Tag Archives: Arizona

Why Buying Commercial Property in Arizona Without a Broker Isn’t Worth the Risk

Everyone wants to save a buck when they can. Do-it-yourselfers have risen to fame over the past decade as YouTube, Vimeo and other social media channels have provided a public forum to teach non-experts how to do things.

The reasons for the shift have much to do with our drive to save time, aggravation and the almighty dollar. But does this mindset apply when buying commercial property in Arizona? The answer, like commercial real estate itself, is complicated.

Understanding the Value of a Good Commercial Broker

Not every state in the country conducts the real estate transaction in the same manner; in fact, some of the players are different. While areas in the east coast, for example, often include a real estate attorney and a real estate broker as part of the process, Arizona transactions sometimes exclude attorneys on either side. This puts the onus of proper real estate dealings on brokers and brokerage firms. Though there is a caveat in this, the buyer of commercial property must take responsibility in performing the necessary due diligence before and during the escrow period to uncover matters than would affect their desire and ability to close.

Commercial brokers help facilitate all dealings related to the search, identification, negotiations, investigations and successful closings for the sale and transfer of real property. How well they perform is often contingent upon their overall local market knowledge, which includes, but is not limited to:

  • Proposed changes in the industry
  • Municipal and private developments in the works
  • Strength of peer relationships
  • Understanding of transaction process
  • Use of commercial real estate contract language and nuances therein that provide negotiating edge
  • Their network of strong third-party resources

The Art of Timing and Playing a Good Game of Chess

A purchase contract is boilerplate content that presents the ins and outs of what is expected, the timelines to execute, and available remedies in the event that an issue arises or a party deems it necessary to back out. What may be of more importance is what the paragraphs and line items don’t say. This is where a commercial brokerage firm can represent a buyer’s best interests exponentially.

For the unsuspecting (and that would be most buyers of real estate not using a broker), time is of the essence and progresses similar to a move in a game of chess. For example, if you want to bide time to ensure you have chosen the best property for your needs, make sure to ask for a lengthier inspection period. This allows you a larger window of opportunity in discovery of issues that may present concern, especially pertinent when buying real estate on or near environmental hazards (such as a gas station or Circle K).

What You Don’t Know When Buying Commercial Property in Arizona Will Hurt You

We’ve seen this happen in many geographic areas in cities from coast to coast. Often, buyers of residential property, including investor pools, will consult their residential REALTOR® for information and representation in commercial real estate transactions. Even for the most well-intended agents and brokers in this part of the industry, accepting the undertaking puts them, their brokerages and buyers at risk.

Residential agents and brokers have to abide by a Code of Ethics that, in part, stipulates the need to serve customers and clients best by referring them to industry professionals who specialize in the specified market niche, whether that be the type of property desired, and county of location.

The above info just illustrated some of the pitfalls in dealing with real estate experts who don’t normally work the commercial market. Now, imagine what it’s like to navigate the hills and valleys of the business without any formal knowledge and licensing in real estate.

You wouldn’t perform surgery on yourself. Why would you consider buying property without the right experience and certifications under your belt, through buyer representation?

The Slippery Slope of Due Diligence Is Best Left to Those Who Hike It Every Day

For the novice in real estate, negotiations don’t start and end when all parties fully execute the purchase contract. It’s a step-by-step roadmap that is often dotted with traps. Some can be anticipated while others come about by surprise. A well-crafted letter of intent can pique the interest of a seller. It can spur a conversation between listing and buyer brokers. This convo can reveal hot points that shape the way the offer will be written. But if you were a buyer without representation, you’d never know what you missed.

The intricacies of a commercial real estate transaction can be arduous … especially during the due diligence process. Some of what it entails includes:

  • Site research about property use and other history
  • Why the seller wants to sell
  • Pertinent details about the area
  • Recent city code changes that affect property condition
  • Potential deferred maintenance or ADA guidelines unmet
  • Environmental hazards
  • Zoning and difficulty in obtaining a variance if needed
  • Buzz on the street amongst other brokers
  • Private and municipal developments and redevelopments that could affect value, foot traffic and ease of ingress/egress
  • Current market value
  • Current market rents
  • Proof of rent rolls, cap rates, net operating income, and operating costs

Do you really want to do this solo?

