R EAL E STATE J OURNAL the most comprehensive source for commercial real estate news
ISSUE HIGHLIGHTS Volume 25 Issue 22 Nov. 22 - Dec. 5, 2013 Professional Services
Represented by Cassidy Turley in Hampstead, MD The Hampshire Companies sells 1,035,249 s/f industrial building
H
AMPSTEAD, MD — The Hampshire Companies , a full-
service, private real estate in- vestment firm has announced the sale of a 1,035,249 s/f state- of-the-art distribution building located at 630 Hanover Pike in Hampstead, Md. The buyer is STAG Industrial, Inc . The property is currently leased to Dart Container. Built in 2000, the industrial building spans across 51 acres and serves as a cross-docked class A distribution center. With recent storm regulations imposed by the Maryland De- partment of the Environment, the coverage ratio for new developments has been sig- nificantly reduced leading to increased costs to build similar
distribution center on the East Coast” said Igor Derbarem- diker , a senior investment manager for The Hampshire Companies. “Hampstead has emerged as a desirable busi- ness location due to low oper- ating costs and a strong labor 630 Hanover Pike, Hampstead, MD
5-15A
large distribution centers, giv- ing the property a more favor- able position in the future. “With complete amenities and a superior location, this property offered an investor the unique opportunity to own a premier state-of-the-art
pool. The strong credit profile of the tenant also made this an attractive deal for the buyer, allowing us to capitalize on this opportunity.” Cassidy Turley represented The Hampshire Companies in this transaction. n
4.5 acre development site on Howard Rd. in Southeast Washington, D.C MAC Realty Advisors represents the seller of Poplar Point Development Site
23 rd Annual Merit Construction Awards of Excellence 12-13B
WASHINGTON, DC — On October 18, 2013, a local de- veloper purchased a 4.5 acre development site on Howard Rd. in Southeast Washington, DC from a European-based fund who was exclusively represented by MAC Realty Advisors, LLC (“MAC”) . The Poplar Point site is zoned W-3 and is located steps from the Anacostia Metro Station, which is served by the Metro’s Green Line. The
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Ballpark has begun to spread just one Metro stop away. This site offers the opportu- nity to develop surface-parked low-to-mid-rise wood-frame residential construction in a transit-oriented location, which is essentially unheard of in Washington, DC,” said Andrew McAllister , execu- tive director of MAC. “Alterna- Howard Rd., Southeast Washington, D.C
tively, the purchaser could wait for the opening of the newDHS headquarters to transform the neighborhood and build a higher-density construction type,” said Bruce Levin , ex- ecutive director of MAC. Bruce Levin, Andrew McAl- lister, Ben Lazarus , and Nick Rubenstein led the market- ing effort for MAC. n
site can be improved with up to 1.4 million s/f of FAR. The property is located near the St. Elizabeth’s campus, which will house the new headquarters of the Department of Homeland Security (“DHS”). “The incredible transforma- tion that has taken root in the neighborhood surrounding the Washington Nationals
Upcoming Spotlight December 6th, 2013 Tax issues/accounting
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A — November 22 - December 5, 2013 — Mid Atlantic Real Estate Journal
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1st Mariner Bank. ........................................................ 1A Acadia Realty Trust.................................................... 13C AIA DE........................................................................ 23B AKRF........................................................................... 21B All-Rite Construction Co.............................................. 9C American Architectural................................................ 1B Aztec Architecture. ....................................................... 7A Barley Snyder Attorneys at Law.................................11A Barley Snyder............................................................... 8C Bayshore Recycling....................................................... 9A Bedford Cost Segregation........................................... 13A Bennett Williams........................................................ 15C BL Companies............................................................. 14C Breslin Realty....................................................... 12, 19C Brubacher ................................................................... 12B Business Card Directory. ........................................... 17A Capitol Aerials.............................................................. 2B Cooper Levenson Attorneys at Law............................. 8A Dare Living Associates................................................. 3C Earth Engineering Inc......................................5, 12B, 3C Ehrlich, Petriello, Gudin & Plaza ............................... 7B Elliott Lewis Corporation ............................................ 6B EntechDigital Controls............................................... 18B Exchange Solutions. ..................................................... 6A First Bergen Title Agency. ......................................... 12A Fortna Auctioneers....................................................... 4A Fowler ......................................................................... 22B Gerard Construction Corp. ........................................ 14B Gilbeaux Associates, P.C............................................. 20B Haftek CWS.................................................................. 2B Harkins Builders ....................................................... 12B Hillman Consulting...................................................... 8C Hinerfeld Comm’l. RE. ............................................IBC-A Hollenbach Construction, Inc. ................................... 