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Broker on the Move – Juliana Tonini is Sailing Her Way to Success

August 30th, 2017

While our brokers are busy going about their business of helping clients each day – thinking about the priorities at hand, and where they are expected to be next – we thought it would be fun to stop the action for a moment and highlight one of our brokers. Let’s see just what a typical day is like, and peek inside their “tricks of the trade”!

Continuing our “Day in the Life…” series, we recently sat down with Broker, Juliana Tonini, and asked her to fill us in on what keeps her going strong after 15 years in Commercial Real Estate:

How long have you been a CREB, and how did you get started?

I have been in the business since 2002. For many years, my background had been working in all aspects of the restaurant industry. I also worked in sales, as a captain, and office manager for a yacht charter company both here in Maine and in the U.S. Virgin Islands. As one job ended, I spoke with a friend who is a commercial real estate broker and she suggested I explore CRE. I started out leasing while pursuing my license and the rest is history. I have been at Magnusson Balfour since day one.

What keeps you motivated and liking your profession?

I love the versatility of being on the road, in the office and working from home; I am customer service oriented and I love dealing with different people. It’s also satisfying to give people the tools they need to make good solid decisions when buying or selling real estate.

What type of car do you drive?

I currently drive a 2015 Mazda 3. It is a great car, kind of sporty. However, I treat it like a truck. I guess a truck will be my next purchase as it is much needed for a woman who owns a boat, loves to landscape and work on her home. After that perhaps a little Mazda Miata.

What items are in your car? What paperwork do you have with you at all times?

Usually too much stuff…. signs, stakes, boots, a hammer, screw gun, etc. A complete set of listing paperwork and forms required for a new client. Of course, my phone and business cards. Then my personal stuff like rain gear, sailing shoes and extra clothing. It’s a mess. See, I need a truck.

How many business cards do you hand out in the course of a week?

I probably hand out 20–30 per week. I’m out and about a lot, and I spend most of my free time sailboat racing and at regattas so I’m likely to hand out a card at any time!

Do you attend formal networking events? How do you get out and build your business?

I am a member of Think Local, Windham, and attend some of their other events in Southern Maine. I occasionally attend Chamber events and charity events. I help man our Magnusson Balfour booth at business and real estate events along with the other brokers.  I’m a pretty social person, so anytime I’m out in public I consider it a networking opportunity!

What technology could you not live without? Do you have a favorite App that helps you with your business?

My iPhone! I use it for everything –My favorite apps that I use the most is my HP10bll financial calculator, DocuSign, and the Weather Channel. It’s my email, my calendar, my camera and my navigation. Sometimes, I would like to toss it in the ocean, however it’s indispensable! Oh yeah Facebook in the evening. It is important to keep up with your friends.

How many miles do you travel in your car in a week?

Probably 100 miles or so a week.

How many phone calls, emails and text messages do you receive daily?

I can’t really say. Real Estate tends to be a business where everything happens at once or not at all. You just have to be ready. Returning calls is one of my biggest pet peeves. Just do it! My phone is always by my side that is for sure!

What’s your area of specialty or expertise, and why did you choose it?

I try to concentrate on the Greater Portland area. However, real estate takes you all over Maine. I’m currently expanding into the Kennebunk area.

What is the most important personal attribute that you bring to your job?

I truly care about my clients. I am eager to learn about their needs and what they expect to accomplish. I never want someone to just buy something, and have it not work out well for them. It’s not just about the sale to me, I am honest and tell it like it is, because I want people to be happy in the long term in hopes to see them again.

What are you most excited about in relation to your job this year?

Reaching my goals, exceeding my expectations, meeting new people. I’m really excited about my new territory and working with people in the Kennebunk area. It’s a great opportunity to learn about a new area of Maine.

What’s the greatest bit of advice a parent or mentor has given you?

I think immediately of my dad. He emigrated here from Italy, was a professional chef, and taught me about working hard for what you want. His work ethic was impeccable, and he instilled that in me. We had a family restaurant in Boothbay Harbor, and I started helping out there at 11 years old. My Dad taught me to work hard.

What is a professional development goal you have for this year?

Well, Social Media is always changing and keeping up with that is an everyday challenge so I hope to improve my skills at marketing myself through social media. I am aiming to seek out more networking events and improve organization skills to better streamline my business.

How do you prefer to relax after a tough day in real estate?

