manufacturing facility sizes shrink, so may the amount of investment and dedication. As a result, leasing can be seen as having a smaller risk than in the past.

Barbi Reuter, CEO of Cushman and Wakefield, believes that nearshoring is the answer to a lot of industrial woes as nearshoring improves supply chain predictability and reliability while maintaining more advantageous labor access and costs. “There is a desire from employers and manufacturers to manage the downside and improve their supply chains and operations,” she said. Between mitigating supply-chain challenges, overcoming reshoring’s difficulties without sacrificing its advantages, and presenting a more favorable labor-cost environment, Reuter insists that “[nearshoring] is going to remain strong for the foreseeable future.”

The mangled supply chain put re-shoring and nearshoring in the spotlight, but is recalibrating the manufacturing sector closer to home as much of an economic win-win as offshoring was once said to be? Well, not exactly.

Companies flocked to offshoring for years because of the cost-savings, and nearshoring is inevitably more expensive. If we look at it from the perspective of an American corporation, they would nearshore to either Canada or Mexico. Even if it may be less expensive than employing Silicon Valley professionals, this still costs more than recruiting developers from India or China. Companies are also more geographically limited when they opt to nearshore their operations, which could hinder better business partner relations. Advocates who are vying for manufacturing to return to the U.S. for the sake of American jobs aren’t getting their prayers answered, which means that nearshoring is not reinvigorating the real estate markets that the offshore wave of previous decades left behind. Nevertheless, re-shoring and foreign direct investment targeted at specific locations by way of nearshoring are both contributing to the robust recovery of U.S. manufacturing. Even with inflation at a four-decade high and interest rates continuing to rise in the background, investment in industrial real estate has soared. Plante Moran’s U.S. Industrial Real Estate Market Summary of last quarter showed that the sector is experiencing both record-low vacancy rates and record-high rent rates.

With manufacturers shifting to a more robust supply chain management strategy after the pandemic unveiled a flawed system, industrial real estate in North America is experiencing a sudden rebound. After years of the sector being an overshadowed asset class, much in thanks to the offshoring surge of the previous decades, industrial real estate is having its renaissance moment.

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Selling a House After the Death of a Parent

Managing a parent’s death can be difficult, especially if you also have to sell a house. Learn about the steps for selling a house after a parent passes away.

A parent passing away is one of the most difficult times in a child’s life, regardless of when it happens. Whether your parents were old or young, the emotional toll it may take on you could last longer than you expected.

But a parent’s passing has its challenges beyond the emotional fallout. They have belongings and assets you may need to manage and sort through when they die, including a home. If you’re handling the disposition of your parent’s home after they die, keep in mind that it’s not the same as a typical home sale. There are a few things you should be aware of if you’re selling a house after the death of a parent.

Selling an inherited house
If your parent passes away and leaves you their home, you may need to manage the transfer before selling it as long as there are details about the transfer.

“When a parent passes away, they could leave the home to their children by transfer-on-death designation in many states,” said Geoffrey Kunkler, a partner at Carlile Patchen & Murphy LLP in Columbus, Ohio. “If they do not do so, the property will likely be in their estate and subject to the jurisdiction of the probate court.”

Kunkler said a transfer can happen quickly as long as the paperwork is in order. And from there, you can sell it once it’s yours. Otherwise, you’ll need to wait for probate to play out.

“If [the] title has not been transferred out of the parent’s name, the child will not be able to sell it,” Kunkler said. “Depending on what the parent wrote in his or her last will and testament and the rules of the local probate court, there could be multiple steps to take before the child can sell the property.”

The probate process could delay your home sale. If you had plans to list the homes soon after your parent passes, you might have to wait a little longer. Make sure your parent’s will or trust has your inheritance clearly instructed so the process can move faster.

Selling an inherited house with siblings

The best way to settle potential family disputes is to make sure your parent’s will or trust specifically outlines their last wishes. Even then, you’ll need to discuss the next steps with your siblings if you’re planning to split costs and proceeds.

If you’re planning to sell your parent’s home with siblings, get answers to questions like:

  • Who’s handling the sale of the home
  • Who’s funding home expenses?
  • How much is the house worth?
  • How is the splitting of the proceeds happening? For instance, is it equal among siblings or is there a set percentage?

