Emerging Perspectives/Part III

January 31, 2011

Steve Stroud, Chairman of NAI Carolantic Realty, gave the following  ‘perspective’ at the 26th Annual Triangle Commercial Real Estate Conference held on January 12th at the RBC Center in Raleigh, NC.  This is the Part III and the final portion of his remarks.

“There are many who will try to convince us that ‘taking our country back’ means taking it backwards.  And nothing is further from the truth.  Yes, we want a return to our founding principles, to personal responsibility, statesmanship, and fair taxation. But, believe me, the solutions to the mess we are in now, require that we look to the future.  Specifically, to take a hard look at our schools and universities and work for fundamental changes in the ways we are teaching our children – especially when it comes to teaching the history of this great country.

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

Unfortunately, many of us will not be around to solve the problems we’ve created.  I believe that at this point the best legacy we can leave behind . . . something we can accomplish . . . is to get our education system back on the right track. 

For example, at the high school and elementary level, you have the efforts of Bob Luddy, founder and president of CaptiveAire Systems.  Bob has a passion for education, and he’s put his enthusiasm, time and money into creating Franklin Academy, Saint Thomas More Academy, and, in 2007, Bob opened Thales Academy in Raleigh, the first in a network of private community schools offering a high-quality grammar school education at low-cost tuition.  Franklin Academy and St. Thomas More are both nationally ranked near the top of all secondary schools.

We have charter schools like Raleigh Charter High School.  It was founded by a Board of Directors made up of business professionals, experienced educators, and college professors.  It is a community school, with a diverse student population and parents dedicated to seeing that their children succeed in a disciplined atmosphere that promotes real learning.

There are many new perspectives emerging on the education scene.  Students and parents have new opportunities, and we need to provide them with even more. We, as business and community leaders, have a responsibility to get involved.  We need to work with our public school system to help them make changes to better prepare our children to compete and succeed in the next century.

If we are going to get our country back, the best place to start is getting our schools back.  And by that I mean getting control away from those who object to the Pledge of Allegiance, and those who don’t believe it’s important that our children learn about the real heroes of American history.  We need the next generations, to appreciate the sacrifices that have made possible all of the freedoms we too often take for granted.  

I’ll close with this quote:  “All tyranny needs to gain a foothold is for people of good conscience to remain silent.”  Thomas Jefferson

We have been silent long enough.”


Emerging Perspectives/Part II

January 25, 2011

Steve Stroud, Chairman of NAI Carolantic Realty, gave the following ‘perspective’ at the 26th Annual Triangle Commercial Real Estate Conference held on January 12th at the RBC Center in Raleigh, NC.  This is Part II of his remarks.

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

“My parents, and their generation, never complained to the government, and never asked for anything but an opportunity.  They rolled up their sleeves and went to work, and they made the most of any opportunity that was afforded them.  They belonged to a community, and that community looked out for one another. There was nothing exceptional about their circumstances, or their resolve to raise a family with a deep sense of personal responsibility and a respect for this country and what it stands for.  They were a typical North Carolina farm family of the 1940’s and Fifties. Their values were hard work, and thrift, and belief in God and family. Their values had not changed one bit from those of our Founding Fathers.

This was not so long ago.  A single generation, in fact.  So where did we go wrong?  And more importantly, what can we do to get our country back again?

First, bring back statesmanship . . . . in Washington DC, in our state capitals, and in our city and county governments as well.  We need to stop electing politicians who know how to campaign but know nothing about governing.  We need to quit the earmarks and eliminate the gerrymandering that creates congressional districts that look like somebody spilled a bottle of ink on the map. Both parties have been guilty of the same thing. 

Second, get rid of bloated government.  Lately it seems that the only jobs being created have been government jobs. On the day that the Federal government employs fifty percent of the population, plus one person, then our democracy will cease to exist. 

Third, bring integrity back to our electoral process.  The right of every legal, registered citizen to vote must be protected.  And we must recognize that if people who have not earned the franchise are allowed to vote, that hurts the legitimacy of the whole democratic process.  Bring back the process where voters need to show their voter registration card, or some other form of official ID.  Right now it’s too easy to cheat.  In fact, the instructions on how to do so are published on the Internet.

Finally, we’ve got to fix the relentless taxation that seems to be aimed at punishing those who make the most of their opportunities and achieve something in our society. 

In some twisted fashion the achievers have become the enemy, to be seen simply as a source of tax money that is then re-distributed.  And when the bill comes due for this incredible level of deficit spending, who do you think is going to be asked to pay it? 