I find it relaxing to move dirt around in my garden, I love to cook a great dinner or go out to eat. The top of the list consists of taking my boat out on the lake or going sailing on Casco Bay with my sailing buddies. In the winter, I like hiding under the covers.

 

 

 

Make an Impact with Great Business Signage

August 15th, 2017

Whether you have a bricks-and-mortar shopfront, an office space, or participate in trade shows, your business signage gives potential customers an immediate first impression of you and your business. There is more to indoor and outdoor signage than simply putting your name on something – you want to make sure your signs have the most impact to grab attention quickly and build brand awareness. Studies show more than 25% of customers to small businesses come in just because they noticed the business’ sign, not because they were looking for it.

So much of our advertising focus these days is on digital media and online marketing opportunities, and while that is a great platform to promote your business, how you present yourself to visiting customers should not be overlooked. Your business signs either grab someone’s attention in a great way, or can be a turnoff. Or worse, maybe you have no signage at all – and by the way – nothing handwritten counts as a sign!

Here’s a rundown of the essential components of great business signage:

Purpose

We need to announce our businesses in a variety of ways – exterior signage, interior signs and directions, trade show displays and banners. Each of these has its own viewing requirements, audiences, and design needs. Step back for a minute and consider:

  • Where is the sign going (near foot traffic or off a busy road)?
  • Who will be looking at the sign? What do they need to know?
  • How close will people be to the sign when reading it?

Your roadside sign needs to stand out, and provide easy readability. Once people are closer to your establishment, important information such as business hours, contact information, and even your tagline or type of business needs to be conveyed. If you are including your services on a sign, include only the key services you offer, not a laundry list.

Design

The most important factors in good design are readability, color, and size. Your signs need to grab attention quickly, and convey your key business message.

Studies show 80% of brand recognition is due to color; think McDonalds or Coke. Your logo and branding likely includes your color scheme, and you want to stick to that so your brand messaging is consistent. Don’t get trendy when choosing colors – colors and strong looks that are hot today will be gone tomorrow, and the long-term nature of signage needs to have a lasting appeal.

Good readability requires good contrast and “white space”. Keep signs simple, and don’t jam pack them with so much information that the eye doesn’t know where to go. Again, the key is to catch someone’s attention quickly and easily. If your colors don’t contrast enough, outlines, borders and the balance of text to graphics all help readability. Never include too many details in a sign, it’s not a duplication of your business card.

It’s common sense that the larger the letter, the easier it is to read of course. Always consider where potential customers will be reading a sign from, and make sure lettering and important details stand out easily. A roadside sign must be easy to distinguish and read from a good distance, especially to attract automotive traffic. A good rule of thumb is 10 feet per inch of letter height; a sign with lettering 10 inches in height has the best visual impact at 100 feet.

While it screams amateur-hour to use too many different fonts in signage (or any marketing materials), take advantage of the different typography of fonts. Utilizing different variations of a font’s weights such as bold, block or extended, keeps your message looking professional but mixes up the look enough to make it more readable or to highlight different items.

Placement

Where should you put your clean, easy-to-read sign? Be sure it is placed in a well-lit location, unobstructed by trees, other buildings or signs, and powerlines. Referring again to the questions about its purpose from the beginning of this article, consider who is reading it and from where when determining height. Inspect the visibility yourself, from the customer’s perspective, before drilling the hangers. Many landlords, neighborhood ordinances, and municipalities have signage regulations and requirements, so always check with these entities first before investing in costly installations.

Good Signage is Critical

Business signs are not just decorations! People see your sign, connect it to something they need or want, and you have a customer in hand. If you are lacking the information someone needs on your signage, they may choose to walk away without further effort, and you have lost a potential customer. No business should overlook the value of this important type of communication.

Saying “Yes, in my back yard!” – The YIMBY movement in Maine

August 2nd, 2017

Start talking real estate development and most people get hot under the collar quickly, thinking about the loss of heritage and green space, and greedy developers filling their pockets. However, there are many good reasons to say yes to development. It is possible to go from “not in my back yard!” (NIMBY) to “yes in my back yard!” (YIMBY), with a community and its citizens reaping the benefits.

In many communities throughout Maine, the demand for housing continues to grow and the need for adequate commercial real estate is on the increase. Towns that have gotten creative with their expansion options, and approach development collaboratively with tax payers, are experiencing a surge in economic growth. Saying “yes” to development is saying “yes” to opportunities.