Emotions run high in families when a parent passes, and it’s normal to have disagreements about how assets should be handled. You can request a mediator, but if you don’t have a unified agreement, probate will determine who gets what for you.

Understanding the status of the house
It’s important to know the house’s status before going forward: probate, transfer on death deed and living trust.

“How a house is titled is critically important,” Kunkler said. “If it is in probate, it will go through the court process before it can be sold. If it is set up with a transfer on death deed, the title passes automatically when the decedent has passed, and all the beneficiary typically needs to do is file an affidavit and the death certificate before they can sell the home.”

A living trust is an easier way to transfer assets and property because it avoids the probate process.

“Often probate can be the slowest,” Kunkler said. “Property that is in a living trust will not go through probate and will instead be governed by the terms of the trust document.”

Because probate can be one of the biggest holdups in selling an inherited home, you’ll need to make space in your timeline for this. If your parents haven’t passed but are making end-of-life plans—like estate planning—a living trust might be a good alternative to a last will and testament. It might be a little bit of work now, but it will save you and your family potential problems once they pass.

Do you need a real estate agent to sell an inherited house?
Selling a regular home is already a difficult task, which is why real estate agents offer a big benefit. They can walk you through any hurdles you might face, especially because you’re selling an inherited house.

It’s usually not required to hire a real estate agent to sell an inherited house, but having one could mean the process goes smoothly. You might want to bring other experts on board, too.

“You may want to seek legal or tax advice in addition to professionals who could help assess the house and the real estate market,” Kunkler said. Consider an estate or probate attorney who has experience navigating the probate process and selling inherited properties.

You’re under no obligation to hire professionals, but going at it alone could delay the home sale. You’ll have to maintain the house while it’s in probate and getting toured. You’ll have to list the home , market it, handle viewings and negotiate with prospective buyers and their agents. All that and going through probate can make selling an inherited home feel like a full-time job. If you have the means, consider offloading some of that work to professionals who can help.

Conclusion
Dealing with the loss of a parent isn’t easy, and that emotional load might be even heavier when you’re tasked with selling their home. But there are some actions to take as soon as you can to avoid drawing out the process.

If your parents are still alive and able to, have them outline their specific plans in a living trust, which avoids probate. A transfer on death deed is also a good option, but you’ll need to make sure your state validates it before choosing that option. If those aren’t viable options in your situation, it’s better to have some form of will than nothing at all. Just know that it could take longer to sell an inherited house this way, especially if the title needs to get transferred out of the parent’s name.

The best thing you can do right now is have a concrete estate plan set up for your living parents. If your parents have already passed and you’re in the process of selling their home, you might need to have a great deal of patience and the help of some professionals to better get you through it.

 

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What Developers Should Know About Sunshine Laws

The best disinfectant is sunlight, as the saying goes. That was certainly the reasoning behind the creation of state Sunshine Laws, which were put into place to ensure transparency in government. The laws require that government meetings and records be publicly disclosed and open to the public. The state of Utah enacted the first of these kinds of laws as far back as 1898. Florida adopted similar laws several years later, and all states eventually passed Sunshine Laws in the 1960s and 1970s. But the legislation truly took the spotlight after the Watergate scandal, a saga that played out in front of the country and led to a new focus on government accountability and transparency. In 1976, Congress passed a federal mandate, the Government in the Sunshine Act.

These laws affected the property industry in several ways with additional scrutiny as the government became involved from the very start of a real estate development project, whether it’s a public-private project or not. Plans must be submitted to the city, permits applied for and granted, and in some cases, public hearings and approval from governing bodies are part of the process. In New York City, new development projects can take several years from start to finish, with some projects required to go through what’s known as ULURP, Uniform Land Use Review Procedure, a months-long process that can make or break a development. It’s during these phases in the development process when real estate firms must engage with public officials that firms must exercise the utmost caution to avoid inadvertently disclosing sensitive information.

Better safe than sorry
City officials’ communications are considered public and can be requested at any time. City filings, like project plans and permits, are also public record and can usually be easily viewed through databases. “A lot of communities go above and beyond what they are required to do so people can see what’s going on in government,” said Scott Ziance, a partner at law firm Vorys, Sater, Seymour and Pease LLP. Ziance works with real estate clients who often have projects with highly confidential aspects.