(Part III, the final portion of Steve’s remarks will be posted next week.)


Emerging Perspectives/Part I

January 16, 2011

Steve Stroud, Chairman of NAI Carolantic Realty, gave the following ‘perspective’ at the 26th Annual Triangle Commercial Real Estate Conference held on January 12th at the RBC Center in Raleigh, NC.  This is Part I of his remarks.

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

“Last year, I talked about essentials to continued growth: the importance of funding our flagship universities to maintain our competitive edge; educating our residents to establish a metropolitan agency to plan for infrastructure, water, sewer, and public services providing efficiency and economies of scale; and finally asking for a good-faith effort between commercial lenders and their mortgagees to extend performing loans and avoid making calls that trigger domino effects throughout the local economy.

Today, I still hold to my recommendations from last year, but I think there is more at stake right now.  I believe our leaders in Washington are playing a dangerous game. Perhaps they should read again what Thomas Jefferson reminded his fellow citizens in his First Inaugural Address, that happiness and prosperity rested upon,

“A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.”  This, he thought, was “the sum of good government.” Thomas Jefferson

Today, government borrowing has created a staggering national debt – now an incredible 94% of GDP. That not only threatens our stability now, but it will be a burden to our children, and our children’s children.  The so-called stimulus did nothing, except create problems we’ll encounter further down the road.  Our national debt has increased by 86%. Unemployment is stuck at more than 9%, and we all know the real number is much, much higher than that.

Obviously our local economy remains at the mercy of decisions made in Washington.  So tonight I’m going to take a broader perspective, and talk to you about our legacy as a nation, and then focus in on what I perceive to be our best hope for getting out of this situation – a greater involvement by all of us in the education of our children. 

We need to return to teaching American history in a way that will renew their appreciation for this country’s greatness and its unique position as a beacon of freedom in the world….by teaching our children the principles put in place by our founding fathers.”


Lease Near the Airport Without Getting Your Wings Clipped

November 29, 2010

Some of you may have heard the expression, “Lease Near the Airport Without Getting Your Wings Clipped”.  This phrase has been used by Southport Business Park located one mile south of I-40 on Aviation Parkway in Morrisville and just minutes from RDU International since the late ‘80s.   The phrase accurately reflects leasing space in the most professional business park near the airport, offering the best location for the best value in the RTP area…and it still holds true today.

Southport Business Park

 

Southport Business Park is a 114-acre office, research and development multi-purpose business park containing seventeen (17) buildings with approximately 900,000 square feet.  There are three (3) office lots remaining for future development estimated to accommodate an additional 200,000 square feet.  Southport’s parent company is GID Investment Advisors LLC (GID).

Founded in 1960, GID owns 4.7 million square feet of office, flex and industrial space in sixteen business parks located in nine states. Throughout 23 years of flex/industrial park development and management experience, GID has demonstrated a commitment to providing tenants a quality product at an exceptional value. In total, GID owns and manages real estate with an estimated value of $5.3 billion that also includes 915,000 square feet of suburban office property and over 25,000 apartment homes spanning 19 states. GID participates with numerous public pension funds and a Fortune 100 pension fund for the acquisition of flex and office commercial properties and multi-family apartment properties.

GID’s philosophy is that well-maintained properties with exemplary customer service, and intensive management will provide a desirable location for tenants. Some of Southport’s larger tenants include: Catalent, Siemens, Gilmore, Hexatech, Semtech and Campbell University.  The park has only a 4% vacancy rate in a market hovering at 18.88%.  This is a testament to the management and ownership of Southport. 

Dee Creech Osborne, SIOR, NAI Carolantic

Dee Creech Osborne, SIOR and I are the leasing agents for the park and work with many types of firms who want easy access to I-40 and a competitive lease rate….thus the saying:  “Lease Near the Airport Without Getting Your Wings Clipped!”  Let us know if we can be of assistance.

John Webster, NAI Carolantic


Signs of Improvement in Retail

November 16, 2010

Last week at the Atlanta International Council of Shopping Centers (ICSC) convention, one of the speakers asked for a show of hands if the recession was over or not. Needless to say, the large majority raised their hands to show that no, it’s not over.  While I agree that we are far from out of this recession, there are some signs of improvement in the retail industry.

In the first nine months of 2010, same-store sales, year-over-year, rose by 3.4 percent. Yes, it’s anemic, and yes we are comparing this to the lack luster 2009, it’s still an increase!

At the same convention, ICSC forecasts that holiday retail sales will increase by 3 to 3.5 percent over 2009 levels, the largest jump since 2006.  Again, it’s anemic, but it’s also an increase!

