Charlotte NC Commercial - Blog #commercial real estate investing

Analyzing Office Building Vacancies

Tue, 01 Sep 2026 08:43:00 -0400

Analyzing Office Building Vacancies

Office buildings are excellent commercial properties to own. One of the most important jobs of a leasing agent for a building with available space is to analyze other buildings to see if any tenant could be induced to move.

Newer buildings may fill up at the expense of older buildings. Since new buildings cost more to build than the older ones, rents may be higher. The actual dollars-per-square-foot costs must be compared, along with other benefits that the tenant may receive, before a final decision is made by the tenant on staying or moving. Here are some of the items for comparison;

What is the time factor for employees at the old location? In a business’ expansion at the old location, they may have expanded to different floors or to different buildings as more space was needed. There may be a big loss in employee time due to the inconvenient layout.
In a similar idea, the tenant may be planning an expansion in the next few years, which will make it necessary to rent space in the old location at then-current rentals, raising the average rental per square foot for the tenant’s entire space, in a less than adequate location.
Don’t assume that the new space rentals are not competitive. Cost-of-living clauses in the tenant’s existing lease may have escalated the rent level up to the costs in the newer, more modern building.
The newer building represents more efficient design, better and newer lighting, modern in every way. The intangible improvements in employee morale and efficiency might overcome any slight difference in dollar-costs per month.
Finally, a change in location to a more, prestigious building in a better part of the community can contribute to the reputation of the tenant–and ultimately to the profitability of the business.
The tenants who could be good new tenants at the new location will usually not be aware of all of the benefits of a move until they are contacted and are given the opportunity to make the comparison.

Creative Management-Renting To The Right Tenant

Tue, 01 Sep 2026 08:41:00 -0400

Creative Management-Renting To The Right Tenant

Property managers must always think about the type of tenant that is most likely to reside in that particular building. For example, when apartments in a project rent for $16,000 to $24,000 per year, tenants will be concerned primarily with quality shelter. This means a safe, clean, efficient building but without a lot of frills and amenities.

On the other hand, if the apartments will rent for $35,000 to $45,000 per year, or more, tenants typically expect and demand much more than just shelter. These tenants want a luxurious life-style, and that means the building should contain a health club, a swimming pool, a private park, and similar conveniences.

In the lower priced units, investors will concentrate more on the basic design, quality and layout of each apartment and on the reliability of such things as the elevator service and good maintenance. For common areas, the workings of the lobby intercom system, the location of the mailboxes, and safety, for example, are prime considerations. However, at the more fully equipped building, the investor faces increased costs of construction and maintenance of areas that produce not direct rental income. If these life-style areas become the slightest bit shabby, it can lead to tenant dissatisfaction and vacancy. The well-equipped, well-maintained building usually has a very low vacancy rate. In fact, it often has a waiting list of prospective tenants that assures full occupancy for a long time in the future–a good sign for investors.

Shared Space Offices
With the revolution in communications, building owners must keep up with the changing needs of the corporate tenant. Often the larger, well-organized businesses do not need office space that was necessary just a few years ago. Computers, faxes and e-mail have substituted for leased office space. Office personal are working from home or a small office near their home and coming into the office once in a while for a meeting.

Tenants in an office suite are offered a private office within the suite that has a receptionist, secretarial help, conference rooms and other amenities. This can be a big saving for small space users or users who need a small office for only a short period of time.

Another user is from the large corporation that needs small branch offices in different parts of the country. Other users might be individuals who need a private space for investment or other work activities as well as professionals such as attorneys or accountants who work primarily away from their offices.

The concept of shared space can be used by companies that have excess space that cannot be leased in its entirety. The company’s existing facilities such as copier rooms, computer rooms, cafeterias already are available. Any income from this type of shared space can be nearly 100% profit.

If this is space that is leased by the company rather than owned space, the lease must be reviewed carefully to see if a sublease could violate the sublease/assignment clause of the lease.

