State Pension Funds Could Help NC Businesses

February 18, 2010

In the coming year, it will be more important for every possible good-faith effort between commercial lenders and their mortgagees, to extend performing loans and avoid making calls that trigger domino effects throughout our local economy. That’s essential, but it’s not enough. There is simply not enough money for loans to act as a stimulus to economic activity.

E. Stephen Stroud, SIOR, Chairman

E. Stephen Stroud, SIOR, Chairman of NAI Carolantic Realty

We do know, however, the State of North Carolina has billions of dollars in State pension funds and other funds.  What if these funds were made available through banks that serve all of North Carolina? They could be put to work for economic development purposes such as commercial, residential and industrial development. 

The mechanism is already in place—no new bureaucracy required!  Loans could be given at the equivalent rate as federal funds.  And since banks touch all of the local economies in every region throughout the state, this would help jump start the economy in local communities throughout the state. AND the pension funds would be secure because the banks would operate under the same state banking agency and rules as they do today.

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Now’s the Time for an Owner Occupant

February 9, 2010

As we begin our climb out of the recession there are many opportunities in commercial real estate, but none greater than that for the owner occupant…where the proprietor of the business, owns the real estate as well.  There is no better time to make the jump from leasing to owning your real estate!

Kyle Greer, Broker with NAI Carolantic

Why?  First, prices have been reset.  Over the past 24 months, we have seen prices fall on real estate and in some cases as much as 35%.  This is primarily due to the fact that values became so inflated during the boom in the mid-2000’s they are now retracting to a more normal level.  So you are ‘buying in’ at a great time.

Second, if you’re looking to build from the ground up or fit-up an existing building, construction costs are at record lows due to the lack of work.  Contractors have slashed their margins just to keep crews working which translates into a great time to build or expand!  I work with a client who builds the exact same building at all locations and in the past two years, we’ve seen the bid prices drop over 40%!

Finally, and probably most critical is the financing.  In the mist of frozen credit markets, owner occupants are the ones who can get the financing needed to execute deals.  There are many reasons banks still have confidence in owner occupants.  They include:  Banks are anxious to build relationships with these businesses as they can sell them other services that are profitable to the bank; underwriting and monitoring is easier on owner occupied real estate; and typically owner occupants have more assets in case of default.  Not only are the banks eager to work with owner occupants, they are receiving the most aggressive financing out there and in some cases as much as 90% LTV!  There are many other programs such as SBA loans and other stimulus money that is directed to the small business owner.  On top of all of this, interest rates are at historic lows.

In summary, prices have been reset, there are many great properties, building costs have never been cheaper, financing is available, and rates are the lowest they’ve ever been.  If you are a business owner and have been on the fence considering whether or not to purchase land or a building for your business, now is the time to act!


Thinking and Acting As a Metropolitan Area.

February 1, 2010

future raleigh skyline
You may think its Chapel Hill, or Raleigh or Apex. But when you’re flying into RDU at night and look out the window, what you see out that window is a metropolitan area.  But we don’t manage it like one. We don’t operate like a metro area.  We pay a high price because we don’t plan like one, and we don’t negotiate like one. We don’t buy equipment and services and land like one. We don’t throw our weight around like one, we don’t make our voice heard like one, and we don’t talk to prospective companies with the sophistication and wherewithal of one.

I’ve said this before, but a metropolitan agency to plan for infrastructure, water, sewer, and public services would provide immediate benefits of efficiency and economies of scale.  More importantly, it would get us on the same page in matters that concern all of us.

Our economic development officials, that work tirelessly for us, would be an even stronger force and could help us win corporate expansions or relocations All of the time.

Cary will be still Cary and Zebulon will still be Zebulon. This isn’t about making the Triangle one big city.

But watersheds and deep aquifers don’t care about city limits and if we’re going to secure an ample water supply for the entire Triangle, we shouldn’t either.  Such oversight would also allow us to build roads that don’t have to make a broken-field zig-zag to accommodate the differing plans of a dozen municipalities over 20 miles. The same goes for sewer and many public services.

The short of it is that private companies of a like-mind have for years merged to gain efficiencies and economies of scale to become competitive. But first we need to educate the residents of this region on the benefits of thinking and acting like a region in matters that concern us all.