Joaquin Canals, Broker, NAI Carolantic Realty

While there are many reasons for this increase, one of the factors that is often overlooked is the flexibility and creativity that brokers/leasing professionals, and owners have demonstrated in negotiating new leases, lease renewals, and options.  Is it a coincidence that waiving the standard 3% annual rent increase helped a retailer’s bottom line, and kept “the lights burning”?

The bright spots on the horizon are the discounters and the luxury sector, while the middle sector will be the last to show improvement. Other constant bright spots will be the recession-proof sectors such as fast-food, cosmetics, hair-cutters, and home improvement stores.   


Pad Sites

November 4, 2010

Recently, I have helped several clients find “pad sites” for their operations.  Pad sites can be described as smaller pieces of rough-graded real estate found frequently in the front of shopping centers and strip malls.  Pad sites, also known as outparcels, typically range in size from a half an acre to two acres.  These sites have utilities in place and are primed for construction.  Banks, casual dining, fast food restaurants, and convenient stores top the list for end users of pad sites. 

Many pad sites are in prime locations with good visibility, and consequently are generally priced accordingly.  Current research in the Triangle area indicates one-acre parcels ranging from $300,000 to over $1,000,000.  For pad sites, the phrase “location, location, location,” rings very true as it relates to the sales price. 

Moss Withers, Broker, NAI Carolantic Realty

If your firm is considering expanding or relocating and your particular need requires a pad site, please don’t hesitate to call us at NAI Carolantic.  We have the experience, a wealth of information, and would like to be of service.


Maintain Optimism…Jobs Are Returning

October 18, 2010

John Hibbits, Broker, NAI Carolantic Realty, jhibbits@naicarolantic.com

Generally I’m an optimistic guy and this time I don’t have to worry about reality being disconnected from my fantastic view of it.  The numbers speak for themselves when it comes to a recovering market.  

The recent October issue of the Research Triangle Regional Partnership Report was filled with information on job growth for North Carolina and specifically the Triangle region. Among the long list of companies locating or expanding included: EMC Corp., Medicago, Cree, Novo Nordisk, GE, BioCryst, SuperValu, and Siemens.  Job growth is especially strong for alternative energy firms.  According to the North Carolina Sustainable Energy Association, they forecast a 22% increase in jobs this year, and a projected 20% increase for 2011.   

Our area gets great national attention in various publications. Forbes magazine continues to dole out awards to North Carolina, ranking our state as the third best state for business in the US.  That is up two spots from last year.  Forbes indicated the key reasons to be regulatory environment, labor supply and growth prospects. 

According to Federal Bureau of Labor and Statistics, North Carolina is the third best state for declining unemployment and fourth in the nation for job creation. Unemployment is down from 11.1% in January to 9.7% now.  No surprise as Manpower recently ranked the Raleigh-Cary metro area as the number one strongest job market in the nation in September. 

Are we seeing an end to the recession? The Kiplinger report said yes over a month ago.  I remain pragmatically optimistic and look forward to working with you in the future.


Zombie Developments

October 8, 2010
Many of you may know that the permits developers receive to construct residential subdivisions have expiration dates by which the developer is required to start and effect the completion of the development.  When a developer defaults on the completion of a residential subdivision there are many losers.  Two primary losers are the buyers of the subdivisions lots, and the governing authority that granted the subdivision approval.
A halted subdivision means the completion of utilities, roads, amenities, and entrances that collectively give value to lots may go unfinished.  Lot buyers can be left with land they can not use and the value of the lots can be decimated.
When land is subdivided into residential lots, tax values and the anticipated tax revenue to the governing authority escalate.  However, when the developer defaults on the subdivision completion, values plummet and the tax revenues become nothing more than an uncollectable forethought.
To assure the completion of subdivision construction, counties and municipalities have long used surety bonds.  The developer is generally required to post a bond that is based on the estimated cost to construct the improvements multiplied by 125 percent.
Unfortunately, it is uncertain at best that the purpose for which these bonds were posted will be served.  Bonds in every state are being called into question.  With the vast amounts of construction insured by surety companies and the contemporaneous nationwide suffering of the financial markets, real estate markets, and real estate developers, there is a growing concern, and in some cases recognition, that surety companies will not be financially able to meet all of their bonded obligations. 

