The offering represents an exciting opportunity for an owner-occupant looking to acquire a headquarters building at a dramatic discount to replacement cost. The building features 40,530 square feet of loading-served lower level high ceiling space that could serve as office or warehouse space, and 47,579 square feet of upper level office space including a fully renovated cafeteria.

Ideal users include value conscious office tenants, warehouse or manufacturing users, houses of worship, and schools.

The building is priced at a remarkably low $2.5 million — $28 per square foot — with seller-financing available.

Email or call Chris Kubler (agent, KLNB) at 301-455-8840 for more details or a tour.

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Retail Suites range from 2069 sf and up. Rent from $3448/month NNN. Buy from $299,995.

Office Suites start at 2600 sf and up. Rent from $1733/month plus utilities and janitorial. Buy from $150,000 as is!!!

Features include:

-Rent, Buy, or lease to own opportunities available
-Ideal for professionals including attorneys, accountants, doctors, dentists, real estate and insurance agents, etc.
-SBA HubZONE and MD Enterprise Zone; great opportunity for government contractors
-Directly across from City courthouse, State courthouse, and City hall. Minutes to Federal courthouse
-Two blocks to Mercy Hospital
-Building signage and naming rights available foor larger user
-Office suites feature full floor presence with private elevator lobby
-Walk to Marc train, light rail, and metro subway f
-Own for less than renting. Let us show you how!

Email or call Chris Kubler (agent, KLNB) at 443-574-1415 for more details.

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One of the biggest advantages for the seller is that holding paper equates to an installment sale, which is a mechanism for deferring capital gains tax. The seller only pays capital gains tax as the principal balance is paid down. An interest-only seller-held note offers the greatest opportunity for savings as no principal is paid down during the term of the note.

This tax benefit is so compelling that a vehicle called a Deferred Sales Trust has been developed to take advantage of the installment sales rules to allow sellers to defer taxes without holding paper. Refer to http://likekind.org for more details.

The benefits for the buyer are fairly apparent: the seller might be the only source available to finance a particular project, or may offer better terms including higher leverage, a lower rate, or a longer amortization. A buyer can potentially, when permitted by the lender with the first trust, to secure a second mortgage from the seller to garner even greater leverage. While the seller may want to qualify the prospective borrower, the process of securing the loan is likely going to be less painful.

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The buyer will customarily offer to put up an earnest money deposit to be held in escrow while this work is completed. Most buyers demand a 30 to 60 day due diligence “study period” during which their earnest money deposit is fully refundable if they opt not to proceed with the purchase. Even though the deposit is fully refundable during the study period, it conveys a certain seriousness in the purchasers intentions.

At the peak of the market, in some cases I saw buyers willing to put up a non-refundable deposit upon contract execution. Typically those buyers reviewed leases and other due diligence information rapidly and before signing the purchase and sale agreement — effectively mimicking an auction purchase.

That said, at the end of the day, the amount of the earnest money deposit is a matter of negotiation between buyer and seller. The buyer wants to keep the deposit as small as possible, and the seller would like to see a larger deposit.

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Terms like NNN or “triple net” don’t mean the same thing to every real estate professional so only a lease can give you a definitive answer. To most however, this means that on top of your monthly rental payment, you as tenant are going to be responsible for paying your pro rata share of all operating expenses, including common area maintenance, common utilities, real estate taxes, and insurance.

Some expenses like management fees and maintenance of the roof and structure are passed through in some “net leases” and not in others. Again, the lease governs.

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Speaking generally about the shift in market conditions, I think it’s safe to speak to the following trend: In the “landlord’s market” of a just a year or two ago, landlords would typically offer 1/2 of the the commission they would pay to a broker that brought a new tenant to them.

Now we’re seeing brokers asking and getting a “full” commission on renewals. The landlords are more fearful of losing tenants and are doing what the can to keep the broker that “controls” the tenant happy.

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It’s unfortunately in the parlance of the commercial real estate industry become interchangeable by some with “operating expenses,” ie all operating expenses.

I’d encourage you to be precise: if you mean “all operating expenses including real estate taxes and insurance,” say so. And if someone refers to “CAM,” you may need to press them to clarify what they mean.

There a wide range of methods by which landlords recover some all or none of various expense categories.

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Answer - The fact is that net operating income does NOT equal cash flow available for debt service.  Items like a capital reserve, major capital improvements, tenant improvement expenditures, and commission expenditures need to be subtracted from net operating income to get to that bottom line of “cash flow available for debt service.”

As such, a capitalization rate (net operating income divided by purchase price), while a good sort of yard stick or rule of thumb indicator, is not a necessarily a particularly good indicator of yield. Consider two different investments:

• Building A is a brand new 30′ clear warehouse leased to the US Government on a long term basis, and
• Building B is a 1980s office building with 20 tenants, local and regional credit, with gradual lease rollover.

Both trading at a purported “10% cap rate.”

Building B is going to require recurrent tenant improvement expenses and leasing commissions where Building A does not.

So why buy Building B?  Well, there are potentially lots of good reasons. Perhaps the rents in Building B are below market. There is arguably less risk in building B, because if a single tenant moves out, you’re left with an empty building. Perhaps building B is located in a better market with more dramatic rent growth. Perhaps the price per square foot of building B is well below replacement cost, and in the case of building A you’re paying more than it would cost to build the building.

So it just goes to show you that a cap rate should only begin your underwriting. You’ve got to take into account return of time (internal rate of return), the market, the building condition, and on and on.

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Output in Excel is free plus we provide the source Argus (.sf) file to share with clients.

Attractive full color custom reports also available at an additional charge.

Introductory price while we grow this business: $100 + $10 for each tenant. Includes one free set of modifications.

Turnaround in 2 business days or less.

Email me at ckubler@klnb.com or call 301-455-8840 for more details.

I’m not going to win many friends among owners for saying it, but it’s time for brokers to start demanding higher commissions. Don’t get green with envy for the brokers. The volume of investment sales transactions is down 70 to 80 percent. Leasing transactions are not moving robustly either, with tenants staying put and renewing for very short terms in many cases.

The opportunity for brokers in this market is representing the most motivated of sellers: those that are facing distress and must sell to raise cash. We’re seeing many more of those sellers in places like Michigan, Ohio and Florida. In the Washington DC area the distress is primarily in vacant buildings or residential land.

Established auctioneers are a busy lot, and brokerages are ramping up groups to market distressed assets for sale or to deal with workout situations.

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