Author: PCRestate

What was the best thing that happened to you or your firm in 2014?

As a new firm, founded in October 2013, we have proudly begun to build a solid foundation and reputation as one of the top commercial real estate brokerage and consulting firms on Long Island.

And as one of the “easiest to do business with.”

What was your most notable project, deal, transaction or personal achievement in 2014?

The establishment of Premier Commercial Real Estate and our Website to assist our customers and fellow “Brokerage Partners”, in all aspects of our profession; whether Tenants, Brokers, Owners or purchasers. We believe, more than anything else, “Timing” is the most important and critical dynamic in Commercial Real Estate. And along that line, we are confident that our “Timing” is perfect for creating a unique company that has the skills, talent and professionalism to satisfy todays participants.

What are you looking forward to accomplishing in 2015?

Building upon our recent and substantial successes. We are a highly skilled and experienced, professional organization prepared to support the most complex challenges in a simple and direct fashion.

What are some of your real estate predictions for 2015?

2015 is expected to be another active year for both purchases and leases. We expect interest rates will probably rise a bit, which should act as an additional catalyst for continued strong demand to purchase buildings. In other words, we expect even stronger demand from any purchasers who have been “watching from, and waiting, on the sidelines” as they will realize that continuing to wait may not be in their best interests as rates begin to rise. An “interesting dynamic” that we feel, is likely to occur in the upcoming year. Additionally, we believe strong leasing demand will result in greater challenges for Tenants who will seek our services to assist them in securing space with the greatest value to support their business requirements.

 The New York Real Estate Journal recently sat down with Jeff Jurick, director at Premier Commercial Real Estate, for a question and answer session.

Q. What motivated you to make a professional career change and enter the field of real estate?

A. While building our family business, Fala Direct Marketing, we made the decision to invest in real estate that would house our growing business. During the 80s and 90s, we made investments in our business and real estate which created long-term value. I managed our real estate portfolio as part of our day-to-day business, gaining insight into what matters most to other real estate investors. Since selling our businesses in 2005, I’ve continued to consult in both marketing, while managing our holdings in Melville, NY. During 2008 and 2009, I oversaw the renovation of 80,000 s/f for a new tenant in one of our properties. I enjoyed the experience and it prompted me to consider learning more about real estate and pursuing it as a career.

Q. As the president &CEO of one of the nation’s largest direct mail companies, what types of properties were you managing?

A. Our properties included commercial and industrial space ranging from 10,000 to 150,000 s/f. I worked with the towns that provided favorable incentives for labor programs, as well as sales tax savings on our yearly capital investments in technology and equipment, which were well in the high seven figure range. Suffolk County assisted us with training programs and incentives for hiring and training. At our peak, we had 700 employees. Competition for skilled labor was fierce, so our property selections were based on where we could access the best labor pool.

Q. How does your experience as a president & CEO of a large national organization benefit your real estate clients?

A. My experience leading a multi-office, national organization exposed me to many of their needs. From site identification, production planning, process flow, office and warehouse layouts, to working with the municipalities and utilities, I was intimately involved in the same issues and responsibilities many corporate real estate officers and C-level executives face. One of the most rewarding and highly visible projects I worked on was the partnership between our company, New York State and the Long Island Power Authority (LIPA) in the development of the largest solar system on Long Island – a 1.1 megawatt system which is still up and running on two of our sites today and which saves over 200,000 kHz per site. We saw the clean energy and ability to produce 25% of our own power as a win-win for everyone, and agreed to participate in the program which was funded by our company and the New York State Energy Department under then Governor Pataki’s administration.

Q. Do you believe your former experience gives you a competitive advantage?

A. There’s no doubt that, with 35 years of experience, overseeing four operating business units, I gained extensive knowledge and insight into manufacturing, warehousing, distribution, quality initiatives and much more, allowing me to quickly understand their operations and facility requirements. On the real estate side, I also benefited from building good relationships with other property owners, developers, brokers, as well as a broader network of professionals, all of whom have helped me to continue to succeed in real estate. I learned that surrounding yourself by the right team members is the key to success. I am confident that I have done that here at Premier and through my many relationships.

Q. You were courted by several real estate firms. What made you join Premier?

A. I’ve worked with managing principal Jason Miller since 2005 on projects for our properties. We often talked about starting a new firm some day. Miller, who I believe is one of the best hunters for properties and tenants, introduced me to managing principal Jeff Schwartzberg. When I met Schwartzberg, it was like meeting a “Pro’s Pro.” He listens, asks the right questions and helps me to develop the best course of action for our clients’ needs. He has taught me how to best quickly assess a client’s needs. Since joining the firm in November, a day hasn’t gone by where I haven’t learned something new.

Q. What’s one of the best lessons you’ve learned?

A. I’ve been fortunate to have worked with some of the area’s top brokers on several real estate transactions. They taught me a lot; most importantly, ask the right questions, listen well, plant a new seed every day and have patience.

