Geodata, MappSnap and Industrial Real Estate

Geodata, MappSnap and Industrial Real Estate

Posted on by Jim Klein

Geodata is widely used in many commercial internet applications like Yelp, Google Maps, Twitter, Foursquare and Factual. Many of these web services match your phone’s location to their own mapping programs. In most cases location data is an aid to sell goods and services. I use the same relationship between point data and the connected internet to find more real estate deals using MappSnap.


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Winter News 2016 – Industrial Real Estate Profits

Winter News 2016 – Industrial Real Estate Profits

Posted on by Jim Klein

development Deal Strategy

The current cycle is being propelled by three major conditions: Space Scarcity, Capital Markets Pressure and Rent Surge. Market dynamics are still very favorable for development and will only be disrupted if demand begins to weaken. Otherwise, strong fundamentals are the prevalent condition in most major U.S. markets.
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Looking at US Industrial with the US Cluster Mapping Project

Looking at US Industrial with the US Cluster Mapping Project

Posted on by Jim Klein

The Cluster Mapping Project (CMP) was pioneered by Michael E Porter of Harvard University. He is just as well known for his works on Competitive Advantage. His work is a necessary foundation for US Industry and business organizations. I reprint his Value Chain diagram below for company diagnostics, which has been repurposed to examine the competitiveness of regions. To understand the implications of location and clustering, you can read an article Professor Porter published in 1995 about the strategic location of inner cities which is just as relevant today.


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Tenant Power

Tenant Power

Posted on by Jim Klein

Tenants have underappreciated power especially in cases of new development and investment projects. Most tenants don’t realize their own worth because they are rarely in the market, don’t experience the development cycle and are oriented towards functionality. Conversely, lease terms and tenant credit are essential to the developer. The capital impact of the lease is well understood by the developer but is often neglected by the tenant.
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Concentration Continues at the Top Tier of Industrial Buildings

Concentration Continues at the Top Tier of Industrial Buildings

Posted on by Jim Klein

The world of big industrial has evolved with fewer and better capitalized buyers. It’s a core group of 15 or 20 nationwide owners that know the markets, have talented principals and to the delight of most sellers, they close for all cash. In contrast, the entrepreneurial developer who played such an important development role in past buying cycles has almost completely vanished from the scene. High Net Worth Funds, REITS, Pension Plans, and the Insurance Companies dominate the ranks of primary industrial investors. Occasionally, developer partners, seek out capital from the large institutions, but control still reverts to the same dominant group of investors.

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Tenants Are the New Opportunity Buyers

Tenants Are the New Opportunity Buyers

Posted on by Jim Klein

Tenant decision making has radically changed since the Great Recession. The combination of low interest rates and falling prices mean that mortgage payments are the same as or less than rent. This has been a fairly rare occurrence over my 30-year career. Tenants with established histories are finding some great bargains. Even companies that may have difficulty obtaining loans and lack large down payments can team with sophisticated investors to solve many financing hurdles.

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Back to Local Markets

Back to Local Markets

Posted on by Jim Klein

WHERE THE ACTION IS

Perhaps I should qualify. Where there is action, it’s on the local level. Now that plentiful financing has been squeezed from the market, there is no more room for mega projects, program development, or new concepts. It’s back to basics and that means individual businesses and landlords dealing with their own unique decisions. Loans are available through SBA programs but limited to business expansions. Local banks that were not burned by sub-prime also have resources for conservative lending. The land side is virtually dead for development except under the most risk averse situations. There is however considerable activity in securing tenants for build-to-suit, but locating sites is still a challenge.

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At the Edge and Stagnation of Valuation

At the Edge and Stagnation of Valuation

Posted on by Jim Klein

The business of real estate is close to an end. Developing, investing and lending have all halted except for the most secure or distressed situations. An enormous swath of the industry is mothballed like an auto plant in the summer. Just like autoworkers, real estate practitioners are wondering if production will re-open. Lending divisions, development companies, land developers, and acquisition departments are closed until further notice. The biggest fallout is people we have all known for many years that are deciding what to do for the future.

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