Most of the time, in-house lawyers at commercial real estate firms or services firms will have basic knowledge of the general principles of Sunshine Laws, and the same goes for outside legal representation. The most important thing for commercial real estate professionals to know is what they have in the public domain that their competitors or their tenants’ competitors can use to their disadvantage, and to think about how to minimize what they put in the public domain. “Where I find people get surprised is by how broad public records laws are,” said Ziance. “Unless it’s a trade secret—and that’s a very high standard to meet—almost everything is public.”

Even choosing a project name can be a giveaway to competitors. It should go without saying, but don’t give away the name of your business in the project’s name in any filings or emails unless you absolutely have to do so. Ziance said he’d seen his fair share of techniques by companies to conceal their identity, everything from using college and high school nicknames to simply putting two random words together. However, some companies don’t do themselves any favors. “I have seen my fair share of things like ‘Golden Arches’ where people aren’t that creative,” Ziance said.

Sword and shield
Commercial real estate firms should worry, but not just about competitors getting an advantage. Reputation and public trust are hugely important when it comes to development projects. One developer recently found that out the hard way while trying to get a project approved by the local government. Development firm Provident Land Services had been trying to build an 80-acre mixed-use development in the Charlotte, N.C. suburb of Weddington. The proposed project was met with a lot of concern from area residents, who turned up in force at town council meetings and formed groups opposing the development. The project garnered so much backlash that one town meeting had to relocate to the local high school to accommodate crowds.

Through public records requests, one of the groups discovered emails between the developer and city leaders. The group claimed that the correspondence showed “a lack of transparency” about how the project timeline was presented to the public. The questioning of the communications between the developer and government officials played out in local media. Some of the groups eventually filed complaints with federal and state agencies about the development, and the town council ultimately rejected the project. A similar story played out earlier this year in Alexandria, Va., when activists opposing the overhaul of an art center obtained emails between developers and city leaders through public records requests and alleged collusion between developers and city officials.

Another important step real estate firms can take to protect information is communicating through service providers. That could mean accountants, lawyers, or even civil engineering firms, which often can get out ahead of permitting. Using a third-party as a contact and choosing a project name that doesn’t give away the company and its plans can further delay any word of a project getting out. “Being able to see what your competitors are doing is the way that public records law can be used as a sword,” he said, adding that by getting creative and using caution with filings and communication, the laws can also be used as a shield.

 The idea is similar to using LLCs in commercial and residential real estate transactions, a common tactic among real estate firms, celebrities, and other high-profile individuals and companies. The federal government took aim at anonymous LLCs last year when it passed the Corporate Transparency Act (CTA) as part of the 2021 National Defense Authorization Act. The law was created to crack down on money laundering and the financing of terrorism by requiring the disclosure of information from corporations, LLCs, and similar entities. Rules in the act were due to go into effect earlier this year but have been pushed back.

Sunshine Laws haven’t changed much since they were enacted, except in the aftermath of the 9/11 terrorist attacks. Several states added exemptions for records relating to a building’s critical infrastructure and computer systems for publicly or privately-owned companies. “Basically, they didn’t want to make it easy for terrorists to know about computer systems or infrastructure,” Ziance said. As an expert in the field, Ziance has participated in several seminars on best practices for Sunshine Laws. He often polls attendees on whether they think non-disclosure agreements signed by the highest-ranking executive or official in the community would protect a project from the public. Most people answer yes, which is wrong. “There is a misconception that a signed NDA would have control over public records laws,” he said. “I’ve seen a lot of mayors and EDC officials sign NDAs that are not going to be binding against them. You can’t agree by private contract to something contrary to the law.”

Ziance’s advice for developers looking to start on a project is to get started early by pinpointing what information will be available to the public. Identifying which documents will need to be handed over to the government should be a part of your checklist. The documents could be sensitive from any standpoint, primarily from the perspective of a competitor’s or tenant’s competitor. “Come up with a strategy with in-house or external lawyers for minimizing disclosure of info and minimizing what at all possible for a public records request,” Ziance advised. Developments don’t stay a secret forever, but if you plan ahead, you have the opportunity to get creative and form a clear strategy. Doing so gives you better control over what information is revealed and when. And when communicating with city officials, always remember the front page test: how would this look if it were on the front page of a newspaper?