Q. Since joining Premier, what have been some of the highlights?

A. Among the highlights was securing my first exclusive representation, which came through a friend. Dealing with friends could put more pressure on you, but I turned that into energy to find the right tenants for this particular site. A few months after signing the exclusive agreement, I placed my first leasing tenant of over 17,000 s/f to a long term deal. That was my major highlight to date and I hope many more to follow.

Q. Are you focusing on any particular types of properties and/or target markets?

A. My primary focus has been on industrial properties for sale or lease, medical project development, medical offices, and site location representation.

Q. You are known for being very active in the community. How are you leveraging your community involvement in your real estate career?

A. My wife, Lisa and I share our family’s tradition and role in giving back to the community. Lisa works on projects for The Ronald McDonald House of Long Island and I am still very active as a Trustee for North Shore-LIJ Health System. It’s been an honor and privilege to sit on the NSLIJ board and learn from one of the most talented businessmen in healthcare, Michael Dowling – which I apply in my real estate career, especially when serving physician groups. I am also still active in Children’s Medical Fund of New York (CMF), for which I served as chairman from 1980 to 2003. Through CMF, I have a tremendous network of prominent business leaders. As a member of the Syracuse School of Management Advisory Board, I am able to remain on the leading-edge of new business trends and developments, which gives me additional insight into the needs of the marketplace.

Q. When you are not facilitating real estate deals, how do you spend your off time?

A. Golf has always been a passion of mine. But I really love spending time traveling with my family whenever we can all be together.

Banks are expanding asset-based lending operations – and establishing new ones – as they target new customers that have long been in the sights of specialized finance companies.

After 25 years spent exclusively serving larger corporations, Citibank has expanded its asset-based lending to midsized companies. Short Hills, N.J.-based Investors Bancorp, which operates six Long Island branches, and Manhattan-based Signature Bank, which operates seven Island branches, both launched new asset-based lending operations late last year, while other national lenders – including San Francisco-based Wells Fargo and North Carolina-based Bank of America – are busier than ever with asset-based lending.

Asset-based lending by 35 of the biggest such lenders rose about 9 percent, to more than $200 million, in 2013, up from $183.5 million in 2012, according to the Commercial Finance Association, a Manhattan-based trade group. About 24 percent of the association’s members are banks, while 76 percent are not financial institutions, but “there are many more bank-based, asset-based lenders than there used to be,” according to Neil Seiden, managing director of Port Washington financial adviser Asset Enhancement Solutions.

“A good part of it has to do, I believe, with the recession,” Seiden said, noting asset-based lending gives banks a tool that can be particularly useful during difficult times.

In this type of lending, companies pledge assets against loans, including accounts receivable, inventory, machinery and even real estate. Banks monitor the value of these assets more closely than with a typical loan, making sure the collateral’s value remains and allowing the banks “to do a deal they typically wouldn’t do,” Seiden said.

Investors Bank CEO Kevin Cummings agreed this helps “to broaden Investors’ banking capabilities,” while Signature CEO Joseph DePaolo said asset-based lending “strengthens our product offerings” to private business.

Asset-based lending also provides a nice profit boost over other forms of lending, since these loans typically carry higher interest rates than traditional loans.

“We think from a credit perspective, it’s fundamentally sound,” said David Viggiano, Investors Bank’s senior vice president and head of asset-based lending. “The yields are marginally higher than typical commercial and industrial lending.”

But they also can be more costly for borrowers, who must provide a steady stream of updated financial information.

“There’s more monitoring and reporting to the lender,” Seiden said. “But the additional reporting gives the lender comfort and allows them to extend more credit to the company.”

To that end, asset-based lending requires a certain expertise, which allows lenders to value and track changes in asset values.

“We do a lot of testing and monitoring,” Viggiano noted.

But “generally, assets have proven to be good forms of collateral,” Viggiano added, and while banks make these loans to a wide range of clients, Investors Bank extends many based on inventory and receivables – particularly to manufacturers, service providers and information technology companies.

Investors Bank Senior Vice President Joseph Costanza referenced a Long Island manufacturer that replaced a $13.5-million traditional credit facility with a $19.5-million asset-based loan from another financial institution.

Seiden said he’s seen several clients shift from traditional loans to those based on assets. Banks typically charge more than for conventional lending, he noted, but typically “less than a non-bank lender.”

While an underperforming economy has made asset-based lending more popular, an economic recovery could also lead to greater asset-based demand.

“As the economy becomes more robust, there’s a need for working capital financing,” Viggiano said. “As credit strength improves, there’s greater demand.”

What an interesting question.

If leasing rates are climbing, is that a good thing or a bad thing?

Well, it depends upon whether you are a Landlord with space to rent, or a tenant who is actively seeking to secure new space. Of course, we as a society, have been conditioned to believe rising rental rates are a “bullish” sign as it points towards improved (lower) vacancy rates and an economy that is improving. Remaining consistent with that point of view, clearly we at Premier Commercial Real Estate are very bullish at this point in time. We see continuing signs of economic improvement and positive absorption of previously vacant rental units. And we expect that trend to continue!

