E-Newsletter - September 2014

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    Sacramento Association of REALTORS®

 

  COMMERCIAL REPORT

November 2014

In This Issue
Community Commercial Real Estate Calendar
Reminders
California Business
Economic Development
AB1897
Split Roll Tax
Brown's Turnaround Plan
A Great PAC
Real Estate Lobbying $
Free Exchange Service
Importance of Consultants
Negotiating Principals Negotiating Principals Negotiating Principals
MORE INFO...

 www.saccommercial.org

 

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SAR Commercial Members
Call Tony to schedule your free Advice/Mentoring Session at 916-437-1205

Center for California Real Estate, all day summit titled "Partnering change in California" on November 14th is well worth the effort to listen too. This summit gathered an impressive collection of real estate financial experts and economists to discuss market conditions in California real estate. Years ago, it was stated that the Bay Area boom would hop over Sacramento to the L.A. area. Has L.A. reached saturation or will Silicon Beach grow stronger?

Watch the On Demand Video »

Dan Creegan and Heather Johnson with Trainor Fairbrook provided an insightful presentation on the changes in the laws regarding agency disclosure that go into effect Jan. 2015 for commercial agents.(SB 1171) The Trainor Fairbrook law firm has prepared a form that is available on their website for your use. During Nov's Legal Lunch also reviewed several court cases addressing dual agency and fiduciary responsibilities. The BRE has been focused on dual agency issues and Dan warns that BRE complaints are not covered by your E and O insurance.


Every first Thursday Legal Lunch, SAR Commercial hosts a commercial legal forum on various subjects in commercial real estate for the accomplished commercial agent. The Law is not a static subject and best practices are constantly changing in all areas of our industry. The Legal Lunch is a pleasant way to stay informed and touch base with a few old friends.

 

December's forum is December 4th will address legal entities, their pros and cons and the taxable consequences. "Who signs and how to hold" Legal and Taxable consequences will be presented by Steven Stwora-Hail and Neil Beeman, CPA to learn the benefits and pitfalls of business entities and the safe guards necessary to make sure your lease hold interest is solid.

 

COMMUNITY COMMERCIAL REAL ESTATE EVENTS

 

11/14 - Metro Chamber State of Sacramento County 11:30 Hyatt

11/17 - BOMA - Capital Bowl

11/19 - ICSC webinar - Enhancing the consumer experience

11/19 - IFMA meeting at Franklin Templeton

11/20 - ICSC Urban Retail and Redevelopment online

11/20 - ACRE Developer Showcase Hyatt - 5:30

11/20-21 - ICSC Napa Idea exchange

12/1 - CCIM Financial Analysis Tools- online

12/2 - CCIM Virtual Deal Making

12/2 - CCIM Creating Reliable Valuations Online starts today

12/2 - ULI Holiday party - Ella

12/4 - THE LEGAL LUNCH - Steve Stwora-Hail 2003 Howe Ave 11:00 Legal and taxable consequences of who signs

12/5 - BOMA Holiday Party

12/5 - SIOR Holiday Party S.F

12/8 - CCIM - Fundamentals of Real Estate Auctions online

12/9 - Investment Forum - Doubletree 7:30 am

12/9 - Nor Cal CCIM Holiday luncheon Oakland

12/9 - CCIM Disposition Analysis online

12/9 - BIA Holiday Party - Firehouse

12/10 - ULI Economic Forecast Breakfast - Sutter Club 8-10

12/10 - BIA - Google analytics 9:00 BIA Offices

12/11 - IREM Holiday Party- Fire house

12/11 - Recon Mixer 5:30 Strings 1500 7th Street

12/11 - IFMA Holiday Party

12/17 - CCIM - HP 10bII skills online

12/19 - The Sacramento Exchange Group - Citrus Heights

1/7 - NAIOP - Leasing Marketing & Negotiation online thru 3/4

1/8 - NAIOP - Financial Analysis online thru 2/26


Next Year's Key Dates:

2/10-2/12 - CCIM Real Street conference - Las Vegas

3/11-3/12 - ICSC Monterey

3/19 - ACRE Broker of the Year Awards

4/12 - 4/14 - NAIOP National Forum - San Francisco

5/17-5/20 ICSC - Las Vegas

Each month, first Thursday - Legal forum

  
  
Legislative Reminders:

 

  1. All commercial agents required to have clients sign an agency disclosure agreement effective next year. (SB 1171) Sample form available at Trainor Fairbrook
  2. Insurance certificates new language will nolonger require the producer to inform a holder of the cancellation of the policy.
  3. New laws pertaining to contract labor pass on HR responsibilities to the recipient of services (AB 1897)
  4. Notices of Non Responsibility no longer protect the property owner from liens. Consult your attorney on best practices pertaining to tenants completing construction projects on leased property.