Determining The Market Value With Appraisal

Tue, 01 Sep 2026 08:40:00 -0400

Determining The Market Value With Appraisal

The purpose of any real estate appraisal is to determine the market value of the property being appraised. The handbook of the Appraisal Institute defines market value as;

“The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (a) buyer and seller are typically motivated: (b) both parties are well informed or well advised, and each acting in what he considers his own best interest; (c) a reasonable time is allowed for exposure in the open market; (d) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (e) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”

If we put this another way, the value of a particular property is made up of the future benefits that the owner of the property can expect to receive from rental or other income. In determining the future benefits that an owner can receive from a property, the current use of the property is considered, and all other uses that it may be capable of in the foreseeable future. As an example, a property that is being used as farmland could be usable for a residential subdivision in a few years, but later might be usable as commercial or industrial sites.

Decision Making
Knowing the value of property is a vital part of the decision-making process of all buyers, sellers and users of real estate. Therefore, valuation is an integral part of all real estate activity. It is needed for your personal planning. Also, zoning, community planning, taxation require a knowledge and use of appraisal.
If the property is held, or will be held for investment purposes (and most are, even small residential properties) an additional question might be, “What will it be worth in the future?”

An Appraisal is Needed
There can never be perfectly sure answers, but the closest that anyone can come to it is by the appraisal from a professional appraiser. This trained specialist can give a good accurate estimate of a property’s value.

When we refer to “Market Value” we have to remember that it is not necessarily the same as market price. Market price represents the actual dollar amount put on a property by a buyer and a seller at the time of a negotiated transaction. This might be higher or lower than the value an individual appraiser might place on the property. This difference might be due to differences of opinion, or it may be that the property, to this particular buyer or seller, has a greater or lesser value because of some special consideration, such as financing that the buyer can obtain or the need of a seller to raise cash quickly.

While the owner or a prospective buyer can order an appraisal at any time, there are times when it is always required. Here are some of the recommended times to get an appraisal;

Purchase and sale
To determine whether a proposed purchase or sale is at a fair price or competitive price. The value fixed by the appraiser may strongly affect the final price, but the financing and tax aspects of the overall transaction may be such that a buyer might offer more or a seller could be willing to take less for the property.
Exchange
Appraisals of each of the properties in a planned exchange should be made if the exchange will have prices on the properties (rather than just equity for equity). A good estimate of value on each will assist everyone involved to establish equities in the priced exchange.
Finance
Always when a new loan is required for a new buyer. Often, the lender will appraise the property conservatively and slightly lower than the new buyer. This can be understandable when the buyer may be prepared to put up as little as 10% of the value, and the lender is being asked to put up all or most of the balance of the purchase price.
Lease
Before entering into a long-term lease, both the lessor and lessee each may need a very accurate idea of the value. This might be a basis for negotiation by either person, to determine if the proposed lease is for a fair rental amount.
Remodel
What if a renovation or modernization of an older building is being planned? The appraisal may be requested to be made on the basis of the property as it is now and as it will be when the renovation is completed. The purpose of the appraisal would be to determine if the additional income would be sufficient to amortize the capital investment and also return a profit to the owner.
For insurance purposes
It may be important to establish replacement costs, less the physical depreciation, to determine how much fire and casualty insurance should be purchased to adequately cover the property. An appraisal, updated on a regular basis, may also be needed to establish proof of loss or to establish the basis for settlement in cases of partial or total loss under insurance contracts.
For condemnation
To estimate damages that are adequate, but not in excess of fair compensation, when negotiating a condemnation award, or seeking the determination of fair compensation for a condemned property in court.
For property tax purposes
To make a proper assessment for local real estate taxes, or to review and contest an assessment to reduce real estate taxes.
Income tax liability
It may be necessary to appraise a property to determine the liability for income taxes in a taxable exchange, or in a liquidation of a corporation owning real estate.
For estate tax purposes
To determine inheritance and estate tax liability when real estate was owned by a decedent at the time of his or her death.
For gift tax
To determine the tax liability when real estate is the taxable gift.
Syndication
As a basis for offering investors an interest in real estate through syndication or participation in a corporation or real estate investment trust.

Commercial Investment Terminology

Tue, 01 Sep 2026 08:39:00 -0400

Commercial Investment Terminology

Getting familiar with real estate terminology can help investors ask better questions and communicate more effectively. It can also make it easier to go through the acquisition process with confidence. Knowing a few key commercial real estate terms can make it easier to compare investment opportunities.

Terms like cap rate, NOI, DSCR, LTV often influence pricing, financing and risk. Vacancy rates, lease structures, and value-add strategies can shape future cash flow.