Most Common Misunderstandings, Errors and Overlooks in Commercial Transactions

As long as you’re probably questioning your ability to enter into a commercial property purchase without qualified representation, here’s a list of other reasons to remove any doubt.

5 Common Mistakes in Commercial Property Purchases:

  1. Underestimating cost of ownership
  2. Negligence in performing per contract
  3. Weak knowledge of competitors (location, location, location)
  4. Glossing over details that can cost you
  5. Inspecting property with verified, licensed, bonded third-party resources

Let’s take a moment to dive into No. 4 noted above, which is all encompassing. In a hot market, when properties fairly priced are hard to come by, haste in securing property can lead to errors in judgment and overlooking clues of issues on the horizon.

As a buyer, are you ready, willing and able to complete the transaction? Unrepresented commercial real estate investors can find themselves in a quandary should they use the inspection services from vendors that don’t have clearance or aren’t deemed as approved vendors from their lender. A buyer broker who’s on your side will know the questions to ask a lender before you spend any money on inspections.

In addition, seasoned commercial brokers will review a closing statement and know what to look for in the numbers. They can check for duplication in fees, overcharges and other inadvertent oversights that can increase the buyer’s cash-to-close.

What Do You Mean There’s No Code of Ethics in Commercial Real Estate?

As daunting as this may sound, there is no formal code of ethics for commercial real estate brokers. Hhhmmm … how do you deal with that and have a chance at getting the commercial property you want at the price, terms and conditions desired?

The Truth About Getting a Better Deal By Not Paying Buyer Broker Commissions

Here’s the biggest sticking point for business owners and investors looking to buy office, retail, industrial, land or multi-family property in Arizona without the use of a commercial broker working on their behalf: the money.

If you need to reread all the information provided in this article up to this point, please do. Take it all in. These, among other reasons, are why an un- or under-represented buyer is in a vulnerable position when making an offer on a property.

If you’re considering this course of action as a means to save the 3 percent (give or take) in commissions that go to the buyer broker, here’s the reality of how that “savings” breaks down:

  • Listing broker will convert the buyer commission into an increase in Seller’s net proceeds.
  • Listing broker will increase their own commission.
  • The broker’s fiduciary responsibility is to the Seller not the buyer, which can then:
    • Compromise disclosure of material facts or defects.
    • Compromise the due diligence and inspection process.
    • Misrepresent at any point in the transaction.
    • Compromise negotiations, not in best interest of buyer.

Experience is the greatest tutorial in commercial real estate. You can’t get a how-to online and have the adequate knowledge and protections that come from seasoned, local professionals working diligently on your behalf. It’s what you’ll find at COBE Real Estate.

Consult a Local Leader in Commercial Brokerage

What Does the Boom in Arizona Multi-Family Housing Say About Where We’re Headed?

It can be a tad confusing. Looking at national news stories about the real estate market as a whole, and making a wise decision about when and where to invest can be daunting. While understanding where the United States is going with respect to financial markets (globally speaking, as well), it’s important to map out a strategy for buying, holding and selling commercial property. Here’s why. The recent boom in Arizona multi-family housing provides eye-opening indicators.

The West Coast May Not Miss the Ocean

Turns out that California residents, business owners and residents are moving out of the Golden State in record numbers. In fact, a top relocation landing point is Phoenix. It isn’t just about the location, moderate weather (except for the summers) and the cost-friendly quality of life. Investors that have long benefited from the high rent rates and exorbitant property values in California are vying for better options, and Arizona real estate is luring them.

Current Administration Put a Cap on Tax Benefits, Affecting Pricier Markets

Owning real estate in Los Angeles, San Jose and San Francisco (just to name a few) isn’t as noteworthy as before. New property tax guidelines are in effect and property owners will finally see the reality that comes with them during this year’s tax filing. Because the maximum allowable deduction for property taxes is now $10,000 and mortgage interest deductions are capped at $750,000 mortgage amounts (for primary and second homes), consumers are rethinking homeownership.