YIMBY offers:

  • Diversity and inclusivity in housing and education
  • Efficient use of land and buildings
  • Enrichment of neighborhoods
  • Increased services and programs for residents
  • Improved infrastructure
  • Effective transportation options

More Opportunities for Residents & Businesses

When there is a shortage of adequate housing and commercial business properties, inequity and exclusion soon follow. When demand for space is at a premium, pricing quickly forces many out of the market, and residents and businesses ultimately suffer.

A community that says no to development without taking the time to find alternatives and explore creative solutions for compromise, will lose out as residents seek affordable housing elsewhere, and businesses move to more accommodating areas. Development provides for these increasing demands for space, allows a community to retain its workforce and employers, and stay competitive in the global marketplace.

Maine’s advances in adaptive reuse of buildings such as our mill compounds and the Air Force Base in Brunswick has offered many solutions to housing and commercial property needs. These once abandoned and broken-down properties are now thriving hubs of residential and commercial activity.

YIMBY and the Creative Economy

There are too many stories of business and job losses to other states and countries, and preventing this comes in large part in allowing adequate development for local facilities and infrastructure.

Maine’s lobster industry is a great example of a creative economy benefiting tremendously from proactive development. Cold storage facilities built locally on the Maine coast now allow us to keep jobs here in Maine, reduce product waste and transportation costs significantly, and expand our position in this lucrative market.

Another example is Maine’s microbrewery sector. Allagash put down roots in a depressed economic area of Portland, that has now become a microbrewery mecca! The activity produced by a confident first-in business owner, resulted in drawing additional businesses to the area, generating more business growth as the buzz grew and more commercial leasing options were created.

Leadership & YIMBY

In order for good development to make it past the doors of town hall, towns and their officials need to adapt with the times and the necessity for development. Use guidelines, building codes and town ordinances and zoning need to adjust accordingly to fit current use requirements and opportunities. Existing owners need more flexibility to accommodate growing needs, and potential new owners need support in what has become an over-complicated process.

Town leadership needs to invite a conversation with its community, so constructive discussions about development can occur. When people feel heard, and common ground can be found, then a development plan can move forward successfully. Leadership must be open, and start the conversation.

The Future of Smart Growth Development

To have economic growth in a community, we must provide the housing and commercial real estate necessary.

If a community is going to draw a hard line on development, then obvious questions are raised:

If there is no development, then how can we accommodate our needs?

If not this development then what is the alternative?

How can a community raise the necessary revenue, and limit tax increases, without development?

It is part of our culture in the U.S. to innovate, change and grow. When we don’t adapt, we lose. Saying “yes” to development doesn’t mean we have no limits, that there is no plan, that the evil developers are going to take over. Saying “yes” to development means we are open to creative strategies for addressing the needs of our citizens and businesses. When it comes to development, we are not so limited by our geography as we are our resistance to transformative change.

Special thanks to Magnusson Balfour Brokers Dennis Wheelock and Craig Church  for their valuable input on this article!

 

Broker on the Move: Michael Atienza gives us a peek inside his world…

June 30th, 2017

While our brokers are busy going about their business of helping clients each day – thinking about the priorities at hand, and where they are expected to be next – we thought it would be fun to stop the action for a moment and highlight one of our brokers. Let’s see just what a typical day is like, and peek inside their “tricks of the trade”!

In this inaugural blog in our “Broker on the Move” series, we sat down with Michael Atienza, and asked him to give us the inside scoop on what it is like to be a commercial real estate broker:

How long have you been a CREB, how did you get started?

I’ve been in involved with Commercial Real Estate about 10 years. I come from an executive sales background, where I learned early on the importance of listening to the customer, and working to meet the needs of individuals for business success. My dad owned apartment buildings in Portland, so I watched how his investments helped build his business, and the impact on our family’s future. I like the idea of owning something that serves a useful purpose, helps other families, and builds an individual’s portfolio at the same time.

What type of car do you drive?

I drive a Chrysler 300C, which is a comfortable-sized sedan. I’m on the road a lot, so it’s my mobile office! I also often drive clients around to look at property, so I want something that is comfortable for passengers. Needing to get where I’m going, no matter the Maine weather also means I need a solid, dependable vehicle.

 What items are in your car?

I never know what might happen while I’m out visiting properties, so I have all the likely safety gear. Additionally, I keep sign riders with me to update listings, and I always have zip ties to secure signs. I have a notepad and pen handy to make notes of property information or phone call notes. Of course, I keep my GPS (on my phone) handy at all times!

What paperwork do you have with you at all times?

