The Buddy Sauter Commercial Real Estate Blog

Planet Money

Buddy Sauter and Associates — Thu, 01 Mar 2012 18:14:16 GMT

Perhaps you are already familiar with Planet Money, the podcast. They have very informative, short talks about money and the economy. Here is a link to one of their podcasts. I selected this one because it talks about lobbyists, Washington, and Realtors.

The Friday Podcast: A Former Lobbyist Tells All

Plant Money Home Page

The Prevailing Trend in Pinellas and Hillsborough Counties

Buddy Sauter and Associates — Thu, 01 Mar 2012 15:22:03 GMT

Every day I talk to five or ten small business people about the state of their business and the value of their real estate and I have seen a few noticeable trends.

Small business owners are more bullish about their economy (as opposed to the national or world economy). They generally seem to think that their situation is improving and will continue to improve over the next year. Many are talking about adding an employee or two.
We are selling and leasing properties to business owners who are looking for more space for their improved outlook. Contrast this to two years ago when business owners were only changing properties as a downsizing effort.
Financing is now readily available for small businesses to buy commercial real estate at very low interest rates. We closed two transactions in December at interest rates of 3.74% (BB&T) and 4.00% (Chase).
Half of our deals last year were SBA where the buyer's put down 10%. By making this financing available and assisting buyers we were able to move a lot of property that would otherwise not have sold.
Sales prices and lease rates remain lower and their is no significant trend suggesting any strong increases in the near term or medium term.
Transactions are much more difficult to close now than in years past. The title companies and survey companies are much more diligent now and we often have to clean up title issues from previous transaction (especially if the previous transaction occurred in the boom years).
The cities and counties are much better to work with now than a few years ago. Now they need the tax revenue that small businesses bring and are actively recruiting small businesses to come her. Contrast this to a few years ago when many of the local cities sent a clear message (perhaps inadvertantly) that they did not want your small business in their borders.

Sale of JFK Supply Property Holdings in Joe's Creek

Buddy Sauter and Associates — Thu, 01 Mar 2012 15:07:08 GMT

For JFK Supply we sold three properties that are all located next to one another, a total of 47,800 square feet of Industrial space. To get the best price for our client we sold the three parcels separately to three different end users. One buyer paid cash and the other two were financed.

The properties are as follows:

2855 44th Ave N - 7800 SF
2900 44th Ave N - 28,000 SF
4500 28th Street N - 12,000 SF

Property 1, 2855 44th Ave N, was sold to a gentleman who is using it only for warehouse space.

Property 2, 4500 28th St N, was sold to Masthead Sailing Enterprises in November. We closed on this property in December and they are busily converting the property to their use. Visit them at www.mastheadsailinggear.com

Property 3, 2900 44th Ave N was sold to MESH. They specialize in the design and build of high end Millwork and interior finishes for restaurants, retail spaces, and high end residences. Learn more about them at www.meshshowroom.com

Video Tour - 5730 15th Ave S, Gulfport, Florida

Buddy Sauter and Associates — Fri, 12 Aug 2011 21:27:23 GMT

This is a nice new listing we recently added. Please take the video tour.

2524 30th Ave N in St. Petersburg

Buddy Sauter and Associates — Wed, 20 Jul 2011 02:55:46 GMT

We have a hell of a deal on a 10,000 SF commercial/ Industrial building in St. Petersburg. The price is $349,900. These types of buildings are currently selling at $40/SF. We are offering this one at $35/SF. The owners are very serious about selling.

More information is available at www.buddysauter.com

Recent Press Release regarding Sale of Cardiac Monitoring Centers

Buddy Sauter and Associates — Wed, 20 Jul 2011 02:46:07 GMT

Delaware Physicians Group to Acquire Cardiac Monitoring Center Shares
A group of Delaware physicians, led by Dr. Allen Davis and Dr. Joseph Pennington, today announced the acquisition of a controlling interest in Cardiac Monitoring Center (CMC), a St. Petersburg based pacemaker and defibrillator monitoring clinic.