California Multi-Family Property Owners Have a New Nemesis: Prop 10

After years of winning numbers (both in property values and vacancy rates), landlords, equity firms, residential developers and property managers may be seeing the end of a golden era. This month, California commercial property owners and their tenants have the legal forum to air their frustration out at the voting booth. Proposition 10 revisits the Costa-Hawkins Act of 1995, which limited rent control. Property owners benefited while tenants had to accept escalating rent rates. Prop 10, should it pass, will put local municipalities at the helm of deciding where and when rent control comes into play.

The effects of the proposed measure are already widespread. It goes beyond apartment and multiple dwelling owners. The panic surfaced into commercial office owners, as well. Cap rates on commercial in California have dropped, sending investors into “sellmode” while they eye other states to identify properties to purchase before their 1031-Exchange deadlines hit.

Arizona and many cities in the Phoenix metro area are the happy recipients of this real estate migration. But do we have enough supply to meet the forging demand?

When Supply and Demand Are at Odds, Arizona Boomtowns Rise

The National Multifamily Housing Council and National Apartment Association collectively examined the issue, formulating a study that would help distinguish current need, as well as short- and long-term forecasts. Their numbers show a deficit, with 150,302 new apartments needed in greater Phoenix by 2030. That is a 38 percent increase over where the local market sat at the end of 2017.

To break the numbers down deeper, here’s a look at rental and occupancy rates from last year, second quarter.

The following bulleted list should be made into an image please.

  • Class A rent rates – 8.7% increase
  • Classes B rent rates – 6% increase
  • Class C rent rates – 7% increase
  • Occupancy was at 95%

If you’re shuddering at the thought that these market signs look familiar (the horror of revisiting 2008), we’re not the same ol’ Phoenix. Even though our property values have gone up substantially in the last decade, consider where they came from – the bust. In fact, property values are just touching on the height-of-the-bubble pricing, but again, it’s been 10 years since then.

We’re Not Just Made of Resorts and Sports Anymore

Phoenix is a hot market for myriad reasons. Sure, we’re still a destination point for business conferences, conventions, sports, shopping and getting away from everywhere else. We’ve had a decade to think long and hard about how the downturn happened and how to avoid it again.

The Valley of the Sun Has Grown Up

Investing in multi-family and commercial real estate in Phoenix, Gilbert, Mesa, Tempe, Chandler and Scottsdale has led to numerous accolades:

  1. We’re Number 3 in the U.S. for tech industry jobs, according to Money magazine.
  2. New jobs are being created at twice the rate of U.S. overall.
  3. Phoenix metro ranks Number 5 for U.S. cities’ population.
  4. Real estate price points remain relatively low.

The above-referenced points play well into office, retail and industrial markets, as real estate is a cross-connective supply chain of sorts.

For multi-family property owners and those who buy and hold single-family residential, there is a different phenomenon that may have been born, in part, during the economic downturn of the past. And from it, a mentality supported by an odd mix of fear, reality and a desire to live in the moment more than ever before.

The Cultural Shift Behind the Arizona Multi-Family Housing Surge

Talk to a millennial, and even some baby boomers, about personal stability through real estate and you’ll more than likely get a gaff or a snicker. They remember firsthand what it was like to watch a 401K trickle down to less-than-retirement worthy or to give property back to the bank. For some, it’s not easy to shake off and start over.

Many baby boomers are cashing in to any equity they have and living more amongst the masses. They are resurging as multi-family tenants, living the dream of greater amenities without the responsibilities attached. Large, urban sprawls of mid- and high-rise communities are dotting the downtown Phoenix skyline.

Millennials come to multi-family living through a mix of no-where-else-to-go or wouldn’t-have-it-any-other-way. Reasons behind the reluctance to own aren’t all financial, though overbearing student debt is a leading cause.