I keep a large, older briefcase-satchel in my car that holds lots of paperwork so I have what I need for clients at any time. I keep all the necessary disclosures that might be needed such as the Brokerage Relationship Form, Property Disclosures and Listing Agreements, copies of Purchase and Sale Contracts and Leasing Agreements. I also have our Magnusson Balfour company brochure with me, lots of business cards, and my listings sheets. You never know what you might need, and I prefer to have things on hand so I don’t have to make a client wait. With real estate, time is often of the essence!

How many business cards do you hand out in the course of a week?

A lot! I reorder at least 500, two times a year.

Do you attend formal networking events? How do you get out and build your business?

I do attend different networking events, and I know that any public event I attend is an opportunity to network and meet people. I really like being able to help people, and serve as a referral for the needs of their family and friends.

What technology could you not live without? Do you have a favorite App that helps you with your business?

I definitely could not live without my Smart Phone! What did we do without them?! I absolutely could not live without the GPS app on my phone!

How many miles do you travel in your car in a week? What is the farthest you have traveled listing/showing a property?

I travel anywhere from 150 miles a week and up. Last year I put 50,000 miles on my vehicle traveling all over Southern Maine and Downeast as far as Washington County. I live and work a lot in Sagadahoc County, so I’m back and forth between Portland and the Bath area often.

My furthest listing thus far was in Machias. I basically will go where I need to, when the listing makes sense.

How many phone calls, emails and text messages do you receive daily?

For sure dozens! The phone is a key business tool in real estate, between speaking with clients, other brokers, and doing the due diligence necessary for my clients.

What’s your area of specialty or expertise, geographic territory, and why did you choose it?

I’ve become a bit known for my knowledge about the Forest Avenue corridor in Portland. I’ve had both a fair number of listings, as well as helped buyers and tenants find properties along there in the last few years, so I know this market very well.

I live in Bath, so I’m now building my business in Sagadahoc county. I’m a single father, and my kids are very active in school activities and sports in Bath/Woolwich. I have recently closed a downtown brick investment building in the center of Bath.

What is the most important personal attribute that you bring to your job?

I believe I am very driven to be better all the time, and I am very dedicated to my work and clients. I have a desire to grow businesses, and being a commercial real estate broker is a great fit for the entrepreneurial spirit to thrive, I love that.

What are you most excited about in relation to your career this year?

I like to strive to learn and do better all the time, so I’m really excited that my business and client base is growing!

 What’s the greatest bit of advice a parent or mentor has given you?

A former mentor has once told me, always told me to set goals that were a stretch – don’t just play it safe or reach for what you know you can attain – really push yourself. I think that was great advice.

What is a professional development goal you have for this year?

I am currently working toward getting my Certified Commercial Investment Member (CCIM) designation, which is really important to me. It is a tough program, including completing course work, passing comprehensive exams, and fulfilling a required transaction portfolio to graduate. This designation will further set me apart from other commercial brokers, and give me more tools to assist my clients with. CCIM designees are recognized as leading experts in commercial investment real estate.

How do you prefer to relax after a tough day in real estate?

I love to be doing anything with my kids. I’m known as “Coach Mike”, having coached many of their sports teams, and we have a great time together. I enjoy walks and hikes with my dog, getting out on the water and boating, fast cars, and I enjoy good food at our many fine dining establishments along the coast of Maine.

On Selling a Business – It’s about more than money

June 13th, 2017

When it comes to selling a business, owners do care about more than just the money involved. After operating, growing, and stewarding a business for many years, owners care about the future of the business and their employees’ stability.

The International Business Brokers Association (IBBA) just released their Market Pulse report for the first quarter of 2017, created to gain accurate insight into the market conditions for businesses sold in the United States. The national survey was conducted with the intent of providing a valuable resource to business owners and their advisors. Magnusson Balfour President/CEO, Scott Balfour, utilizes these reports as part of his knowledge base and expertise he brings to advising commercial real estate and business brokerage clients.

One area highlighted in the report was “Negotiations”, and the significant factors business owners consider when selling their business. Surprising to some – money isn’t everything – sellers have several other facets on their minds when they sell their business.

The Market Pulse reports:

“When it comes to selling a business, owners care about more than just money. Advisors indicate that cash at close is a key desirable for sellers, as is taking care of their employees. Getting out quickly and leaving a legacy are also highly valued. Results indicate that a relative minority of sellers are interested in employment contracts and other deal structures that keep them active in business.”