The company has a strong presence in the west coast of Florida, the mid-west and mid-south states. The synergies of the venture will create the opportunity for CMC to expand into the mid-Atlantic pacemaker / ICD monitoring services market.

Current Management and Staff will continue providing the excellent care and outstanding service which they are known for in the medical community.
The company was founded in 1987 and is a St. Petersburg, Florida based Independent Diagnostic Testing Facility. They provide comprehensive “in home” monitoring for patients with all manufacturers of implanted defibrillators and pacemakers. One of their notable strengths is that their technicians maintain personal relationships with the patients and go the “extra mile” to provide an extraordinary service to the patients.

Over the years CMC has monitored and assisted in the care of over 20,000 device patients and have grown to monitor patients for cardiologists and physicians throughout the United States.

The transition to the new owners is planned to occur over the coming months.
Terms of the share purchase were not disclosed.

This transaction was facilitated by Buddy Sauter & Associates.

The Economic Situation - June 2011

Buddy Sauter and Associates — Tue, 31 May 2011 13:05:14 GMT

The most recent Economic Situation Report from Bruce Yandle of Clemson University is available here:

The Economic Situation - June 2011

Review of America's Finances - USA, Inc.

Buddy Sauter and Associates — Wed, 20 Apr 2011 11:28:00 GMT

My cousin is Texas is a Stock broker and sent this email to me. It is a little long, but very informative.

"Attached is a very interesting, informative and unbiased report of America's finances seen through an analyst's perspective. The report looks at the United State's Cash Flow, Balance Sheet and Income Statement as if it were a corporation. It's an interesting starting point for rational discussion and understanding of America's budget problems."

About USA, Inc.

The Economic Situation by Economist Bruce Yandle (Clemson University)

Buddy Sauter and Associates — Wed, 20 Apr 2011 11:16:00 GMT

The Economic Report for March 2011 is available here.

As usual, it is a good read, written in plain English.

To understand the U.S. federal budget, divide by 100,000,000

Buddy Sauter and Associates — Wed, 20 Apr 2011 11:10:00 GMT

...from the Blog of Philip Greenspun

News accounts on the latest federal budget deal gave the numbers in a vacuum, e.g., “The deal cuts $38 billion from last year’s budget. It’s being called the largest domestic spending cut in U.S. history”. How can an individual voter make sense of quantities that are ordinarily written in scientific notation? I think the easiest way is to divide everything by 100,000,000 (10^8).

Let’s start with federal spending. The FY 2011 federal budget is approximately $3.82 trillion (3.82×10^12). Of that, approximately $2.17 trillion will be paid for by taxes collected and the remaining $1.65 trillion will be borrowed from our grandchildren. If we divide everything by 100 million, the numbers begin to make more sense.

We have a family that is spending $38,200 per year. The family’s income is $21,700 per year. The family adds $16,500 in credit card debt every year in order to pay its bills. After a long and difficult debate among family members, keeping in mind that it was not going to be possible to borrow $16,500 every year forever, the parents and children agreed that a $380/year premium cable subscription could be terminated. So now the family will have to borrow only $16,120 per year.

Why I am more optimistic today than yesterday

Buddy Sauter and Associates — Tue, 11 Jan 2011 16:15:00 GMT

The recovery of commercial real estate in Pinellas and Hillsborough Commercial real estate is gated primarily by our ability to get loans. As loans have become more available (primarily through the SBA 504 program in conjunction with Regions, B of A, Florida bank and other local bankers) we have seen a steady increase in the number of Commercial Property transactions. This began to get some steam about the middle of 2010.

We are even starting to see some conventional commercial realty loans (non-SBA) for those with great credit putting down a substantial down-payment (Regions and Florida Bank).

These loans have all been limited to end user properties and it remains very difficult to get loans for investment properties. Though we are seeing some potential loosening of the purse strings for multi-family projects (again with good credit and a substantial down-payment).

This is but one piece of the economic puzzle for our local businesses.