11B Hutchinson Mechanical Service................................. 19B Hylant............................................................................ 4C IREM................................................................... 24B-IBC Jeffrey Realty.............................................................. 14C Jewel Electric Supply Co.............................................. 3B Jottan, Inc................................................................. BC-A Kaplin | Stewart Attorneys at Law............................. 2C Katz Properties.......................................................... IC-C Kay Realty Services.................................................... 15C SILBERT Realty & Management Co......................... 15C Kline’s.......................................................................... 18B KW Comm’l. James Balliet Comm’l. Grp,................... 6C Landcore Engineering Consultants, PC...................... 4C Limbach Engineering................................................. 20B M. Miller & Son . .......................................................... 4B Marcus & Millichap..................................................BC-C Max Spann RE & Auction Co....................................... 4A McMahon....................................................................... 2A Metro Commercial...................................................... 11C Michael Baxter & Associates........................................ 2A New America Power...................................................... 6B NJ Smart Start............................................................. 5B NJAA........................................................................... 22B NorthMarq.................................................................... 3A P Cooper Roofing, Inc.. .................................................BC PennCap Properties.....................................................11A Poskanzer Skott............................................................ 3B Preferred Construction Management........................ 15B Premier Compaction Systems ................................... 10B Proffessional Women in Construction. ........................ 4B Rational Contracting ................................................... 9B RD Management.................................................... 16-17C REMCO Realty Group.................................................. 3C Retail Brokerage Directory................................... 20-21C Retail Business Card Directory................................. 23C Rhino Realty Group.................................................... 10C Singer Financial. .......................................................... 3A Specialty Building Systems....................................... IC-B Sperry Van Ness-Miller.............................................. 10A St. John Properties................................................. IBC-C Subway........................................................................ 22C Target Building Construction...................................... 6C The Azarian Group, LLC.............................................. 1C The Feil Organization. ............................................... 24C Traffic Planning & Design, Inc..................................... 3C Tri-M............................................................................ 13B TTI Environmental, Inc.............................................. 19B Welco Realty.................................................................. 7C Whitesell. ...................................................................... 2B Whitestone Associates................................................ 10C WithumSmith & Brown, PC......................................... 8B Worth & Company...................................................... 13B WP Realty. .................................................................... 5C www.1031tax.com....................................................... 15A MAREJ A dvertisers D irectory To advertise, call 1-800-584-1062
Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Publisher/Senior Account Executive ................................. Elaine Fanning Section Publisher .................................................................... Steve Kelley Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant ....................................................................Julie King Office Manager .................................................................... Joanne Gavaza Contributing Colomnist ............................................... David J. Ledermann Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly P.O. Box 26 Accord, MA 02018 (Mail) 312 Market Street, Rockland, MA 02370 (Overnight) Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, P.O. Box 26, Accord, MA 02018 USPS #22-358 | Vol. 25 Issue 22 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
Mid Atlantic Real Estate Journal
U By David J. Ledermann Affordable Care Act: Reducing Employee Hours May Increase Litigation Risk nder the Affordable Care Act’s employer mandate, beginning in 2015, applicable large em- ployers (those having at least 50 full-time equivalent em- ployees) must offer minimum essential health coverage to substantially all full-time em- ployees and their dependents. If employers don’t, they risk a penalty of $2,000, on an annu- alized basis, multiplied by the total number of the employer’s full-time employees reduced by 30. If an employer that offers minimum essential coverage to substantially all of its full-time employees and their depen- dents fails to offer coverage that is affordable (i.e., employee pre- mium contributions for self-only coverage do not exceed 9.5% of household income) and provides minimum value (i.e., the plan pays on average at least 60% of the cost of plan benefits), the employer may be liable for an annualized penalty of $3,000 multiplied by the number of its full-time employees that obtain federally subsidized insurance on