Many commercial real estate terms work together, so it helps to look at the big picture rather than focus on a single term and can lead to more productive communication with brokers, lenders, and advisors. Terms often appear in listings, lender documents, and other documents and are not always explained in plan English. Understanding a few of these real estate terms can help investors evaluate deals with more confidence.

Whether you’re investing in your first commercial real estate opportunity or refreshing your knowledge, the following list covers a few of the most often used commercial real estate terms for 2026.

Net Operating Income. NOI is the income a property generates after operating expenses are paid but before debt payments and taxes.
Cap Rate. Cap rate is short for capitalization rate. It measures a property’s annual return based on its Net Operating Income (NOI).
Loan-to-value Ratio. LTV measures the relationship between a loan amount and a property’s value. For example, if a lender finances 75% of a property’s purchase price, the loan has a 75% LTV. Lenders use LTV to evaluate leverage and risk.
Debt Service Coverage Ratio. DSCR compares a property’s NOI (Net Operating Income) to its loan payments. Lenders use this to determine whether a property generates enough income to cover its debt obligations.
Triple Net Lease. NNN lease requires tenants to pay base rent plus certain property expenses like property taxes, insurance, and maintenance.
1031 Exchange. A 1031 exchange is a tax-deferred, not tax-free, exchange of properties. A 1031 exchange allows a real estate investor to defer the capital gains tax by reinvesting the proceeds from the sale of one investment property into another “like kind” property. Specific tax rules apply. Because tax rules can be complex, investors need to work closely with qualified tax professionals and legal advisors.

The Management-Investor Conference

Sat, 01 Aug 2026 14:47:00 -0400

The Management-Investor Conference

Property owners own investment real estate for profit. With proper management, they can earn a good return monthly from one property or a portfolio of properties. However, a certain property may have been acquired for an upgrade, to bring in income later or sell for a capital gain. Either way, the investment must be managed, considered, and watched at all times. If the owner and property manager are taking care of business, there may be ways to increase the income, or the value.

Owners of portfolios of stocks and bonds meet with or call their stock broker often. It makes sense for real estate investors also to meet with their real estate investment representative and property manager often, perhaps quarterly. Exchanging ideas with the professionals who have the daily pulse of the real estate market can be profitable. At each meeting, the investor can plan on finding out the current market conditions that will have an effect on equities that are owned or that can be acquired.

In many cases, the owner’s investment representative is also the property manager. If not, the investment consultant and property manager should always meet with the owner together since both share the responsibility for improving the owner’s position.

The Conference

Planning any professional meeting will make it more productive. To keep a business meeting on track and save everyone time, notes should be made in advance by the property portfolio owner or the broker. The following are some examples of questions or subjects that might be discussed at each meeting; or some at least once a year:

Are there ways that the management of the properties be improved? Can any current expenses be decreased?

How do our rent levels compare with the others in the immediate area?

Have there been collection problems–are all rents current at this time?

Is the current maintenance of the properties up to the best standards?

Has the planning department approved any zoning variances in the areas of my properties? Would it enhance the value of any property in the portfolio to apply for a change in zoning?

Have any new construction projects been started nearby? What are they and what effect might they have on my properties in the area?

Is the present use of the properties the highest and best use?

Could improvements be made that would increase the income?

Are we attracting the kind of tenants that should be in this type of property?

Are any properties of the type we own on the market at this time in this immediate area?

Would there be any benefit in a refinance of any properties at this time?

Are any properties in this portfolio suitable for a condo or co-op conversion? If so, should we do the conversion or sell the property to an expert in that field?

Can we offer any property for syndication? How would we handle it?

Which of these properties has the best set of benefits for the present owner? Which has the least benefits?

Which of the properties in the portfolio would be the most desirable to dispose of at this time?

Goals for Acquisition

When each of the points in the meeting has been covered, both the property owner and his/her management and investment representatives should have a much better picture of the property portfolio and what should be accomplished. At this time, maybe each property owned should be graded in order of the most desirable to the least desirable to continue holding. Then the answer to item #15 will be apparent.

That answer may be an important result of the meeting. The goal should be set for the sale or exchange of the least productive property (to this owner) in the list of real estate owned. This result is very satisfying since the “weakest” property is identified and the goal is set to use its equity to acquire a certain type of real estate that will fit better into this owner’s portfolio.

