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C O M M CRa l COMM ERCIA L e r E i Ct A L oIm mE S Te n IN T C NV t m M E ENT nves i

012 April | 2 March | January | February | 2012
Nothing b Net-Leaseut Investors : With NNNScore 10 Myths About Tainted Properties
Tech Upd Gadgets oate : n the Go
(er Shelter allFrom)the Storm Sm s, M arket ultifamily M

November | December | 2011
Commercial real estate offers investors refuge amid economic uncertainty.
ovetsunities OppInr tors

e cities leave cor h of in searcr returns. highe
Big
ming Debt Co hats e: W Du ing the Lendok? Outlo
Apartment still rule the investments front page.
Media Frenzy
the azine of The Mag The Magazine of the
Leases Ground a Yield r Offe ge Advanta
Find New Clients Through Social Media
Where the Real Estate Jobs Are in 2012
w w w.ccim .com
Institute
www.ccim.com
Institute
m.com w w w.cci
The Magaz ine of the
Institute
CommerCial investment
CommerCial investment
Small(er) Markets,
Opportunities
Investors leave core cities in search of higher returns.
March | April | 2012
Big
Debt Coming Due: Whats the Lending Outlook? Ground Leases Offer a Yield Advantage
www.ccim.com
The Magazine of the
Institute
CCIMs Annual
CAPITOL HILL VISIT

WASHINGTON, D.C.
TUESDAY, APRIL 17 - Orientation & WEDNESDAY, APRIL 18 - Hill Visits Represent the Commercial Real Estate Industry Registration Now Open
On April 18, CCIM Institute members will join with IREM to bring issues that affect commercial real estate to Capitol Hill. An orientation will be held at the J.W. Marriott in Washington, D.C., in the afternoon on Tuesday, April 17. Capitol Hill Visit Day provides a unique opportunity for CCIM members to build relationships with their U.S. representatives and senators. Members will be prepared to discuss CCIMs positions with their elected ofcials. It is vitally important for CCIM members to attend and participate in the Capitol Hill visits.
Learn more at www.ccim.com/newscenter/public_policy. Contact CCIM Legislative Liaison Adriann Gerardi at (800) 837-0706 ext. 6033 or agerardi@ccim.com
COMMERCIAL INVESTMENT
March.April 2012 Vol. XXXI No.2
COVER STORY
FEATURES Small(er) 22 Unsinkable Markets, Big Investments? Opportunities
26
by Rich Rosfelder
16
38 Marketing for
Use these three strategies to build new business.
by Jennifer Norbut
Trendy pop-ups require an oldfashioned approach.
Todays Market
Marina buyers must dive deep into due diligence.

by Kelly Rutkowski Hubbard
32 Ground Control
by Philip F. Himovitz, CCIM
COLUMNS
2 12 14 16 18 20 Presidents Desk CCIM Q&A Financing Focus Investment Analysis Legal Briefs Technology Solutions
Land leases offer distinct advantages to owners and developers.
35 Capital Markets
2012
Ocean Photography/Veer
D E PA RT M E N T S
4 6 42 44 45 46 48 In This Issue Market Trends Regional Outlook International Beat Buyers Guide Deal Makers CCIM Connections
Is there enough liquidity to support a recovery this year?
PRESIDENT S
DESK
w
liquidity. Leil Koch, CCIM leilkoch@ccim.net
Networking ROI
professional network.
What is the value of your professional network? When asked this ques-
tion, I imagine most CCIM members would respond in a word: priceless. As a member of the CCIM Institute, you have a number of valuable opportunities to help you grow and reap the benets of a strong
CCIM Capitol Hill Visit, April 1718, Washington, D.C. Collabo-
rate with colleagues to lobby congressional leaders on the legislative
issues that have an impact on commercial real estate, including
carried interest, capital gains taxes, and commercial mortgage American Real Estate Societys Critical Issues Seminar, April 18, event, which will bring together experts from around
St. Pete Beach, Fla. CCIM Institute is co-sponsoring this
the globe to discuss strategies for successfully emerging
from the Great Recession. Douglas A. Sawyer, CCIM, moderate an educational session.
past president of the CCIM Education Foundation, will International Council of Shopping Centers RECon, May 2023, Las Vegas. Connect with top retail professionals at this leading booth at the 2012 Leasing Mall. Go to http://tables.ccim.com.
CCIM chapters also host a wide range of local and regional network-
@
Whats online with Commercial Investment Real Estate magazine?
Only @
www.ciremagazine.com
Mexico or Brazil? Which country is a better bet for real estate investors? An indepth analysis of these two prominent Latin American economies and the key factors that inuence their performance reveals a surprising choice.
Big Deals in Small Markets Even small towns such as La Crosse, Wis., are generating interest from investors searching for higher returns. Casey Weiss, CCIM, principal with Access Commercial Real Estate in La Crosse, discusses his markets appeal.
industry event and schedule a deal-making session in the CCIM
L.A. Industrial Aggressive investment in the greater Los Angeles industrial market is a direct result of increased condence and competition, according to David Fults, senior vice president of Voit Real Estate Services.
Online. All the Time. Only at www.ccim.com/cire
ing events, such as the Kansas City CCIM Chapters networking event
on April 23, during CCIMs 2012 Spring Business Meetings. Check out the Calendar of Events on CCIM.com to nd events that will give you an opportunity to make the kind of connections that facilitate transactions. CCIM is here to help you invest in your network and build your business.
COMMERCIAL I N V ES T M E N T
Small(er) Markets,
Opportunities
Big
Debt Coming Due: Whats the Lending Outlook? Ground Leases Offer a Yield Advantage
President, CCIM Institute

www.ccim.com
The Magazine of the
Institute
Save the Date: APRIL 1718, 2012
Only CCIM.com @
Watch a video from CCIMs Chief Legislative Ofcer Charles Achilles to learn more about the 2012 Capitol Hill Visit and legislative issues that impact your business.
Join your fellow CCIMs in Washington, D.C., April 1718, to make your voice heard at CCIMs annual Capitol Hill Visit. Go to www.ccim.com/newscenter/public_policy for more details or contact CCIMs legislative liaison, Adriann Gerardi, at agerardi@ccim.com.
Commercial Investment Real Estate
FROM APARTMENT BUILDINGS TO RETAIL TO INDUSTRIAL SPACE, YOUR CENTURY 21 COMMERCIAL PROFESSIONAL HAS THE EXPERIENCE, NETWORK, AND FOCUS TO MAKE YOUR COMMERCIAL TRANSACTION A PIECE OF CAKE.
Visit
C21.com/commercial /cire
or call 800-577-1634 to connect to a CENTURY 21 Commercial ofce near you.
CENTURY 21 COMMERCIAL PROFESSIONALS.
2012 Century 21 Real Estate LLC. All rights reserved. CENTURY 21 and CENTURY 21 Commercial are registered trademarks owned by Century 21 Real Estate LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each ofce is independently owned and operated.
COMMERCIAL INVESTMENT IN THIS

Commercial Investment Real Estate, the member publication of the CCIM Institute, reports on market trends and analysis, current developments in the eld, and successful business strategies.
CIRE Staff Executive Vice President/CEO
ISSUE
Whats happening in smaller markets? Deal making for one thing: In 2011 alone, investors spent $57.4 billion on more than 4,000 properties in secondary and tertiary markets, according to Real Capital Analytics. On p.26, Associate Investors Editor Rich Rosfelder talks to CCIMs in some of those cities to determine what are tired kind of risk investors are willing to take of waiting. in non-core locations. Is a company app p.26 the 21st-century business card? Could be, says Senior Editor Jennifer Norbut who looks at todays high-tech marketing solutions on p.38.
The CCIM Institute, an af liate of the National Association of Realtors, confers the Certied Commercial Investment Member designation to commercial real estate professionals who have extensive training and industry experience and complete a rigorous study program.
Henry F. White Jr.

Executive Editor
Executive Ofcers
President
Sara Drummond sdrummond@ccim.com

Senior Editor
Leil Koch, CCIM Lahaina, Hawaii

President-Elect
Jennifer Norbut jnorbut@ccim.com

Associate Editor
Wayne DAmico, CCIM Essex, Connecticut

First Vice President
Rich Rosfelder rrosfelder@ccim.com

Contributing Editors
Karl Landreneau, CCIM Baton Rouge, Louisiana

Treasurer
Three capital markets experts lend their ideas to a discussion on investment lending on p.35. James R. Kirkpatrick, CCIM, is a vice president of Grandbridge Real Estate Capital in Houston. David Rif kind is principal and managing director for George Kirkpatrick Smith Partners in Los Angeles. George Ratiu is a research economist with the National Association of Realtors and produces NARs Commercial Real Estate Outlook. An associate for International Waterfront Consultants LLC in Jacksonville, Fla., Kelly Rutkowski Hubbard covers Hubbard the waterfront in this issues brokerage niche article on marinas on p.22. Philip F. Himovitz, CCIM, president of Himovitz Properties in Scottsdale, Ariz., Himovitz focuses on the bene ts of ground leases on p.32.
FEATURED WRITERS
William F. Becker Jr., CPA, Steven P. Heller, Dennis LaMantia, Anna Nellis, Suzanne D. Reifman
Design Consultant
Craig Blorstad, CCIM Bloomington, Indiana Editorial Review Board Adrian A. Arriaga, CCIM Roger B. Broderick, CCIM Todd D. Clarke, CCIM David B. Eaton, CCIM Jeff Engelstad, CCIM Eric B. Gareld, CCIM Tony M. Guglielmo, CCIM Thomas E. Hankins, CCIM James L. Helsel, CCIM Soozi Jones-Walker, CCIM J. Howard King, CCIM Robert Knight, CCIM George C. Larsen, CCIM Kevin G. Lenze, CCIM Mark L. Levine, CCIM Charlie Mack, CCIM Michael T. McLean, CCIM James J. Piro, CCIM David L. Schank, CCIM Robert M. Stone, CCIM
Reader Services: All dues-paying
members of the CCIM Institute receive
Commercial Investment Real Estate (ISSN 1524-3249) is published bimonthly by the CCIM Institute of the National Association of Realtors, 430 N. Michigan Avenue, Chicago, IL 60611-4092. Periodicals postage paid at Chicago, Ill., and additional mailing ofces. Postmaster: Send address changes to Commercial Investment Real Estate, 430 N. Michigan Avenue, Chicago, IL 60611-4092. Subscriptions: $45 for nonmembers in U.S.; $55 for nonmembers in Canada and Mexico. Call (800) 532-8633. For reprints, call (312) 321-4460. The opinions expressed in signed articles and materials appearing in Commercial Investment Real Estate, including specic references to products and services, are those of the authors and not necessarily those of Commercial Investment Real Estate, the CCIM Institute, or the National Association of Realtors. 2012 by the CCIM Institute. All rights reserved. Editorial address: 430 N. Michigan Avenue, Chicago, IL 60611-4092; (312) 321-4460; magazine@ccim. com; www.ccim.com/cire.
Commercial Investment Real Estate magazine six times a year as a member benet. Subscribe, purchase back
issues, or order customized article reprints: www.ccim.com/cire or (800) 532-8633 x4507. Make address changes: magazine@ccim.com or (800) 532-8633 x4507. Request reprint permissions: rrosfelder@ccim. com. Submit articles and editorial ideas: sdrummond@ccim.com.
podcast Only @
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Philip F. Himovitz, CCIM, president of Himovitz Properties in Scottsdale, Ariz., discusses the potential benets of ground leases.
For advertising information, contact: Rich Rosfelder at (312) 321-4507 or rrosfelder@ccim.com
Connecting ideas, capital and clients.
Grandbridge Real Estate Capital provides the vital link between complex market conditions and capital solutions. As a national full-service leader in commercial and multifamily nance, we combine our wide range of capital sources with a knowledgeable and experienced team to deliver results, deal after deal. Our scope of services includes: Freddie Mac Program Plus Seller/Servicer | Seniors Housing Fannie Mae DUS FHA-insured Loans | MAP and LEAN Nearly 50 Insurance Companies CMBS | Institutional Investors | Pension Funds Proprietary Lending Platform | Structured Finance $25 Billion+ Loan Servicing Portfolio
To nd the lending professionals in your area, visit gbrecap.com/connect.
OPPORTUNITIES REALIZED.
$61,750,000 Plainsboro, NJ Multifamily 704 Units Acquisition Agency $5,200,000 Minnetonka, MN Industrial/Warehouse 173,111 Sq. Ft. Renance Insurance Company $5,000,000 Tampa, FL Retail 86,355 Sq.Ft. Renance Insurance Company $144,432,200 TX, CO, AZ MHC Credit Facility 11 Communities Acquisition Agency and CMBS $5,325,000 Multiple WI Locations Retail 28,470 Sq. Ft. Renance Insurance Company $10,950,000 Dothan, AL Multifamily 173 Units New Construction Bank $27,050,000 Woodlawn, MD Ofce 359,937 Sq. Ft. Acquisition BB&T Real Estate Funding
Atlanta | Birmingham | Charleston | Charlotte | Columbus | Dallas | Ft. Lauderdale | Greenville | Houston | Indianapolis Jacksonville | Kansas City | Louisville | Madison | Milwaukee/Chicago | Minneapolis | Mobile | Naples | Norfolk Pittsburgh | Raleigh | Tampa | Washington, D.C. gbrecap.com/connect
Loans are subject to credit approval.
MARKE T
TRENDS
Briey Noted
Hospitality The gates are opening for eager private equity and institutional buyers to take calculated risks in primary and secondary markets, says Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels. He adds that foreign investors will dene the market in several gateway cities. JLL expects American hotel transaction volume this year to match last years $15 billion, which was a fouryear high and a 24 percent increase over 2010. Industrial Sales of industrial properties improved signicantly in 2011, up 67 percent in the rst 11 months over the previous year, according to Cassidy Turley. While cap rates have remained around 7.8 percent to 8 percent, strong demand and low interest rates may push them down during 1Q12. Multifamily Class B apartment properties
will play a bigger role in 2012 as rising rents with increases averaging around 4.5 percent force renters to settle for lower-quality digs, according to Greg Willett, MPF Research vice president. Occupancy averages 94.6 percent in the nations 64 largest markets, with Pittsburgh topping the chart at 97.8 percent.
In the coming year, expect self-storage to continue its migration toward a more retailstyle property, focused on location, demographics, and construction quality.
Fstop/Glow Images
Ofce In 2011, vacancy rates fell in about

two-thirds of the ofce markets tracked, says Jon Southard, director of forecasting, CBRE-EA. Although total employment growth was lackluster in 2011, ofce-using sectors, such as professional and business services, have been among the best performers in this regard and have provided just enough support to keep the ofce market moving toward recovery, he says.
Stephen Mellon, national director of self storage, Grubb & Ellis
U.S. Construction Starts

SECTORS 2011 ESTIMATE 2012 FORECAST CHANGE 20112012 (%)
Retail The retail market is playing both sides

against the middle in 2012, according to Lane4 Property Groups Kansas City Retail Report. Luxury and discount retailers are upping leasing activity, at the expense of mid-tier retailers. So look for more dollar stores, off-price apparel shopping, and automotive parts stores as well as luxury retailers in major markets. Other trends noted by Lane4 include the increase of dining, medical services, training and exercise, and education tenants in retail centers.
Multifamily Ofce Hospitality Retail Other commercial
23,650 16,500 4,600 12,600 10,175
28,000 17,350 5,000 13,275 11,825
18.0 5.0 9.0 5.0 16.0
Source: McGraw-Hill Construction
PRUDENTIAL COMMERCIAL REAL ESTATE
THE SHOULD I LEASE OR SHOULD I BUY? CHALLENGE.