an exchange. Fundamental to these penalty provisions is the concept of “full-time” em- ployment because even covered employers will not be liable for penalties for employees who are not full-time. The Affordable Care Act de- fines a full-time employee as an employee who averages at least 30 hours per week. Because the employer man- date results in penalties only for full-time employees, some employers have considered, or have even begun, restructur- ing their workforces to reduce their full-time employee count. Employers should be aware, however, this strategy carries the risk that the employer may be deemed in violation of Section 510 of the Employee HARRISBURG, PA —Rain- bowShops has signed a lease ex- tension within Harrisburg Mall that includes a nearly 4,000 s/f expansion into the adjacent store, located on the second level of the one million square shopping project on Paxton St. The retailer intends to add a
Retirement Income Security Act of 1974 (“ERISA”). That law makes it unlawful for an employer to take any adverse action against a participant for exercising a right to which the participant is entitled or for the purpose of interfering with the attainment of any right to which the participant may become entitled under an employee benefit plan. Reducing employee hours to avoid, or to at least minimize, the employer mandate’s impact arguably runs afoul of ERISA Section 510. Courts that have faced the issue, however, have required that a Section 510 claimant show that the em- ployer specifically intended to interfere with the claimant’s benefit plan rights. It remains to be seen whether reducing employee hours to avoid penal- ties under the Affordable Care Act constitutes an adverse employment decision intended to deprive a participant of a right under the employer ’s health plan. Another threshold question concerns whether the affected employee is a plan participant, because Section 510 protects only participants, not necessarily employees who do not participate in the benefit plan. It may also be that reduc- ing existing full-time employ- ees’ hours to less than 30 per week may be more problematic in terms of Section 510 liabil- larger children’s clothing and accessories line of products at this new 12,000 s/f location, and expects to open the enlarged store in mid-winter 2014. St. John Properties and Petrie Ross Ventures comprise the partnership group that co-owns and manages the property.
ity than limiting the hours of newly hired employees. That being said, an employer who guesses wrong faces sig- nificant exposure. Potential remedies for ERISA Section 510 violations include back pay to the extent an employee’s compensation suffered because of the reduction in hours, re- instatement to the level of hours the employee previously worked, and the provision of health plan benefits for the pe- riod the employee was without coverage under the employer’s plan. Plus, a prevailing party in an ERISA suit is eligible to recover the attorney’s fees ex- pended prosecuting the claim. Unfortunately, government regulators have not provided clarifying guidance on this is- sue. Informal comments from the U.S. Department of Labor suggest that agency will issue no guidance regarding whether employer efforts to minimize the mandate’s impact violate Section 510. Moreover, regard- less of whether any regulatory guidance on the subject is is- sued, it is a virtual certainty that the courts will ultimately decide the extent to which em- ployer decisions in response to the employer mandate impli- cate Section 510 of ERISA. David J. Ledermann con- centrates his practice in employee benefits law and ERISA at Barley Snyder. n “This expansion is significant because it validates the impor- tance of the Harrisburg Mall location and the value of our shopping environment from the perspective of a national and widely-respected retailer,” said Bill Russell, director of Harris- burg Mall. n
Rainbow Shops plans expansion at Harrisburg Mall with addition of children’s clothing and accessories component
Mid Atlantic Real Estate Journal — November 22 - December 5, 2013 — A
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M id A tlantic R eal E state J ournal Site to be 1.3m s/f LogistiCenter Carlisle DermodyProperties acquires 107 acres in Carlisle, PA
C
ARLISLE, PA — Dermody Proper- ties , in partnership
COLUMBIA, MD —Sperry Van Ness, one of the nation’s largest commercial real estate brokerage firms, has recently completed an industrial prop- erty lease transaction for a 4.6 acre site plus 9,000 s/f of office and shop area, led by Scott Skogmo, SIOR of Sperry Van Ness/Skogmo Commercial in Columbia, MD. Following are details of the transaction: Thompson Pump and Manufacturing , Inc. has leased a 4.61 acre industrial site with approximately 9,000 s/f of office and shop area to ex- pand their Baltimore –Wash- ington DC operations at 711 Pittman Road in the Marley Neck area of Anne Arundel County, Maryland. The property will now be used as the new Thompson Pump regional office and dis- tribution center. Thompson Pump is a leading manufac- turer and full-service pro- vider of high-quality dewater- ing pumps, portable pumps, pumping equipment and en- gineering expertise. They are the leader in diesel-driven portable pumps. n Sperry Van Ness completes 9,000 s/f industrial lease LogistiCenter Carlisle is centrally located within the Northeastern United States. Located only one mile off of Interstate 81, the industrial park is within one day’s drive of nearly 40 percent of the U.S. population. This region affords vital access to many global markets, including with PCCP , announced the purchase of a 107-acre parcel on Ames Dr. in Carlisle, PA. The site will be the location of a two-building, master-planned industrial park, known as Lo- gistiCenter Carlisle, totaling 1.3 million s/f. Dermody Prop- erties will begin construction on a 602,250 s/f building based upon the leasing progress of the existing building. Today, the building site is available as a build-to-suit.