Scott Balfour seconds the findings in this survey, in fact, he believes these sentiments – taking care of employees, business legacy, along with quick cash on the sale – run even higher in priority with Maine business sellers. “Yes, cash at closing is important, but owners have spent years with their customers and their employees, and they are very concerned with the ‘people’ side of the transaction,” says Balfour. Sellers often want more conversation with potential buyers, in informal settings such as over lunch, where they can discuss in greater detail the potential buyer’s intentions for the future of the business and the employees. Owners want the people that make their business tick to be cared for, even after the sale and transfer to new ownership. The Maine business climate continues to grow strong, and also includes caring for people. Maine business owners are considering the futures of those that made them successful – not just about the money.

Read the complete IBBA and M&A Source Market Pulse Survey Report here.

Special thanks to Scott Balfour for contributing to this article.

 

 

3 Hard Truths About Goodwill Value

June 2nd, 2017

So, you’ve toiled your whole life – built your business on blood, sweat, and tears. What’s it worth? Two heart attacks and a divorce? It’s certainly cost you some sleepless nights so that must translate to some monetary value – right?

If you want reassurance, a wry chuckle or two, and to sleep soundly, read no further; the truth is rarely kind. If you’ve survived this long as an entrepreneur, however, it’s unlikely you bury your head in the sand.

The First Truth: ‘Goodwill’ is defined and valued by the Buyer and/or Commercial Lender – not you. Beauty is in the eye of the beholder, and if they are going to beholderin’ the loan, it’s theirs to determine. Buyers equate Goodwill with measurable success, reliability, and confidence in future earnings – demonstrated in the historical financial statements of the business.

The Second Truth: All the intangible assets – reputation, customer list, history, systems in place, long-term employees, logo, and so forth – are only worth what they contribute to cash flow. If those things aren’t generating a stronger bottom line for you now, why would the Buyer pay for more than the value of the tangible assets?

How does one arrive at Goodwill?  Subtract the Market Value of Physical Assets (Inventory, FF&E, Property) From the Market Value of the Business (Usually based on a Comparable multiple of Cash Flow).

The Third Truth: The Buyer’s Tradeoff is a real thing. Think of it this way – how does the cost of your Goodwill compare to the cost of building a company from scratch? (Think legal fees, advertising, and carrying cost until break-even). Does the difference in values outweigh the intrinsic value a Buyer places on the creative opportunity to design their own logo, reputation, systems, etc.? If they feel that they can do it better for cheaper, you’re overvaluing your Goodwill.

Understand these truths now, and you’ll be able to better plan your exit. Taking a hard look at the Buyer’s viewpoint can give you the perspective you need to determine a realistic value, and reveal ways to improve it before your sale. Work with a Business Broker to get a current Broker Price Opinion for your business, and ask for an analysis of the best opportunities for improvement. Don’t wait – while building value is possible, it’s not easy, and it takes time. Start the work now, and by the time you’re ready to sell, the Goodwill value will be something to be proud of.

 

 

 

Written by Raynor Large, Associate Broker with Magnusson Balfour Commercial & Business Brokers.

Finding the Right Commercial Lender

May 24th, 2017

Money

Purchasing real estate for the location of your business is a huge decision, and not one to take lightly. Before you become a commercial property owner, take time to find the right lender to work with you on your building purchase or construction financing.

Commercial real estate loans are very different than residential real estate lending. Financial institutions look at the financial stability of a commercial client with the business stability in mind, may require additional collateral, and assess risk on commercial lending differently.

Greater Portland has roughly 18 commercial lenders, each with unique portfolios and niches they prefer to work in. At Magnusson Balfour, one of our roles as Business and Commercial Brokers is to assist our clients in determining the best financial loan scenario for their business.

We know, by the very nature of our business, what interest rates are doing in the market, what a good interest rate and amortization schedule looks like for different industries, and we understand what lenders look for in terms of information and how they will review you as a client. The package we prepare for clients purchasing a commercial property can very much shape the perception of lenders because they know we have done a lot of due diligence up front regarding property details, comparable market analysis, and have prepared business asset lists such as inventories and equipment. We provide lenders with the research that helped us arrive at the purchase price, and hence they tend to feel more comfortable because they know you are working with a qualified real estate broker.

Getting Ready to Buy

Before you approach a lender, you need to get your paperwork in order. If you have an existing business, you will want to have all your financials for the last three years, as well as your personal financial information, organized. If you are looking to purchase a business, you will also need to have a completed Business Plan with two-year cash flow projection.