CBRE: Construction costs forecasted to jump 14 percent in 2022

An ongoing global sand shortage is delaying real estate developments, straining project budgets, and sending some construction companies scrambling to find alternative solutions. The sand shortage has been a growing problem over the last decade, driven by the continued growth of the world’s population and more people moving to urban areas. A recent construction outlook report from JLL found that the US construction industry is seeing “rapid price growth” in the price of sand, and it is not expected to come down any time soon. According to Stanford University, the price of sand has more than doubled over the last few decades, jumping from $4 a ton 31 years ago to the current price of $10 a ton.

Concrete, one of the most widely-used materials in the construction world, is created mostly from sand. It is used to construct buildings, bridges, roads and is also used in cosmetics and computer microchips. In fact, sand is the most consumed commodity in the world, after water. However, keeping up with demand has been a challenge. The kind of sand used in construction is mined from riverbeds, lakes and beaches, and the soaring demand for the material is leading to an environmental crisis in some places where mining is common. And because sand is an unregulated business, the unrelenting demand for the key material has led to violence, death and “sand mafias.”

There are alternatives to using sand in the construction process. One is mass timber, a material that has been growing in popularity in recent years. Another is crushed rock, which is already being used in the US, Europe, and China where it is the main source of aggregates. A third option is recycling waste from construction and demolition sites like concrete or masonry. A report from the United Nations Environment Programme released earlier this year on the sand shortage recommended better regulations and standards surrounding sand extraction in order to protect riverbeds and coastlines. “If we can get a grip on how to manage the most extracted solid material in the world, we can avert a crisis and move toward a circular economy,” said UNEP’s Pascal Peduzzi. While prices may not go down anytime soon for the construction world, it’s an encouraging sign that influential organizations are making the sand shortage a priority.

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HOW TO DO MORE FOR YOUR CREDIT SCORE

Your credit score, also known as your FICO Score, plays an important role when you apply for a mortgage. You can get a free credit report from each of the three credit bureaus once a year at AnnualCreditReport.com. This is the only source for free credit reports, and it’s authorized by federal law. It takes time to build credit for the first time, or to improve your score — there are no quick fixes. But here are some steps the people at FICO say will help improve your score.

Check your credit reports for errors. Get your free credit reports from all three credit reporting agencies and carefully review them for any information that is incorrect or not up to date. When you find an error or information is missing, contact the credit reporting agency that issued the report, as well as the credit card or lender that provided the incorrect information. Checking your own credit report or FICO Score does not impact your score in any way.

Pay your bills on time. This makes up 35% of the FICO Score calculation. Late payments and collections have a significant negative impact on your score. If you’ve missed payments, get current and stay current. The longer your pay on time after being late, the more your score should increase. But if your bill becomes a collection account, it will stay on your credit report for seven years. If you’re having trouble paying bills, contact your creditors, or see a legitimate credit counselor. Seeking such assistance won’t hurt your FICO Score.

Reduce your amount of debt. Making up 30% of the FICO Score calculation is your credit utilization — how much the amount of your debt has used up your available credit. So, keep balances low on credit cards. Pay down your revolving (credit card) debt, rather than moving it around. Pay off the highest interest cards first, while maintaining minimum payments on the others. Avoid closing unused credit cards or opening new cards to increase your available credit — this could lower your credit score.

More tips from FICO. Starting out, it’s advised that you should avoid opening a lot of new accounts too rapidly. This lowers your average account age, impacting your score, and can look risky if you are a new credit user. Open new credit cards only as needed — not just to have a better credit mix, which is unlikely to raise your score. Note that closing an account does not make it go away. It still shows up on your credit report and may be used when calculating your score. Here’s more from FICO about credit scores.

Written by our preferred vendor, Supreme Lending.

Kendra Gunby – Senior Loan Officer
NMLS# 1933458
1000 Mansell Exchange W #310
Alpharetta, GA 30022

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To Wait or not to wait? That is the question.

