Who’s Bigger – Who’s Rising – Who Cares?

 

Breaking News! San Francisco and New York barely slipped into the Top-20 world’s highest priced commercial markets. NYC only made the chart at #10 with a pitiful $127 per square foot/per month rate. Home state favorite San Francisco didn’t even break into the Top-15 – Pathetic!

Don’t look away yet! The “NEXT” Silicon Valley won’t even be in the continental USA! That’s a cold paddling for San Francisco again, adding HTML insult to the SF gluten-free bruised ego.

The next world-master city of the tech-sec will probably be Beijing China with a blistering 165% growth in tech in 2014 – Stockholm Sweden elbowing in 2nd with 127% growth, and Tokyo pushing hard at 126% to make the Top-3 of this list of questionable importance.

But why aren’t SF and NYC on top? Will Silicon Valley get to keep the name Silicon-Valley? Who’s to blame? Most important of all – does it even matter?

Actually – no – it doesn’t matter. You can bundle up all the statistics available on the WWW and never find your current city making a ranking, or represented as a slice of a pie, and you would still be running a wildly successful business full of energy, inspiration, and importance.

The reality is ALL commercial real estate is local.

How is your location? – not compared to London’s West End – but compared to that other, newer office space advertised 2 blocks away from your current office.

How’s your visibility? – not compared to Beijing’s 1,086 foot average building height – but compared to the office space you can see on your drive home every night.

Local knowledge and local instincts are the most important data that you should consider when your lease is coming up for renewal. If you decide to take advantage of the historically low rents and move your business from your garage to a store-front this year, let your thinking start from a local zip code and look for a broker who knows the local market like their backyard.

Parting thoughts: this is sunset in Beijing’s highest priced financial district ($195.82 per sq ft). It’s a televised sunset – since their horizon is locked away behind the world’s highest density smog. They did make the #1 spot on that list by a long-shot.

This is sunset in La Jolla – shot by James Seggie at The Mad Shutter, a talented local photographer. This location in La Jolla is called Horseshoe by the local surfers, just a short drive from 7301 Girard Avenue, suite 301 – offered for lease at the globally reasonable rate of $2.50 per sq ft/monthly.

 

Mostra 2012/2013
Photo: ©Carlo Borlenghi

Your Commercial Lease: the iceberg principle

Have you committed the time, energy, experience, and resources necessary to secure the best terms for your commercial lease?

You probably did not.

Let’s face it. . . being the captain of a company keeps your head above water, watching out for the obstacles that can alter your business course.

When the time to lease cometh, it’s easy to command from the upper deck: “I shall negotiate!”

Do you know which specific terms to negotiate, and which terms to let ride?

Commercial leases often run into multiples of pages, and it’s easy to miss the crucial passage . . . such as who’s responsible for end of lease restoration, or who foots the bill when maintenance costs triple. Do you know what happens when the parking lot trees need to be replaced due to storm damage?

In the excitement of leasing into a new business location did you remember to consider what happens after 2 years, when unexpected changes to traffic flow patterns alter your business-scape?

When you jumped at the opportunity to extending your lease, did you consider what happens when the old property across the street is revitalized into a competing retail location in year-3 of your new 10-year lease?

There is no better advice than to have an experienced property manager represent you, and cut to the heart of your lease negotiations. It requires experience to detail the effects of the kick-out clause, pace the rate of your CAMS, measure the arc of the radius clause, and cap the admin charges where needed.

While this year may be the best time ever to rent space, remember that owners of properties are eager to make up for money they’ve lost during the recession. There are numerous terms and conditions coursing through a standard commercial lease that need to be considered, not just the visible.

Hire a good navigator and set sail for the Horizon!

Photo: ©Carlo Borlenghi

 

 

The Rise of Crowdfunding: Re-think Commercial Financing

There is a new wave of financing rising above the water-lines of the “Biggy-Bank” industrial complex – Crowfunding – offering an alternative way to finance everything from small-business ventures – to billion dollar commercial real estate investments.

Fundrise is just 1 example of what’s going to hit the commercial markets in the near future. Think you cannot afford to raise the capital for a commercial business venture? Now would be a good time to re-think the entire concept of lenders and borrowers. Get a glimpse of the near-future of what “Crowd-Thinking” has in store for disrupting the static markets.

According to the world bank report of 2013: The crowdfunding market will reach about $95 Billion in just 10 years. If the Venture capital world and big banks don’t evolve – we could witness the fall of both houses.  For example Kickstarter has helped 80,000 companies raise over $1.6 Billion – This in turn keeps them in control of their company. Viva the Crowd!

Crowdfunding will grow dramatically as the NEW way to finance non-tech businesses that have been traditionally financed by bank loans and friends and family. The opportunity here is enormous, and crowdfunding has barely scratched the surface of the commercial financing market – YET.

Horizon Resources is here to help you think, and rethink your plans of raising capital and investing in commercial real estate. This is a great time for commercial property as an investment and we welcome your call for assistance!

Photo: ©Carlo Borlenghi

THREE QUESTIONS THAT KEEP US PREPARED & FOCUSED.

Preparing for inclement weather is OUR job. When you’re out enjoying the smooth sailing and warmer waters, we spend our days preparing for what’s coming next. As seasoned property managers we have learned to use the mild times to ask ourselves 3 critical questions:

1. What is the current risk and exposure?

This is a frighteningly true figure – an average of only 15% of tenants are compliant with the insurance requirements in their lease, and only 4% of vendors are compliant with the property managers insurance requirements.

When the climate is mild we keep ourselves prepared with Certificates of Insurance (COI) for every vendor we work with. We also are the eyes and ears of our tenants and notify them immediately if their own insurance coverage is not current and certified.

2. Are we prepared for a sudden change in weather?

When it comes to physical inspections, our eyes are fixed on the future. The time to prepare for inclement conditions is NOT the hour before the big drops start falling.  We keep our full time maintenance staff on-site and taking actions to prepare for wind, rain, fire season, and high temperatures. The most inexpensive repairs we make are the ones we complete long BEFORE a crisis requires them.

3. Can we increase Income now, when the times are good?

Remember your New Years Resolution back in January? To get to the gym, increase your time spent with family, learn a new skill?  Did you?  We don’t only set yearly goals, we set goals every MONTH. By analyzing repairs, finding ways to cut the fat, shed expenses, increase NOI, and analyze our tenant’s goals for the coming season. We consistently consider new techniques to keep the property in top financial condition along the way towards 2016 and beyond.

Photo: ©Carlo Borlenghi

Horizon & Cox Cares: Leadership through Golf & Giving

Congratulations to our Horizon Team in joining COX Cares of Cox Communications to support First-Tee Pro-Kids of San Diego – at the Annual Cox Communications Golf Tournament – held Sunday June 7^th at Twin Oaks Valley golf course!

It was beautiful weather that accompanied us supporting Pro Kids: a wonderful non-profit dedicated to promoting leadership, values, and development of under-served youth in San Diego & North County.

Our Eagle level sponsorship of $1,500 helps the notable mission of Pro Kids in teaching 9 Core Life Skills through golf:

Integrity – Respect – Sportsmanship

Responsibility – Honesty – Perseverance

Courtesy – Discipline – Confidence

Our local community is the base of our business and the 9 Core Life Skills that Pro-Kids teach are at the root of our commercial real estate success. We encourage you to get involved too!

This is an annual event and we hope to see you there in 2016!