Tuesday, December 06, 2016

Commercial Real Estate in the Aftermath of the Election

By my count, the 2016 Presidential Election was a mind numbing 596 days and included over 20 different players. We are now down to one President-Elect and a fraction of that time to digest what that means for the United States. Of course the President-Elect was not the only party on the ballot, there were many more down ballot races that narrowed the balance of power in the US Senate and gave the Republicans control of the executive and legislature in Concord. With almost all of our federal election results in New Hampshire being decided by the slimmest of margins with both red and blue victories, I will wager that those reading this article have an equal chance at pleasure and frustration. And while there are many issues that are important in the State and throughout our Country, today’s discussion will focus on issues of concern for real estate, mostly commercial. Spoiler alert: No one has a clue what will happen to commercial real estate as a result of this election. 

At the top of the ticket there is a New York real estate broker President-Elect Donald Trump. He is a licensed broker, which begs the question: “What would it be like to sit through a continuing education course with him?” but I digress. For someone who has made his mark primarily in land, bricks and mortar, his campaign has been very quiet on anything relating to this sector.  The closest we got was in the second presidential debate where carried interest and depreciation were discussed.  While this may have been interesting for someone in my shoes, it really did not help us understand what a President Trump may do as far as changing any current taxation laws on the books.

In Donald Trump’s “Contract with the American Voter”, released in October, he calls for “massive tax reduction and simplification” and the lowering of the business rate from 35% to 15%. This is just one bullet out of twenty-eight and does not expand much further, so we are all guessing on what the details around “simplification” could mean.  In a Nov 10, 2016 Forbes article, Chief Economist for the National Association of Realtors described that he believes “trimming mortgage interest deductions [and] reducing property tax deductions”, could be on the table with a Trump presidency.  He also added the 1031 Like-Kind Exchange could be a focus, which allows owners to sell and exchange into a larger property, while deferring the taxes that would be owed at that time. I may even add a redesign of capital gains on investment property to this list.

All of this, in theory, makes sense.  Mortgage interest deduction on housing, capital gains shelter on primary homes, capital gain treatment for investors of real estate, keeping 1031 Exchanges as is, if removed could all total up to close to $1 trillion dollars per year to Uncle Sam.  However some of the key personnel in both the US House and the US Senate who have been pushing for reform of our tax code have retired.  Even if that challenge is overcome, there are plenty of objections from special interest groups, not just real estate that would push back.  For federal tax reform, there will be a push from the Republicans to reform.  If it comes, I expect: a cap on all deductions for personal returns or elimination of the “stepped up basis” at time of death for a 1031 exchange investment.

In Concord, it does not appear that there will be a tremendous shake up in the taxation of real estate or commercial real estate holdings.  What is of interest to owners and occupants of real estate is the Governor Elect’s energy plan.  For a typical office tenant, energy consumption can be around 10% to 20% of their overall occupancy costs.  For retail and industrial users, the costs are much higher as the Granite State consistently is in the top 10 highest costs of energy.  Chris Sununu’s plan calls for “increasing the availability of baseload power” and in effect increasing the supply to lower the cost.  It is not clear if this is the path that will succeed or another option will open up, but it is clear that our elected officials know this is on the minds of commercial real estate owners and users.

A major theme of the newly elected officials is deregulation.  President Elect Trump calls for two regulations to go away for every new one that is created.  In real estate speak at a federal level, it means that Republicans are sure to use their new power to change/modified/repeal all or portions of Dodd-Frank to free up lending.  The issue is such a priority that it sits in their party platform.  The theory behind reform is that this regulation used to reign in the mega banks and was akin to using a sledge hammer on a thumb tack for our local community banks.  Some local banks claim to have responded to Dodd-Frank regulation by shrinking their lines of business to avoid more costly regulatory requirements. It is almost certain that the Republicans in Washington will go after Dodd-Frank, what is unclear is how the lenders will respond to the change and will that change lead to more capital for real estate and business development.

Of more interest to occupants and owners of real estate is what the Federal Reserve will do with interest rates.  Even though the increase in rates does not have a linear effect on commercial property value, there is a correlation.  While December seems as likely a date as any for a raise to the interest rate, the Federal Reserve is in a no-win scenario, with any action or inaction likely portrayed as a political one.  However monetary policy typically likes stability prior to increase of rates.  With this election cycle being anything but stable, it would seem a drastic rate hike is unlikely but a steady climb over 2017 will be forth coming.  