This gives a result for the owner that is seldom achieved by many investment real estate owners. At all times, there is a definite effort being made by a top real estate management and investment team to improve the owner’s position.

Basic Strategies In Choosing Investment Properties

Wed, 01 Jul 2026 10:45:00 -0400

Basic Strategies In Choosing Investment Properties

No single property can fit all of the investment goals and rules an investor has set. Even if the investor tried to build a property to specifications, he would find some things “not quite right”. The investor is, therefore, wise to anticipate problems and have some basic strategies for dealing with them. Here are some suggestions to help the investor devise other approaches to meet special needs:

Energy saving potential is more important than style or appearance. Given increasing shortages of natural gas and rising prices of fuel, energy saving has become paramount for successful real estate investing.

Location is usually more important than the buildings on the lot. You can always make repairs and improvements to a building, but you can’t do anything to change the qualities of a location.
An older property is preferable to a new property if you want to be reasonably certain about income and cost potentials and are seeking the most rentable space for each investment dollar.
Good workmanship is preferable to good materials if you have to make a choice. Workmanship can overcome the defects of poor materials, but you would pay constantly for poor workmanship. Hopefully, you can avoid this kind of choice because poor workmanship and poor materials mean extra costs and continuing problems.
Low down payments are preferable because they increase the earning rates on your equity. However, be sure you have a financial reserve in case the property does not produce enough net income at times to pay for the financing.
Plain properties without distinctive architecture or other characteristics are the most durable investments. Luxuries or extras may make the property look better, but they do not improve the income potential.
In a given market, smaller units will usually be more saleable, easier to manage, and easier to keep rented in changing markets. Any apartment property with more than 20 units will require professional management.
Size of the property and units within the property should fit the average for the market. Smaller or larger units often present problems that result in lower prices and higher costs.
Use experts when in doubt. The costs of using appraisers, builders, lenders, and lawyers are considerably less than those associated with making mistakes. If your investment cannot produce enough income to let you pay for expert help, then it may be the wrong investment.
Convertibility. The property should lend itself to changes as the market changes so that you can always maximize the rent potential.
Flexibility. The space in the property should be easily changed to meet different user needs at minimal costs of time and money.
Specifying repairs to be made before buying is a safer, less costly financial strategy. Estimate them ahead of time, thereby being able to negotiate for a lower price.
Financing trade-offs. To keep loan payments low, negotiate for long-term payout bases at equivalent rates. Include in your estimates the initial costs of the loan and the repayment costs and privileges.

A Comfort Zone in Loans and Investments

Wed, 01 Jul 2026 10:45:00 -0400

A Comfort Zone in Loans and Investments

Each investor has a “comfort zone” about loans. The leverage seeker wants the largest loan that is practical. Others may have experience or training that calls for no loans at all. They must have the property free and clear.

Most of us have a loan comfort zone somewhere between these extremes. Nearly everyone accepts the idea of some sort of mortgage. The use of OPM (other people’s money) makes sense.

The comfort in loans may affect the type of investment. Many of these “free and clear” owners prefer land as the investment. They want no improvements on it, just the bare land.

Here’s some of the benefits of investing in unimproved land. These can make a lot of sense.

There are no tenant problems. There may be a simple lease for farming or grazing, but only limited contacts between lessor and lessee. Often, the investment land lies unused.
A well-chosen land investment can result in huge profits. We have all heard stories of owners who have purchased land for just a few dollars an acre, then later sold for millions! (The key is “well-chosen”).
Land is a secure investment. Even in the worst economic situations, the land is still there. Value can fluctuate, but the investment will not disappear.
Land represents wealth. It can be a quick source of cash for an owner to use for another investment. Land looks good on a financial statement. It adds permanence and stability to an applicant for loans or for a line of credit.

Who Buys Commercial Property

Wed, 01 Jul 2026 10:44:00 -0400

Who Buys Commercial Property

When we represent a seller of a commercial property, we try to determine, as soon as possible in the marketing process, what type of buyer is most likely to be interested in this particular property. We then focus the main appeal on those elements that are most important to that type of buyer.

Types of Buyers

Normally there are three types of buyers for commercial property:

Investors, who seek an income-producing investment in which to place their surplus funds.
Speculators, who buy so they can sell when the market goes up.
Users, who seek sites for their businesses.