When your business is growing and you need more space, its one of the key questions youll face. Prudential Commercial Real Estate helps you find the right answer. Our Commercial specialists provide in-depth analysis of market data and trends to tailor a strategy to your business goals. So you can make lease-or-buy decisions based on objective, research-backed recommendations. Not just guesses. Visit prudentialrealestate.com/commercial or call 800-666-6634, ext. 6055 to locate a Prudential Commercial Real Estate professional in your area.
Acquisition & Disposition / Relocation / Lease Administration / Capital Services Property Development / Market Research / Energy & Sustainability / Location & Site Selection
2012 BRER Affiliates Inc. Real Estate brokerage services are offered through the independently owned and operated network of broker member franchisees of BRER Affiliates Inc. Prudential, the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, used under license with no other affiliation with Prudential.
MARKE T
TREND S
Booyah for Mooyah

Mooyah is moving up the better burger chain, hoping to match national brand recognition with Five Guys and Smashburger. Mooyah has contracts in place for opening 300 units this year, according to FastCasual.com, adding outlets in Alabama, Arkansas, Florida, Kansas, Louisiana, Oklahoma, Virginia, Maryland, and Washington, D.C. Te chain is opening 14 units in rst quarter alone. Started in 2007, the chain has 22 stores in Texas, along with single outlets in Connecticut, California, and Tennessee.
U.S. Hospitality Update

# of properties opened
Given the relatively small investable universe in Canada, we continue to notice a growing trend of Canadian buyers heading south of the border.
Mark E. Rose, chair and CEO of Avison Young
649
373
Warehouse Winners
Top 5 markets for warehouse space net absorption, 2011 1. Dallas (10.9 msf) 2. Phoenix (7.8 msf) 3. Detroit (5.7 msf) 4. Indianapolis (5.4 msf) 5. Atlanta (5.4 msf)
Source: Cassidy Turley
70,291 rooms
38,409 rooms
2011
Source: STR/McGraw Hill
2012F
Where did they nd them?
For your greatest investmentprofessional real estate talent

Post your commercial real estate jobs on CCIM Career Center.
ccim.selectleaders.com c
MARKE T
TREND S
Worth a Second Look

Five oce markets nearing full oce employment
MARKET OFFICE EMPLOYMENT (IN THOUSANDS)
Current Austin Pittsburgh Salt Lake City Seattle Minneapolis 161.5 229.9 177.5 393.6 440.8
Peak 163.1 234.6 177.6 405.2 441.7
Source: CBRE Econometric Advisors
CJ Burton/Corbis
Multifamily on a Roll
Apartment building sales rose 27 percent in 2011, ringing up close to $57 billion. Te second-largest transaction category properties between $10 million and $20 million was up 63 percent. And the median per unit sales price for properties priced $1 million to $10 million increased 12 percent, the rst increase since 2005. 2012 Outlook: Sellers will bring more properties to market by midyear; buyers will target class B and value-add assets and core properties in secondary markets.
Source: Marcus & Millichap
Healthcare Remains Healthy

A survey of 105 healthcare industry professionals projected their 2012 real estate transaction volume:
Source: Grubb & Ellis
>$300 million
22.0%
<$10 million
20.3%
$150 million to $300 million
8.5%
$10 million to $50 million $50 million to $150 million
22.0%
Chaoss/Veer
27.1%
2012 COURSE SCHEDULE

Classroom
CI INTRO
NY CA WA FL TX MA TX OH CA IL PA NY MN TX CO NY CA HI FL LA TX GA CA WA LA TX CT IL VA NV FL Mar 21 - 22 Mar 21 - 22 Mar 29 - 30 Apr 5 - 6 Apr 12 - 13 Apr 17 - 18 Apr 19 - 20 Apr 19 - 20 May 2 - 3 May 10 - 11 May 10 - 11 May 12 - 13 May 14 - 15 May 14 - 15 May 15 - 16 Jun 2 - 3 Jun 21 - 22 Jun 25 - 26 Jul 19 - 20 Jul 26 - 27 Aug 2 - 3 Sep 6 -7 Sep 12 - 13 Sep 27 - 28 Sep 27 - 28 Oct 1 - 2 Oct 3 - 4 Oct 4 - 5 Oct 8 - 9 Nov 1 - 2 Dec 6 -7
CI 101 CONTINUED
Taipei + Austin Charlotte Denver Tampa Moscow + Honolulu Birmingham Warsaw + Houston Washington Santa Ana Calgary + New Orleans Portland Chicago Las Vegas Warsaw + Online Online Online Online Online Online TN TX NC CO FL RU HI AL PL TX DC CA AB LA OR IL NV PL Jun 9 - 18 Jun 11 - 14 Jul 9 - 12 Jul 10 - 13 Sep 10 - 13 Sep 11 - 16 Sep 17 - 20 Sep 18 - 21 Sep 28 - Oct 3 Oct 22 - 25 Oct 22 - 25 Oct 23 - 26 Nov 5 - 8 Nov 5 - 8 Nov 12 - 15 Dec 3 - 6 Dec 3 - 6 Dec 7 - 12 May 8 - Jun 7 Jul 16 - Aug 15 Aug 21 - Sep 20 Sep 11 - Oct 18 Oct 22 - Nov 26 Nov 5 - Dec 10
Classroom
Moscow + Denver Dallas Calgary + Washington Las Vegas Charlotte Atlanta New York Chicago Santa Ana Moscow +
Kent
CI 103
Albany San Francisco Kirkland Orlando Houston Dedham Dallas Columbus Del Mar Oak Brook Radnor New York Minneapolis Austin Denver New York Santa Ana Honolulu St. Augustine Alexandria Houston Atlanta Sacramento Kirkland Baton Rouge El Paso Rocky Hill Oak Brook Richmond Las Vegas Ft. Lauderdale
RU CO TX AB DC NV NC GA NY IL CA RU
WA
Mar 27 - Apr 1 Apr 10 - 13 Jun 4 - 7 Jun 18 - 21 Aug 6 - 9 Aug 27 - 30 Sep 24 - 27 Oct 1 - 4 Oct 13, 14, 20, 21 Nov 5 - 8 Nov 5 - 8 Nov 13 - 18
Dec 3 - 6
Online, Instructor-Led*
Online Online Online May 1 - 31 Jul 24 - Aug 23 Sep 11 - Oct 18
In Class
CI 104
PL NC FL PA CA TX AB IL GA CA RU Mar 26 - 31 Apr 30 - May 3 Apr 30 - May 3 Jun 4 - 7 Jun 5 - 8 Jul 16 - 19 Sep 24 - 27 Oct 1 - 4 Nov 5 - 8 Dec 3 - 6 Dec 11 - 16 Apr 30 - May 31 Jul 30 - Aug 29 Sep 11 - Oct 18
Classroom
Radnor Dallas Chicago Calgary + Atlanta San Francisco Columbus Kent St. Louis Scottsdale Moscow + Stamford Charlotte Orlando Warsaw + Online Online Online Online PA TX IL AB GA CA OH WA MO AZ RU CT NC FL PL Mar 26 - 29 Apr 16 - 19 Apr 16 - 19 Apr 30 - May 3 May 21 - 24 Jul 23 - 26 Sep 10 - 13 Oct 1 - 4 Oct 2 - 5 Oct 8 - 11 Oct 9 - 14 Oct 22 - 25 Oct 29 - Nov 1 Nov 5 - 8 Nov 12 - 17 May 1 - 31 Jul 10 - Aug 9 Aug 14 - Sep 13 Oct 29 - Nov 28
CI 102
Warsaw + Charlotte Orlando Radnor Santa Ana Dallas Calgary + Chicago Atlanta San Francisco Moscow + Online Online Online
Classroom
Toronto Vancouver Taipei + Stamford Indianapolis Kent Warsaw + San Francisco St. Petersburg + Nashville Overland Park Singapore + New York ON BC TW CT IN WA PL CA RU TN KS SG NY Mar 26 - 29 Apr 9 - 12 Apr 10 -19 Apr 16 - 19 Apr 30 - May 3 Apr 30 - May 3 May 14 - 19 May 14 - 17 May 19 - 24 Jun 4 - 7 Jun 4 - 7 Jun 4 - 9 Jun 9, 10, 16, 17
CI 101
Register NOW by visiting www.ccim. com/CourseSchedule or calling our Solution Center at (800) 621-7027, ext. 3100 or +1 (312) 321-4460.
*For specic dates and times of Online, Instructor-Led courses, please refer to the course schedule or contact the CCIM Solution Center for more information. +Denotes Non-United States/Canada courses Schedule subject to change without notice. For the most up-to-date schedule, visit www.ccim.com/ CourseSchedule.
CCIM
Q&A
Sharing a Passion
by Jennifer Norbut
From disc jockey to deal maker, 2012 CCIM Institute President Leil Koch, CCIM, was hooked on CCIM from day one. I loved the numbers, the analysis, and the concepts, he says of the rst course he took back in 1991. So enthralled by his newfound knowledge, I did the very thing you are not supposed to do, which is run back and analyze every deal I had ever done with CI 101 tools in tow, Koch jokes. Though his career evolved from DJ to residential agent to commercial broker, his passion for the industry hasnt changed. Commercial Investment Real Estate asked Koch to share his initiatives for 2012 and provide a look at whats ahead for commercial real estate.
CIRE: What strategies should commercial real estate professionals use to prepare for the markets eventual rebound?
Koch: First, keep in mind that the rebound has already started in a lot of markets. Second, there are always opportunities even in areas where the rebound is slower to emerge. Te tools and techniques of the CCIM designation create a tremendous advantage in the marketplace. As such, commercial real estate practitioners should ensure that they are current on the latest education and technology the CCIM Institute has to oer. Tese resources make you more valuable to your clients, which makes you more protable in the end.
CIRE: What are some of the key initiatives youd like to accomplish in your term as CCIM Institute president?
Koch: Our team has several initiatives for 2012. Te recent Education, Marketing, and Technology event in Napa, Calif., was an excellent platform for networking and gaining insight on todays top education and tools in the industry. In a dierent style of networking, well be rolling out a series of national property marketing webinars for members this year. As commercial real estate continues its global growth, CCIM will focus on creating business and strategic plans for several key global markets in which we have a presence. Im also looking forward to launching CCIMs rst-ever volunteer service project, where CCIM members collectively are encouraged to give back to their communities.
Rock icon Mick Fleetwood (left) entertained guests at the inaugural event for 2012 CCIM President Leil Koch, CCIM.
This economic climate is exactly what the CCIM designation has trained us for.
CIRE: Your father, a successful global businessman, had a passion for giving back to the community. How has that inuenced your business and plans for leading the CCIM Institute?
Koch: Both my parents instilled a responsibility throughout my upbringing to give back to the community. My father was a founder of the Keystone Program in which 23 Minnesota companies many of which were Fortune 500 companies committed at least 2 percent of their pretax earnings to address community needs. Today the program is known worldwide as the Two Percent Club and the Five Percent Club for businesses donating those respective amounts. Organizations such as CCIM can make a dierence in the communities where we derive our livelihoods. Te volunteer service initiative this year will start that process.
And, of course, there are the traditional in-class courses and a unique executive track that combines the two formats.
CIRE: Why is the CCIM designation so critical to succeeding in todays commercial real estate market?
Koch: The CCIM designation is the Ferrari of real estate designations. In fact, this economic climate is exactly what the CCIM designation has trained us for. Its the best education and technology tools bar none. We are our clients best assets in every commercial real estate transaction from analyzing risk to wealth creation. With more than 14,000 members in over 30 countries, CCIMs promote expertise by speaking a common investment and analytical language.
Jennifer Norbut is senior editor of Commercial Investment Real Estate. If you have a story worth sharing in CCIM Q&A, send it to jnorbut@ccim.com.
CIRE: What advice would you give to industry professionals who are considering taking a CCIM course in 2012?
Koch: Theres no better time than now to expand your skill set and prepare for the recovery. CCIM offers something for everyone. The core courses provide the practical analytical skills required in todays market while the Ward Center courses focus on timely topics that you can apply immediately to your day-to-day business. Te dierent formats available oer a lot of options for people who prefer or whose schedules require online courses.
Executive Master of Real Estate Development Program

a joint degree offered by the College of Architecture, Design and Construction and the College of Business
MAKE PLACES, not projects.

