National – 8/13/2013 Why should anyone grant someone else a Right of First Refusal? Heres an uncharacteristically succinct answer: because they have no choice. Yes, make the deal or not. Granting any option rights always seems like a one-way deal. The optionee (i.e., the one who gets the right) isnt bound to do anything, but the optionor (i.e., the one who gives the right to the other) is stuck if the option is exercised. The only reason it isnt a one-way deal, is because the party granting the option right gets the deal by reason of having granted the option right small comfort, but true…. …More
Latest Commercial Real Estate News and Comments for the Commercial Practitioner and how they affect Greater Madison/Dane Co. SC Wis. Comments and thoughts always appreciated.
In this up and down commercial real estate market, we are seeing the resurgence of the Percentage Lease. Most often it is in the retail and hospitality sector. In this type of lease, the rent is based upon a percentage of sales volume that the business makes at that location. Often times there is a minimum (and sometimes a maximum) rent base as well. For example, a restaurant has calculated that they can afford paying five percent of their gross sales as rent. If the sales volume for the month is $50,000 they would pay the landlord $2500 for that month as base rent. Now usually this is on a projected annual basis and then adjusted after the first year to compensate for seasonal swings. In this case, there may be a minimum of $1800 er month and a maximum of $3200. We have seen more than the usual number of these types of leases coming through the commercial pipeline than in normal market conditions.
What has been your experience with Percentage Leases? Do they work out for both parties involved? Have you experienced any quirks of some sort?
Let us know your thoughts on this since they seem to be more prevalent.
Last night, Regus held its Grand Opening Party for the Madison/Middleton location. This is their first venture into the Madison Market, although they have Office Suites in over 1100 locations, located at 8383 Greenway Blvd. #600. The concept is not new. Small high end luxury office space, whether a single office or small suite, with shared amenities on an ala carte basis has been in Madison for years. Urban Land Interests has it downtown just off the Square. Other not so high end ventures also exist in the area. Space is usually leased to start ups, temporary needs for companies that are in transition into other quarters, new companies locating into our market, or just small single users who need those amenities or space. What makes Regus work is that they have all the other locations and experience to draw from. They are also leasing from T. Wall Properties so if a company grows and needs to expand into some larger permanent space, TWP has a variety of locations to chose from. Seems like a win win situation for everyone. For you commercial real estate brokers, Regus will pay you commissions on any signed lease. For more information contact John Williams, General Manager at John.Williams@Regus.com or Deana Porter at Deana.Porter@Regus.com or visit their web site at http://www.regus.com.
At our recent Commercial Brokers Group meeting
the main topic centered on a presentation
by the City of Madison on the new East
Washington Corridor Development and the
opportunities for the Commercial Sector. What
became evident was a bit shocking but a pleasant
twist in the City v. developer mentality.
Mayor Dave seems to understand that smart
growth in the Commercial Development and
Zoning arena can be good for all involved. He
pledged to do so with TID’s and TIFF in the
Corridor as well as helping to ease the process
with the City Departments involved.
This is one area where the City welcomes high
rise density as well. Tax revenue generated will
help not only the area with parks, green space,
jobs, transportation, but full coffers will help
promote some of the social aspects and programs
that need funding as well. I suggest you
go downtown and check out the project’s
model complete with miniature buildings of a
facsimile of what can happen. And if you see
Mayor Dave – give him kudos and let him know
you support this endeavor.
Land For Sale Near EPIC in Verona- Click to Watch Video Show!
I just read an excerpt from our WRA Realtor News Update on virtual staging. You can now remodel, replace furniture etc. virtually to show someone how a home might look but not the way it looks today. I wonder how upfront this may be. Does it leave the persons own imagination from working on what can be done? Does it say that if not done the way it is staged your tastes are not in vogue? Or does it actually give a few ideas on how a space should be and your imagination is stimulated even further. Hard to say. I do believe this would be a great Commercial Real Estate application. How many times have brokers shown a large baron 10,000 sq. ft space of concrete and windows to a client and trying to show and tell how the open space could fit their needs? I know I have been there. So open that it shuts down the senses on overload of where to start. Now without expensive drawings and draftings a client can be shown how it might layout for their specific needs and what it would look like in a 3D environment. Pretty cool, as long as we do not let our imaginations go to sleep.
Just read excerpts by Financial Times John Grapper and Wired Magazine’s Editor Chris Anderson about the new business model some are calling “Freemium”. It is definitely geared towards the new Internet model 2.0 where things are not pushed at the consumer but rather given openly and freely and on a “Hi, I am here to help you if needed and in the meantime here is free information etc.” This model or idea is not new to the real estate industry when you think about it. Google is the master. It does not get the information we give it free information and it aggregates it. So in essence it does not pay for content and in return gives it back out. A “Freemium” to us the user. It makes it’s money by having ads placed by a few who want to be first or higher in the search content results.
But the real estate industry has not taken it to the full extent that Google has. We still pay to place or view information on a system (MLS, PropertyDrive,CoStar etc.) and very little in the advertising or placement venue as a revenue stream. As a broker we offer this information to clients or customers and the real value is we are able to interpret and make sense out of the information. Guidance Counselors in a sense. That is why and where our value comes from. Our experience and knowledge in the profession. We can help our clients get the best possible price, in the shortest amount of time with the least inconvenience and we are paid well to do it. Of course, there are some out there that do not need us to do so and that is all well and fine. 80/20 rule. We will work with the 80% and that is more than enough.
So let’s embrace all that free information out there. All that “Freemium” means more work for us to help clients make sense of it all.