Before you are ready to complete any loan application, you will need:

  • 3 years’ tax returns
  • Personal financial statement
  • P & S Agreement of the purchase property
  • 3 years’ of the Seller’s financials

At Magnusson Balfour, one of the essential pieces of our work with a new client is to assemble a complete financial package that includes everything necessary to approach lenders. This way, when you are ready to make your purchase, getting financing will not be delayed due to lack of preparation.

Business and Commercial Broker, Craig Church, points out that one of the benefits of having a good broker working with you as you search for a commercial property for your business is the expertise that goes in to getting you ready to approach lenders. “The first thing we do is work with clients to define what they want to accomplish for their business in buying property. From that crucial piece, we can better help them find a lender who offers the right product at the best rates.”

Shop Around

“Just because you have a solid banking relationship with a financial institution, it doesn’t mean they will provide you the best opportunity for your business loan,” Church warns. Commercial lending is an entirely different department with a different staff of loan officers, and the process is very different. Also, all commercial lenders have specific portfolios they are working to build on, and what industries and levels of risk they consider. Smaller, local banks tend to lend more conservatively and make smaller investments, whereas large institutions have larger and more diverse portfolios. It is very necessary when it comes to a business loan that you shop around.

Choosing a Lender

One of the first things your real estate broker will do is assemble a financial package to present to multiple banks to get a Term Sheet from each. A Term Sheet is a non-binding document, prepared prior to formal underwriting of a commercial loan application, that outlines the terms and structure of a potential business loan by a lender. It delineates the interest rate associated to the length of the term of the loan, the amortization schedule, the commitment fees and costs of the loan, as well as the expectations of the bank such as the Loan to Value percentage, the down payment required, collateral required, etc.

With Term Sheets in hand from each potential lender, we work with you to determine the top 2-3 offers to consider. At this point, we advise clients to go meet with these best choices, and see which institution is the best fit for you.

Because banks retain commercial loans in-house (versus selling them on the secondary market as is customary with residential loans), you will have a long-term relationship with both the institution and likely the individual loan officer, so you want to make sure you feel comfortable with the relationship and confident in the institution.

Alternative Lenders

If you don’t qualify for a “typical commercial loan” there are options for Bridge Loans, and seeking independent investors for your business venture. There are capital lending groups who will lend on a higher interest rate in cases of more unique businesses, to people who perhaps don’t have a great credit score, or those with minimal equity of their own to invest. These alternative loans can give you an opportunity to get off the ground, and establish a successful business. Once you have proven what you can do and that the business is sound, you can later approach a traditional lender and refinance. This may be an option to explore, and one to discuss with your business or commercial real estate broker.

The Bottom Line

Lenders are all about the numbers – they want to know that their investment is able to be paid for and that the collateral is there to back it up. Magnusson Balfour is very good at assisting clients, not only in determining a good buy for your business property, but in preparing you for finding the right lending situation.

Special thanks to Magnusson Balfour Brokers Craig Church and Raynor Large for the preparation of this article.

5 Property Maintenance Tips for Spring

May 16th, 2017

Spring Tips

Business owners know that the first impression is everything! Now that the Maine winter is finally behind us, it is time to take a walk around your commercial property to assess any winter damage, and spruce things up for spring. Besides always wanting your business to look inviting to your customers, it’s important to make sure your building and grounds are safe and accessible. Even if you lease your business location, you know your surroundings better than anyone, so alert your property manager of these important issues.

Assess & Prioritize

The first thing to do is walk your entire property, notepad and camera in hand, and inspect the buildings and grounds for any damage or hazardous issues. Common building issues include damaged siding and roofing, missing or damaged window screens and entrance doors, and peeling paint. Landscaping always takes a beating in the winter, so look for loose walkway pavers, fallen debris, and missing chunks of ground. These items not only look bad, but affect the longevity of the building materials, so addressing them on an annual basis is good risk management.

Make a list of things that need to be repaired or replaced, and get on the schedules of your contractors. Of course, any safety hazard is a top priority to get resolved quickly, but even landscaping has a big effect on your appeal and property value. You won’t be the only property owner facing a list of needs, so making your calls early ensures you will get on the schedules of repair companies in a reasonable timeframe.

Clean Up

Getting any debris such as branches, leaves and trash raked up is a quick and easy improvement, and also encourages healthy early grass growth. Most professional landscapers have a “spring cleanup” offering, and these professionals will come with all the right equipment, and can also sweep up the sand left from winter.