Curriculum focuses on sustainable and responsible real estate development practices. Starting May 2011 with rolling admissions
For more information visit: mred.auburn.edu
Auburn University is an equal opportunity educational institution/employer.
www.ccim.com
FINANCING
FO CUS
Energizing Tax Benets

Maximize deductions through building improvements.
by William F. Becker Jr., CPA
energy-ecient improvements. Reductions that result from other improvements are not considered for the purposes of calculating the deduction. If the improvements do not result in an overall 50 percent energy savings over the reference building, a partial deduction may be available for energy-ecient improvements in each of the buildings systems that result in energy cost savings of 16.6 percent. Te partial deduction equals up to 60 cents per square foot for each qualifying system. To qualify for the deduction, the improvements must meet certain standards. First, the improvements must be depreciable property. Second, the improvements must be made to a building that is located in the U.S. and within the scope of ASHRAE Standard 90.1-2001. Tird, the improvements must be made to one of the building systems discussed above. Finally, the improvements and energy savings must be inspected and certied by a qualied contractor or engineer.
In response to the growing focus on energy conservation, Congress passed the Energy Policy Act of 2005 or EPAct, which created tax incentives to encourage the construction and retrotting of energyefcient buildings. Although initially scheduled to sunset after two years, the law has been extended several times and now provides certain incentives through 2013 that offer some signicant benets to commercial property owners.
EPAct Deduction
Te most common provision in EPAct is the Energy Ecient Commercial Buildings Deduction. Tis deduction, which is also referred to as the Section 179D deduction, allows a property owner to claim an immediate tax deduction of up to $1.80 per square foot for energy-ecient improvements to a buildings envelope or its lighting, hot water, and heating, ventilation, and air conditioning systems.
EPAct Credit
A building qualies for the full deduction if the energy-efficient improvements are installed as part of a plan to reduce the buildings total annual energy and power costs by 50 percent when measured against a reference building located in the same climate zone that meets the minimum requirements of American Society of Heating, Refrigeration and Air Conditioning Engineers or ASHRAE Standard 90.1-2001. Te 50 percent reduction must come solely from the
Another EPAct provision is the New Energy Ecient Home Credit (IRC Section 45L), which provides a tax credit of up to $2,000 for each energy-efficient dwelling unit constructed by an eligible contractor. Tis credit is also available for qualifying multifamily housing units of three stories or less (IRS Notice 2008-35). Unfortunately the New Energy Ecient Home Credit expired at the end of 2011. However, it is also important to consider
JohnKwan/Veer
buildings completed in prior years, since owners may still have an opportunity to claim tax credits missed in prior years by amending previously led tax returns for each year a property became eligible for the credit. Te federal statute of limitations for ling an amended income tax return is three years, which would generally allow amended returns to be led as far back as 2008. Credits that cannot be fully utilized during the tax year may be carried back one year or forward for up to 20 years until fully utilized.
Incentives for Solar Energy

EPAct also contained incentives for solar energy, which have been extended and broadened since its original passage. Under current law, the Energy Credit (IRC Section 48) is equal to 30 percent of the cost of qualifying solar property placed in service before January 1, 2017, and is allowed for both regular and alternative minimum tax purposes.
Commercial solar property includes two primary categories: solar photo voltaic, which is used to generate electricity, and solar thermal, which is used to heat water. Although the cost of solar energy property has been coming down, the initial expenditures can still be high. In addition to the Energy Credit discussed above and cash incentives offered by many utility companies, there are other ways a property owner can oset some of the costs associated with a solar investment. For tax depreciation purposes, solar property has a relatively short life. However, under the current, bonus depreciation rules, the property owner may be able to deduct 50 percent to 100 percent of the cost of the solar property in the initial year, depending on when the property was placed in service. Te property owner also has the opportunity to sell any unused electricity back to the utility company at market rates, thereby
potentially generating revenue from the property. When Congress enacted EPAct in 2005, the idea was to encourage energy eciency by providing property owners federal incentives for incorporating energy eciency designs into their buildings. Many state and local tax incentives also exist. If you have built a new property or made signicant energy-ecient improvements to your property during the last three years, talk to your tax adviser to see what tax benets may be available to you.
William F. Becker Jr., CPA, is a tax partner in the Tampa, Fla., ofce of Cherry, Bekaert & Holland. Contact him at bbecker@cbh.com. CCIM Institute strongly advocates for energy-efciency incentives such as tax credits and deductions versus federal government mandates. View CCIMs Energy Statement of Policy at http://www.ccim.com/newscenter/ public_policy.
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INVESTMENT
ANALYSIS
Pop Goes Retail
Temporary stores need their own lease language.

by Steven P. Heller
A pop-up lease is more than just a new name for a traditional short-term lease. The power of new media, along with the effects of the Great Recession, has created fertile conditions for a new breed of short-term retail lease.
New retail marketing approaches have embraced the pop-up idea. A retailer with a new concept may want to briey occupy a prominent space solely for the visibility and the buzz it creates, or to temporarily experiment in a test market. Online retailers increasingly seek a physical store presence to complement their websites. Established national retailers, no longer willing to cede the short-term lease market to small businesses, are increasingly exploring pop-up arrangements to exploit seasonal or other short-run market opportunities. A new real estate concept may even be evolving, where a particular space is operated as a permanent pop-up site for a continually changing cast of new and attentiongetting tenants. Te viral marketing nature of Facebook and other new media fuels the success of these approaches.
Standard short-term commercial leases are nothing new. Typically these leases run a year or less, going month to month afer that initial period, allowing either party to end the agreement. Because of the short term, the parties usually negotiate simplied leasing arrangements and avoid serious nancial commitments such as upfront expenses for new construction. Tey may even avoid any demising of the space at all. For example, in oce buildings, short-term tenants may share open corridors, access, and reception areas; in industrial warehouses, short-term tenants may separate their spaces with only a chain link fence or rope, or even a mere paint stripe, and they may share dock doors.
Retail Pop-Ups
Pop-up leases adapt these concepts to the modern retail environment. A longestablished type of pop-up shop is a seasonal business, such as a Halloween or Christmas store. But now all types of retailers seek novel advantages from the pop-up arrangement.
Landlord Considerations
Landlords facing daunting vacancies have been unusually open to oering even prime retail locations to these short-term tenants.
Normally, any landlord would prefer a solid, long-term tenant, but landlords can also receive benets from pop-up leases. With hopes of an improving leasing market in the future, a landlord can opt to ll up its vacant space now with a cash-owing tenant without getting stuck long-term with currently low rental rates. Landlords can also exploit the attention a pop-up retailer creates, bringing shoppers and market visibility to a fading center. Pop-up retailers also provide dynamism and entertainment value to landlords of mixed-use projects who are seeking amenities for their oce or residential tenants. Even with these quick, simplied deals, landlords need to carefully structure pop-up leases to create sucient exibility so that the space remains marketable to attractive longterm prospects. In addition, landlords need to have enough standard legal protection to avoid liability and runaway costs. A pop-up tenant may want a very short lease term, anywhere from six weeks to six months; some may desire month-to-month leases with the option to grow into a long-
Ilyashenko Oleksiy/Veer
term tenancy. But a landlord needs exible termination rights of its own so it can keep the space available for a solid long-term tenant. Also, because short-term tenants, for whom time may be critical, will probably be extremely sensitive to initial delivery deadlines, the lease agreement should clearly spell out these targets and any exceptions or penalties, so that neither party is blindsided. Rent for a pop-up store may be as little as half of that for a traditional lease, and is typically arranged with a gross at rate that includes common-area expenses and sometimes utilities. However, to avoid swallowing unexpected costs for pop-up utilities or special services such as security, landlords should strategically assess specic site conditions and structure the deal accordingly. In terms of structuring rent payments, a very brief term of one to six weeks may call for prepayment or two lump-sum payments. Otherwise, its usually on a standard monthly (or prorated monthly) basis. Rents are usually a xed amount, not linked to
Pop-up retailers can bring shoppers and market visibility to a fading center.
sales performance, as pop-ups are ofen more about visibility than sales. And the term is too short to justify the expense and hassle of reviewing and auditing sales records. Similarly, the agreement should clearly limit the use rights of short-term tenants. With regard to sales, granting an exclusive use right to a pop-up would tie the landlords hands for other prospective tenants; a loosely drafted permitted-use clause in the pop-up lease agreement risks conict with the exclusive-use rights of existing tenants and risks upsetting existing tenants if the pop-up tenant engages in undesirable conduct. Remember that many pop-up tenants may desire publicity but likely feel little commitment to the quality operation and reputation of the overall project. Landlords should carefully assess the likelihood of violating existing leases, or even just injuring operations of (or relationships with) valued
long-term tenants in evaluating the quality, reputation, and likely operating hours of a proposed pop-up tenant. Finally, a pop-up lease shouldnt surprise a landlord with pop-up liability. Legal protections in the insurance, indemnity, limited liability, and similar provisions should be just as solid as those in any long-term lease. Liability from a slip-and-fall or any other incident wont be any less for a short-term deal. Pop-up may be a trendy label, but landlords using an old-fashioned, careful approach to leasing will benet from the new market dynamics and the opportunities that these deals present.
Steven P. Heller is a partner with Gilchrist & Rutter PC, based in Santa Monica, Calif. He focuses on commercial leasing, development, and sales/acquisitions. Contact him at sheller@ gilchristrutter.com.
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LEGAL
BRIEFS
Govt Issues
What should owners know about federal tenants?

perfect world? Tese tips will help identify some of the issues that GSA leases present to property owners.
by Suzanne D. Reifman
You are an investor who has just snapped up a distressed property that includes a lease with the federal government. In the best scenario, you gain a desirable tenant with a long-term lease, and the U.S. General Services Administration wants to lease additional space in your building.
Lease Issues
A surprising number of buyers of foreclosed properties do not realize that the property includes a government lease. Property due diligence needs to specically address whether there are government tenants and what agencies are involved. Federal government tenants will not agree to use a building owners lease document and will demand that the building owner use a standard government form, which contains literally hundreds of pages of unique government requirements. As a result, GSA leases require substantially dierent and more robust due diligence than leases with commercial entities. In addition, some new owners fail to understand the nancials of a GSA lease and end up with an investment that is signicantly less advantageous than they thought. GSA leases also aord the government unique rights not found in most private-sector leases, so solicit assistance from a professional with GSA expertise. Perhaps more signicantly, government leases contain many onerous compliance requirements. Has the previous building owner provided the required supplies and services or have there been performance problems? Tese could result in the government performing the work (and charging you) or possibly terminating the lease for default, among other consequences. Tis is most important in cases involving possible violations of the False Claims Act or certain other criminal laws and regulations. Government enforcement of FCA violations is at an all-time high. Moreover,
In a sadder tale, you review the lease and learn that the terms are not as favorable as they originally appeared. You also receive notice that the GSA will be vacating half of its space in the building moving out the Securities and Exchange Commission and moving the Social Security Administration into the balance of the space. Te GSA represents more than 400 federal agencies and has more than 7,000 leases in properties throughout the U.S. In eect, it is the nations largest tenant, but one with many faces: Not all federal agencies use space in the same manner. For example,
while the SEC might be a quiet corporate oce, an SSA oce may have greater public contact. With more people wandering through the building, your security costs increase. Because the federal government plays by its own leasing rules, this exchange of tenants and many other aspects of government leases can be a rude awakening to those who purchase foreclosed properties without realizing the complexity of leasing to government tenants. In a perfect world, GSA leases can provide government-insured stability to properties, but these days, who lives in a
Ralko Vadim/Veer
the government has certain mandatory disclosure requirements for violations of the civil FCA and for other civil and criminal violations. Te GSAs subordination, nondisturbance and attornment lease clause provides that, in the event of a foreclosure, a purchaser/transferee of the lease automatically acquires all of the obligations of the lessor under the lease. In other words, when the building owner agreed to the original lease with the government, it committed you to providing uninterrupted services to the government.
Novation Agreements
Te GSA and many other federal agencies will issue a supplemental lease agreement in which the new owner certies to various requirements. In addition, all government contracts, including leases, are subject to the Anti-Assignment Act, which prohibits the assignment of the contract to a third party without the governments consent. This means the government will not recognize
the property transfer unless it enters into a novation agreement, under which the new owner agrees to assume the responsibilities and liabilities of the former owner. It may be tempting to simply avoid the issue, especially since many new owners intend to re-sell the building as soon as possible. However, once the government realizes there is a new owner, it usually will place all rent payments in escrow until a novation agreement with the new owner is nalized. Once you have executed the SLA and the novation agreement, you are now a government contractor subject to the stringent requirements of the lease. As a result, you need to take all necessary steps to immunize yourself from liability. First, assuming you determined the overall compliance of the former building owner before this point, you will need to stay on top of lease administration activities to avoid your own compliance problems. In particular, make sure that any invoices for payment are accurate. Federal government leases contain vari-
ous socioeconomic clauses that require certain government landlords to subcontract a certain percentage of their supplies and services to small businesses and to ow down various government requirements to their subcontractors. Tis usually requires modifying standard subcontracts and possibly changing subcontractors if a vendor cannot or will not meet the governments ow down requirements. Tere is no doubt that leasing to a government agency can be an extremely sound investment, particularly in times of economic uncertainty. Although these recommendations represent only the tip of the iceberg in terms of issues to consider when leasing space to a government tenant, they should increase the possibility of a happy ending over a horror story.
Suzanne D. Reifman is a partner in the Washington, D.C., ofce of Vinson & Elkins, with previous experience as a GSA contracting ofcer. Contact her at sreifman@velaw.com.
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TECHNOLOGY
SOLUTIONS
Choosing a CRM
by Dennis LaMantia
Wouldnt it be nice to have a full-time assistant who could remember all your clients names, properties, and birthdays? Even better, what if the assistant was available 24 hours a day and never called in sick? For many commercial real estate professionals, a customer relationship management system lls that role. A CRM system can improve a companys efciency, as long as the system matches the companys needs.
A common feature that distinguishes a commercial real estate system is a built-in property database, which allows users to connect people to properties. A property database isnt standard in general business systems, but it can be added with some customization. Jason M. Allen, CCIM, leasing manager at Dean Realty Co. in Kansas City, Mo., has used ACT! for Commercial Real Estate for about three years. His company customized the system to track oce and industrial leases. The opportunities feature, which syncs with our calendar, allows us to set up a series of activities for tenants whose leases are expiring. Tose activities include tenant meetings 8 months to 10 months before the lease expires to see how business is going. Six months out, well start talking about the renewal process and improvements that
CRM Features
Te term customer relationship management is loosely used by sofware makers to describe programs that have a wide range of functions, including grouping contacts, automating sales tasks, qualifying leads, and tracking marketing analytics. Commercial real estate professionals ofen turn to CRM systems afer realizing their email address books are insucient for managing customer interactions. Systems such as Real Estate Assistant, Rethink Commercial Real Estate CRM, ACT! for Commercial Real Estate, and ClientLook are made specically for industry professionals. Other systems, such as Salesforce.com, Microsoft Dynamics CRM, SugarCRM, Infusionsof , Daylite, Highrise, and Kazeli CRM, are designed for general business use.
might need to be done, Allen says. And when a prospect is added to the system, it is automatically assigned a three-month follow-up campaign, including emails and phone calls. Most CRM systems also include reporting features that oer an aggregate view of a businesses activities. Reporting is really helpful for me, says Daniel J. Scanlon, CCIM, adviser at Grubb & Ellis Northern New England in Manchester, N.H., who has been using REA for about seven years. Reports allow me to identify specic property types and match them to investors who are looking for that type of property. Allen, likewise, prints a weekly report to see whos at the top of his opportunity list. Email integration which gives users seamless access across desktops, smartphones, and other mobile devices is another important feature for many CRM
Sylvain Sonnet/Getty Images
users. REA syncs with Outlook, and Outlook syncs my calendar and contacts to my phone, says Nicholas L. Miner, CCIM, of Commercial Properties in Phoenix. Email integration also helps commercial real estate professionals manage email marketing campaigns. I use REAs merge function to send personalized emails every week to about 500 people and maintain a history of recipients, Scanlon says.
CRM systems can offer vastly different features, which can make comparison shopping difcult.
CRM providers charge either a recurring monthly or annual fee or a one-time fee, and systems are priced according to the number of users. Single-user prices begin at about $40 per month. One-time fees range from $230 to $2,000 for more advanced systems. When pricing systems, buyers should include costs for training, maintenance, and upgrades. To avoid overbuying, potential buyers can take advantage of free trials oered by most CRM companies. Once you know how the system will be used, research the options and do some trial runs, Allen says. During the free trial, play with the features and apply them to your business model. Tink beyond the standard Rolodex idea. Taking advantage of every feature a system has to oer can help commercial real estate professionals expand their business models, but full adoption can be difficult. Most brokers use 10 percent of their CRMs capabilities, regardless of what system they use, says Rod N. Santomassimo, CCIM, president of the Massimo Group in Cary, N.C. CRE professionals should really evaluate what features they will actually use versus the ones that seem really cool. Underuse may be the result of feature overload or reluctance to modify routines. You have to be consistent in your use, says Miner. If youre not consistent, youll get frustrated and resort to what used to work, which for many people is Outlook. Ask yourself, Am I really willing to commit to the new CRM system and make it a part of my daily routine?
Dennis LaMantia is interactive marketing manager at the CCIM Institute.
CRM System Buying Tips

