LEADER◆◆◆BOARD
The Real Estate Media Group Thought Leadership Program
By Ian Ritter, Custom Content Manager
Development Planning
THOUGHT LEADER
Acquisition Strategy
THOUGHT LEADER
Environmental Due Diligence
THOUGHT LEADER
DAVID ZIMMER
President, SIOR
President,
Zimmer Real Estate Cos.
DAN PRYOR
Partner,
Odessa Realty Investments
CHARLES TALLINGER
LEED AP
National Client Manager,
Partner Engineering & Science, Inc.
How can developers best
get projects started in this
economic environment?
If a developer feels bullish about the
market and wants to begin a new project,
it clearly must be well thought out and in
a desirable location. It must be designed
to have broad appeal to a wide variety of
prospective tenants. The developer needs
a substantial balance sheet in order to
obtain financing, and there is probably a
requirement for at least 50% pre-leasing.
Leases should come in between five to
seven years. The other development-team
members must be financially responsible
as well, especially the general contractor.
Given the length of time for the public
approval process and the lead time in
conceiving a project, and with the confidence that we will return to a “new” normal in the next 12 to 24 months, this is
an excellent time to begin thinking
about development in certain markets
around the country.
For more insights into the current market,
visit sior.com
Where should investors be
looking to buy in the coming
year?
Where we are actually seeing real estate
cash flow growth is only in a handful of
the major cities. For example, investors
are going to New York City; San
Francisco; Boston; and Washington, DC.
Unfortunately, the valuations in these cities are very aggressive. We suggest people
look less in these areas. These markets
work for certain investors, such as pension funds with liabilities that they need
to match in the near term. They need a
certain rate; they don’t need high yield.
Their biggest risk expsoure is high cap
rates. But for investors looking for IRRs
in the low-to-high teens, these markets
are going to be a challenge. They should
increase their focus on urban-suburban
or secondary markets. One needs to be
mindful of job growth and demographics. There have to be pro-business government and low tax rates.
Odessa Realty’s new blog, “Commercial
Property Advisor,” is coming to GlobeSt.com
How can firms best handle
environmental due diligence
in this market?
For anyone engaging in hard-asset due
diligence on a transaction, whether it be
the buyer, seller or lender, timing is an
issue that it hasn’t been before. A lot of
people out there are not sellers by
choice. Many of these transactions move
very quickly, and there might be multiple
bids. We often see people engage us after
they’ve already won a deal. Then we get
into a situation where we have three or
four days to do due diligence that normally takes three weeks. That can be
done, but it’s not cost effective and it
puts a lot of stress on everyone involved.
The best thing to do is to reach out to
your consultant as soon as possible. And
previous reports go a long way. These
things will allow us to cut our time in
half. Be proactive and reach out early,
and that will save you a lot of headaches
in the long run.
Read Partner’s blog, “The Science of Real
Estate,” at globest.com/blogs/buildingsciences
The REM Thought Leadership Program extends across our entire media platform (Real Estate Forum, GlobeSt.com and the RealShare Conference Series), providing
expert commentary and business advice from a variety of industry thought leaders. To learn more, visit: www.ALMRealEstateMediaGroup.com/ThoughtLeadership