What is clear is that as a result of the consolidation of power of the Republicans in both Concord and Washington, we are likely to see a good amount of action in the first quarter of 2017. But not even Carnac knows what that will eventually mean for the commercial real estate market.

Chris Norwood is a licensed real estate broker at NAI Norwood Group, Inc. a firm that focuses on commercial real estate sales, leasing and consulting. Chris has actively lobbied with the Realtors in Washington DC for the past six years. Chris sits on the Public Policy committee for both the NH Association of Realtors and the NH Commercial Investment Board of Realtors. He also sits on the Government Affairs Committee of the Manchester Chamber of Commerce.

Tuesday, November 29, 2016

NAI Norwood Group Supports The Salvation Army

NAI Norwood Group is pleased to have participated in the Salvation Army's bell ringing at Harvest Market in Bedford, NH. Thank you Jay Lee for corralling the team and getting us involved!



video


The Salvation Army operates 7,546 centers in communities across the United States. These include food distribution, disaster relief, rehabilitation centers, anti-human trafficking efforts, and a wealth of children's programs. Their work is funded through kettle donations, corporate contributions, and the sale of goods donated to our Salvation Army Family Stores. Eighty-two cents of every dollar they spend supports various missions across the country. Visit their website for more information:  http://www.salvationarmyusa.org/

Monday, November 28, 2016

NAI Norwood Group Sells Prime Retail Location

Northwood NH – NAI Norwood Group is pleased to announce the sale of a 6,000+ SF retail building in Northwood NH. Deana Theriault with NAI Norwood Group represented the seller, and Debbie Forte of Cocoa Early & Associates represented the buyer in this transaction. According to the Registry of Deeds the sale closed for $290,000.
 The mixed use building sits on 3+ acres directly on highly traveled Route 4. The property will undergo immediate renovations. Formerly home to several car dealerships and granite shops, the property will now become a cabinet store. With large store front windows, ample parking and large showroom this will be an excellent location. Northwood is home to the historical Antique Alley as well as an array of small businesses making this new cabinet store a great fit.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

Tuesday, November 15, 2016

NAI Norwood Group Leases 9,000+SF in Bedford

Bedford NH – NAI Norwood Group is pleased to announce the lease 9,377+/- SF of industrial/flex space at 21 Commerce Park North in Bedford NH. Chris Norwood and Jeff Lessard represented the landlord. Doug Martin of Colliers International represented the tenant.


This lease finishes the ground floor releasing of a former blight building that the landlord completely renovated. The asset will be the home for Lyophilization Services of New England as well as the existing tenant Cross Fit Amoskeag. NAI Norwood Group is looking forward to leasing up the remaining flex space on the site.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

Tuesday, September 20, 2016

NAI Norwood Group Sells Land to Bluebird Self Storage

Hooksett NH – NAI Norwood Group is pleased to announce the sale of 3+ acres in Hooksett to Bluebird Self Storage LLC. Joseph Mendola, Senior Vice-President of NAI Norwood Group represented the Seller and Scott Frankiewicz of Keller Williams of Nahua Represented the buyer in this transaction. The closing price on the land was $725,000 according to the Registry of Deeds.

Bluebird Self storage is a major developer of self storage in NH. With sites in Greenland and Dover, Bluebird has other self storage projects in Bedford and Manchester, NH. This land acquisition is their newest location in the northern end of Hooksett, NH. It will be about 80,000 gross square feet of space once completed.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

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Monday, August 01, 2016

Self Storage - Your next investment?

Begun as a niche of multifamily, self-storage has developed its own identity as a highly profitable investment. While many mom-and-pop businesses still operate in the self-storage arena, real estate investment trusts and institutional investors from universities to pension funds to the Blackstone Group are snatching up multiple deals in self-storage facilities, usually for the high end, larger facilities in urban centers. 

For example, in December 2015, Storage Pros Management sold 37 properties for $242.5 million to a joint venture led by an institutional investment rm. In another mega-deal, Morningstar Properties and Harrison Street Real Estate Capital sold 43 of its self-storage facilities for $315 million to the self-storage REIT Public Storage in October 2013. Annually, $2 billion of transactions in self-storage take place. 