CRM systems can oer vastly dierent features, which can make comparison shopping dicult. Prioritizing features and setting a price range make the selection process easier. For example, a cloud-based system may be a priority, which would eliminate any products requiring network or desktop installation. Other features to consider are mobile access, email marketing and tracking capabilities, tech support quality, property listings, and scalability. Prioritizing features can focus the buying process.
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Unsinkable ? Investments
Marinas require extensive due diligence to stay aoat.
Even in todays real estate environment, specialty properties such as marinas hold a particular attraction in select markets and appeal to certain investors. But purchasing a marina is not like buying a retail strip center or a self-storage facility. While careful due diligence is necessary for all properties, it is vital for a property that is half-
by Kelly Rutkowski Hubbard
submerged in water. In this case, what you cant see can sink the entire investment. Performing due diligence assessments for the acquisition of marina properties is very different from other types of commercial real estate projects. Each marina is unique with respect to its location, design, market, amenities, and operation. Since the majority of a marina is water-based, these properties are more susceptible than other real estate to damage caused by the coastal/marine environment. Terefore, it is essential to perform proper due diligence prior to investing in a marina property, regardless of the type and quality of information the seller provides. In addition, properly performed due dili-
gence equips investors with valuable knowledge that can be used to their advantage. For example, knowing any design aws or structural damages can serve as a negotiating tool with sellers to reduce the sales price. Likewise, having a permanent record of the facilitys condition can be advantageous in case of future insurance claims or property sales. Being aware of any permit restrictions as well as large capital costs or potential limitations associated with expansion reduces the investments risk and provides a means to validate the ventures protability. A due diligence assessment can also serve as a guide for future maintenance and capital improvements.
Due Diligence Checklist

A proper due diligence assessment covers all of the engineering, environmental, regulatory, and economic aspects of the marina. The assessment should be performed by a team of knowledgeable, experienced consultants with marina-specic expertise in the engineering design, regulatory environment, and economics of the industry. Since the purpose of due diligence is to conrm the propertys economic viability, the investor needs to know the propertys probable expenses and income. Understanding the following can help to predict expenses and income: capital costs required to make upgrades to the facility or to meet the investors intended vision; repair and maintenance costs associated with maintaining the facility such as maintenance dredging and periodic inspections of the structures; operating and management costs for running the day-to-day business; predicted income generated from slip rates; slip mix occupancy and any seasonal uctuations; absorption; and other services or products oered.
MARINA B A S I C S
Similar to hotels, marinas are labor-intensive investments, dependent on rental income and ancillary sales of fuel, food and beverages, and boat services for revenue. The U.S. has about 12,000 marinas and boatyards, according to the National Marine Manufacturers Association. About 70 percent are individually and privately owned, and the typical marina has between 50 and 100 slips. While marinas have suffered from the economic downturn, interest in boating remains strong. From 2009 to 2010, boat registration numbers decreased by only 2.2 percent, indicating that boat owners are managing to stay aoat despite difcult economic conditions. In a 2011 survey by Marina Dock Age, 38 percent of marinas reported a decline in slip rental fees over the last three years, while 36 percent reported an increase. Still, marinas have not been immune from the recession. In Florida, for example, destination marinas, dockominiums, and those with condo developments popular investments prior to 2008 have succumbed to decreased rentals and cash ow and landed in foreclosure, according to a Miami Today report. But given the waterfront locations, these properties are not languishing on the market: Ten Miami River marina properties have been sold in the last ve years, and local real estate professionals predict sales to continue as the economy improves.
Engineering Assessment
Just because a marina exists at the location doesnt mean that it should be there or that it was designed correctly when built. One of the most important design aspects of a marina is the ability to protect the docks and vessels berthed at the facility from
CJ Burton/Corbis
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Environmental/regulatory due diligence assessment involves evaluating any potential or currently existing environmental liabilities associated with owning the marina property and knowing whether local or federal environmental or regulatory restrictions prevent future improvements to the marina facilities. Typical standards followed include the ISO 14015 and ASTM 1528. Te environmental components include water quality, sedimentation, wetland impacts, protected species, protected vegetation, and contamination of soils and/ or marine sediments. For example, soil contamination is often found in boat In the U.S. there are 12.5 million registered recreational service yards near buildings boats. Below are the states that had the most boat that house or that previously registrations in 2010. housed dry cleaning services. The regulatory aspects include the evaluation of land and water (submerged 914,535 land) property surveys, planFlorida ning and zoning regulations, regulatory permits, required 813,976 Minnesota licenses, contracts, easements and restrictions, and naviga812,066 tion setbacks. Michigan
wind-driven waves, swell, vessel wake, ice, debris, and strong currents. To conrm that the facility is adequately protected, a coastal engineer should perform an initial site analysis. Analyzing wind, wave, and water-level data provides the information necessary to evaluate whether the docks and wave attenuators are designed for the correct wave heights and oriented for optimum vessel maneuverability. Afer reviewing any available information provided by the owner, the engineers conduct a walk-through survey. Te purpose of this inspection is to identify and document the condition of the structures, estimate the extent of damage and deterioration, make recommendations and cost estimates for required repairs and maintenance, estimate the expected remaining service life of the structures, and make recommendations for the type and frequency of future inspections. Te typical components found at a marina property include both water-based and land-based structures and systems. When evaluating the water-based structures, the inspection should be performed at low tide, since the corrosion rate is much higher in the intertidal and splash zones. An underwater dive inspection should also be considered.
Te marinas layout can pose limitations on the size and type of vessels that can enter and berth at the facility and dictate future expansion opportunities. Te expansion potential is inuenced by engineering and design and environmental/regulatory conditions that directly impact the economics. Te extent of these limitations should be evaluated even if the investor intends to maintain the marina as-is. Owning a marina that has opportunities for growth and expansion is more valuable than owning a marina that poses limitations for future investors.
Environmental/Regulatory Assessment
Top 5 Boating States
810,008 California 615,335 Wisconsin

0 200,000 400,000 600,000 800,000 1,000,000
Economic Assessment
A market overview should be conducted for the marina facility by a marina consultant, even if the property appears to be protable and there are no plans to make
any changes or expansions. Te investor who envisions making any changes to the existing slip mix and/or upland facilities should perform a more-detailed market analysis to conrm whether there is a market need. Te construction costs associated with building a small-craf marina are expensive and increase considerably when involving mega yachts. Boats larger than 98 feet require deeper water, wider fairways and entrance channels, greater loads, bigger piles, and higher-capacity utility service. To estimate expansion or redevelopment costs, the consultant must rst develop conceptual layouts that are based on the ideal slip mix for the current market. Buyers should know the estimated capital costs for improvements, along with slip rates and operational costs, prior to purchasing a facility. Tese values should be entered into a nancial pro forma to model the total prot or losses to understand the return on investment. The operations portion of the evaluation includes analyzing the way the facility is managed and the associated costs. Management issues to consider include the following: What security measures are currently in place at the facility with respect to restricted entry and protection of the boats from vandalism and thef? Have there been any previous incidents of thef and vandalism at the facility? Is the lighting adequate? What are the current operational costs for the marina facility? What costs could increase in the future? How will costs change if the marina layout is redeveloped and/or new sta is hired? Tese due diligence assessments apply to both freshwater and saltwater marinas and should be performed by consultants familiar with a specic location. In addition, potential marina buyers should also investigate legal and insurance issues before proceeding.
Kelly Rutkowski Hubbard is an associate at International Waterfront Consultants LLC in Jacksonville, Fla. Contact her at krutkowski@ iwcllc.com.
Source: National Marine Manufacturers Association
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Small(er) Markets,

(by Rich Rosfelder)
Opportunities
Big
Commercial real estate investors are ready for a bit of risk. According to a 2011 Colliers survey, more than half of U.S. investors surveyed are prepared to move out of their comfort zones in search of higher returns. Teir adventures will lead them straight to non-core markets. And with pricing still below replacement costs in many second- and third-tier cities, properties that t investors criteria are already generating a lot of interest. Transaction volume in secondary and tertiary markets reached more than $57 billion in 2011,
according to Real Capital Analytics, which tracks property sales valued at or above $2.5 million. Private investors were by far the most active, closing 2,398 deals totaling nearly $22 billion. Cross-border investors, non-listed real estate investment trusts, and equity fund investors accounted for many of the remaining transactions. As expected, multifamily properties were the primary targets. Tough bargains can be found in some secondary and tertiary markets, todays savvy investors arent just looking at price.
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2011 U.S. Secondary and Tertiary Market Deals I

INVESTOR SECONDARY MARKETS
# of properties Volume in billions
TERTIARY MARKETS
Private User/other Equity fund Public Institutional Non-listed REIT Cross-border Unknown Total
Source: Real Capital Analytics
1,295 291 186 168 164 106 101 35 2,346
$12.3 $2.2 $3.9 $5.6 $5.4 $2.3 $1.9 $0.2 $34.1
1,103 238 120 128 81 234 44 128 2,076
$9.5 $1.7 $2.2 $3.0 $1.9 $2.8 $1.0 $0.7 $23.3
Teyre tired of waiting, and they want to nd properties with good leases, strong tenants, and a good ROI, says Jim Baker, CCIM, president of Baker Commercial Real Estate in Jeersonville, Ind. Plus, ination may be just around the corner, and having assets is better than having cash. If its the right asset in the right market, that is.
Where the Action Is