Multi-Family Rentals Are Attractive:

  • More bells and whistles for the money
  • Greater sense of community
  • Easier commute to work
  • More affordable
  • Turn-key living
  • Less responsibility
  • More freedom

Best Places to Rent and Live in Arizona

Recently, WalletHub compiled data from cities coast to coast, reviewing factors that gauge decisions made by renters that affect how and why they choose to live where they live. From this, the findings dictate specific rankings, such as rental market and affordability, quality of life, and overall assessment of all factors, with “1” being the best, and so forth.

Here’s how our residential tenants rank many of our local areas:

Overall Best Places to Rent in the United States:

  • #1 – Scottsdale
  • #2 – Peoria
  • #3 – Chandler
  • #4 – Gilbert
  • #9 – Mesa
  • #10 – Tempe

Best in Affordability:

  • #7 – Gilbert

Best Quality of Life:

  • #1 – Scottsdale
  • #2 – Peoria
  • #3 – Chandler
  • #9 – Gilbert

Follow the transportation arteries in these cities and wherever municipal monies are increasing infrastructure and further development: That’s the sweet spot for commercial investment.

Has the Real Estate Gravy Train Stopped in the Tracks of 2018?

Permits for new construction have eased and 2018 is projected to take a step back on the multi-family frenzy. Perhaps it’s a move to prevent oversaturation, though the numbers don’t justify the caution. But millennials will pay off their debt someday and settle down with their two dogs, maybe a significant other, and children? A little later than former generations, but it will come. Until then, to the multi-family property owners go the spoils.

Ask About Phoenix Multi-Family Opportunities

Schedule a Consultation Today

What Makes Land a Good Investment?

This entry was posted in Commercial Land and tagged , on by .

Factors to Consider when Purchasing Land

By Josh Brimhall

I was raised in a family that taught me to appreciate not only the beauty of the world we live in, but also the value of a raw piece of Land.  Most people see a parcel and don’t think much of it because, after all, there is land all around us. Why would it be special?

Some people aren’t aware of the superior benefits that come with purchasing land.  The simplicity and stability that comes with owning the right piece of land can far outweigh the myriad of problems that can to come up with other types of real estate. Land is a stable, safe place to invest and should be thought of as a secure long term asset that can surmount market trends.

Not all mark-twain-quote-buy-land-theyre-not-making-it-anymore-e1436949051801land is equal however.  There are a variety of factors that can positively or negatively affect the value of a piece of property. When considering a land purchase and whether it is the right investment for you, it is best to consider the following:


Zoning:

There are multiple Zoning Districts, the most common being Commercial, Residential, Industrial and Resource. The Zoning Ordinances dictate what uses are allowed in each district, or more notably, what is prohibited in a zone.  It is extremely important to understand what a property can be used for, and what the best use of the property is. With this knowledge you can quickly determine whether it will fit your needs.

Utilities:

Whether you intend to develop the property yourself, or market the property to a developer, it is important to understand what limitations you may have.  If a property does not have access to basic utilities you will lose a massive portion of the property’s usability, marketability, and value.

Growth patterns:

Analyzing the development growth patterns and land availability of an area could play a huge role in the success of your asset. There is likely to be more demand for land as an area expands, which can add value to your investment.

Easements:

Simply put, an easement is the right that someone has to someone else’s real property.  As you can imagine, this information is vital for the access, planning, and development of your property, but is not always apparent to the naked eye.

These factors, along with many others, have the potential to make or break an investment if not discovered and/or taken into serious consideration. Although this may all seem a bit overwhelming land can be an excellent investment and working with an experienced broker is critical to your success.

 

JoshJosh 11-28-16-2ua Brimhall

Senior Advisor

Joshua S. Brimhall joined COBE in 2016 and specializes in Land acquisition and disposition throughout the State of Arizona.  He is a sixth generation Arizona native that has been involved in agriculture growth corridor transactions since 2000 which has translated into a lifelong passion for real estate.  He is a partner at Langley Properties and his expertise in acquiring, operating, developing and marketing properties for his clients shows in his vast market knowledge.  He has worked with home builders, developers, and investors in the every facet of residential lots, working farms, and numerous commercial properties throughout Arizona.  Joshua finds great joy in earning and maintaining long lasting trusting relationships with new clients and investors.

