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By AZ Advisory Team, February 27, 2010 9:00 am

The generation of Americans now between 44 and 62 years old, 76 million of them, collectively known as the baby boomers, make up about 30% of the U.S. population according to the U.S. Census Bureau. They helped shaped America into what it is now. The economic boom of the 1990s, when these baby boomers were 26 to 44 years old and when most were producing income for themselves, created an unprecedented amount of personal wealth in America—currently estimated at more than $33 trillion.

With this, we are now at the forefront of what is expected to be the largest transfer of wealth in American history.  This huge transfer of wealth, estimated to be $40.6 trillion in a 55-year period according to Paul G. Schervish and John J. Havens in a Boston College research, will be a mix of waves of retirements and inheritances spanning three generations surrounding the largest and richest generation in America, the baby boomers.

First, the oldest of the baby boomers are retiring.  A couple of years ago, Kathleen Casey-Kirschling born on January 1, 1946 – the first baby boomer – retires and files for early retirement benefits at 62.  Other millions of baby boomers will be retiring as well in the next 26 years. It won’t be long before they think of transferring their wealth to their heirs.

Stay tuned for the continuation of this post. If you want to receive the entire report, sign up here: AZ Advisory – Powerful Tips in Commercial Real Estate Investing.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 26, 2010 10:31 pm

Negotiating a commercial real estate lease need not be that difficult. As a matter of fact, many landlords and property managers are now recognizing that providing superior tenant service means making lease negotiation process as simple and efficient for tenants as much as possible.  It is important to arrive at a lease contract that meets the needs of tenant and landlord in a smooth and quick fashion as delays over minor details is not beneficial for either party.

Increasingly, landlords are shortening the lease negotiation process through a system of alternate lease clauses that can be used to substitute for standard lease clauses as the situation warrants.  By making the effort to develop “standard” alternative clauses, the landlord’s legal counsel can avoid having to write specific language each time an issue arises.

Tenants, at least initially, need only raise the issue or concern, rather than make specific requests with respect to changing lease language.  This is most easily accomplished by employing a checklist that covers the issues which typically need to be addressed, at least from the tenant’s perspective. By using such a checklist, tenants can quickly review each negotiable clause in the landlord’s standard form lease, with the issues and concerns then brought to the landlord’s attention.

Stay tuned for the continuation of this post. If you want to receive the entire report, sign up here: AZ Advisory – Powerful Tips in Commercial Real Estate Investing.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 26, 2010 10:14 pm

Third Party Development

Hospitals and health care systems have embraced third party ownership and management of real estate, because it can preserve capital resources for acute care needs, eliminate the potential conflicts that arise in the landlord/tenant relationship between hospitals and referring physicians, and minimize the potential legal and regulatory challenges associated with leasing space to referring physicians. High profile transactions to convert existing medical office buildings and other non-core medical real estate to third party ownership and management have focused public attention on monetization over the past few years. Hospitals and systems are now beginning to use third parties to develop and own new medical real estate projects.

This concludes the topic Repositioning to Medical Office.  Take a look at my commercial real estate office listings here and take a look at this medical office in South Miami available for investment acquisition.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 25, 2010 10:24 pm

Alex Zylberglait of Marcus & Millichap is proud to present 6285 Sunset Drive. This ready for occupancy 5,200-square foot medical office building is ideally suited for a small medical practice.

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6285 Sunset Drive lies within an established medical hub just steps from South Miami Hospital (which recently completed its medical office complex), a few blocks from South Dixie Highway, and the Metrorail & bus stations.

This medical office building commands a high visibility location in a heavily traveled section of Sunset Drive. It is in the vibrant city of South Miami which borders the University of Miami main campus and the affluent communities of Coral Gables and Pinecrest.

Because of the unparalleled quality of its location, 6285 Sunset Drive would be a solid investment with significant appreciation potential.

Contact Alex Zylberglait, CCIM, SIOR
Vice President Investments
Director – National Office and Industrial Properties Group

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 24, 2010 11:26 pm

Repositioning

Adding value to office assets usually is achieved through improved leasing practices on ailing buildings. While owners and managers can only raise rents as the market allows them, some are seeking tenants whose market rent per square foot exceeds that of the typical office tenant. Repurposing a building into medical office is a top strategy in markets with strong medical demand, such as Florida and Southern California.