Aside from the promise of higher yields, whats drawing investors to secondary and tertiary markets? The simple answer is jobs and the prospect of more jobs. Cities with strong nancial, energy, trade, or biotech sectors and population growth are generating the most interest, says Peter Slatin, editorial director and associate publisher of Real Capital Analytics. He mentions Charlotte, N.C., Madison, Wis., Minneapolis, Huntsville, Ala., and Inland Empire, Calif., as target markets. Proximity to primary markets is also a factor. For example, Miami is experiencing a construction boom, Slatin notes. Tat benets Fort Lauderdale, Fla., which saw several major transactions last year.
With their strong economies and universities, Pittsburgh and Austin, Texas, continue to be favorites as well, particularly among office investors, Slatin adds. Downtown Pittsburghs largest oce building, the 2.3 million-sf U.S. Steel Tower, was purchased by an investment group last year for $250 million, which was well below replacement cost, according to RCA. Large real estate investment trusts, foreign investors, institutional investors, and private individuals with cash were all active in Aus-
tin in 2011, says Bob Rein, CCIM, associate vice president with NAI REOC in Austin. He focuses on class B and C oce properties in the $7 million to $10 million range. Given the higher degree of risk and the cost of capital increases, smaller investors are seeking a 15 percent to 17 percent internal rate of return on these assets, Rein adds. High capitalization rates, market stability, and university-related projects are also drawing investors to western Massachusetts. Mark Berezin, CCIM, of Innity Real Estate
With their strong economies and universities, Pittsburgh and Austin, Texas, continue to be favorites as well, particularly among ofce investors.
Group in Holyoke, Mass., cites the Massachusetts Green High Performance Computing Center as the latest boon to the area. A collaboration between ve universities, state government, and private industry, the Holyoke-based project is expected to create 600 construction jobs, 130 research jobs, and 13 permanent positions at the center. Were working with multifamily and mixed-use investors from Boston, New York, and California who have discovered our market through Internet research and know that the focus on green energy and education is going to be a signicant component of the economy of the future, Berezin says. Urban inll sites are a big draw for investors in Charleston, S.C. On King Street, a popular shopping destination, national powerhouses such as GreyStar and Regent Partners aggressively compete with regional and local investors for the best land, hotels, former public buildings, and historic properties, says Richard B. Morse, CCIM, of Palmetto Commercial Properties in Charleston. With retail rents around $40 per square foot, oce rents approaching $30 psf, and hotel occupancies at 80 percent to 90 percent, King St. is seeing unprecedented investment activity, he adds. But Morse is taking a measured approach. My goal is to become the investment expert for historic mixed-use properties on or near King St. in the $500,000 to $1.5 million range, he says. While they may not be the most expensive types of investment properties trading right now in our market, I believe they have less risk, higher potential rental income, and are simply more enjoyable to own.
WOOING SMALL-MARKET INVESTORS
Under the Radar Investors are clearly interested in non-core

markets. But to close deals, rst you have to nd them. Around two-thirds of larger transactions are happening with o-market properties, says Liam Murphy, CCIM, of Hayes Commercial Group in Santa Barbara, Calif. A lot of brokers used to just focus on getting listings; now they need a relationship with a capital source or acquiring party.
As investors venture into secondary and tertiary cities in search of more lucrative opportunities, theyll need expert assistance to navigate each markets unique real estate landscape. How can CCIMs set themselves apart and become the go-to resource for potential clients in these markets? Commercial Investment Real Estate asked designees to share their tips for wooing investors. Network. Many deals involve off-market properties, so its important to know which investors have capital and are in an acquisitive mode, says Liam Murphy, CCIM, of Hayes Commercial Group in Santa Barbara, Calif. Two partners in Murphys ofce recently approached a local investor with an opportunity to purchase a $10 million property. That investor referred them to an interested party, and they closed the deal. Pick a niche. Focus on specic types of properties in a larger geographic area, says Larry Goldman, CCIM, director of commercial properties with Re/Max Best Associates in Overland Park, Kan. When the downturn hit, Goldman started working on real estate-owned deals in Missouri, Arkansas, and Illinois. The specic focus, plus a strong Web footprint, positions me well for REO dispositions, buyer rep work, and other protable assignments, he adds. Develop a process. Gregory Fitzgerald, CCIM, of Tri-Oak Consulting Group in Canton, Ga., uses The Closing Navigator to meet the needs of net-leased retail property investors and sellers. The process strategize, locate, qualify, offer, close relies on transparent collaboration among transaction parties and a strong commitment to the property niche. Stay involved. Bob Rein, CCIM, associate vice president with NAI REOC in Austin, Texas, is an active member of NAIs Global Investment Council, which includes the companys most experienced investment advisers. He also attends courses offered by CCIM Institutes Ward Center for Real Estate Studies to keep [his] industry knowledge current and learn new techniques. When investors call, call them back. Returning calls seems like a very basic business practice, but it takes time and is surprisingly uncommon, says Casey Weiss, CCIM, principal with Access Commercial Real Estate in La Crosse, Wis., who has heard this complaint from several new clients. By simply staying in touch and following up, I am providing much better service than some competitors. And remember: The numbers are on your side. Commercial real estate is currently seeing solid risk-adjusted returns compared with investment alternatives such as stocks and Treasuries, and it doesnt hurt to remind potential investors. I typically explain to my clients the benets of investing in commercial real estate vs. the stock market, and I usually get their attention when I discuss 15 percent to 20 percent IRRs, says Richard B. Morse, CCIM, of Palmetto Commercial Properties in Charleston, S.C. I dont believe there are many investments out there now that generate that type of return consistently.
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Private Investor Activity 2011

PROPERTY TYPE SECONDARY MARKETS
TERTIARY MARKETS
Multifamily Retail Industrial Ofce Hospitality Total

Source: Real Capital Analytics
472 325 224 204 70 1,295
$6.1 $2.4 $1.4 $1.8 $0.5 $12.3
359 310 178 131 125 1,103
$3.8 $1.9 $1.3 $1.3 $1.0 $9.5
In Murphys market, corporations that operate investment funds are adjusting their risk prole and selectively oering properties to qualied capital sources, which usually means other corporations. Tis can be frustrating for aspiring real estate investors that want higher returns but arent privy to information about available properties. Discovering investment opportunities in secondary and tertiary markets often requires a more proactive approach. I research buildings that arent for sale, Rein says. If its on LoopNet and CoStar, investors already know about it and theres a reason its not selling. Rein nds properties that t his clients criteria and approaches the owners, which might need the inux of capital to pay o other mortgages. Owners, likewise, might need help uncovering opportunities in their own portfolio. For example, in Charleston, S.C., local families or out-of-state investors who dont pay attention to the market may not be aware that their neglected historic properties now have value. If we think its time for them to sell, we can match them up with the right buyer, Morse explains. Tese owners are usually interested in selling to get the cash, but they arent in a position to renovate the property. Tat means they can sell at a bargain, Morse adds, which is good for the market.
Put a Ring on It
When investors nally nd the right property in the right second- or third-tier city,
they dont want to let it go. Lately, investors seem to be planning on a longer hold period than investors who were buying properties 10 years ago, Berezin says. Tey accept that, while this market is clearly going to support appreciation, this is not an environment where a two- to three-year hold then ip strategy is going to succeed. Asset tangibility is also a factor. Baker works with local private investors who like to know the property and the trade area. In other words, they want a property they can literally hold on to. Teyre not thinking in terms of hold periods, Bakers explains. Teir goal is long-term income mailbox money. Baker recently worked with a private investor who purchased a land lease to a national restaurant chain in a Louisville, Ky., submarket from another private investor at a 7.5 percent cap rate. Te buyer could have purchased with all cash but decided to leverage around 50 percent of the cost with a local bank at 4.5 percent to maximize returns on the property and spread the risk around. Tis also lef the buyer with more cash to invest in local real estate. And when it comes to distressed properties, x and ip is now x and hold. Most active investors have a value-add mentality with a long-term investment horizon, says Darren Powderly, CCIM, president of Compass Commercial Real Estate in Bend, Ore., where cash buyers are looking to capitalize on a ood of available real estateowned assets. Tey feel that purchasing a good property at prices well below replace-
ment cost and then adding value will result in attractive investment returns ve to 10 years from today. Morse is pursuing this strategy in Charleston. In 2010, he put together an investor group with other brokers to purchase a 3,000-sf historic mixed-use property on King St. from a cash poor seller who needed the capital to pay o other mortgages. Te group renovated the property and increased occupancy from 50 percent to 100 percent. Tey plan to hold for ve to 10 years and wait for the market to catch up. Overall, however, there is still enough uncertainty in the market to constrain valueadd investments, Slatin says. But he expects more opportunistic money to go afer distressed assets this year, and a large portion of those transactions will take place in secondary and tertiary markets. Tat said, investors that hold out for bargains risk being lef behind. Prices are low and may go slightly lower, but its not worth waiting for the perfect opportunity when almost perfect ones are available in smaller markets, says Casey Weiss, CCIM, principal with Access Commercial Real Estate in La Crosse, Wis. Its important to buy based on solid fundamentals, not simply a bargain price. Good deals in these markets are limited, Weiss adds. If investors arent looking now, they might be too late.
Rich Rosfelder is associate editor of Commercial Investment Real Estate.
Ground Control
Owners and developers unearth opportunities through creative land leases.
by Philip F. Himovitz, CCIM
c
jovannig/Veer
Editors note: Originally published in 2006, Ground Control is one of the most popular articles in CIREs archive. Author Philip Fred Himovitz updated the article for republication.
GROUND LEASE VS. FEE-SIMPLE OWNERSHIP

Many of todays developers and investors believe that owning the land on which their investment sits is the most ideal scenario. However, the following example illustrates the yield advantages leasing land may have for some development projects. Under a fee-simple ownership scenario, the cash required to develop a 20,000-square-foot building might be $455,000. The same building developed under a ground lease scenario requires only $245,000. While this represents a $210,000 (54 percent) advantage for the ground lease deal, the overall yield and challenge of a secondary sale still have to be investigated. With a sufciently long lease term remaining, the before-tax cash ow yield is 12.7 percent and 20.4 percent, respectively, and, after-tax, 9.3 percent and 16.0 percent. The yield differences are signicant and, in this scenario, favor the lease deal. Land and building costs, escalations such as U.S. Consumer Price Index hikes, and debt underwriting criteria all inuence the investment decision and conclusion. This example demonstrates another approach to development and a ground lease deal may be the better option. It should encourage commercial real estate professionals to explore the possibilities and opportunities ground leases present. When tax consequences are considered, the ability to deduct ground lease payments from the operations equation presents the developer with a new dimension that favors or, at a minimum, gives parity to the ground lease deal. The ability to deduct ground lease payments from income in the tax computation makes that scenario more favorable. (See tables on p. 34 for a cost analysis.)
Commercial real estate developers and investors ofen favor total fee ownership of income property. Te propensity to own and the emotions attached to it sometimes can result in misguided decisions and strategies and lost opportunities. Relinquishing ownership of income property is really a question of when, not if. Once developers move beyond the notion of ownership as an investment goal, new opportunities that may not have been visible before, such as ground leases, become apparent. In its most basic form, a ground lease, or land lease, separates the ownership of land from the ownership of the improvements on the land, such as an oce building or a shopping center. Te landowner leases the land to the developer of the improvements, who pays rent for use of the land. Typically ground leases are long-term and include set rent escalations, eviction rights should the lessee default, and a reversionary right, which means improvements on the property revert to the landowner at the end of the lease term. While such lease terms do not particularly favor developers, ground leases oer some distinct advantages to them. Te two most prevalent types of ground leases are subordinated and unsubordinated. Each provides benets that can enhance the developers yield and turn dismal or modest returns into more attractive and risk-mitigated ventures. Tey also give developers the opportunity to involve multiple partners without negotiating formal partnership agreements. Ground leases transfer control not ownership of a property and, for the landowners, they are considered one of the most secure forms of real estate investment. But landowners may be considered preferred investors and may be open to developers who oer them a stake in the improvements erected on their land, in exchange for other considerations such as rent abatement for vacancy. Such a quid pro quo can substantially reduce risk to a lender.
Lease Structures
In a subordinated ground lease, the landowner oers the land as collateral for the developers mortgage, giving the landowner a signicant stake in the development risk. Te subordinated ground lessor is considered a secondary lender with junior rights behind the primary lender, usually a bank or other nancial institution. Normally the ground lessor has a future claim on the improvements, as most ground leases require improvements to the land to revert to landowners at the end of the lease. As such, ground lessors usually consider the downstream value of the improvements in establishing a rental rate. On the other hand, a ground lease that provides for the removal of any improvements at the end of the lease, such as relocatable metal buildings, modulars, portable plants, or parking lot appurtenances, would factor that eventuality into the rate as well. Te subordinated ground lease rental rate is usually a few percentage points above long-term permanent loan rates applied to the land value, which would correctly calibrate the risk-reward equation, including the risk of foreclosure, for the ground lessor. Te unsubordinated ground lease oers the landowner a more desirable role, comparable to that of the primary lender. Tis makes long-term permanent conventional nancing more challenging for the developer, since the lender must assume the risk of lease termination and default. However, due to the senior position of the unsubordinated ground lessor, the ground lease rate can be lower and therefore much more attractive for the developer. Te permanent lender recognizes the ground lease payments as an annual expense that will be factored into its loan underwriting. In total, the cash required in the deal by the developer is reduced while his yield is increased. In both cases, the developers requirement for cash in the deal is reduced because of the value that the landowner brings to the deal. Te reduction in cash usually required causes the investment yield to increase when the income stream is extended into the future. Te value of the future cash stream will be determined by a threshold
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Development Parameters
Building size Building cost Initial rental rate Annual CPI increase Land value Ground lease expense Floor-area-ratio Capitalization rate Loan-to-value Loan interest rate Loan term Debt service constant Debt service coverage ratio Discount rate Operations expense allowance Sales costs Cost recovery years Tax rate 20,000 sf $100.00 psf $12.00 psf, nnn 2.5% $6.00 psf $0.36 psf-year 25.0% 8.0% 75.0% 6.0% 25 years 0.0782 1.20 12.0% 10.0% 4.0% 39 years 35.0% discount rate, resource availability, and underlying assumptions the same general market and economic model assumptions that apply to fee-simple land ownership deals. Other considerations include the length of the remaining lease term, reversion covenants, and extension and renewal rights and options. Occasionally the ground lessor will participate in the cash ows by applying a lease rate as a percentage of the income that the rental property produces. Tis strategy can have the positive eect of averting a monetary default in the event of a dark project. It also has the positive eect of mitigating the risk that a rst mortgage lender perceives if the lease is unsubordinated. For example, if prevailing long-term interest rates are 6 percent, a comparable subordinated ground rental rate might be 8 percent, whereas an unsubordinated lease might be priced at par or 6 percent.
Ground Lease Benets