Make sure all your parking areas and walkways are clean, and in good condition. An annual power-washing of surfaces, of your building and hardscaped areas, will make your place look its best. When you make your business look like someone cares, you send a message to your customers about your level of attention to detail.

Safety First

Pay careful attention to the travel path of your clients – from car to footpath entrance – and make this your first focus of attention. Once walkways are clear of any debris, parking spaces should be made easily accessible. Also, consider the special needs of your customers by making sure paths are level, and that railings and other appropriate safety precautions are in place.

HVAC Inspection & Maintenance

With winter heating season behind us, attention now turns to air conditioning systems. These should be serviced annually to inspect the coils, drainage and replace filters. If your property has a sprinkler or irrigation system, this too needs an annual maintenance inspection for any leaks, blockages, or damage.

Plan Improvements

Sometimes, we don’t consider our commercial property’s “curb appeal” as much as we do our residences, but the visual impression you make on your customers says a world not only about how much you care about quality, but also about your worth (read: pricing and value).

If your exterior and landscaping has become run down over the years, or is minimalist, this may be the year to plan some exterior improvements. Really look at your property from an outsider’s viewpoint: what is messy, faded, or rundown looking? Re-sod your grassy areas and keep them mowed nicely. Grass needs annual fertilizing and weed/insect control measures, and during the spring growth is the perfect time to catch an issue early. Keep your shrubs and trees pruned and cut back from walkways and parking spots. Have landscaped beds cleaned of old mulch, and add a new layer. Don’t skimp on mulching – it not only makes everything look much better, but it cuts back on the need for weeding and watering. Adding some hardy perennials or annual flowers to your planting beds will provide the finishing touch of color to improving your visual appeal.

 

Which type of Commercial Lease is right for your business?

April 24th, 2017

Thinking of leasing commercial space for your business? Before you speak to a potential landlord, it is important that you understand how commercial leases work.

Successful business leasing requires:

  • Thorough understanding of the different types of leases;
  • Having an ally in your corner – your Real Estate Broker;
  • Making sure the lease fits business needs and future growth plans;
  • Never signing anything until your attorney reviews it!

It’s important to first point out that commercial leases are very different from residential rental agreements. Commercial leases are legally binding contracts and breaking a lease has serious financial consequences. On the bright side, commercial leases are typically negotiated to fit the needs of your unique business space and methods of operation. This negotiation stage is critical to ensure you are setting yourself, and your business, up for success. Having an experienced commercial real estate broker helping you not only search for the right space, but negotiating your needs for you, can make or break a good deal.

Types of Commercial Leases

We’re accustomed to commercial real estate being rented at a square footage rate, but how that is being determined is essential when evaluating a lease agreement. Terms of commercial leases vary dramatically based on the type of building, what different industries require, and popularity of particular geographic areas – these all drive square foot costs. So why are some spaces more than others? When is something “a good deal”?

There are three common types of commercial real estate leases: Gross, Triple Net (NNN) and Modified Gross. They each ultimately indicate how much the tenant pays for base rent, along with a portion of the associated expenses of the building. Some leases include most building expenses, others include very few, all attribute to the ultimate cost per square foot you will pay to rent space for your business. Terms of individual leases vary tremendously, but this provides an overview:

 Gross Leases

A Gross lease basically means a tenant pays one lump sum for rent which includes associated building expenses (real estate taxes, utilities, building insurance, property maintenance, etc.). You may have to pay IT/telecommunications costs, and any unique business fees for services you may require. Sometimes excess utility consumption is charged back to the tenant, and you will need your own property insurance.

Triple Net (NNN) Leases

Triple Net leases have smaller base rent amounts, but other expenses are also paid for by each tenant, and need to be considered in your total square foot costs. In NNN leases, common language includes reference to CAMS, or Common Area Maintenance, which includes janitorial services, property management, landscaping, building maintenance and repairs, and other expenses associated with the common shared areas or services of the building and its tenants. CAMS are calculated on an annual basis. If you lease 10% of a building’s square footage, you will also pay 10% of the associated costs (utilities, insurance, taxes, maintenance).

Modified Gross Leases

A Modified Gross lease is sort of a happy compromise between Triple Net (NNN) and Gross leases, with the party responsible for various building costs shared between the landlord and the tenants. Perhaps the rent is offered at $13.00/SF and includes real estate taxes, building insurance, and the heat. However, each of the individual spaces have their own electrical box, so each tenant is responsible for their individual electrical use, and the maintenance costs are pro-rated according to the percentage of leased space.