As of second-quarter 2007, medical tenants occupied only 4.2 percent of leased office space nationwide, according to CoStar Group. However, U.S. healthcare spending totaled nearly $2 trillion in 2005, or $6,697 per person, a figure that is expected to more than double by 2016, according to the Centers for Medicare and Medicaid Services. In addition, healthcare services are expected to be the fastest-growing office-using employer between 2004 and 2014, according to a recent National Association of Realtors study.  With more than 1.9 million office-using healthcare jobs expected to come online in the next decade, high concentrations of medical office and a rapidly rising population may be a winning combination.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 24, 2010 6:22 pm

The increased amount of care and attention needed for the aging baby boomer population will have a tremendous impact on the health care industry. Consequently, medical office properties may offer a particularly lucrative opportunity for investment.

Medical offices are particularly attractive to doctors because it puts them in close proximity to other medical service providers. Patients also benefit from the centralization of medical offices for the convenience of obtaining a wide range of medical services, such as diagnoses, MRIs and physical therapy all in the same building. Owning and renting out medical office properties can be an appealing and relatively affordable option for investors who wish to get involved in commercial real estate.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 16, 2010 1:32 pm

Another strategy is to buildout a space using modular furniture, even floor-to-ceiling, movable walls with doors to create flexible office space rather than immovable walls. They can use that allowance in their furniture budget vs. construction budget. If they have more of a budget for furniture, it’s a good option for people. This open office setup might include a couple of traditional offices but the rest is comprised of cubicles and furniture. If a company with modular furniture moves to another space, it can take it with them. It’s pricier on the front end, but it gives them even more flexibility with their space.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 15, 2010 12:11 pm

Reducing Costs

All players involved in tenant improvements, from the contractor to the tenant, are looking at ways to save or get the best value for their money. Tenants are trying to be efficient with their space planning and that they are looking at any way they can keep down the costs.

This value engineering analysis oftentimes involves tenants determining what TIs they must have and what TIs they want. Some ways tenants and landlords are cutting TI costs are by reducing or eliminating built-in cabinets, 4- to 6-foot-high divider walls, and any unnecessary frills, such as sidelights on doors and windows next to doors.

The trend is away from multiple coffee stations and back to one central break room, to avoid the costs of multiple sinks.

Tenants are spending more money on the highly visible, public places, typically lobbies and conference rooms, while keeping the remainder basic. As far as interiors and finishes, color schemes that will last 10 or more years are popular. Tenants are moving away from a lot of color – such as pink – and toward the use of neutral shades that won’t go out of style.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 12, 2010 1:49 pm

Construction costs and therefore tenant improvement costs are high, and are continuing to rise. Due to this, tenant improvement allowances are also increasing.

The high costs of TIs are driving some companies to forego new and opt for second, third- or fourth-generation space. Consequently, a surge in retrofitting of older buildings is taking place. The increased demand in these older buildings is driving up their lease rates, too.

The high costs of carrying out TIs are affecting lease lengths. Most often, landlords require a five-year minimum lease because they need that time to amortize the cost of the tenant improvements. Because tenants typically want only a three-year lease on second- or greater-generation space, landlords typically spend less money on those TIs.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.

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By AZ Advisory Team, February 11, 2010 7:10 pm

Tenants or buyers are ultimately responsible for the cost of tenant improvements. However, with leased property, the landlord may provide an allowance that pays for some, or all of them. In those cases, the tenant funds the remainder. The financial arrangement can get worked out in a number of ways, which often depends upon the tenant’s credit worthiness.

The landlord may pay for all TIs but insist upon a 10-year lease. When the landlord and tenant share the TI expense, the landlord may request the tenant pay the tenant’s portion up front. The landlord may allow the tenant to pay half at the outset and the rest over the lease term, with interest added for the amortized share. Or, if the tenant has strong financials, the landlord may amortize the entire amount over the lease term, along with an 8 percent to 12 percent interest rate.

You might get a $30 per square foot allowance, but have to move into a gray shell and buy everything, or you might get a $15 per square foot allowance and get painted walls, a ceiling, slab and a bathroom.

When a landlord contributes to the TI costs, the landlord usually wants to control how the money is spent and ensure the improvements are done to code.  In the case of a purchase, however, the developer only oversees a few issues, such as whether and how anything will be attached to the shell. Otherwise, buyers may do whatever they wish inside.

Alex Zylberglait provides commercial real estate investment advisory as well as research, estate planning, asset allocation, valuation, financing, special assets services, transaction advisory and commercial property acquisition and disposition services.