Te potential to form a joint venture with a building developer can be attractive to the primary ground lessor. Te yield values are enhanced by the security of the future improvements. Provisions against wasting the property, requirements to maintain the improvements, cure and notice rights, certain reasonable approval conditions, and the ubiquitous hazardous materials covenants are standard. Clearly, an unsubordinated lease presents possibilities that oer an alternative investment vehicle that provides security to patient investors and can be traded, sold, or transferred in creative ways. For example, tax-deferred 1031 strategies are possible by trading into an income investment as a sandwich ground lessee-ground sublessor. Te usual threshold is that the lease term be greater than 25 years. Since these instruments can take on the color of a security, real estate professionals who enter into these deals should carefully document all aspects of the transaction and seek advice from qualied securities professionals. In addition, opportunities exist in some municipal ground lease situations wherein, under certain conditions, property taxes are completely or virtually eliminated. Likewise other tax benets accrue to these sanctuaries because of the reversionary character of building improvements and the incentive-rewarding jobs creation. Tese areas of investment can oer a spectacular advantage over neighboring competing properties in pricing and yield. Lease term and length inuence the acceptability of ground lease deals. Te current climate is cautionary because of the parochial need to own; however, institutional managers realize that it is all factored into the risk and yield and accept the challenge with appropriate lease drafing and terms that are favorable to the asset managers objectives. Te environment is changing as the pressure for yield performance and risk mitigation goes begging. Te challenge is pioneering in an area where heretofore only the creative and adventurous have explored.
Philip Fred Himovitz, CCIM, is president of Himovitz Properties in Scottsdale, Ariz. Contact him at fredhimovitz@cox.net.
Initial Development
Loan underwriting Gross rent Operations expense Ground lease expense Maximum loan amount Developed cost Cash required Own $240,000 $(24,000) $0 $2,025,000 $2,480,000 $455,000 Lease $240,000 $(24,000) $(28,800) $1,755,000 $2,000,000 $245,000
Annual Cash Flow

Gross rent Operations expense Ground lease expense Debt service Before-tax cash ow Before-tax cash-on-cash return Tax on cash ow After-tax cash ow After-tax cash-on-cash return $240,000 $(24,000) $0 $(158,409) $57,591 12.7% $15,126 $42,465 9.3% $240,000 $(24,000) $(28,800) $(137,288) $49,912 20.4% $10,716 $39,196 16.0%
Capital Markets
What issues are facing the lending market this year?
2012
Many economic issues converged late last year to slow commercial real estates recovery. In addition, the uncertainty of vintage commercial mortgage-backed securities loans coming due this year and for the next several years has buyers, sellers, and investors speculating on the continuing availability of capital. To get a clearer picture of the capital markets activity this year, Commercial Investment Real Estate asked an economist and two mortgage banking executives to weigh in on the subject.
m
Participants
George Ratiu is manager of quantitative and commercial research for the National Association of Realtors in Washington, D.C. Contact him at economistsoutlook.blogs.realtor.org. David Rif ind is principal and managing director for George Smith Partners, a real estate investment banking rm located in Los Angeles. Contact him at drifind@gspartners.com. James R. Kirkpatrick, CCIM, is vice president of production for Grandbridge Real Estate Capital in Houston. Contact him at jkirkpatrick@gbrecap.com.
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Amy Strycula/Getty Images
More than $55 billion in CMBS loans are set to mature this year, the most of any year to date, according to Standard & Poors. Of them, $19 billion are ve-year loans originated in 2007, at the height of the market. How is this going to affect the lending environment for commercial real estate?
George Ratiu: Te main impact of maturing debt will be felt in the banking sector, which has had to contend with these loans for the past three years. And based on both bank practice and regulator guidance, banks have been extending or restructuring loans based on multiple factors, such as asset performance, market, and management. Overall, given banks post-nancial crisis aversion toward commercial loans, the lending environment will likely remain tight in 2012, with private and equity capital continuing to serve as the main source of funding. David Rifind: 2012 is the beginning of the renance wave, fueled by historically low interest rates. Te peak will be somewhere between fourth quarter 2013 and second quarter 2014. Every healthy lender is prepared to compete for a piece of this business. We are actively tracking maturities for our clients. Tis is the leading theme of the mortgage banking business for the near and intermediate term. Jim Kirkpatrick, CCIM: Te bottom line is that in a yield-hungry world, real estate is looked upon favorably. A lot of lenders are underallocated in real estate and we are seeing new CMBS platforms emerging. Assuming continued economic growth, the lending environment for the foreseeable future should remain strong.
markets and a decline in capitalization rates. Secondary and tertiary markets have been contending with a lack of nancing due to the underlying strength of local economies and weaker fundamentals. As the supply of investment-grade properties in top markets dwindled, some secondary markets became attractive to investors looking for higher yields. A broad improvement in macroeconomic conditions will likely boost this trend, providing increased ows of capital to these markets. Rif ind: Te maturity wave is drawing money and attention back to the commercial real estate markets. Tree themes are converging to create what may become a powerful new market cycle. First is low rates/ liquidity: Capital is aggressively seeking yield at every point on the risk curve. Banks must book positive loan growth and many are aggressive. Life companies and pension funds have reallocated large amounts of capital to commercial real estate. CMBS wants to come back and be a force in the real estate capital markets. Opportunity funds and real estate investment trusts are innovating to participate higher up in the capital stack. Second is the return of fundamentals. Rents and occupancy levels are stabilizing in many
CMBS Annual U.S. Issuance

in billions
250 200 150 100 50
$230 $201
markets. With little new supply over the past ve years, there is a solid case for a positive trend in property performance. Te distress theme is still relevant and there will still be transactional opportunities motivated by debt maturities. Tis is especially true for properties in markets where fundamentals have not yet recovered to a level to qualify for loans from the primary debt providers. Tere is enough liquidity to address the capital needs of the market going forward. As long as the underlying fundamentals continue to improve, we should see a robust recovery in many markets. Kirkpatrick: I am based in Texas and we have been blessed with a strong economy and the accompanying job growth. Going into the recession, we had very little overbuilding so our real estate markets are in fairly good shape. Most of the renance opportunities we are seeing will underwrite and those that dont can mostly be accommodated with some of the new mezzanine platforms that are coming out. In other words, the owner does not need to write a check to get their loan renanced. I wish I could say our good fortune extends across the country, but my guess is that it doesnt. Tose loans maturing in 2012 that were originally highly leveraged or with little to no amortization over the term and in regions of the country with limited economic growth/high unemployment are probably going to require the infusion of some fresh equity to get them renanced. Terefore, by extension, the ability of ownership to write these checks could impact real estate values.
What other factors are affecting the capital markets this year?
Ratiu: The European banking concerns will likely remain a major factor for U.S. capital markets. Some U.S. banks do have exposure to European sovereign debt, which will likely impact their overall willingness to extend capital for commercial projects. In addition, the Dodd-Frank Act and the yet-to-be drafed regulations will continue to provide a source of uncertainty in 2012, as regulators work to enact and implement new rules. Against this backdrop, commercial banks are expected to remain cautious on commercial lending.
As this tsunami of loans continues, reaching its peak in 2017, will it have any other effects on the commercial real estate market? Will specic capital sources, cities/regions, or property types be affected?
Ratiu: Some of the eects have been manifesting over the past year. Capital has been chasing high-quality, stabilized properties in gateway cities such as New York, Boston, San Francisco, Washington, D.C., and Chicago. Tis has led to an increase in prices in these
$40 $12 $3 $12
2006 2007 2008 2009 2010 2011
Source: Commercial Mortgage Alert
Rifind: Te leading factors are macroeconomics and politics. Tese are the same factors that have provided head winds for the past six months. How the European liquidity crisis plays out is important. Te upcoming U.S. elections are important. Kirkpatrick: Where are interest rates going? I tend to side with the camp that says interest rates have to go up, but as I write this, the benchmark 10-year Treasury is 1.97 percent, virtually unchanged from August when Standard & Poors downgraded U.S. credit. Sticking to my guns, when rates do go up, a steady climb can be accommodated, but sharp spikes, particularly in some of the short-term money such as Libor, could wreak real havoc. In addition, continued growth of the CMBS markets will aect capital markets, but more to the point, what is the underwriting that will be necessary to drive this growth?
hope lenders will continue with disciplined underwriting standards as competition for loans heats up. Kirkpatrick: Tere should be plenty of money available to renance those loans coming due, as well as to finance new acquisitions or development. At the end of the day, the real question is whether or not the owner/borrower is prepared for all of the scrutiny associated with borrowing in todays environment.
Will buyers and investors have difculty nding nancing in 2012?

Ratiu: Given the 2011 bifurcation in commercial markets along property values, buyers at the top end of the market will continue to find access to financing in 2012. With record amounts of cash and the ability to issue bonds or equity for nancing, large corporations and equity funds are expected to remain active in the market this year. Buyers at the other end of the valuation spectrum will likely encounter a similar environment in 2012 as last year: restricted capital availability, relatively tight underwriting standards, and a higher risk aversion on the part of lending institutions. Rif ind: Buyers will have less diculty nding nancing this year. Qualifying for new loans will remain dicult for some. Credit requirements remain strict. Borrowers need strong reserve liquidity and credit to obtain loans. Property level underwriting is also very conservative and leverage will remain relatively low, requiring a larger equity contribution from the buyer. Ultimately, this is healthy for the markets and I
While the general economy seems to be recovering at a quicker pace than originally predicted, commercial real estate activity retreated during the second half of 2011. What is the cause of the disconnect between the two? What factors may spur a similar uptick in commercial real estates recovery this year?
Ratiu: Commercial real estate investment activity tends to be more sensitive to developments in nancial markets. As the European sovereign debt crisis unfolded, it took a darker turn in the second half of the year. Concern of a resolution moved farther away, prompting capital markets and investors to scale back the pace of acquisitions.In addition, until the tail end of the year, stubbornly high unemployment gures remained at the forefront of economic news, as signs of a robust recovery proved feeble. Moreover, actions in the international and political environment added reasons for investor concern. For 2012, a continuing rise in economic growth coupled with improving fundamentals in commercial markets would go a long way toward shoring up last years moderate rebound. In addition, the prospect of the resolution of the presidential election cycle
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is likely to provide a clearer medium-term horizon for investors. Rifind: I dont see a disconnect. Te U.S. economy slowed signicantly in the second half of 2011. Commercial real estate activity also slowed down from its initial burst of activity. Capital markets volatility came into play in the middle of 2011 with the debt cei ling debate and the downgrade of the U.S. debt rating. Tis was followed closely by Greece and the EU liquidity crisis. Tis raised the caution ag and slowed activity. Commercial real estate is a long-term store of value and not a quick trade. It is dicult to view it with a short-term lens. Recoveries are not always linear. 2011 was no exception. Te market healed signicantly in 2011 and this trend will continue. Kirkpatrick: In my opinion, the disconnect between the improving economy and the retreat of commercial real estate activity was the result of two factors. Too much money was chasing those deals that came to market. With all of this competition, the result was predictable: Prices increased and yields fell. In the latter part of 2011, I think many investors decided to take a step back to see if rent growth would actually materialize to justify the going-in yields being paid. Ten, afer a fast start in 2011, the CMBS market stumbled many of the new CMBS platforms shut down, some commitments were not honored, and for those that remained, spreads widened dramatically. Te message here is that CMBS is an important part of the commercial real estate equation. Te good news is that the U.S. economy continues to improve. Jobs are being added, which in turn will lead to increased demand for commercial real estate. It will just be a matter of time before investors return to the market. On the debt side, CMBS has settled down. Spreads have come in and investors seem to have reached a comfort level with current underwriting. Banks and life insurance companies seem to be actively pursuing new lending opportunities. I wouldnt look for a return of 2006, but 2012 has the makings of being a solid year for commercial real estate.
This article was edited by Sara Drummond, executive editor of Commercial Investment Real Estate.
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Marketing
for Todays
These 3 Web-based strategies can build new business and expand your brand.
by Jennifer Norbut
Market
i
Don Bishop/Getty Images
In this economy, everyone is looking for a deal. Consumers and businesses alike are scrambling to ensure the bottom line pencils out, fostering a Groupon-like mentality in nearly every industry. What started as a deal-of-the-day site featuring restaurant coupons, Groupon now oers everything from discounted medical examinations, to low-cost tax preparation, to deals on residential real estate services. In fact, last year a Chicago residential brokerage oered $1,000 back at closing for buyers who purchased a $25 Groupon coupon. With all types of industries and services using Groupon-like strategies to reach new customers and clients, Commercial Investment Real Estate informally surveyed CCIMs to nd out if such discounting tactics have viability in the commercial real estate industry. While respondents unanimously agreed that online sales techniques such as Groupon will never take the place of face-toface business development, commercial real estate professionals can achieve success with creative Web-based marketing strategies. Te following three tips may help to capture new business and catapult your companys brand to the market forefront.
as the 10BII Financial Calculator, CamCard (business card importing), and DropBox (online document sharing) to increase their productivity. In addition, several commercial real estate companies are developing apps as part of their ongoing marketing strategy. Commercial real estate brokerage Shindico released its company app Shindico Canada via iTunes last October. Clients have been very impressed that we had gone out of our way to grasp new technology, says Sandy G. Shindleman, CCIM, president of Shindico in Winnipeg, Manitoba. It provides a nice, instant take-away. Austin, Texasbased app developer Blyncc created the customized app for Shindico and has developed apps for a number of CCIM members companies, including 2011 CCIM President Frank Simpsons rm, Te Simpson Co., as well as several franchise oces of NAI Commercial, Sperry Van Ness, Coldwell Banker Commercial, Re/Max International, and KW Commercial, among others.
1. Feed the Appetite for Apps

With the sharp rise in tablet and smartphone use in recent years, mobile applications, or apps, are available for nearly every service imaginable. In the September/ October 2011 CIRE Web-exclusive article, 10 Tablet Apps for Commercial Real Estate, CCIMs reported using apps such
Its nice to be able to give somebody something for free that is useful. The app is a business card that sticks.
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TAILOR YOUR TACTICS