Interest rate increases and financial market uncertainty have caused many to push the pause button on their home purchase journey.  Why?  Interest rates are still very low, relatively speaking.  In the 1980’s rates were three times higher.  Believe it or not, people were purchasing homes at the time.  Those people are still here and eager to talk about it!  The market has been a little shaky this year.  I’ll give you that.  But, how much does the secondary market really affect the housing market?  Let’s zoom out and look at some important factors before jumping to an answer.  My research indicates that we are at least six years behind on residential home building in the United States.  The phrase “lack of inventory” has become a part of everyday conversation in the residential real estate community across the country.  The result has been homes selling for tens and even hundreds of thousands of dollars over list price and upwards of forty purchase offers for sellers to sort through.  There aren’t enough homes for the amount of buyers in the market.  Meanwhile, rent prices have increased every year.  In most real estate markets, it’s actually a smaller monthly cost to pay a mortgage than to rent (pay someone else’s mortgage).  Here’s my point: the real estate market is insulated from the secondary market, to some extent, because we are experiencing a nationwide shortage of homes while the demand for homes and cost to rent are increasing.  This will be the case for the foreseeable future.  So, make peace with yourself about interest rates and please understand that the house you are eyeballing online, the one with the awesome kitchen, will cost you more in a year from now even if the secondary market continues to struggle.
Written By – Will Bush
Sr. Loan Officer with Affinity Home Lending
NMLS: 1410602
GA RMLO: 70948
FL RMLO: LO76819 • CO RMLO: 100530369
TX RMLO: 1410602 •

Twitter Latest Big Tech Firm to Cut Office Space

Twitter announced this week it would close one of its San Francisco offices and shrink its New York City office footprint in a move to save money and embrace more remote work. The company told employees in an email that it will vacate one of its San Francisco offices in a building close to the firm’s headquarters. Plans for an office in nearby Oakland were also shelved. Corporate office space in major markets including New York, Tokyo, Mumbai, New Delhi and Dublin will also be reduced, and Twitter is also considering closing its office in Sydney and other international cities once leases expire.

The news is the latest in a recent trend of major tech companies downsizing their office space or scuttling plans for more space altogether. In June, ratings app Yelp announced it would close some of its U.S. offices, while earlier this month, Facebook parent company Meta pulled back on plans to expand by another 300,000 square feet at its office in Manhattan, and e-commerce giant Amazon pressed pause on the construction of 4 million square feet of office space in Washington and Tennessee. All of the companies cited a need to reconfigure their office footprint in light of the continued preference for hybrid and remote work from employees.

With many companies in agreement that a higher number of hybrid and remote workers will remain steady, office owners have been busy making sure that when employees do come into the office, they’ll want to stay. Landlords are spending big money on amenities to help draw tenants back to the building, offering everything from doggy daycare to rooftop bee colonies. In Chicago, the city’s iconic Willis Tower recently underwent a $500 million renovation and offers a plethora of amenities for building tenants across 150,000 square feet of space. Whether or not it’s the amenities drawing people back to the workplace, things seem to be heading in the right direction, as office occupancy just hit its highest level since March 2020.

Thank you to Propmodo for this article. To read more, click here! 

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Why Combining Real Estate Expertise With Financial Planning Is A Winning Combination

Although my articles usually focus on business leadership and entrepreneurship, my experience in corporate America prior to joining the Navy SEAL teams and the master’s degree following my service are all in real estate finance, investment and development. As an entrepreneur and business owner, I also find it prudent to also stay apprised of the best ways to make your money work for you.

It is human nature to want to be right, particularly when it is your job to be the expert. That is one reason why financial planners, individuals who have spent years studying and passing examinations to be allowed to consult people about their wealth, can be quick to minimize the role of real estate assets in a client’s portfolio.

The average CPA receives little to no advanced education about real estate, be that the market or how to manage real estate assets. Perhaps more importantly, such an advisor spends little to no time keeping up with the market or working in that space on a day-to-day basis. Real estate is not something that you can track casually; it is a fast-paced, highly nuanced industry.

That is why a new branch of financial planning called Integrated Asset Management (IAM) is gaining traction. The specialty of this sub sector is expertise across asset classes, to include real estate. But the way that is achieved is not by developing new advisors, it is by putting a variety of experts in the same office.

I recently sat down with Andrew Canter, CEO of Canter Companies and a leader in IAM. In our discussion he said, “No one is saying that financial advisors need to develop a whole new area of expertise; that’s just not realistic. But putting financial advisors and real estate experts under the same roof is, and that is starting to happen.”

At an IAM company, financial planners share an office with the other side of the business, which does real estate investing and development. The outcome is a proximity of experts who operate in two different industries that overlap at important junctures.