 

Economic Development Rrequires a Community Effort

 

During the second week of October, over 100 representatives from six counties and 22 cities from the Sacramento region embarked on an educational trip to Nashville, Tenn., with the Sacramento Metro Chamber of Commerce's 2014 Study Mission. One thing became clear during my weeklong trip: Nashville's business community is highly invested in educational opportunities and outcomes. The city's education system has benefited by leveraging resources from the business community. The business community in turn benefits from workforce quality and retention, which is an ideal model for the Sacramento region to emulate. "The business community cannot dabble in education, Nashville Area Chamber of Commerce's Ralph Schultz told us. "You either go all in or you don't do it. Otherwise it will be the most frustrating experience you've ever had. "Here's how the Nashville Chamber has succeeded in influencing educational outcomes and how Sacramento can learn from its successes: Read more »

 

AB1897 Means Greater Liability For Employers

 

On September 28, 2014, Governor Jerry Brown announced the signing of Assembly Bill 1897, which amends Labor Code section 2810 by creating a new Labor Code section 2810.3.

The new law targets businesses that obtain or are provided "workers to perform labor within its usual course of business from a labor contractor." The statute's definition of "labor contractor" excludes bona fide nonprofits, bona fide labor organizations, apprenticeship programs, hiring halls operated pursuant to a collective bargaining agreement, and motion picture payroll services companies.

Once AB 1897 becomes effective, private employers will be unable to deny liability for labor contractor's failure to pay all required wages[1] or to secure valid workers' compensation coverage for contract workers. Employers using the labor services will now "share with the labor contractor all civil legal responsibility and civil liability for all workers supplied" to the company. This liability is...Read more »

Leave Prop 13 Alone

California's business climate is well-known for being unfriendly. CEO Magazine has rated California as the worst state in which to do business for more than eight years running. Undoing Proposition 13's provisions, as is currently being proposed, will make a big problem even worse by increasing taxes on the very businesses that create jobs and contribute to our economy. California small businesses failed at rates 69 percent higher than the national average in 2011. Of the top five metropolitan areas for small business bankruptcies, four are in California. We also struggle with one of the highest unemployment rates in the nation and have a higher poverty rate than Mississippi. Yet despite these figures, Sacramento politicians think now is the time to make it more expensive to run a business. Proposals to increase business property taxes threaten to make it even tougher for the tens of thousands of small businesses in this state to hire workers and contribute to their local communities. Read more »

How Governor Brown Cultivated a Complete Turnaround of the CA Business Climate

Corporate executives who have not considered investing in California for a long time suddenly have new reasons to do so. Fresh off four years of painstakingly adjusting public policy to make California more business-friendly, Governor Jerry Brown is now rolling out the welcome mat to expanding companies with a new set of tools in his recruitment arsenal. Armed with new tax credits, more funding for economic development, balanced budgets and improved credit ratings, California now competes for jobs and industry without the burden of financial shackles, and the results speak for themselves. Is it enough?

Legislation Political Action

Realtors Political Action Committee, or RPAC, and the Realtor Party may sound like "D.C. things," but they're much more than that for CCIM members, says Leil Koch, CCIM, 2014 chair of the National Association of Realtors Commercial Committee and 2012 CCIM Institute president. "RPAC and the Realtor Party work on all three levels of government - federal, state, and local - to create a strong business environment for all of us," Koch explains. "From tax policies to zoning issues to water rights to electrical grids - you name it and it's affecting our business as CCIMs. RPAC and the Realtor Party are there for us at every turn." Stand Together

td align="left" colspan="1" rowspan="1" Lobbying dollars for the real estate industry tops 71 million

Where do the dollars come from? Who is working the hill? No longer a secret.