In March 2011, Mansard Commercial received what we determined to be the last-ever call from a client asking what else we could do to market his listings. As a brokerage, we had gotten too comfortable with basic marketing techniques, and, as evidenced by our clients concerns, clearly these techniques were not meeting our or our clients objectives. That very morning the Mansard team held a brainstorming session in which we questioned what it truly meant to be a commercial real estate broker. It quickly became apparent that we are not only a sales organization, but we also have to function skillfully as a marketing organization on behalf of our clients. It was time to implement strategic marketing theory into our processes. Our team analyzed marketing methods from consulting gurus such as Jack Trout as well as supply and demand analysis principles taught in CCIMs CI 102 course. Through this process, we created the Mansard Method, a customized four-step plan for developing unique client positions, generating leads, qualifying opportunities, and making deals. Positioning involves disaggregating demand and supply, identifying the most powerful attributes that our clients assets possess, and performing gap analysis and industry sector analysis to generate targeted lists. We then communicate our differentiating message to our targets to establish dialogue and our clients invest in implementation costs. As part of the process, we qualify every lead using a seven-step process and guide clients through the deal-making process by assisting with the buy-sell decision, providing stakeholder interest analysis, nancial analysis, and deal troubleshooting. One of our rst successes occurred with a client who had for-lease space listed with us for about six months with little activity. In a test-run of the Mansard Method, we invited the client to the ofce and presented our plan to reposition the property, which included adding 15 percent back to the rental asking rate. The client agreed to try the tailored marketing approach, and within ve weeks the building reached 100 percent occupancy with a waiting list. What had changed wasnt necessarily the tactics that we implemented, but rather our strategic approach. For example, using our positioning analysis, we analyze factors that could make a difcult-to-market ex building with a crane into a differentiated asset that a heavy equipment repair user might want. In another example, we analyzed an ofce propertys 10-year tenant history to identify a specic industry sector that had been successful in the building. This allowed us to transition the marketing from a general ofce property to a leading building for tech companies wanting growth and access to the Massachusetts Institute of Technology and Harvard Universitys skilled labor pools. Since March 2011, 75 percent of Mansards clients have opted in to the Mansard Method and theyve experienced four times greater lead ow, reduced transaction times of up to 200 percent, and stronger deals. Jeremy Cyrier, CCIM, is president and founder of Mansard Commercial, a Boston-based full-service commercial real estate advisory and investment rm. Contact him at jeremy@mansardcre.com.
Blynccs apps for commercial real estate companies include industry-specic tools that add value and functionality for clients, says Todd Kuhlmann, CCIM, principal and director of product development for Blyncc. Within the app you can quickly locate a companys commercial real estate listings, but it goes way beyond that, he says. Te apps include valuable analysis tools for measuring distances, completing loan calculations, preparing full amortization summary reports, and completing a ve-year investment analysis report. Te apps also include internal rate of return, net present value, and time value of money calculators. Shindleman says theres marketing value in being an early adopter of commercial real estate apps and clients have found the most value in the distance measuring and nancial analysis tools. With social media integration built into the apps, clients and prospects can follow your company on Twitter and Facebook or join your LinkedIn page with the tap of a nger, Kuhlmann adds. Like all technology, our apps are constantly evolving, Kuhlmann says. Most recently weve added a section in the app to store media reports, where the company can upload PDFs of documents about their company, research reports, articles, or any other document and have it immediately accessible on the iPhone or iPad. Tis media can then be printed, emailed, or even placed in a custom Dropbox folder. As the industry becomes increasingly mobile, the value of apps will continue to rise, Kuhlmann notes. However, apps dont serve as a replacement for face-to-face contact with clients. Instead, these online tools are a valuable complement to a companys overall marketing strategy. If you have to go back to your oce to get more information on a listing or obtain an important document for a client, you may miss the opportunity to make that sale or obtain that listing, Kuhlmann points out. Tough the return on developing an app for your business may not be evident just yet, apps can provide a certain level of cachet. When somebody pulls out an iPhone or iPad at a social function or a business
conference, its nice to be able to give somebody something for free that is useful, Shindleman says. Te app is a business card that sticks.
2. Step Beyond Social Media

As industry professionals have learned during the past few years, strategically executed social media initiatives can be very powerful marketing tools. Teres no comparable way to connect and communicate with so many people so instantaneously, says Darren J. Powderly, CCIM, partner and president of Compass Commercial Real Estate in Bend, Ore. Te next step in the process is to use these tools to build successful relationships, according to several CCIMs. Sites such as LinkedIn, Facebook, and Twitter have opened up a new dimension of relationship-building among clients and colleagues. One of the biggest advantages (of social media) is the opportunity to discuss business with people who are not just looking to sell, says Edward Anderson, CCIM, manager of real estate for Kerr Drug in Raleigh, N.C. Not having an agenda or preset goal removes a level of apprehension and changes things from a negotiation to a conversation that may result in an unexpected collaboration. Connecting with people outside your daily sphere of inuence can produce a totally fresh perspective on an ongoing problem. Powderly notes that eective social media marketing is as much about gleaning information from clients, industry organizations, and competitors as it is about marketing your own business. Were not doing all the tweeting, Powderly says. We also learn a tremendous amount by following topics of interest and sharing those topics with our target market. With Compass Commercials 780 followers on Twitter and several brokers with 500 or more contacts on LinkedIn, Powderly suggests using these channels to maintain relationships as well as create new ones. Bend, Ore., is a small town, but most of our team has relocated from other areas of the country, he says. Social media enables us to maintain our contacts from across the
country. When I reconnect with friends or business associates they ofen comment on how active I am on social media. Several have asked me to keep them in mind if a killer deal surfaces. As a result, my buyer network has ourished. Te key to stepping beyond a mere presence on social media requires a clear-cut understanding of your goals, strategy, and desired results. Te whole approach is like unpeeling an onion, says Russell J. Bardolf Jr., CCIM, SIOR, of Rock Commercial Real Estate in York, Pa. Social media contains a lot of layers, targets, and levels of communication. Te key is to gure out how to make those various components work eectively for your own business development and marketing goals.
3. Get Blogged Down Blogs are a great way to build brand exposure, says Justin Cazana, CCIM, principal of Cushman & Wakeeld/Cornerstone Commercial Real Estate Services in Knoxville, Tenn., who blogs regularly at http:// knoxvillecre.blogspot.com/. His company uses a three-tiered content development approach: I write about industry specifics, another [colleague in the brokerage] focuses on commercial real estate news in the market, and yet another blogger focuses on technology in commercial real estate, Cazana says. Not only does it allow us to provide vast amounts of information, but it helps our website register on search engines since the site is constantly being updated. Nick Miner, CCIM, vice presidentinvestments of Commercial Properties in Phoenix, who initially started a blog to better serve clients, says blogging has also expanded his market presence, helping to build a blog subscriber base as well as attract new prospects. Miners investment in regular blogging is slowly starting to pay o in leads. Just recently a past client referred an owner/developer to my site who immediately subscribed to my blog. Whenever someone signs up to receive my blog posts, I follow up right away with a welcome email. Tat email prompted
the prospect to call me instead of the other way around, which is the goal, Miner says. While CCIMs generally agree that blogging adds value to their marketing eorts, the return on the time investment is hard to quantify in a service industry such as real estate. Evaluating proxies such as Facebook likes, retweets, shares, and comments can help bloggers determine how well their content is resonating, according to an article on Mashable.com, a social media aggregation service. Reviewing analytics as well as monitoring secondary indicators, such as the quality of the leads and length of the sales cycle, can be useful as well. To get started blogging, experienced CCIMs recommend analyzing the process as you would a transaction: Conduct thorough due diligence and think about the end result. Before you spend a lot of time writing your blog, you have to develop a marketing plan for it, Cazana says. Start by asking yourself what your clients want to know and how to best share it with them. We drive our blogs through four Facebook accounts, three Twitter feeds, and several personal LinkedIn accounts so we can maximize the reach of the blogs. If clients cant nd it, they cant read it. Tough many bloggers give up when they dont receive instant results, blogging should be looked at as an organic process that develops and grows over time. The key is to become a trusted source for information, Cazana says. Tat is why we vary topics from the current state of the market, to how to look for a broker, to breaking down specics of a lease. Ideally you become a lot like a TV news anchor a friendly face people can turn to for information because they trust you. While Groupon and similar online couponing techniques may continue to keep consumers and businesses alike looking for the next great deal, in commercial real estate success boils down to knowing your customers needs and tailoring a solution specifically to them, Powderly notes. Ultimately, people want to do business with people, not their iPads.
Jennifer Norbut is senior editor of Commercial Investment Real Estate.
www.ccim.com
OUTLO OK
REGIONAL
Californias Big Deal

The state of California accounted for 29 or close to a quarter of 2011s top single-asset hotel deals, including the $137 million sale of the Mondrian Los Angeles, which was the second-highest U.S. price per room sale at $578,000 per room. Private investors and private equity are seeking comfort in hotel deals: 130 single-asset transactions priced at $10 million or more checked in at $8.9 billion in 2011, considerably higher than 2010s $5 billion in sales, according to the LWHA 2011 Major U.S. Hotel Sales Survey.
WEST
N O R T H
Canadas Ofce Market Tightens

Vacancy rate
METRO 2011 (%) 2012F (%)
Vancouver, B.C. Calgary, Alberta Toronto National

Source: Avison Young
W E S T
Tech Demand Fuels Bay Area Market

San Franciscos unemployment rate dropped 230 basis points in the last two years, down to 7.8 percent, and the oce market has followed suit, seeing its strongest leasing since 2006. Growth continued through all four quarters last year, ending with 2.1 msf of positive absorption. Given the lack of new construction and demand from technology tenants in the South Financial district, rents for class B product are competing with and sometimes surpassing class A rents, according to CBRE. Submarket asking rates for both property classes average $40 psf. Nearly half the market demand, about 3 million sf from technology tenants, is focused on this submarket and a few others that account for about 20 percent of the markets space.
ibphoto/Veer
M I D W E S T
Indianapolis Industrial Market 2011
7.6 7.2 7.9 7.6
6.4 5.2 7.2 7.0
5.5 msf of new leasing 2.6 msf leased to

new tenants
5.6 msf of renewals

and expansions
1.8 msf of user sales

Source: Cassidy Turley y y
N AT I O N A L
Without Borders
Whats lling those empty Borders big boxes across the nation? A variety of retailers: HH Gregg in Aventura, Fla., Furniture King in Glendale, Ariz., and a Jo-Ann Fabric and Crafs in Reading, Pa. Discounters Stein Mart and Ross Dress for Less have taken up residence in Atlanta and DeKalb, Ill., stores, respectively. A Vacaville, Calif., store was divided between two retailers: Ulta Beauty and Kirklands. Among the non-retail tenants, childcare chain Children of America has leased a former Borders in the Chestnut Hill neighborhood of Philadelphia. And in the Chicago suburb of Deereld, Ill., NorthShore University HealthSystem signed a 15-year lease for a 24,500-sf, two-story former bookstore.
E A S T
Ofce Rents 4Q11, psf

Manhattan New Jersey Philadelphia Boston $50.37 $24.30 $23.25 $23.12
Source: Newmark Knight Frank
N AT I O N A L
Industrial Net Absorption

(in millions sf)
30 25 20 15
S O U T H
27.0 Market 4Q11 4Q10 12.3 7.4 2.4 U.S. total 4.1 2.2 Midwest 3.2 South 4.7 1.1 West
Retail Hot in Miami-Dade County

Vacancy rate: 5% Number of unlled big boxes: 31; Downsizer Best Buy is subletting up to 15,000 sf in some of its locations Expanding retailers: Walmarts Neighborhood Marketplace, Aldi, Target, Whole Foods, Fresh Market, and Publix Under construction: 55,000 sf in downtown Miami
10.8
10 5 0
Northeast
Source: Cassidy Turley
S O U T H M I D W E S T
Multifamily Appreciation
Price per unit increases
MARKET 2009 ($ PER UNIT) 2011 ($ PER UNIT) % CHANGE
Above Average
PhotoAlto/Glow Images
2012F Employment Growth U.S. metro average ....... 1.4% Minneapolis-St.Paul...... 2.1% Louisville, Ky................. 2.1% Milwaukee .................... 1.7%
Charlotte, N.C. Austin, Texas Jacksonville, Fla.

