President Jonathan Shaver, CCIM Looks Back On 2017

I got involved with the Louisiana CCIM Chapter very shortly after entering the brokerage business in 2010.  I participated on the board level for several years before joining the executive committee as Secretary-Treasurer in 2015.  It’s been an extremely gratifying experience to serve as President this year, and I wanted to take a look back at the year that has been. 

We started the year with a bang at our annual Ruth’s Chris dinner in January.  I was sworn in as President, along with our other executive committee members, David Gleason, CCIM as President-Elect and Ben Walker, CCIM as Secretary-Treasurer.  This coming January, we’ll follow largely the same program, except that David will be sworn in as President, Ben as President-Elect, and Flo Meadows, CCIM as our next Secretary-Treasurer.  It should be a great event as always.  Shameless plug: please join us on January 18 at Ruth’s Chris if you can – the registration link is at our website, www.ccimlouisiana.com. 

We held CI 103, User Decision Analysis for Commercial Investment Real Estate, in New Orleans in March.  It was taught by Richard Juge, CCIM and Joe Larkin, CCIM and was attended by twenty-nine aspiring designees.   Also in March was a happy hour we co-hosted with the Urban Land Institute (ULI) at Urban South Brewery. 

April and May brought conference season, with our CCIM Mid-Year Meetings in Chicago, our 5^th annual Energy Conference in Lake Charles held in conjunction with the Houston Gulf Coast CCIM Chapter and a Beach Meeting in Orange Beach, AL held in conjunction with the Mississippi, Alabama and Florida CCIM Chapters.   In Chicago, we pinned two new designees: Michael Cashio, CCIM and Hartley Crockett, CCIM, both with NAI Latter & Blum in Baton Rouge.  In Lake Charles, we heard from Dave Wilson, CCIM, 2018 CCIM Institute President and Barbara Crane, CCIM, 2018 CCIM Institute President-Elect and networked with more than sixty CCIMs from Louisiana and Texas.  And in Orange Beach, we enjoyed visiting with seventy CCIMs from across the Gulf Coast and heard from Robin Webb, CCIM, 2017 CCIM Institute President and others. 

Our early summer was relatively quiet, but then came our Foundations Course in Alexandria in July, our Election Luncheon in Lafayette in August and our Past President’s Luncheon in New Orleans in September.  The Foundations course was taught by Karl Lanreneau, CCIM and Richard Juge, CCIM, and was attended by twenty-one.  It included a lively post-class happy hour at the Mirror Room Lounge and dinner at the Diamond Grill on Thursday night.  The speaker for the Election Luncheon was Mark Zappi, Director of University of Louisiana Lafayette’s Energy Institute, who gave us an update on the oil and gas industry in light of diminished oil prices.  Finally, our Past President’s Luncheon was attended by thirteen CCIM past presidents and was filled with valuable insight from our past chapter leadership. 

In September, we also co-hosted the second of two happy hours with the New Orleans Metropolitan Association of Realtors’ (NOMAR) Commercial Investment Division (CID), the Women’s Council of Realtors and ULI at Oak and Ale on Oak Street.  Special thanks to Matt Eaton, CCIM, Liz Tardo and Kendra Home for helping organize a great couple of social events. 

Our Chapter sponsored, and many chapter members attended, the 7^th annual NOMAR/CID Economic & Real Estate forecast in October.  Speakers included Dr. Lawrence Yun with the National Association of Realtors, Rick Haase with Latter & Blum, Chris Bonura with the Port of New Orleans and Guy Williams with Gulf Coast Bank & Trust. 

October also brought our CCIM Mid-Year Meetings & Conference in Toronto.  It was a great trip and we pinned three new designees from across our state – Joel Davidson, CCIM with NAI Latter & Blum in Lake Charles, John Monteleone, CCIM with Dwight Andrus Real Estate in Lafayette and Jon Smith from our RE/MAX Commercial office in New Orleans.  The conference included a fascinating conversation with Steve Forbes, as well as plenty of other insightful speakers. 

The month of November was also a busy one – it included CI 101, Financial Analysis for Commercial Investment Real Estate and our annual Golf Tournament.  CI 101 was taught by Karl Landreneau, CCIM and Alec Pacella, CCIM and attended by nineteen candidates and others from Louisiana, Alabama, Mississippi and Oklahoma.  Our Golf Tournament, held at University Club in Baton Rouge and attended by approximately 50 friends of the Chapter, was not won by the RE/MAX Commercial team. 

