Blog


29Jun

These are some of the options a commercial real estate owner has when considering selling (including sale-leaseback) or leasing their property.

You have a few options when it comes to selling or leasing your commercial property.  The most common options would be selling it, leasing it or doing a sale leaseback.  There are positive and negative to each option, lets run through a few:

Selling:  When selling a property, you will primarily come across two types of buyers, users and investors.  The good news is investors are usually well capitalized, often are cash buyers, highly qualified and can close quickly.  The downside is investors typically must pay less to make the investment numbers pencil.  Additionally, investors are usually a lower risk buyer to the seller (high chance of closing and lower risk of falling out of escrow) and for that they get a discount (less risk less reward).  Some industrial investors will start considering assets at the $5 million level and over and more at $10 million and over.

Users are buyers who intend to use the property for their business.  Due to the many benefits of owning your own property and typically being less qualified users can pay a higher price.  The downside is users typically are less sophisticated and take longer to complete the transaction.  You also run a higher risk of falling out of escrow with a user buyer (higher risk/higher reward).

One of the things to consider when selling is capital gains.  You can defer your real estate capital gains through a 1031 exchange but there are some rules you must follow.  You have up to 45 days to identify 3 potential replacement properties and 180 days to complete the purchase. 

Leasing:  Leasing your property is another option.  The upside is collecting passive income, avoiding potential costly environment remediation issues and/or capital gains a sale may trigger.  The downside is you must play landlord and deal with the many issues that brings.  A few examples could be legal, maintenance and/or vacancy issues. 

Sale-leaseback:  Sale-leaseback could be another option if you would like to sell your property and continue to occupy all or a portion of it.  A typical reason for this could be a cash infusion for the business, pulling equity out the to deploy in other areas and more recently a way to avoid tax risk due the potential passage of the split tax roll.  A buyer for a sale leaseback would typically be an investor, so many of the advantages and disadvantages listed above apply.  An investor for a sale-leaseback will typically want a longer term, however if the investor is primarily buying the property as an investment to lease to other tenants they usually will grant a short-term sale-leaseback if you just need extra time to wind down your business or move it.  The price of the sale is mostly driven by the rent you agree upon for a longer-term deal, so the higher the rent, the higher the sale price and vice versa.

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18Jun

SB 939 failed to advance through the Appropriations Committee today.

Just got word from A.I.R. SB 939 failed to forge ahead.  During the Appropriations Committee hearing to today, the measure failed to advance.  CLICK HERE FOR MORE DETAIL

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18Jun

Save time and drive profits by adding a 3D virtual tour to your listing.

Lee and Associates Long Beach is pleased to announce 3D virtual tours are now available with the addition of Matterport.  Per Matterport's website, sell at a 4-9% higher sale price, decrease time on market up to 31% and 90% buys are more compelled by a listing with a 3D tour.  With coronavirus and COVID-19 social distancing concerns and the reluctance to tour at all, this may be the only way to get your space shown.  Additionally, generating higher engagement and interest in these slower economic times may be to key to closing the deal and getting that buyer/tenant.  Click here for a demo.

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11Jun

Recent events have even further strengthen the argument for this trade.

Originally posted February 3rd, but things have changed considerably since with the global coronavirus COVID-19 pandemic and social unrest!  With the desire to socially distance and find open spaces one must wonder if people will be motivated to avoid the dense urban centers and move to the more spread-out area of the suburbs.  This would be a bit of a countertrend to previous years with the TODs (Transit Oriented Developments) and mixed-use developments in city centers.

On the other hand, the desire to avoid crowds and packed retail buildings, more folks are using ecommerce.  This will only increase the already overwhelming demand for warehouse space, especially in the areas close to the population base where faster delivery is possible.

These changes have only led to a stronger argument for this trade idea!

***

This trade seems to make more and more sense for the commercial real estate investor of late.  Multifamily appears to have peaked after an extended run and is experiencing downward pressure over concerns with governmental/legislative issues, especially regionally here regionally in Southern California.  Meanwhile, Industrial is starting to take over as the hottest commercial real estate segment.  Also, some apartment owners no longer have the tolerance to deal with the higher demands and maintenance needs multifamily typically requires or they have moved out of the area.

The solution?  Sell your Multifamily Assets and Trade into Industrial Real Estate Properties.  Why Industrial?  Ecommerce and its explosive need for space.  With all the big box retail giants like Sears and Toys R Us shutting down, ecommerce has disrupted the industry transferring the need for space from store to warehouse.