So, if you anticipate a need for new or additional space OR if you are nearing the expiration of your current lease, you might want to chat with a real estate professional to jump start the process before prices rise further. Even if your lease has a fair amount of remaining term, there may be considerable benefits in opening discussions with your current landlord “sooner rather than later”.

Alternatively, you may be a buyer who has been waiting for an opportune time to buy? Or an owner who has been thinking about selling but you have been reluctant to do so, in poor market conditions. Hmmm. Interesting….so let’s take a look at these two positions.

Increasingly, property values had bottomed out in the past few years, known as the “post 2008 era”. Of course, 2011 saw signs of improvement which has continued into 2012, 2013 and now, 2014. As confidence levels improved, buyers began to realize that the bottom of the market was reached and prices are on the rise. The combination of historically low Interest rates, which have remained at attractive and inviting levels AND limited inventory (buildings on the market being offered for sale), has created a “dynamic” which has placed upward pressure on pricing. We expect that trend to continue. So, if you are considering purchasing a building, we encourage you NOT to wait much longer as you may miss the boat. Either you may experience rising interest rates or higher prices. Either way, not a good idea to put off your plans much longer, in our view.

As a property owner who had been wanting to sell, but was unhappy with general market conditions, I suggest you consider the following rule of advice that was professed by a very experienced and successful owner/developer that I respect wholeheartedly…..…”sell when you can, not when you have to”. Today, demand for purchasing buildings exceeds supply. That, of course, is a terrific situation for sellers. Some brokers refer to that as a “Sellers Market”. Not necessarily so, in our view, but certainly a good situation and opportune time to “go to market”. Think about doing so….this is the time.

The Pendulum has swung………..do you really want to wait until it swings back?

Commercial real estate transactions are typically more complex than residential transactions. Usually, they involve large sums of money and increased liability for both parties. Unlike a residential transaction where the law provides basic consumer protection for the buyer, the law takes a neutral approach to its treatment of commercial transactions.

Courts expect that both parties to commercial real estate transactions are sophisticated enough to understand the contract terms. Therefore, they will hold the parties to the terms of any sales agreement – absent illegality or fraud. For these reasons and others, a buyer and seller of commercial real estate should both have professional help closing the deal.

Property Valuation

A large part of buying and selling commercial real estate is the process of determining a value for the property. By nature, real estate is a unique product that may have no exact sales comparison. For example, a buyer may be looking to purchase a movie theater in an area where there is no other theater that has sold to establish a market for the property.

Further, commercial property often has an income component that adds to the value of the property. Commercial property typically has a current and future income stream that must be factored in to the sales price. Buyers and sellers will hire a professional valuation expert to set a price for the property.

Sales Negotiation and Due Diligence

Buying and selling commercial real estate is typically subject to intense negotiation. Commercial buyers cannot fall back on consumer protection laws if an aspect of the deal ends up not being fair. Buyers are expected to conduct due diligence. In other words, they must investigate the transaction thoroughly before making a decision.

During the sales negotiation, the buyer has leeway to determine facts that impact the value of the property and attempt to gain concessions from the seller to offset any problems. This negotiation can ultimately impact your bottom line and whether the commercial asset makes or loses you money.

Assuming Liability

Another important aspect of buying and selling commercial real estate is the potential transfer of legal liability to the new owner. If commercial property is found to violate certain laws, it can be subject to government regulation. For example, once it is determined that a commercial property is the site of an environmental hazard, the current owner must clean it up – regardless of who created the hazard.

Environmental clean-up can cost more than the property itself is worth. The process of buying and selling commercial real estate requires various types of professional assessments to ensure that the new buyer is not taking on an eventual liability.

Loss of Liquidity

Commercial real estate transactions typically tie up large sums of liquid assets. In a down market, owners can have a hard time selling the property. Owners can have trouble with tenants and vacancy rates that affect their ability to make financing payments on the property.

If payments to the lender fall behind, commercial property is subject to foreclosure. Typically, commercial real estate purchases come with a lot of long-term risk. This risk must be realistically evaluated prior to making the purchase.

A Commercial Real Estate Lawyer Can Help

The law surrounding the purchase and sale of commercial reseal estate is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a lawyer who deals in commercial real estate.

Elected officials and developers will join Allstate Insurance executives in cutting the ribbon Monday on the company’s new 88,000-square-foot regional headquarters in Hauppauge.

The new building at 898 Veterans Memorial Highway, a project of Colin Development and the property’s landlord Hauppauge Office Park Associates, will hold more than 450 Allstate employees currently spread out over four separate Hauppauge locations.

The $23-million project received property tax abatement of $1.2 million, sales tax benefits of $1.1 million and mortgage recording tax incentives worth $178,500 through the Town of Islip Industrial Development Agency.

Among those expected to attend the ribbon cutting ceremony next week are Suffolk County Executive Steve Bellone, Islip Supervisor Tom Croci, Colin Development President Fred Colin and its COO Ed Glackin.