CompStak Exchange Transforms the Commercial Real Estate Industry

Today, commercial real estate tech start-up CompStak launched CompStak Exchange, a new platform of the lease comp database platform free for commercial real estate brokers, researchers, and appraisers. CompStak Exchange features enhanced functionality to facilitate the exchange and analysis of lease comps, with an ability for multi-market companies to adopt the system for lease comp management across markets. More info »

AS INTEREST RATES RISE, NET LEASE MAY SLOW DOWN

 

by Mike Janssen 


The tight and highly competitive net lease market may see a slowing of activity due to a recent rise in interest rates, a trend that some expect to continue for some time to come.
 

The rate for the 10-year Treasury note has been rising since mid-May, swaying the dynamics of net lease transactions. In the past few decades, hikes in rates have been relatively rare and brief. The most recent increase "clearly impacts single-tenant net lease transactions," says Bill Hughes, senior vice president and managing director at Marcus and Millichap Capital Corp. in Irvine, Calif. The impact is more pronounced on the pricing of investment-grade properties that have lower cap rates, Hughes says, though other properties may also see prices move.
"You may see a slowdown in investment grade for a few weeks until both sellers and buyers accept the new world," Hughes says of the upswing in rates. "I think they will come back together."


Effects of the rate hike may spread throughout the network of net lease stakeholders. Developers may see profits fall, and "you've got to wonder whether the economic dynamics for those companies will remain the same and whether they'll continue to be as aggressive in developing properties and expanding their product line," says Hughes.


Eventually, buyers and sellers will come to absorb the impact, and landowners and the construction industry will feel ripples as well. "It's going to have some multiplying effect on the market," Hughes says. (NREIOnline) Interest Rates Slow Down

 

 

OFFICE RECOVERY EXTENDS TO SECONDARY MARKETS

 

Though the early office recovery was mostly restricted to strong energy and technology markets such as San Francisco, Boston, and Houston, improvements in fundamentals are emerging in more secondary markets, according to Marcus & Millichap's 2Q13 National Office Outlook.

 

Office vacancy rates tightened in most markets from 1Q12 through 1Q13, driving the national vacancy rate down to 16.5%. In addition, net absorption increased 41 percent year over year in 1Q13. Secondary and tertiary markets also offer good investment opportunities, according to the report.

 

Office sales volume last year rose 30% over 2011, with the largest percentage increase in the $10 million to $20 million segment. This trend is likely to continue throughout this year. In addition, office capitalization rates in primary markets have fallen 130 bps since the downturn but are still 90 bps above 2007 cap rates.

 

Secondary and tertiary markets' cap rates are 150 and 229 bps, respectively, higher than the market peak. Commercial mortgage-backed securities financing is helping to fuel acquisitions outside of primary markets, with 2013 issuance totaling $34.7 billion through May. (CCIM)


  

SURVEY NAMES CHINA THE MOST ATTRACTIVE NEW FRONTIER FOR APPAREL SELLERS BUT BRAZIL TAKES FIRST PLACE FOR RETAIL OVERALL
              
by Elaine Misonzhnik 

Are you a specialty apparel retailer looking to expand overseas? China might be your best bet, according to the 2013 A.T. Kearney Global Retail Development Index.

The global consulting firm placed China in the number one spot for apparel sellers due to its huge population and strong growth in apparel sales. United Arab Emirates took second place in overall market attractiveness, followed by Chile, Kuwait and Brazil.

The annually published index analyzes three key components: apparel market attractiveness, which encompasses clothing sales and sales growth, population size and the presence of international retailers within the country, retail development growth and country risk. The latter looks at political and financial risks, as well as the level of crime and corruption in each country.

The rankings differ slightly from A.T. Kearney's 2013 Global Retail Development Index, which measures the attractiveness of emerging markets for all retailers. In that survey, Brazil and Chile took the number one and two spots respectively for the second year in a row due to the growing middle classes in both countries, under-control inflation, sustained economic growth and a stable political situation.
  
China and United Arab Emirates took the number four and five spots in that Index, with China falling one place from 2012's rankings and UAE rising two spots.
India has also fallen in the Global Retail Development Index, to 14th place from last year's fifth, not even making it into the top 10. The country has felt the effect of the global economic slowdown, according to A.T. Kearney researchers, with retail sales growth slowing across all segments. In addition, the cost of finding affordable retail spaces in India continues to be a challenge for international chains. (NREIOnline)
  
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