In any given week, I talk to maybe 15 or 20 small businesses. Some are doing better than others, most look forward to putting 2010 behind them and they all have the same fundamental problem. In 2008 and 2009 as the economy tanked, their banks all curtailed and then canceled their business lines of credit. So the folks who remained solvent had to scrape together enough cash to float their payrolls and inventory. Anywhere between $20,000 and $200,000 depending on the size of the business to replace these lines of credit. This has had a crippling effect on them. Some went out of business. Now that the economy is turning slowly better, they are unable to respond to all of the orders and calls for their services because they do not have the cash to fund the growth, to hire employees, or buy more inventory.

If these guys could get their lines of credit back, it would alow them to slowly start growing to meet the new demand and invest their cash into new facilities to house that growth. Specifically, those that are renting can now buy (prices are low and interest rates are low), and those that own can trade up.

This means more jobs, increasing real estate values (in Pinellas and Hillsborough) and an improvement in our little piece of the world.

Today I had a client tell me that their bank had actually increased their line of credit. The increase was small...and they had to fight for it by threatening to take their banking relationship elsewhere, but they got an increase, enough to grow their business a little bit.

I am optimistic that this is the start of better times ahead for our small businesses.

Great Rolling Stone Article on Florida's Foreclosure Courts

Buddy Sauter and Associates — Mon, 22 Nov 2010 11:34:00 GMT

One of my favorite current writes is Matt Taibbi. I have mentioned his work here before. His upcoming article in the November 25th issue of The Rolling Stone takes on Florida's court system for rapid evictions. It provides nice insight into what is going on and, as always, Matt's writing is exquisite.

Quote from the Article

"Now, months after its first pass at foreclosure was dismissed, the bank has refiled the case -- and what do you know, it suddenly found the note. And this time, somehow, the note has the proper stamps. "There's a stamp that did not appear on the note that was originally filed," Kowalski tells the judge. (This business about the stamps is hilarious. "You can get them very cheap online," says Chip Parker, an attorney who defends homeowners in Jacksonville.)

The bank's new set of papers also traces ownership of the loan from the original lender, Novastar, to JP Morgan and then to Bank of New York. The bank, in other words, is trying to push through a completely new set of documents in its attempts to foreclose on Kowalski's clients.

There's only one problem: The dates of the transfers are completely fucked. According to the documents, JP Morgan transferred the mortgage to Bank of New York on December 9th, 2008. But according to the same documents, JP Morgan didn't even receive the mortgage from Novastar until February 2nd, 2009 -- two months after it had supposedly passed the note along to Bank of New York. Such rank incompetence at doctoring legal paperwork is typical of foreclosure actions, where the fraud is laid out in ink in ways that make it impossible for anyone but an overburdened, half-asleep judge to miss. "That's my point about all of this," Kowalski tells me later. "If you're going to lie to me, at least lie well."

The dates aren't the only thing screwy about the new documents submitted by Bank of New York. Having failed in its earlier attempt to claim that it actually had the mortgage note, the bank now tries an all-of-the-above tactic. "Plaintiff owns and holds the note," it claims, "or is a person entitled to enforce the note."

Soud sighs. For Kessler, the plaintiff's lawyer, to come before him with such sloppy documents and make this preposterous argument -- that his client either is or is not the note-holder -- well, that puts His Honor in a tough spot. The entire concept is a legal absurdity, and he can't sign off on it. With an expression of something very like regret, the judge tells Kessler, "I'm going to have to go ahead and accept [Kowalski's] argument."

Click here for the article in The Rolling Stone

Just Sold 965 ~ 1027 Central Avenue

Buddy Sauter and Associates — Thu, 11 Nov 2010 21:36:00 GMT

We recently closed on this interesting transaction. The property includes two commercial buildings, a large parking lot and a grassy lot and contiguously located along Central Avenue. The sales prices was $350,000 and the sale was financed by the Seller.

Just Sold - 3237 Tyrone Blvd - SBA 504 Loan Deal (or How to Buy Commercial Real Estate for 10% Down)

Buddy Sauter and Associates — Tue, 02 Nov 2010 20:53:00 GMT

We just closed a sale transaction for 3237 Tyrone Blvd (just north of Tyrone mall). The building is 4000 SF and sold for about $270K. We put together the financing through the SBA 504 program and Regions Bank. With this program the buyers only put 10% down and get very competitive interest rates on a good loan (I have talked about this program before on this blog here and here ).