“Self-storage is the best performing sector of commercial real estate,” says C. William Barnhill, CCIM, owner of Omega Properties in Mobile, Ala. “Whether a CCIM is involved in brokering, building, managing, or owning self-storage facilities, it’s a great business.” 

Since he entered the self-storage marketplace in 1993, Barnhill has managed, brokered, and sold these facilities. Currently, he owns about 3,500 units in the Mobile area and manages the brokerage for self-storage facilities in Alabama, Mississippi, and the panhandle of Florida. 

Evolving Marketplace 
Self-storage has returned 101 percent to investors from early 2008 to 2011, outperforming all other REIT categories, according to data compiled by Bloomberg. Every year at least 11 million people in the U.S. stash some of their possessions into storage units. 

“People own a lot of things and inherit things that they don’t want to lose,” Barnhill says. “ rough the years, we have had both population growth and more people learning how to use storage.” 

For instance, major life events o en involve greater demand for self-storage, such as birth, death, marriage, divorce, building a home, renovating a home, or downsizing a home. 

“ The self-storage market is constructed like a pyramid with mom-and-pop owners of one to five properties at the bottom half and the top 12 percent is owned by REITs,” says William Brown field, CCIM, CRE, of Brown field & Associates, LLC, in Houston. “In the middle, regional players are building new properties and buying the best mom and-pop properties. They fi x up the properties, standardize them, and may eventually sell them to REITs.” As storage has evolved, many of the facilities have changed from bare-bones, concrete and corrugated aluminum shells into more attractive, climate-controlled facilities with LED lighting, which blend into good neighborhoods and off er tenant insurance.

NAI Norwood Group is part of the Argus Self Storage Network. Joe Mendola, Senior Advisor, has spent the last two decades immersed in this type of real estate. He would be happy to answer your questions, help you locate an investment, or assist you in divesting assets in your current portfolio.  

For the full article or more information please contact our offices at: 603-668-7000 or 603-431-3001 or visit us at www.nainorwoodgroup.com. 

Content provided by Sara S. Patterson is executive editor of Commercial Investment Real Estate.

Thursday, July 28, 2016

Renaissance of Route 101

BEDFORD NH - NAI Norwood Group, Inc. recently hosted a “Route 101 corridor” Open House showcasing the listing inventory of various commercial office and retail properties now available on the strip.  The event was held at The Granite State Kitchen facility with Rick Sawyer, Bedford Town Manager, detailing the completed projects and via power point announced the ground breaking of several new businesses coming to the marketplace.

To set the stage, Rick explained that Bedford has a land mass of some 32.8 square miles with a total inventory of properties assessed at 3.25 billion dollars.  Because of the growth pattern spreading out to the Routes 101/114 area, plans are coming to fruition for a five lane traffic expansion from Route 114 to Wallace Road in 2018-2019 with paving improvements from Wallace Road to the Amherst town line.


This Renaissance of Bedford has now jumped from the golden South River Road venue spilling over to Route 101 to keep pace with the commercial demands of the community.  Newly added buildings along the corridor are ….


  •       144 Multi Family and Work Force Housing Units
  •       The Copper Door
  •       Bellweather Credit Union
  •       CMC Family Medical Center
  •       Wholistic Pet
  •       Convenient MD
  •       Primary Bank
  •       Members 1st Credit Union
  •       Millennium Running

And coming soon ….

  • The Bedford Village’s Inn new show stopper “The      Bedford Grand Hotel”Komma Veteriarian Clinic
  • Murphy’s 22,265 s.f. Tap Room on the site of the former WeatherVane

The event was well attended by local commercial real estate brokers, bankers, state development planners and other interested parties. Bedford is having its greatest RENAISSANCE since the 1980s. Along with this continually growing economy, the medical community has grown exponentially along South River Road not to mention the extraordinary development of the Goffe Mill Plaza and Market and Main projects. 

We would be happy to provide you with the full e-mail slide presentation upon request along with our full selection of available properties in the Bedford area.

Written by Louise Norwood, NAI Norwood Group, louise@nainorwoodgroup.com