41,667 50,500 31,500
81,500 64,500 38,000
95 27 23
www.ccim.com
BE AT
INTERNATIONAL
Russias
Big Deal
More proof that a well-located retail center can always command top dollar: A Morgan Stanley real estate fund has agreed to buy the largest mall in St. Petersburg, Russia, for $1.1 billion, from Meridian Capital, according to Bloomberg News. Built for $380 million and opened in November 2010, the 1 msf Galeria contains ve oors, with 250 shops, a movie multiplex, bowling alley, and underground parking. Te mall is located next to the train station with direct connections to Moscow. Rising wages and consumer spending are fueling a boom in Russian malls, as international brands enter the country looking for space. Russia has about 80 sm of mall space per 1,000 people, compared with the EU average of 240 sm.
Mexico/Caribbean Hotel Pipeline

2011: 32 hotels (4,886 rooms) 2012F: 59 hotels (7,424 rooms)
Source: STR
Direct Commercial Real Estate Investment 2011

in U.S. $ billions
400 350 300 250
$400 up 25%
By [2011] year-end, commercial property values in the Irish market had declined by as much as 65 percent from peak levels. We anticipate that decline will come to an end in 2012 and we will see a small positive total return being achieved in the Irish market for the rst time since 2008.
Marie Hunt, executive director, CBRE, Ireland
200 150 100 50 0
$155 up 60%
$161 up 18% $84 down 1%
Americas EMEA
Source: Jones Lang LaSalle
Asia Pacific
Total
Markets to Watch
Transaction activity doubled in Eastern European property markets last year, hitting 6.1 billion, more than twice 2010s activity level of 2.9 billion, according to Cushman & Wakeeld. Retail and oce properties dominated sales, at 40 percent and 37 percent respectively, with industrial garnering 15 percent of sales. Poland and the Czech Republic were the favored markets and will continue that role this year. C&W forecasts 5 billion in sales by year-end. Investors hope that the London Summer Olympics will give the U.K. markets a much-needed boost of condence and cash, according to Jones Lang LaSalle-UK. Oce employment is improving slowly, and a lack of quality product will help give a modest increase to rents this year in the oce sector. In addition, the residential market is attracting attention and cash from Italians and Greeks looking for safe haven outside their own troubled economies, says IBTimes.com.
BUYERS
GUIDE
All Talk, No Recharging

Te Droid Razr Maxx, an Android smartphone from Motorola, gives users more than 21 hours of talk time on a single charge. To improve battery life, the Razr Maxx is slightly thicker than previous models. Te phones Kevlar backing and a Gorilla Glass screen help ensure durability, and it can connect to a corporate network through an enterprise-grade VPN. Te phone has 11.5 GB of internal memory and includes a 16 GB microSD card. Te Razr Maxx costs $300 with a two-year Verizon contract.
For more information, visit http://goo.gl/8xAkP or call (800) 734-5870.
Property Management on the Cloud Mobile Modem

Te Pantech UML290 is a mobile modem that connects Mac and Windows users to Verizons 4G LTE network, which is currently available in 38 U.S. cities. A USB connector rotates 180 degrees and can be folded away when not in use. Te device costs $99.99 when purchased with a twoyear Verizon contract.
For more information, visit http://goo.gl/ ZuERs or call (800) 922-0204.
LeaseRunner combines tenant applications, background checks, lease writing, and rent collection into one Web application. Te program provides applications for various property types, including residential, oce, retail, industrial, parking, and storage. Leases can be pre-populated with tenant and property data and executed though e-mail with digital signatures. Feature pricing ranges from $3 for each rent collection to $50 for each business credit screening.
For more information, visit http://leaserunner.com or call (303) 468-8018.
$kin in the Game

Anwar Elgonemy, CCIM, discusses the structural problems in commercial and residential real estate nancing in the book Skin in the Game: Te Past, Present, and Future of Real Estate Investments in America. Elgonemy focuses on commercial debt maturities, private-label mortgage-backed securities, and the decline of home equity and its eects. In addition to explaining these, Skin in t Game proposes solutions to prevent another mortgage crisis. Te book the cost costs $12.95.
F For more information, visit http://skininthegame.info or call (415) 699-3347.
A Br Bright Projection
With an 80-lumen LED light, the AAXA P4 Pico Projector claims to be the brightest por80 table projector on the market. Te projector has 2 GB of internal memory and the Windows CE processor, allow allowing users to display les without a computer connection. Te 5.6-by-2.7-inch f projector can operate for up to 75 minutes on a full charge. Te projector costs $339.
For more information, visit http://goo.gl/NoQAe or call (714) 957-1999. v
www.ccim.com
MAKERS
DE AL
Ariz., represented Central One in the more than $2.9 million sale of 3.7 acres of land in Tucson to Wal-Mart Stores.
The Biggest Deal
Sam Foster, CCIM, of Jones Lang LaSalle

in Los Angeles and three partners negotiated the $45 million sale of a 192,053-sf office building in El Segundo, Calif., from Kilroy Realty Corp. to AG Net Lease Fund II.
Ofce
Big Deal
Andrew Sumlin, CCIM, of Cushman & Wakeeld in Atlanta represented RB Terraces LLC in the 10-year, $16.3 million lease of 55,000 sf of ofce space in Atlanta to Ventyx. Hans Kaunath, CCIM, of
Retail
Big Deal
place of Naples LLC to Naples Tanglewood Holdings LLC.

Marlene A. Spritzer, CCIM,
Tarheel Bookstore in the more than $1.9 million sale of an 8,400-sf retail space in Chapel Hill to BS Franklin Properties.
J. Tyson Glasser, CCIM, of RealtyLink LLC in Greenville, S.C., represented an undisclosed seller in the $25.6 million sale of the 167,341-sf Midtowne Park retail center in Anderson, S.C., to a national REIT. Glasser also represented an undisclosed seller in the more than $2.5 million sale of the 7,575-sf Firestone Complete Auto Care in Burlington, N.C., to an undisclosed buyer. Elizabeth Clare, CCIM,
of Spritzer Commercial Properties LLC in Durham, N.C., represented Goldsboro Five Points Plaza LLC and Te Tird Millennium Group LLC in the more than $5.7 million sale of the 57,485-sf Five Points Plaza in Goldsboro, N.C., to Southeast Associates of Asheville LLC.
Ryan Garrick Imbrie,
Land
Big Deal
Lee W. Schaefer, CCIM, of Maverick Properties in Nashville, Tenn., represented Bristol Development Group in the $6.7 million purchase of 7 acres of land in Brentwood, Tenn., from an undisclosed seller. Nathan L. Cox, CCIM,
Ciminelli Real Estate Services in Tampa, Fla., and a partner represented CW Capital Asset Management in the 11-year, $13.6 million lease of 70,706 sf of oce space in Clearwater, Fla., to an undisclosed lessee.
Sandy Shindleman,
of Cushman & Wakeeld Commerce Real Estate Solutions in Las Vegas and a partner represented Bank of America in the more than $17 million sale of the 240,000-sf Village Square in Las Vegas to Westport Capital. David J. Stevens, CCIM, of Investment Properties Corp. in Naples, Fla., negotiated the more than $6.1 million sale of a 48,615-sf shopping center in Naples from Tanglewood Market-
CCIM, of Sperry Van Ness in Portland, Ore., represented Sunset Oaks LLC in the $5.6 million sale of a 30,380-sf retail property in Hillsboro, Ore., to an undisclosed buyer. Keith A. Sturm, CCIM, of Upland Real Estate Group in Minneapolis represented an undisclosed seller in the more than $2.9 million sale of an 18,000-sf Oce Max in Blaine, Minn., to an undisclosed buyer.
Gary P. Hill Jr., CCIM, of
Tomas Linderman Graham/ Grubb & Ellis in Chapel Hill, N.C., represented
of Bellator Real Estate & Development in Spanish Fort, Ala., represented Loxley Triangle LLC in the $4.2 million purchase of 1,361 acres of land in Spanish Fort and Loxley, Ala., from an undisclosed seller. William H. Rollins, CCIM, of Land Solutions in Fort Myers, Fla., and a partner represented Weakley Family Properties LLC in the $3.8 million sale of 2.3 acres of land in Naples, Fla., to LSII Properties. Debbie W. Heslop, CCIM, of Volk Company in Tucson,
CCIM, of Shindico Realty in Winnipeg, Manitoba, negotiated the 25-year, $12.3 million lease of 30,000 sf of oce space in Winnipeg from Shindico Realty to Winnipeg Regional Health Authority. Shindleman also negotiated the $6.9 million sale of 35,000 sf of oce space in Winnipeg from an undisclosed seller to a pension fund. R.C. Myles, CCIM, of Cassidy Turley Fuller Real Estate in Denver and three partners represented F&C Holdings LLC in the $9.5 million sale of two oce buildings totaling 93,039 sf in Littleton, Colo., to IBC Holdings LLC. Mark E. Douglas, CCIM, of Talhimer/ Cushman & Wakeeld in Richmond, Va., and two
partners represented Metropolitan Life Insurance Co. in the more than $6.2 million sale of a 285,846-sf oce property in Henrico County, Va., to the County of Henrico. Chad Boddez, CCIM, of Colliers International in Edmonton, Alberta, represented PTI Group in the 10-year, $5.3 million lease of 28,253 sf of oce space in Edmonton from Supreme Capital.
Howard Friedman,
a partner represented Te Yoder Group in the more than $5.4 million sale of a multifamily portfolio totaling 75 units in Muncy, Bloomsburg, and Miinburg, Pa., to an undisclosed buyer.
than $7.5 million lease of a 101,250-sf industrial property in Allentown, Pa., from an undisclosed lessor.
Timothy M. Kerrigan,
Financing
Russ W. Martin Jr., CCIM, of First Security Bank in Little Rock, Ark., arranged the more than $9.8 million renancing of a 248-unit multifamily property in Shreveport, La., for an undisclosed borrower.
Industrial
Big Deal
David E. Blois, CCIM, of Stonehaven Realty Management in Burlington, Ontario, represented a private German investment group in the $17.9 million purchase of a 185,700-sf industrial property in Oakville, Ontario. Joshua Levin, CCIM,
CCIM, of Compass Commercial Real Estate Services in Bend, Ore., represented Deschutes Ridge Business Park LLC in the more than $5.1 million purchase of a 60,000-sf oce complex in Bend from WBCMT 2007-C33 Disk Drive LLC.
of Levin Commercial Real Estate LLC in Atlantic City, N.J., and a partner represented SunOpta in the 15-year, more
Ted Barr, CCIM, of Woodside Health in Cleveland represented Woodside Health in the more than $4.7 million purchase of two medical oce buildings totaling 29,162 sf in Kingwood, Texas. Jarrad Katz, CCIM, of NAI Global Las Vegas LLC in Las Vegas represented NLV-ZIM LLC in the 15-year, more than $3.1 million lease of 9,900 sf of medical oce space in North Las Vegas, Nev., to Greater Las Vegas Dialysis LLC.
CCIM, R.J. Neary, CCIM, and Ryan M. Zabrowski, CCIM, of Investors Realty in Omaha, Neb., negotiated the more than $4.6 million sale of a 131,110-sf industrial property in Omaha from Professional Veterinary Products to Sergeants Pet Care Products. Keith Armstrong, CCIM, of Target Realty Corp. in Stavely, Alberta, and a partner negotiated the $2.7 million purchase of an 18,168-sf industrial property in Calgary, Alberta, from an undisclosed seller to Silkstone & Granite Ltd. Daniel A. Berger, CCIM, of NAI Commercial Partners in Lancaster, Pa., negotiated the $2.5 million sale of 136,196 sf of industrial space in Ephrata Borough, Pa., from Homette Corp. to LNR Property LP.
Mixed-Use
Katherine C. Campbell,
CCIM, of Talhimer/Cushman & Wakeeld in Virginia Beach, Va., negotiated the $5.4 million sale of two mixed-use buildings totaling 64,186 sf in Virginia Beach from an aliate of Rosemont Realty to Continental Parkway LLC.
Submit transactions to Deal Makers, CIRE, 430 N. Michigan Ave., Chicago, IL 60611; e-mail to dealmakers@ccim.com; or fax to (312) 373-8219. Include a high-res digital color property photo or head shot if available.
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Auburn University .....................13 CCIM at ICSC ............................25 CCIM Capitol Hill Visit ........ cover 2 CCIM Career Center ....................9 CCIM Course Schedule ............. 11 CCIM Membership ............ cover 3 CCIM Spring Business Meetings ................................... 17 CCIMREDEX..............................15 Century 21 ..................................3 CIRE Bulk Subscriptions............21 CIRE Online .................................2 Grandbridge Real Estate Capital ..5 Prudential Commercial Real Estate ..................................7 Re/Max International ......... cover 4 STDB.........................................31 Ward Center for Real Estate Studies ......................................19 Looking for more information on a product or service? Visit our advertiser Web links on CIRE magazines Web site at www. ccim.com/cire. For advertising information, contact: Rich Rosfelder at (312) 321-4507 or rrosfelder@ccim.com.
CCIM ROI
Multifamily
Drew R. Bobincheck,
CCIM, of Landmark Commercial Realty in Lemoyne, Pa., and
Heel Cos. in Raleigh, N.C., had just nished teaching a North Carolina CCIM Chapter-sponsored nancial calculator course in Raleigh when he was approached by student Frank Bridger, CCIM. Bridger was looking for multifamily properties, and Taylor told him about the 177-unit Autumn View Apartments in Fayetteville, N.C., which his client hadnt put on the market yet. Teres a high level of trust between CCIMs, Taylor says. We knew Frank had done the due diligence and the buyer was legitimate. Te CCIM connection helped to expedite the more than $11.8 million sale to an undisclosed buyer.
Jay Taylor, CCIM, of Tar
www.ccim.com
CONNECTIONS
CCIM
Market Monitor
Economists are mostly prophets of doom these days, but Mark Dotzour, chief economist and director of research for the Real Estate Center at Texas A&M University, has some good news to share. Underlying investor demand for real estate is very strong, he says. REITs have raised a lot of money and need to invest it. Private equity funds have raised cash and havent found enough deals either. Tey are faced with the prospect of buying property or giving the investors their money back. Cap rates for trophy properties and agricultural land values are quickly approaching the bubble levels of 2007. He also has some good advice for Washington. Te best thing that could happen to the economy would be for Congress and the president to adopt SimpsonBowles (proposed decit-reduction legislation) and begin a credible program of balancing the budget over a 10-year period. As for commercial real estates recovery this year, hes keeping his eye on small businesses. Ill be watching monthly surveys from the National Federation of Independent Businesses, Dotzour says. Until small businesses get more optimistic about the future, hiring will not happen.
SMALL BUSINESS OPTIMISM INDEX

January 2012 Change from Last Month -1 0 -5 5 1 1 3 0 -1 -2
Index Component Plans to Increase Employment Plans to Make Capital Outlays Plans to Increase Inventories Expect Economy to Improve Expect Real Sales Higher Current Inventory Current Job Openings Expected Credit Conditions Now a Good Time to Expand Earnings Trends
Net % 5% 24% -3% -3% 10% 1% 18% -9% 9% -24%
Source: National Federation of Independent Businesses
For more from Mark Dotzour, attend CCIM Live! Oct. 1216 in Las Vegas, where hell provide a keynote presentation on commercial real estate and the economy.
m CC OTE fro N
d ers, ership, an te Memb ad itu t CCIM Inst titute, le Ins involvemen ar IM De he of the CC our membership. T rams g On behalf you for y s our pro k hen aff, than like you strengt ojects to St r ndividuals elop innovative p of i v ps us de te and hel bers. real esta Mem al , commerci erve all s mier rtunities po pre provides pment op elo CCIM iness dev es. us cation, b ber resourc edu mem reality. valuable na and is missio h making t or k you f Than
IM
incerely, S
t hip. I , CCtMtute Presiden mbers h /me Leil KocM Ins i im.com w.cc 2012 CCI isit ww ets, v
ta For de i ershi memb ls on p ben
BUILD YOUR BUSINESS

NOT YOUR BROKERS
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