The new owner is a small businessman who is going to transform the building into new office and move his existing business there.

Contact me if you have any questions about buying commercial real estate with the 504 program.

Just Leased - 1825 5th Ave N

Buddy Sauter and Associates — Mon, 01 Nov 2010 18:00:00 GMT

We just leased this very nice building on 5th Avenue North where it goes under I-275. For years it was Sauer's Paint and Body Shop. The owners did a complete refresh of the property - paint, windows, roof, doors, resurfaced blacktop, etc. and it looks great. The new tenant is Akoona Ice who sell and rent ice vending machines.

David Stern - The Foreclosure Mess

Buddy Sauter and Associates — Thu, 21 Oct 2010 11:37:00 GMT

From BoingBoing -

David J. Stern is a Florida lawyer who operates a foreclosure mill, a firm that foreclosed on more than 70,000 homes last year. According to a deposition from Tammie Mae Kapusta, a former employee, Stern's firm cut many corners, foreclosing on homes without serving notice, ignoring mortgage payments that would have prevented foreclosure, and "yelling at" employees who talked to homeowners on the phone, because that was "giving them too much time."

Apparently, it's working for Stern, who just bought the mega-mansion next to his mega-mega-mansion on a private island so he could tear it down and install a tennis court. Seriously, this guy sounds like the villain in a Carl Hiaassen novel, except Hiaassen's villains are more believable and less evil.

But while the banks are ultimately responsible, the root of the problem appears to lie with "foreclosure mill" law firms like Stern's. These operations process foreclosure cases on behalf of lenders, and their business model is based on moving the paperwork through as quickly as possible. That's why such firms have pioneered practices like "robo-signing" -- whereby their employees process thousands of court documents in pending foreclosures without ever actually reviewing them, as the law requires. Of course, it's in the banks' interest for their contractors to move quickly, because the faster a foreclosure moves, the less time a struggling borrower has to fight it...

U.S. Office Market Enters Early Recovery as Absorption, Demand Point Up, Vacancy Turns Corner - From CoStar Group

Buddy Sauter and Associates — Fri, 15 Oct 2010 14:48:00 GMT

Nice Article on Office Recovery - From CoStar Group

The office market recovery has begun -- although it may not feel that way yet in every market across the country.

The theme of CoStar Group's 2010 Third Quarter Office Review and Outlook released this week was both simple and direct: "We are in early recovery for the office market," said Andrew Florance, CEO of CoStar Group in the company's webinar presentation.

CoStar confirmed that in the third quarter the U.S. office market posted positive net absorption for the second consecutive quarter -- 5 million square feet absorbed in the second quarter and 7 million square feet in third quarter.

However, CoStar's research also made it evident that the recovery has been anemic so far and is still very early in the process. CoStar is projecting that the national office market won't begin seeing rental rate increases for another three or four quarters or net operating income increases for another four to six quarters.

The fact that the U.S. office market posted positive office employment growth for a consecutive quarter is a first positive indicator that recovery is beginning to take hold, despite high unemployment levels and continued layoffs. In the past two quarters, approximately 24,000 and 8,000 office-using jobs respectively have been created, according to U.S. labor statistics.

That growth has led to a second positive indicator of office recovery -- the strength of the leasing activity.

"Leasing activity in the quarter was healthy and robust," Florance added. "We're now seeing the strongest leasing activity numbers we have seen since the peak of the market [in 2005 and 2006]."

"Tenants are no longer staying on the sidelines to wait for a better deal. They are trying to move in to capture better deals," Florance said.

In its third quarter analysis CoStar also noted the historically low level of new office supply as a third positive indicator for the office sector.

"Office deliveries in the United States remain stunningly low, historical all-time lows," Florance said. "We're down 85% right now in deliveries [from historical averages]. When you look at new construction starts, we're running at about 3 million to 4 million square feet of new construction starts for office space in each quarter in the United States. That is well below what is required to replace depreciating inventory."

Florance estimated that the inventory of existing office space is contracting by about 75 million square feet of space per year.