Whew!  It’s amazing to me A) how much we accomplished this year and B) how quickly it flew by.  I want to thank all our 2017 Chapter leadership for their service.  So David Gleason, CCIM, Ben Walker, CCIM, Flo Meadows, CCIM, Will Adams, CCIM, Richard Juge, CCIM, Scott Graf, CCIM, Andrew Vanchiere, CCIM, Gregg Thompson, CCIM, Jim Purgerson, CCIM, Matt Ritchie, CCIM, Jack Hodges, CCIM, Justin Gallionardo, CCIM and Steve Legendre, CCIM, thank you!  There’s no way our Chapter would operate without you.  And of course thank you to the Nicole Davis and all the folks at Strategic Management Services, LLC.  Their work behind the scenes helped us all look good (or as good as it’s possible for us to look anyway). 

I quoted from President Kennedy in my inauguration address.  He did not have any opportunity to give a farewell address, so I thought I would reiterate the quote from his inauguration here: “ask not what your country can do for you, but what you can do for your country.”  Our Chapter is in great hands.  But we are always looking to widen our tent and cultivate new leadership.  If you are a Chapter member (or not) and have ideas about how to grow and improve our chapter, please join us and get involved.  My involvement has been incredibly rewarding over the years, and I know it will continue to be for many years to come. 

For more information on the CCIM designation or the Louisiana CCIM Chapter, please contact Jonathan D. Shaver, CCIM at (504) 838-0001 jshaver@nolacommercial.com.

A LEASE: WHAT'S IN THE NAME?

Jon Smith, CCIM, Sales Associate
RE/MAX Commercial Brokers, Inc.

William Shakespeare may have written "A rose by any other name would smell as sweet, " but he was indeed talking about flowers and not commercial real estate. One of the most important, yet confounding, aspects of the acquisition of commercial property is the commercial lease form, and unfortunately, often many of them smell nothing like a rose.

A commercial lease is a legally binding contract between a building owner and the user of the property, and even though the asset classes in commercial real estate are common from one market to the next, there is no such thing as a standard, universal, or uniform commercial lease. Compounding the confusion contained in a commercial lease is that there is no typical structure or length. All too often a building owner will try to save money on legal fees by recycling a contract form picked up from a broker or one from another property. It is not uncommon for a tenant to see a lease that is cobbled together from several different contracts written specifically for several different uses.

Following the medical warning “don’t take prescription medication not prescribed to you,” the end-user and the building owner alike would be well served to ensure that the lease they are entering into was written specifically for that property and looks at all of the conditions that need to addressing in each particular situation. 

I can’t tell you the number of times I’ve been in court – on both sides of the table – because of inadequate, vague, and ambiguous language in a boilerplate lease misapplied to a tenant, who themselves didn’t take the time to read the contract.

Certainly, it is simple enough to determine if a lease is legally valid and binding. A quick check of the following can determine that:

• Names of all parties
• Description and ADDRESS of the property (and, yes, I’ve seen leases that omitted this) 
• Consideration, or right to occupy premises in exchange for payment of a sum.
• Legality of Objective (can’t break any laws with the lease)
• Offer and acceptance
• Written form (there are some instances where verbal commercial leases are valid and binding; however if you get into a verbal commercial lease it will be as the old saying goes “a fool and his money are soon to part”)

The above are all conditions that must be met to make the lease valid and binding, however, within that lease lives a host of things that can trip up landlord and tenant alike if they are not carefully and specifically addressed in the lease. 

  

Namely, these include:

Lease Term with specific commencement date and termination date. I’ve seen leases without a commencement date, or a blank commencement date. Always have a hard number in your lease for this. I try to avoid leases that read “Lease commences on the date of occupation by Tenant and expires 60 full months thereafter.” Instead, I like “Lease begins on July 15, 2017, and expires on August 31, 2022.”\

Rent. Believe it or not, there are vagaries here too. Be sure that your rent section has when, where, and how to pay rent and a recourse if that method becomes delayed.