Important Lease Factors to Consider:

  • Lease Term: when the lease begins, the length of it, and termination and renewal options
  • Lease Amount: what is the rent, when is it to be paid, and are there allowable escalations (increases)
  • Security Deposit: how much and what are the conditions for its return
  • Sub-Lease Terms: can you assign or sublet the space
  • Size: what is useable now, what is “deemed to be”, etc.
  • Inclusions: are insurance, property taxes, maintenance costs, etc. included in the lease (gross lease), or will some be paid for independently (NNN lease)
  • Clear description of the space: what are you renting, are there common areas included (or restricted), how is the space measured? Is parking included or is it a separate fee?
  • Build Out: are there improvements, modifications, or other changes allowed for the space, who will pay for them, who owns what following any changes
  • Signage: where and how can you identify and advertise your business
  • How is the building, and its spaces maintained, including HVAC equipment
  • How will disputes be handled

Bottom Line

When evaluating your options for business rental space, it is very important to understand the different types of leases, and all the variables that may be going into a lease’s terms. Ask for a history of the operating expenses of the building that you are considering. This is something that your real estate broker will ask for and review with you.

When looking at any lease, you always need to ask, “What is included? What is not included?” While there are vast differences between the different types of commercial leases, very often square foot costs really end up at the same market rate, no matter how the expenses are allotted. Always have an attorney review your lease, as this is complicated legal language, and changing a lease after it is enforced is very difficult and rarely done.

SONY DSCSpecial thanks to Magnusson Balfour Broker Craig Church for his valuable input into this article!

2017 Real Estate Market Forecast

March 3rd, 2017

Members of the Magnusson Balfour team recently attended the Maine Real Estate & Development Association’s 2017 Annual Forecast Conference & Member Showcase in Portland, where we spent the day hearing from economic and industry experts regarding the economic outlook on the Maine real estate market. The conference is also a great opportunity for us to network with other real estate industry professionals. It is a day spent learning about the trends driving Maine’s real estate market, and, as a result, the growth of our economy.

A strong understanding of the economic shifts occurring in the local and statewide market is a key component to our effectiveness as commercial real estate and business brokers. One of the most helpful aspects of the Conference are the forecasts that are provided, broken down by region as well as by business sector. This information is tremendously helpful to us as we advise clients regarding their investment in or relocation of their business.

We know the real estate market has been recovering steadily in Maine, and different regions are growing strongly, many within specific real estate type. The Biddeford/Saco and Lewiston/Auburn area have traditionally been more industrial and commercial, but they are now growing rapidly in the hospitality/food and retail sectors. The renovation of empty mill buildings is offering high-end housing, and revitalized streetscapes. Geographic areas with convenient proximity to mass transportation and border access are expanding in distribution facilities. Once a struggling community, the re-purposing of the Brunswick Naval Base is demonstrating the impact of creative adaptive design and mixed-use buildings. This revitalization is seeing expanding office and retail businesses, as well as residential growth, making the area highly desirable for both businesses and residents.

It is a seller and landlord-friendly market in most places, as vacancy rates are dropping for their 6th straight year, currently at less than 2% in Portland. Buyers and lessees are in need of qualifying properties, raising prices to a premium and making it a hot race to get a contract on strong listings. While interest rates are expected to creep up some more in 2017, rates are still historically low and continue to support strong market growth.

Commercial real estate and successful business brokerage has a significant impact on our communities, and our state’s economy. What is happening in the real estate market influences curricula and workforce training programs at our colleges and schools. Small business growth and expanding industries in a community means a growing workforce that requires other businesses and services, as well as adequate housing. It is very exciting to see growth in new market sectors, rehabilitation of vacant buildings bringing new businesses to areas, and our graduates finding the education and career opportunities they are looking for here in the state building a strong workforce of the future. The outlook continues to be bright, and continued growth is predicted – all good news for our clients!

The Maine Real Estate & Development Association

The Maine Real Estate & Development Association (MEREDA) is an organization whose mission is to promote an environment for responsible development and ownership of real estate throughout the State of Maine. MEREDA publishes the MEREDA Index quarterly, an invaluable tool that summarizes key measures of activity in the Maine commercial and residential real estate markets, for both new development and existing properties, as well as construction employment.

FMI about MEREDA:

http://mereda.org/about.php

The MEREDA Index is available to the public and can be viewed at:

http://mereda.org/currentindex.php

 

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