"If you have positive absorption and contracting supply, that is going to imply decreasing vacancy rates," Florance said.

CoStar is showing that the U.S. office vacancy rate is clearly moving down and declined slightly in the third quarter to 13.62%. The amount of availability also was in decline from 17.7% to 17.6%. (The availability amount includes space that is occupied but also on the market.)

"This means we are no longer in a deteriorating market," Florance said, "and the balance is shifting ever so slightly but consistently from being a tenant market to a being an owner market."

However, it office market conditions can be a very different story from market to market around the country.

"We're excited about a 30 basis point improvement in vacancy rates at the same time that people may be out there struggling to lease a property in Orange County or Phoenix. What we're saying about recovery may not foot with what many may be experiencing right now in the actual leasing marketplace," Florance said. "But [declining vacancy] is a leading indicator and it is a clear indicator; it means that ultimately conditions are improving, but it doesn't mean that things are uniformly better everywhere."

In conjunction with the release of third quarter office numbers, we sampled brokers across the country to find out what they are experiencing in office leasing activity in their markets.

Boston: "The lifeblood of the Boston market is its knowledge-based sectors, and those innovative companies which by definition start small, then grow," said Mary Sullivan Kelly, senior vice president and chief research officer for Colliers Meredith & Grew. "I can tell you that anecdotally, we are seeing growth from a number of firms -- particularly small and mid-sized tech and life science firms, some increasing their space requirements marginally, some by 50% or more, and this is an encouraging sign. From where we stand right now - fourth quarter 2010 - it is going to take some time for this to impact the vacancy and absorption stats, but still, I believe bodes well for 2011 and beyond."

Atlanta: "What I can tell you is merely anecdotal, but with our clients (almost exclusively small to mid-sized local and regional firms) I am seeing tenants focusing on budget impact above all else," said Rob Hill, commercial brokerage sales and leasing with Hill Corporate Partners. "When money was cheap and credit was easy, landlords were able to compete based on creating efficiency for the tenant through reconfiguring their space - giving the tenant "more bang for the buck.'"

"Today, while money may be cheap, credit (along with collateral) is nearly nonexistent. This leaves the tenant to face either paying for tenant improvements themselves or adjusting their business practices to fit an existing layout," Hill added. "Paying for tenant improvements, from a practical standpoint, requires a longer term to justify (and depreciate) the expense. Unfortunately, in today's world, five years can easily see a company's whole business strategy change."

"Add to this the uncertainty and potentially costly changes brought about by the anticipated elimination of balance sheet distinction between capital and operating leases (including renewal and expansion options), and it isn't surprising that market data is hard to get and harder to interpret," Hill added. "In essence, there seems to be a shift from more thoughtful, proactive planning and execution to an approach that avoids commitments under rules that seem destined to change in ways that are as monumental as they are unclear - and this goes as much for landlords as it does for tenants. The name of the game today - and if current trends continue, for a long time to come - is survival and maintaining as much flexibility as possible. Everyone has gone almost totally defensive."

New York: "What I am seeing in the office leasing market is smaller tenants getting lower renewal rents (dollars per square foot), taking less square feet be it renewed or tenants consolidating, and landlords doing more tenant improvements," said Adelaide Polsinelli, associate vice president investments for Marcus & Millichap. "Larger tenants are doing the same as smaller tenants except they are taking advantage of the lower rents and taking on more space in buildings where they want to stay for a longer time."

"The trend seems to be that for tenants who believe we are at or around the bottom, they are taking advantage of opportunities that will enable them to expand in the future if they are a large tenant, and to reduce their overhead if they are a smaller tenant," Polsinelli said.

Austin: "Caution is the word with tenants - new tenants and renewals," said Luke Wood of Cantex Realties LLC "Current tenants are waiting longer to renew and heavily scrutinizing space needs. In years past, our large tenants would usually absorb space for expected expansion. Now, those tenants are not only giving back that space, they are cutting existing space to the exact need of today."