Occupancy and Use. For landlords especially, this is an important clause to add to a lease to ensure that the pleasant dress shop doesn’t become a coffee shop, motorcycle repair garage, or death-metal rehearsal studio. 

Utilities and Services. Use this section in a lease to spell out who pays for what, and who holds what deposits, if any. This is especially important in Gross and Net leases where the tenant pays some, but not all of the utilities. 

Parking. If parking is a factor, it is critical to spell out all details of parking in the lease. Parking is as contractually essential to the operation of a commercial entity as anything. If parking is not available, then have the lease define this. Parking squabbles are one of those items of minutiae that can cause significant headaches down the road. 

Signage. Another landlord clause, the Landlord should always retain the right to control any and all signage, including temporary window signage. Once that lease begins, this right is waived unless previously negotiated. 

Tenant Improvement. Almost always, space will need physical repair. Use the lease to determine who is paying for what portion of the repairs, how long that process will take, and how that repayment will occur. Will the Tenant pay and have rent abated? Will the Landlord pay and bill back the tenant over time? This is another major area of the lease that is usually fumbled during execution and causes significant headaches in the future.

Alterations and Improvements. A third major landlord protection, if the tenant wants to make physical modifications after the lease commences, the Landlord should always retain the right to approve those alterations. You’d be surprised how many leases do not hold this clause. 

Casualty and Condemnation. Who is responsible for what in the case of fire or other damage, and how can the lease be negated as such. I have seen leases without a casualty section, where the property was partially damaged by fire and the tenant had to sue to be let out of the Lease.

Right to Relocate. This states what rights (if any) a landlord would have to relocate a tenant within the leased premises. In smaller properties, this can be seen as a non-factor, but for smaller businesses within larger centers, having this protection can be critical. 

Options to Renew. A good commercial lease has a section to renew, it states when the period to notify the landlord is and it indicates the terms under which the lease can be renewed. I was once in the middle of a landlord and tenant who spent over $100,000 in legal fees suing each other over a very poorly worded renewal clause. It is important to have this in writing and to make sure it is clear and unambiguous. 

Sure, there are many other sections in a well written commercial lease. Sections such as right to assign, expansion options, holdover clause, estoppel certificates, and many other terms are ones you’ll see in a lease as you pass it on to your attorney.  However, some of the ones I’ve highlighted above are ones that either get left out of a lease for whatever reason, or are so poorly written that they WILL cause a legal battle in the future. 

Remember, one size does not fit all on a commercial real estate lease, and more draft contract forms are floating around that you can imagine. Always read your lease since you’re the one signing it, but always have a legal professional review it for you.

Landlords who go the cheap route by using boiler-plate or retread leases or tenants who try to save money by leaving legal counsel out of it usually wind up paying for it in one way or the other in the end. 

Note: This post discusses contracts and leases in general, broad terms and is not intended to be legal advice. You should always seek the opinion of a lawyer when dealing with leases, contracts, and other written instruments of business.

Jon Smith, CCIM

RE/MAX Commercial Brokers, Inc.

jsmith@nolacommercial.com

504-838-0001

nolacommercial.com

Fishing for the Right Location? Try Landing One Instead!

Mike Mito, Sales Associate

By: Mike Mito, Sales Associate

The only constant is change and things can change in ways you would never expect or have planned for.

In fishing, real estate and oil and gas exploration location is everything!  There may be only a few choice locations that produce the desired results and those that can best take advantage of any situation are those that have the foresight, knowledge, tools, experience and skills to be flexible and prepare for any inevitability.

Adapt or die

As a child growing up in Canada I spent almost every summer in a small outport community, Harbor Deep, located in Newfoundland in Northern Canada. Newfoundland, for much of its history, has been known for its rich fishing grounds but technological improvements, mismanagement and overfishing decimated what had been a goldmine and resulted in a moratorium on the two main species of fish, Cod and Atlantic Salmon.

The changing world was already putting significant pressures on outport life but the lose of the fishing industry amounted to a death knell; Harbor Deep ceased to exist back in 2002 when the population voted to accept a resettlement agreement put forth by the Canadian government. The moratorium amounted to the loss of the only real industry in the town; villagers even faced severe fines for catching fish for their personal consumption. No fish, no jobs, no livelihood or quality of life and no reason to stick around. What had once been a prosperous little fishing village became a ghost town overnight.