LogistiCenter Carlisle
Canada. This strategic location has attracted many household brand names to the area. Lo- gistiCenter Carlisle has such corporate neighbors as PepsiCo, Giant Food, Quaker Oats, Whirl- pool, Mondelez (formerly Kraft
Foods), SC Johnson, Kuhne & Nagel, and Amazon.com. Dermody Properties is serving as the industrial developer and operating partner, and PCCP is serving as financial partner on the project. n
A — November 22 - December 5, 2013 — Mid Atlantic Real Estate Journal
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UPCOMING AUCTIONS
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27 Lot Subdivision Great Meadows, NJ 196+/- Acres Minimum Bid $810,000 Warehouse Properties Linden, NJ ABSOLUTE AUCTION 10,000+/- s/f - 2 Properties 2 Preserved Farms Hamilton Twp., NJ •13+/- Acre with Historic Farm House • 30+/- Acre
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Mid Atlantic R eal E state J ournal P rofessional S ervices
Mid Atlantic Real Estate Journal — Professional Services — November 22 - December 5, 2013 — 5A
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Nate Hyman Eastern Union Funding
Bruce A. Johnson Bedford Cost Segregation, LLC
Kurt M. Kalafsky Aztec Architects, LLC
Allen Meccia, Jr. First Bergen Title Agency, LLC
Brent Miller Sperry Van Ness – Miller Commercial Real Estate
Michael Muller Eastern Union Funding
Diane Schaefer, CES Exchange Solutions
Jim Slinkard 1031tax.com
Nicholas F. Talvacchia Cooper Levenson, Attorneys at Law
Inside: Exchange Solutions.........................................................................................................................................................6A Kurt M. Kalafsky, Aztec Architects, LLC.................................................................................................................7A Nicholas F. Talvacchia, Cooper Levenson, Attorneys at Law........................................................................8A Bayshore Recycling.........................................................................................................................................................9A Brent Miller, CCIM, CPM, Sperry Van Ness – Miller Commercial Real Estate.........................................10A Barley Snyder.................................................................................................................................................................. 11A PennCap Properties....................................................................................................................................................... 11A Allen Meccia, Jr., First Bergen Title Agency, LLC. ............................................................................................12A Bruce A. Johnson, Bedford Cost Segregation, LLC..........................................................................................13A Eastern Union Funding..................................................................................................................................................14A design 3................................................................................................................................................................................14A Jim Slinkard, 1031tax.com.............................................................................................................................................15A
6A — November 22 - December 5, 2013 — Professional Services — Mid Atlantic Real Estate Journal
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Mid Atlantic Real Estate Journal — Professional Services — November 22 - December 5, 2013 — A A rchitect
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By Kurt M. Kalafsky, Aztec Architects, LLC Post Storm Preliminary Building Assessment
A
fter any major storm or weather event it is important to do a
immediately addressed by a licensed plumber. 9- Verify there is no natu- ral gas smell in air inside and around the outside of the structure. If in doubt, call the local utility company to inspect for leaks. 10- Is the above ground heating oil tank intact and connected properly? Any loose or broken connections should be corrected immediately. 11- Is the below grade oil tank still below grade or has is risen/floated to the surface? If your tank shows any sign of movement call you Oil Supply
Company immediately. 12- Is the exterior siding and/or any exterior building skin intact? Loose or missing façade materials could allow water infiltration which could harbor mold growth. 13- Is your roof sheathing damaged by falling trees or debris? If so your structure may have been impacted by a tree, limb or other debris. Also inspect your attic in that area for possible hidden structural damage. 14- Are all roof shingles in place and lying down? Loose or missing shingles could allow
water infiltration which could harbor mold growth. 15- Are roof flashings intact and in place? Loose or missing flashings could allow water infiltration which could harbor mold growth. 16- Is the Chimney leaning or does it appear to be dis- turbed by flying debris? If so it must be fixed before a fireplace and/or your boiler is utilized. 17- Inspect your rain gutters, window shutters, canopies, porticos and window awnings to determine if they are safe and securely attached. This is just a sampling list of
things to look for after a storm. Every structure is different. If you are not sure regarding any issue it is always a good idea to have it checked out. A LicensedArchitect or Licensed Building Inspector have expert knowledge and are authorized to give your building a proper evaluation. A thorough evalu- ation is a good investment to protect your most valuable asset. Kurt, Aztec Architects is one of the original founders and chief technology officer of TheAztec Corporation and Aztec Architects, LLC. n