The seller’s agent will appeal to the special interests of each of the three types of buyers. Advertising and marketing materials should develop each appeal and furnish supporting facts, realistic projections, and professional information.

The Appeal

For the primarily income-seeking buyers, we focus on the financial data, concentrating on rentals from the property, terms of the leases, maintenance charges, mortgage information, and net income. We will also demonstrate the probability of income growth from the property.

For the speculator-buyer, the stress is on the potential for a resale profit. We might show that the property is in the line of future development (new public transportation is planned or being built, or there are other newly built or renovated commercial properties as neighbors). Demonstrate that the property is in a growing, vital locale.

Since income is of only a secondary interest to the speculator-buyer, we’ll go no further than the current income status. The focus will be on the potential for profitable resale.

The location will be of greatest interest to the user-buyer. Is it right for the user’s business? Is the building in good physical condition, or must it first be remodeled, improved, or up-dated? We must demonstrate the wealth and habits of the surrounding population.

With each type of potential buyer, the marketing effort will focus where it is most likely to produce a prompt, successful sale.

When you are ready to sell your investment property or are in the market to increase your investment portfolio, our company can help you by giving advice and suggestions on what is available on the market today or help you with setting the sale price for a satisfying profit on the property that you now own.

Benefits In Workplace Changes

Thu, 07 May 2026 10:45:32 -0400

Benefits In Workplace Changes

Working from home is now becoming a trend. It is remaking how we work, the tools we use for that work, how we communicate at work, the hours we work and even how we dress for work.

A major benefit to the employer is being able to downsize on square footage of space for the company. A major benefit to the worker is that they can buy a home outside of the business area in a suburb or at an ocean resort with the great locations that they desire and not have to think about what the daily commute will be.

Employees who work from home have changed some sectors of commercial real estate, both in terms of how spaces are designed, how many square feet the company needs for workers and where the company is located.

Many companies have downsized their office space to save money by allowing or even encouraging employees to work from home. What was born from necessity during the last recession has turned out to have greater benefits than lower rent on the commercial office.

It has been reported that employees that work from home are more productive, with less distractions, and seem more satisfied in general.

If the same employees were in the office, there are coffee breaks, socializing and interruptions through out the day, that is not happening at the home office. The employee can work in any kind of clothes that they desire, no longer have to spend money on lunches, gasoline, parking and the day to day expenses that occur when commuting to an office.

This type of work has also been a boon for parents who need more flexibility in their schedule to accommodate child care, school events and sick kids. Sometimes it can be a problem to work at home with small children. But these are small problems that can be solved by balancing work and personal live

Recruiting the best talent, employers find that the work at home concept is a major perk.

Remote work does have its share of problems. Some people dislike working in the same place where they live and relax, and it can be difficult to create and maintain a company environment without co-workers being in the same room. But the concept of not commuting on a crowed bus or slow and go traffic is a major benefits.

Above all, buying a home in a more desirable location is a great plus for the employee and being able to downsize on square footage is a major plus for the company.

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The Future Of Commercial Real Estate Investments

Thu, 07 May 2026 10:45:20 -0400

The Future Of Commercial Real EstateInvestments

Which way is the right way in real estate investments in 2026? What is the future in these investments? An answer to these questions can be an interview with an interested professional real estate broker who can act as a real estate investment counselor. Each prospective investor can be interviewed in depth to find out specific needs in an income property. At the same time their needs are being evaluated, the broker will also communicate what benefits are available in various properties and how to identify them.

Some considerations should be given to the risk of loss for each age bracket of investor. Should an older investor purchase a property with the smallest down payment and highest leverage position? This will limit cash flow and may cause the property to have a “negative” cash flow. Is this what they want–or do they want cash flow from the property?

How about the younger investors? Are their objectives for long-range estate building or for current cash flow? Would they be more willing to take chances with a marginal investment that might bring big returns later?

Each investor must decide these answers for himself or herself. But, only after enough information has been furnished so that an intelligent decision can be made.

When a new investor has a better idea of the type of property that will do the right job for him/her, or them, then and only then should they be exposed to the market place and shown specific properties. Now the investor or investors can evaluate the various benefits and risks for the information shown on each property and apply the information to their own situation.

What is right for you? A new rental unit? A strip center? A one hundred-unit apartment property? . Real estate counseling can show you that you can choose which is right for you and know the reasons why it is right!

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