The need for a hybrid of expertise is growing. Real estate is an attractive investment right now, with interest rates still lingering near historic lows. In fact, some estimates say there are as many as 30 million Americans who have invested in both commercial and residential real estate. And the Bankrate Financial Security Index Survey released earlier this year suggested that 54 million Americans preferred to put money they would not need for the next ten years into a real estate investment over stocks or bonds.

That means that there is a substantial sector of the market that needs both a financial planner and a real estate consultant to help them manage their assets. Getting two different advisors to agree on how money should be appropriated, which risks to take, and how to achieve the same financial goal is unrealistic. And yet the nuances of managing real estate assets and traditional financial investments demands that anyone with such a diversified portfolio needs both kinds of advisors. At the same time as real estate is factoring into the lives of more and more Americans, fewer Americans know or understand what a financial advisor does. In a survey done this year by advisory firm McAdam, it was found that one in three Americans do not know what a financial advisors does, and that number increases to 46% among millennials. That could in part be because the financial services industry has not modernized itself to meet the needs and priorities of people in today’s economy.

That is, until now. IAM is following the tradition of many industries before it. Consider the movie rental industry. When it began, Blockbuster was king. So much so that one of my core functions as a financial analyst with Trammell Crow Company in, where I worked in 1999 after college prior to joining the Navy, was the analysis of new potential store locations. I remember distinctly because I misspelled their brand name on the cover of the very first proposal I built for them! Not one of my better moments.

But that business model was shaken up in 2002 when Red Box started distributing its DVD vending machines. That model was quickly replaced by Netflix’s DVD mailing business, which was actually able to pivot to today’s video streaming world quite successfully. Each step of the way, the market changed and an old model of business was phased out. Today, the market is arriving at a point where it demands more expertise of its financial advisors.

“This is a very real dilemma for people. I see it all the time,” says Canter. “Integrated Asset Management is a very simple idea: mingle real estate experts together with financial advisors in a mutually beneficial way.”

Whether IAM shakes up the entire financial services industry or just modernizes a piece of it, its emergence is an indicator of an industry in transition, which is good for all of us.

Thank you to www.forbes.com for this article. To read more, click here! 

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Experience Matters: Estate Planning and Real Estate

Why is it important for you as an attorney, estate planner, trust administrator, or SNT trustee to have a go-to real estate professional assisting you with your client’s real estate needs?

Because having the right real estate professionals representing your firm matters when it comes to helping you build or maintain your client’s legacies through the acquiring of real estate assets as well as selling those assets to pass those legacies on, when and if that time comes.

We believe you should be able to be proud of the real estate firm representing you and thankful to be associated with them. The right real estate group should make you look good to your clients.

And here’s why we believe The Meridian Real Estate Group with its wide array of real estate services and specific experience in estate planning related transactions should be your go-to real estate professionals.

Commercial and Residential: The Meridian Real Estate Group has both a commercial and residential division including land and luxury. We are a one-stop shop and can handle any type of real estate needs your clients may have.

Service: We pride ourselves with going above and beyond for our clients and providing them with excellence in everything we do. It’s not enough for us to be a full-service real estate group, we also strive to provide superior service to all of our clients.

Land: Buying and selling land can be a daunting task and should be handled by professionals. Thankfully, with tens of millions of dollars of land transactions under our belt, we are not only considered experts in the field but are also widely sought-after specialists.

Luxury: Having worked with successful business executives and owners, as well as entrepreneurs, professional athletes, and celebrities, we are very accustomed to working with high-net-worth individuals and their assets, and fully understand the discretion and professional decorum needed to make them and their families feel comfortable.

Preferred Vendors: Our team of preferred vendors including appraisers, handymen, plumbers, electricians, roofers, landscapers, painters, junk removers, etc., are ready to help us get a property ready for market at a moment’s notice. Having these professionals available and on the ready is a huge benefit and often underappreciated until the time comes that one is needed.

Experience: With years of diverse real estate experience including collaborating with estate planners, trusts administrators, 1031 exchange intermediaries, and SNT trustees, we believe our team would be a great asset to your firm and would love the opportunity to earn your business and make you look great to your clients.

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Rent spiked again in April, expected to keep climbing through the year

The pace of rent price growth was more than double what it was a year ago, reaching 14 percent for a single-family home in April, according to a report released Tuesday by CoreLogic.