visual evalu- ation of your structure for any possible damage that may need to be addressed. The following list is a sam- ple of some of the primary
Kurt M. Kalafsky
areas of concern that may need further evaluation for possible remedy before further damage occurs: 1- The electrical system should be checked by a licensed electrician before turning the power on. This is to insure all components are dry and will function without causing any shorts and reducing the pos- sibility of hazardous live wires which could cause electrocu- tion or fire. 2- The exterior of the struc- ture should be surveyed for any impact damage caused by windblown and water born debris. Damage to the exterior skin could allowwater infiltra- tion which could harbor mold growth. 3- Check to see if the struc- ture is undermined and/or unstable. Sink holes near or along your foundation will require immediate further investigation for structural stability. 4- Look for foundation cracks. New cracks in your foundation are a sign of ex- cessive stress and should be investigated further to determine the appropriate remedy. 5-Are anywalls out of plumb – This could indicate struc- tural damage and should be investigated further ASAP. 6- Check for wet drywall, carpeting, furniture, insu- lation, etc. They should be removed at the earliest pos- sible time in order to avoid mold growth. Wet drywall is a breeding ground for po- tentially harmful molds and bacteria. 7- Check wood flooring to insure it is level and not heaving in any way. A heav- ing wood floor indicates water infiltration and hidden mold which should be removed im- mediately. 8- Inspect all supply and waste water piping in order to insure no leaks are present. Any sign of leaks should be
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A — November 22 - December 5, 2013 — Professional Services — Mid Atlantic Real Estate Journal
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A ttorney
By Nicholas F. Talvacchia, Cooper Levenson, Attorneys at Law Expanded tax credit and incentives for job creation and redevelopment in 2013 act
T
he New Jersey Economic OpportunityAct of 2013, signed by Governor
by the New Jersey Economic Development Authority. The Act phases out the business employment incentive (BEIP), program, the business reten- tion and relocation assistance grant program (BRRPG) and the urban transit hub tax credit (UTHTC) program. I. Grow New Jersey The Grow New Jersey Pro- gram is a tax incentive program which provides tax credits for the creation of new jobs or re- tention of existing jobs. Eligibility To be eligible for tax credits a project must be (i) located in a “qualified incentive area”;
(ii) must be a “qualified busi- ness facility”; (iii) meet the minimum capital investment requirement; and (iv) create or retain a specified minimum amount of full-time jobs. Proj- ects that a solely a point of final purchase retail facilities are generally not eligible for a grant of tax credits. Qualified Incentive Area •Mega Projects: Amega-proj- ect is defined as manufacturing, energy, defense and maritime businesses in port district, or business in the aviation in- dustry located in an Aviation District with an investment
of at least $20 million and the creation or retention of at least 250 jobs or 1,000 jobs created or retained. •GardenStateGrowthZones: These zones are Camden, Tren- ton, Paterson and Passaic. • Distressed Municipalities: Municipalities qualified to receive assistance under the municipal Urban Eight Project, under the supervision of the local finance board, identified by DCA. • Priority Areas: Planning Area 1 (Metropolitan); Plan- ning Area 2 (Suburban); A designated center under the State Development and Rede-
continued on page 14A • 35 new or 50 retained full-time jobs for any other velopment Plan or designated growth center; and a deep poverty pocket, port district, a federally owned land approved for foreclosure under the fed- eral based realignment closing commission action, disaster recovery project, a qualified incubator project, a tourism destination project or transit orientated project and areas that contain vacant commercial buildings having over 400,000 s/f of office, lab or industrial space. • Other EligibleAreas: These areas include an aviation dis- trict, Planning Area 3, certain portions of the Meadowlands, Pinelands and Highlands and certain planning areas. Capital Investment The minimum capital invest- ment requirements are as fol- lows: (i) $20 psf for the rehabili- tation of an existing industrial premise; (ii) $60 psf for new construction of an industrial premise; (iii) $40 psf for the rehabilitation of an existing non-industrial premise; and (iv) $120 psf for new construction of an non-industrial premise. The minimum capital investment is reduced by 1/3 for projects located in a Garden State Grow Zone or projects located in eight South Jersey counties. Qualified Business Facility A qualified business facil- ity is a building or complex of buildings located within a “qualified incentive area” and in connection with a business not engaged in a “final point of sale retail businesses”. The Act, however, provides the following exceptions: in a Garden State Growth Zone or the Atlantic City Tourism District, up to 7.5% of retail facilities included in a mixed use project are eligible for tax credits along with non-retail facilities. TheAct also expressly defines certain types of proj- ects including a supermarket project located in a Garden State Grow Zone or a tour- ism destination project in the Atlantic City Tourism District or a catalog distribution center as not being a point of a final purchase retail facility. Job/Creation/Retention • 10 new or 25 retained full- time jobs for a technology start- up company or amanufacturing company. • 25 new or 35 retained full- time jobs for a business engaged in a targeted industry.