Jim Adams, Broker, NAI Carolantic

Now enters The Permit Extension Act of 2009, Senate Bill 831.  This bill provides for the extension of any real estate related entitlements and approvals by counties and municipalities in the State of North Carolina that are current and valid at any point during the period beginning January 1, 2008, and ending December 31, 2010.  As the statute states in Section 2. Paragraph 14, “It is the purpose of this act to prevent the wholesale abandonment of already approved projects and activities due to the present unfavorable economic conditions by tolling the term of these approvals for a finite period of time as the economy improves, thereby preventing a waste of public and private resources.”

The irony is that the statute that was intended for the public good (and perhaps to provide some aid to the real estate development community in a very difficult environment) has perhaps put lot owners in a lurch and taxpayers in the position of having to pick up the pieces of failed or failing developments.  Seizing on wording rather than the intent of the statute, developers and bond companies are contending that incomplete, stagnate developments are not in default on completion requirements.  They contend that the effect of the extension provisions of the Act was to also extend their completion requirements.  Bond companies are challenging the claims of municipalities and counties in court to avoid having to pay on bond obligations. 

The net result of the strategy buys time for both the developer and the bond companies.   In the meantime, it means that there are no funds to complete the developments that have come to be known as “zombie developments”….developments that are neither alive nor quite dead yet.  It is both unfortunate and interesting that our “best laid plans” don’t always work out as we intended them. 

 


Nothing Could Be Finer…

September 24, 2010

We can’t say it enough…the Raleigh/Durham region is one of the best places in the US to live, work and play.  This was reconfirmed this week when I attended the Greater Raleigh Chamber of Commerce Board meeting and heard the latest Economic Development report.  From May 15-September 15, Wake County Economic Development has assigned 12 new projects, had 7 client visits and had 104 existing industry interactions.   Twenty projects are actively being worked on by staff and will represent a potential total of $305,625,000 in new investment and 3,293 new jobs.  There have also been 18 companies who have relocated or expanded in the area since May.  They include:  BB&T, Deere & Co., Kyma Technologies, Inc., Rex Healthcare, WakeMed Health & Hospitals, Inspire Pharmaceuticals, and Pensk Truck Leasing Co.  These 18 companies account for 267 new jobs and over $167.9 million in new investment.

Jimmy Barnes

Jimmy Barnes, SIOR, President of NAI Carolantic Realty, Jbarnes@naicarolantic.com

Despite the sluggish commercial real estate market, we do see some activity.  One of our brokers, Scott Hadley, just completed a large lease renewal and expansion for FMI.  Another broker, Gray Creech, closed on two office condos, and I recently completed at 25,000sf lease with BeavEx in RTP. We continue to work with several clients in locating new sites for their operations. In addition, we are helping several banks dispose of excess real estate with closings occurring in North and South Carolina.

Let us know if we can be of assistance to you.  As the song goes, “Nothing could be finer than to be in Carolina!”

NOTE:  Be sure to mark your calendar for our 26th Annual Triangle Commercial Real Estate Conference scheduled for January 12, 2011 at the RBC Center in Raleigh.  This invitation-only event continues to be one of the most unique gatherings of Triangle business and community leaders.


Industrial Market Update

September 2, 2010

Ed Brown, SIOR, CCIM, NAI Carolantic Realty

The Triangle’s industrial warehouse market with over 23 million square feet has shown positive net absorption during the 2nd quarter of 2010. This is significant since the previous seven quarters have reflected negative absorption. Stagnant job growth, a slowdown in the construction industry, and a decrease in manufacturing have all contributed to the negative warehouse absorption. This past quarter was a positive sign for us, but we still have a long way to go before the market reaches equilibrium. 

Additional good news is that due to a limited supply of available buildings to purchase, existing buildings are maintaining their value in Wake and Durham Counties.  We recently had the good fortune of selling an 80,000sf building by RDU airport for $45/psf and a 16,000sf warehouse for $44/psf.  Prices significantly drop in the surrounding rural counties as the Hohn building in Louisburg, (Franklin County), sold for $7.50/psf.  The Purolator building in Vance County sold between $7.00 – $8.00/psf.  The Lenox building in Oxford traded for $19/psf due to an existing tenant in the building wanting to purchase the property. 

Industrial land sales in the Raleigh/Durham area continue to be slow.  We did recently sell an eight acre site on the south side of Raleigh at I-40 and Hwy 70 for $2.45/psf. This is representative of current market values for industrial land.   

If I can assist with any industrial properties in Wake, Durham or surrounding counties, please give me a call at 919-832-0594 or email ebrown@naicarolantic.com.  The Triangle industrial market has been my focus for over 24 years and I would welcome an opportunity to meet with you.