"Startups are signing short-term leases; stable, credit tenant's want to lock in long-term low rates," Wood said. "Rates are down. Most quoted rates are $1.50 - $2.00 above the effective rate deals are being signed. Sublease space is finally being absorbed, resulting in more direct deals for landlords. Leasing activity has been steady. Deal flow has been consistent with years past; however, tenant's expectations have changed."

Phoenix: "The Phoenix metro area is driven by construction and housing expansion," said Rick Mineweaser, president / designated broker of Diamond Pacific Investments, adding, "and that industry is comatose. Not until housing stabilizes and picks up will this area really start to recover. Markets like Phoenix provide a real sense of the effects of phantom occupancy, where much of the occupied space (space paying rent) is vacant or underutilized."

Depressing real Estate in London

Buddy Sauter and Associates — Tue, 12 Oct 2010 13:24:00 GMT

This is a very interesting piece form the Blog Oobject about London's Real Estate Pricing

Its October 2010 and Chinese property booms while most of the Western world’s houses have shrunk to more realistic levels. In the US, homes have ceased to be ATMs to buy oriental barbecues, but in Britain, a crowded island with a cultural attachment to carving out a personal defensible space Englishmen’s homes are still castles, with prices to match.

As US housing prices adjusted, UK ones, faltered then regained their losses smack in the middle of the recession. This time things look different, with last month seeing the largest dip in housing prices in history. Perhaps prices in Britain will go up forever, or perhaps Britain will be like Japan, another crowded island which had the same phenomenon and where eventual capitulation resulted in a crash where property is worth less than a decade ago?

One way to judge judge this is to look at what a million dollars gets you in London and its hinterland - a place where an apartment recently sold for a quarter of a billion dollars during the biggest downturn since the Great Depression. Click through each item to read the justification for inclusion.

Click below for link to pictures and original Oobjet site:
http://oobject.com/category/depressing-million-dollar-london-property

Real Estate in India

Buddy Sauter and Associates — Wed, 22 Sep 2010 00:53:00 GMT

From one of my colleagues in Bangalore, India...

Hello Buddy,

With regards to your mail on my thoughts on real estate market in India I

did a little research to give you an account of the current situation.

India has been one of the fastest growing economies in the past few years.

With an average GDP growth rate of 8 to 9 percent, the construction of

public and private infrastructure is in full flow. This has raised the

prices of land in almost all parts of the country.

The situation in big cities like Mumbai, Delhi, and Bangalore etc. is

particularly resilient (from a seller¹s point of view). Apart from the

economy, the population in the big cities is also increasing, hence putting

pressure on the infrastructure and creating scarcity of residential areas.

The solution to this problem has been found in sub-urban parts of such

cities.

Builders are constructing large apartment complexes with world class

facilities in these areas. There is huge demand for such apartments,

penthouses and bungalows and appears to be growing.

As far as the recession is concerned, then Indian real estate market was not

as much affected by it as other economies did. There was a plunge in demand

back in 2008, but the industry quickly recovered from it by the mid of 2009.

The present situation in the market is again showing growth. According to a

government report, there is a shortage of houses in urban areas, which

provides exceptional scope for investment.

I hope this information will prove to be helpful for you. Please let me know

if you need any further information on this subject.

Regards,

Divya

On 9/21/10 9:47 AM, "buddy@buddysauter.com" <buddy@buddysauter.com> wrote:

> Thanks. On a separate note, Could you write me an email giving your thoughts

> on India's real estate market. Just you thoughts on where it is and where it

> is headed and the effects of the recession (if any).

> Regards,

> Buddy Sauter

> buddy@buddysauter.com

> 727 421 3706

The Signature Condo - Update (and also The Sage)

Buddy Sauter and Associates — Tue, 21 Sep 2010 11:32:00 GMT

Some time ago I posted in this blog the results from the Signature Condominium Auction . Yesterday I spoke with signature's Realtor, the hard working Debbie Newman, and she let me know that only 4 units remain available.

And The Sage is undergoing a similar change. A few months ago a group from Nova Scotia bought the remaining, vacant 70+ units for rentals and now have only 12 left.

As the supply goes away, the prices will rise across the board.. Hurry if you are interested in living downtown.