In a shifting real estate market, the guidance and expertise that Inman imparts are never more valuable. Whether at our events, or with our daily news coverage and how-to journalism, we’re here to help you build your business, adopt the right tools — and make money. Join us in person in Las Vegas at Connect, and utilize your Select subscription for all the information you need to make the right decisions. When the waters get choppy, trust Inman to help you navigate.

The price of rent continues to climb at a record pace, with single-family homes renting for 14 percent more this year than a year ago.

And if that’s not bad news for a growing pool of renters, many of whom have already been priced out of the buyer’s market, it gets worse.

“We expect single-family rent growth to continue to increase at a rapid pace throughout 2022,” said Molly Boesel, principal economist at CoreLogic, a real estate data company that tracks home price growth.

The cost of a single-family rental was 14 percent higher than a year ago in April, a report released Tuesday by CoreLogic said. That’s more than double the rate of growth from April 2021, and six times higher than April 2020. It was the 13th consecutive month of record-breaking annual price gains.

The sustained and rapid growth is due to a shortage of rental properties in the market and a thriving job market, the report said.

“Single-family rents continue to increase at record-level rates,” Boesel said. “In April, rent growth provided upward pressure on inflation, which rose at rates not seen in nearly 40 years.

Miami continued its break-neck pace of rent growth, with single-family rentals going for 40.8 percent more in April 2022 than a year ago. (In April 2021, rent grew at an annual rate of 5.6 percent.)

Orlando, Florida and Phoenix followed Miami with the second- and third-highest price growth. Rent grew 25.8 percent in Orlando and 17.8 percent in Phoenix.

Rent grew slowest in Honolulu (7.7 percent) and Philadelphia (7.8 percent), according to the report.

“Phoenix’s April 2.7% unemployment rate is likely helping drive demand and rental cost gains,” the report said, “while Philadelphia’s 6.2% unemployment rate could be causing more tenants to stay put to avoid incurring additional expenses.”

CoreLogic says the growth of multi-family rentals has been more moderate than single-family because of a rush of demand for the latter, created by the COVID-19 pandemic. The gap is starting to close.

The sources of rental income properties, foreclosed homes, all but dried up in that same time, and forecasters don’t expect there to be a backlog of distressed properties that will come on the market any time soon.

April 2022 single-family rental price chances

  • Lower-priced (75 percent or less than the regional median): 13.7 percent, up from 4 percent in April 2021
  • Lower-middle priced (75 percent to 100 percent of the regional median): 14.4 percent, up from 4.4 percent in April 2021
  • Higher-middle priced (100 percent to 125 percent of the regional median): 14.6 percent, up from 4.6 percent in April 2021
  • Higher-priced (125 percent or more than the regional median): 13.5 percent, up from 6.4 percent in April 2021

 

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US existing-home sales prices tally new record after topping $400K

Total sales of existing homes, condos and co-ops dropped 3.4% between April and May to a seasonally adjusted rate of 5.4M, according to new data from the National Association of Realtors.

Sales of existing homes fell for the fourth-straight month in May, according to data released Tuesday by the National Association of Realtors.

Total sales of existing homes, condos, and co-ops dropped 3.4 percent between April and May nationwide to a seasonally adjusted rate of 5.4 million in May. Sales were down 8.6 percent year over year from their rate of 5.92 million in May 2021.

The decline is the latest sign that the once red-hot housing market has cooled as mortgage rates and record high prices push more buyers out of the market. The median home sale price clocked in at $407,000, marking the first time median prices exceeded $400,000. The median price of an existing home increased 14.8 percent from the previous year, when prices hovered around $355,000, marking 123 consecutive months of price increases.

May’s numbers may represent an end to the pandemic housing market, said NAR experts, which saw elevated competition and a migration of buyers from city centers to outlying suburbs.

“Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” NAR Chief Economist Lawrence Yun said in a statement. “Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.”

While sales are down and will likely continue to go down, home price appreciation will likely continue unabated without any significant increase in supply, Yun predicted.

“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun said. “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.”

Homes stayed on the market for 16 days in May, down just one day from April and March when typically stayed on the market for 16 days according to the NAR.

All cash buyers made up about 25 percent of all transactions in May, down one percent from April but up two percent from May 2021.

16 percent of homes were purchased by individual investors or second-home buyers, who typically purchase in all cash, according to the data.

Less than 1 percent of sales were made up of distressed sales — foreclosures and short sales.

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