I see many parallels between the fishing industry in Canada and the current situation with the oil and gas industry in the Gulf, technology has allowed us to recover more oil and at a lower cost making the financial metrics of off shore production harder to justify. It may be safe to assume that the price of oil will go up in the future, as producers who are over leveraged, poorly managed or too costly are run off by low or non existent profit margins thus limiting supply and driving prices higher; as to when that may be, it is very hard to say. Those with the vision and foresight can find value in the current market as companies are forced to liquidate or look to get underperforming assets off of their balance sheets to allow themselves to run leaner and operate within the current economic reality.

Those who bury their heads in the sand will be left in the dust while those with vision will see opportunity.

Re/Max Commercial is happy to offer for sale the following properties for the opportunistic buyer:

http://www.lacdb.com/listing/30125043

http://www.lacdb.com/listing/30019843

http://www.lacdb.com/listing/29967264

Feel free to reach out to us regarding our perspectives on the economy, its impact on commercial real estate and asset valuation and where we feel value can be found and how to best take advantage of the current market to position yourself for the future.

Cheers!

Mike Mito, Sales Associate
mmito@nolacommercial.com
504.838.0001
nolacommercial.com

RE/MAX Commercial Brokers Facilitates Firehouse Subs First Metairie Location

RE/MAX Commercial Brokers, Inc. is proud to announce that Matt Eaton, CCIM represented Firehouse Subs in their search and negotiations for their first Metairie location at 3814 Veterans Memorial Blvd at the corner of Belmont Place. After touring multiple locations on and off market, Matt was able to locate a highly visible location on heavily trafficked Veterans Highway. Through fervent negotiations, Matt was able to secure a great deal for his client in a highly sought after property in the heart of Metairie.

This new Firehouse Subs store #1492 is scheduled to open later this month and will feature hot subs and submarine sandwiches made with premium meats and cheeses, steamed to perfection, then piled high on a toasted private recipe sub roll. Firehouse Subs continues to remain active in the Louisiana and Mississippi markets. They are looking for 2,000 square feet of free-standing or end cap locations.

Matt Eaton also represents a number of other national/regional retailers including Rouses Supermarket, LA Dental Center, Quest Diagnostics and Waffle House in Louisiana and the Gulf South. Please call Matt Eaton at 504-339-2136 to see how he can help you grow your business.

MAGAZINE STREET PARCELS FETCH HIGH PRICE WITH OPEN BID PROCESS

RE/MAX Commercial Brokers senior agents Martin O. Miller III, CCIM and Matt Eaton, CCIM listed and helped sell two of the largest, last remaining vacant parcels of land on Magazine Street, each measuring roughly 30,000 sq.ft.  Through an open-bid process developers were asked to submit their highest and best offers to acquire 1310 & 1339 Magazine Street.  Although not a conventional process, the open bid method for these parcels proved to be the best course of action for the sellers netting them one of the highest sales prices per square foot on Magazine Street to date.  The local developer that purchased the property has a proven track record in the city with developments on Magazine Street and in the CBD.  People are eager to see their plans for these two sites. 

The open-bid sales method is when multiple offers are received from buyers within a certain time frame.  This method works for highly desirable properties as it creates a competitive environment and a frenzy for the property versus standard marketing where there are no deadlines or a sense of urgency.  For this process to work there has to be good coordination with the sellers, brokers and buyers along with adequate marketing and promotion of the property prior to the offer deadlines.  

For more information on this property or the open-bid process, please contact Martin O. Miller III, CCIM at (504) 838-0001 or momiller@ccim.net.

RE/MAX Commercial Brokers has 4 of the top 10 Most Viewed Listings!

LoopNet, Inc., the most viewed public portal for commercial real estate, just promoted the Top 10 most viewed properties in the entire State of LA, and RE/MAX Commercial Brokers, Inc. of N.O. had 4 of those 10.  RE/MAX Commercial Brokers of New Orleans issued a statement that said ‘this is a testament to the quality of our agents, clients, listings, and the power of RE/MAX’s International marketing efforts’.   A core tenet of RE/MAX’s philosophy is Maximum Exposure.  In the end this means a quicker sale and at a higher price for our customers.  Please email us at info@nolacommercial.com as to how we can help you sell or lease your property.