In 2017 e-commerce accounted for 9% of all retail sales in the United States and is expected to grow to 12.4% this year!  Based on those numbers e-commerce appears to still have a lot of room to run.

It’s also normally considered an easier asset to manage with less demands.

So, what’s the first step if you’re interested?  Get an idea of what your Apartment Building is worth, so you have an idea of your budget.  Next get a list of available properties to trade into.  This can include leased properties with stabilized returns, upside potential or vacant properties with proforma projections.  A good broker should be able to help you with this, feel free to reach out if you do not know where to start.

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09Jun

For Sale in Corona, CA 2.59 acres of land zoned for residential use. Corona features a great school district and is a predominant area of affluent households.

• Residential Redevelopment Opportunity

• Exceptional Corona School District

• Area With A Predominance of Affluent Households and Strong Demographics

• Property Currently Has ±20,000 SF Industrial Building With ±1,300 SF of Office and Bonus ±6,700 SF Covered Storage Space


CLICK HERE FOR BROCHURE AND MORE INFORMATION

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18May

The proposed legislation could require lessors to defer CA rent obligations for a year or longer and allow tenants to negate the lease and walk away with no responsibilities for tenant improvements.

A California Commercial Real Estate Legislative alert went out last Friday from AIR about SB 939, a COVID-19 related measure.

The proposed legislation could require lessors to defer CA rent obligations for more than a year or allow the tenant to negate the lease and walk away with no responsibilities for tenant improvements.

If passed the measure would be in effect for 22 months from March 2020 or for two months after the end of the state of emergency, whichever is later.

As mentioned in the notice the proposal mysteriously (or as they say unfairly) doesn’t apply to any publicly traded companies or one that is owned or affiliated with a publicly traded company (franchisee).

Included in the notice are better potential options like the proposal put forth by Toni Atkins.

For more information, read the full bill or to send a letter opposing SB 939 CLICK HERE.

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11May

Industrial Commercial Property Warehouse For Lease

New Listing for lease in Long Beach, CA:

  • ±5,500 SF Industrial Warehouse
  • Floor Drains
  • Fenced and Paved Yard
  • Located in Cannabis Zone
  • Close Proximity to Freeways and Ports
  • Former Food Facility

CLICK HERE FOR MORE INFORMATION

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05May

100,345 SF Warehouse in Rancho Cucamonga, CA Leased.

Ron Mgrublian of Lee & Associates completed a 5 year  lease for a 100,345 square-foot industrial warehouse space located in Rancho Cucamonga, CA.  The value of the lease is approximately $3.9 Million. Mgrublian of Lee & Associates in Long Beach represented the tenant... MORE DETAILS

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30Apr

Receive a financial reprieve from the SBA during the COVID-19 pandemic.

In addition to PPP, the SBA will now pay your new or existing SBA mortgage for six months!  Our office recently had a buyer who got the first 6 months of their mortgage covered by the SBA and the first 3 by their bank.  Additional debt relief is also available, if you need more information a good broker should be able to point you in the right direction, CLICK HERE FOR MORE INFORMATION.

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24Apr

Recap of the 2020 1st quarter Commercial Industrial Real Estate Market activity for the Los Angeles - Long Beach area in Southern California.

COVID-19 has impacted the Los Angeles/Long Beach Industrial markets on the heels of another record breaking year in 2019.  Q1 saw a slight increase in the vacancy rate, but also an increase in the average asking lease rate.  Congress passed the Payroll Protection Program (PPP) and other programs designed to provide relief and 1031 exchange buyers received extended deadlines.  CLICK HERE TO READ THE FULL REPORT

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23Apr

INDUSTRIAL MARKET OVERVIEW - Q1 2020

The vacancy rate rose in the San Gabriel Valley Industrial Market in first quarter of 2020.  New construction brought additional square footage to the marketplace adding over one million square feet.  It will be interesting to see how this new supply is absorbed as situation regarding COVID-19 continues to unfold.  Click here for more details.

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21Apr

Don't fall prey to cybercrime, follow these easy steps to avoid becoming a victim.

Cybercriminals are taking advantage of the unusual times we’re in.  Fake emails, texts and phone calls intended to manipulate the situation in relation to COVID-19 and Commercial Real Estate are reported on a daily basis, I’ve received a few myself.  Use the Stop, Call and Verify call process to protect yourself from scammers.  Click to here for more details.

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