He studied Finance and Spanish at Brigham Young University and Utah Valley University.  Joshua has an Ambitious, energetic personality that motivates him to achieve anything he sets his mind to.  He is an active member of his church and enjoys doing anything recreational with his wife and family.

josh@coberealestate.com
(480) 610-2400
Cell: 480-580-6838

For more a information on available land properties visit : COBE Property Search

 

JUST SOLD: Dana Landing Ste 127-130

This entry was posted in Office and tagged , , on by .

The Offices at Dana Landing

Address: 3048 E Baseline Rd, Bldg 13, Ste 127 -130, Mesa, AZ 85204

  • SOLD: $515,000
  • Buyer: 182nd Place LLC
  • Building Size: 2,500 SF

Closing on February 2, 2017 the 2,500 SF Condo at Dana Landing sold for $515,000. COBE Real Estate Brokers TJ Zaharis and Steve Beck represented the seller in the transaction.

Located in the Offices at Dana Landing just east of Lindsay Rd on E Baseline Rd. Within 1/4 mile of major retail area of Dana Park. Office park has excellent tenant mix of medical and professional offices. Very strong demographic area. Within minutes access of the US-60 Superstition Freeway.

  • 2,500 SF 2-Suite Office Condo
  • Excellent Investment or Owner/User Investment Opportunity
  • Offices at Dana Landing has Excellent Professional/Medical Tenant Mix
  • 1/4 Mile from Major Retail Area of Dana Park
  • Within Minutes Access of US-60 Superstition Freeway

For more information on available properties or how COBE Real Estate can help sell or lease your property contact:

TJ ZAHARIS
VP, Designated Broker
COBE Real Estate

Steve Beck
President & Associate Broker
COBE Real Estate

2152 S Vineyard, Suite 116
Mesa, AZ 85210

(O) 480.610.2400
(F) 480.610.2407

or visit our property search here: COBE Real Estate Property Search

Press Release – Warehouse District Property Leased

This entry was posted in News and tagged , , on by .

December 21, 2015 (Mesa, Arizona)

Phoenix based WebPT and Galvanize, a Denver based technology educational company, will soon be occupying 122,000 SF at 515 E Grant Street in the historic Warehouse District of downtown Phoenix. TJ Zaharis, designated broker for COBE Real Estate, represented the owner of the warehouse, Cowley Cos. Inc. in negotiating the long term leases which will include extensive renovations of the 1946 red brick warehouse.

With an expected move in date of September 2016, the warehouse renovation along with these two highly successful companies as tenants, will create a unique transformation of a former produce distribution facility into a hip and innovative high tech campus.

This will be the 5th move for WebPt, a web-based physical therapy electronic medical records company. They will move across the street from their current warehouse location and double their current space.   “We’re staying with the theme of collaborative, open spaces, with lots of meeting rooms,” said WebPT co-founder and President Heidi Jannenga . “We’re cutting up the floor so you can see the basement level from the main floor (like a reverse loft) and there will also be a mezzanine loft for the three-level office.”

The extensive renovations by Cowley Cos. Inc., will also include construction of an amphitheater, recording studio, restaurant and coffee shop.

“The central location and affordability of the Warehouse District lets us be centrally located and convenient to students,” said Jim Deters, founder and CEO of Galvanize. “We saw the Warehouse District as a place creative people want to be,” Deters said. “We need to be in the middle of that work cluster.”

TJ Zaharis, who represented Cowley Cos in the negotiations, sees the Grant Street Warehouse project as a catalyst for future investment and employment over the next decade. “The Downtown Warehouse District has a vast amount of early last century properties that are perfect for this technology office use.” Zaharis further states, “This announcement is a big win for the Warehouse District that has been years in the making – all the collaboration between the public and private sectors should be celebrated for truly being pioneers in this revitalization.