Christie on Se p t emb e r 18, 2013, con- solidates and expands cer- tain New Jer- sey incentive programs for job creation and redevel- opment. The
Nicholas F. Talvacchia
Act expands the Grow New Jersey Assistance Program and the Economic Redevelop- ment Growth (“ERG”) grant program, both administered
NEW JERSEY IS OPEN FOR BUSINESS! OUR CLIMATE FOR NEW DEVELOPMENT IS BETTER THAN EVER!
Let us help with your project. Land use, environmental, redevelopment, tax
Our Land Use attorneys, led by Department Chair Nicholas Talvacchia, help developers obtain local and state approvals for projects and development incentives for those projects. Nick has extensive experience in obtaining land use approvals, including state environmental permits. He has negotiated a multitude of redevelopment agreements. Clients depend on Nick to guide them through the application process: • Municipal Land Use Throughout New Jersey • New Jersey Department of Environmental Protection • Coastal Area Facility Review Act ("CAFRA") • Green Acres Program, including diversion applications • Waterfront Development permits • New Jersey Department of Transportation
incentives, and more. Representative projects - $2.4 billion oceanfront resort redevelopment project
- $280 million 600 room hotel tower - $35.5 million oceanfront pier with restaurant and retail - $50 million 280 room hotel tower - $70 million 359 room hotel tower casino expansion - $245 million 1200 room hotel tower - telecommunications/cell site approvals for major cell phone carriers - $10 million electric substation - national chain approvals, including home improvement and pharmacy stores
Nick has successfully litigated denials of state and local permits.
Contact Nick at 609.572.7544 or ntalvacchia@cooperlevenson.com
www.cooperlevenson.com NEW JERSEY PENNSYLVANIA DELAWARE NEVADA
Mid Atlantic Real Estate Journal — Professional Services — November 22 - December 5, 2013 — 9A
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r ecycling /D eMolition D eBris
10A — November 22 - December 5, 2013 — Professional Services — Mid Atlantic Real Estate Journal
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P roperty M anagement
By Brent Miller, CCIM, CPM, Sperry Van Ness – Miller Commercial Real Estate The benefits of professional property management C ommercial real estate properties and portfo- lios that are actively missed or miscalculated rent increases and failure to pass on all maintenance charges that are the tenant’s respon- sibility.
tion that money can be saved by not paying third party management fees. In reality, professional management is a value added service that will enhance overall property returns. As an owner of commercial real estate, unless you’re a very large and sophisticated commercial enterprise, at- tempting to do it yourself or to hire internal staff is not only inefficient and very expensive, but is often short sighted. You see, the right question to ask is not can you manage your own portfolio,
but should you? 1. Time: Is managing prop- erty the best use of your time? Do you have better things to do, or would it take you lon- ger to manage your property than it would a professional manager? 2. Competency: Profession- al managers are immersed in commercial real estate on a daily basis. There may be missed opportunities that end-up leaving money on the table. 3. Cost: Many do-it-yourself owners end up leaving money on the table in the form of
will collaborate with you to de- termine how your properties should be positioned relative to current market trends and competitive properties. They will advise on issues that may lower operating expenses, in- crease NOI or add new sources of NOI. 2. Cost Savings – Manage- ment firms use the aggregate size of their portfolios to ne- gotiate prices, to assure high quality, and rapid response time. They have greater scale than the typical property own- er and can deliver bottom line savings as a result thereof. 3. Domain Expertise - Pro- fessional property manage- ment firms who have invested in state of the art technology, professional education and the newest tools will provide a far better solution to improv- ing the property performance than an in-house attempt. 4. Regulatory & Compliance – Professional management firms are familiar with state and local municipal codes and regulations as well as with federal laws (ADA, EPA, DEQ, etc.) which may impact your property. 5. Responsiveness – Do you really want to deal with the phone call that comes in the middle of the night or when you’re in a meeting, out with your family, on the golf course, etc.? Professional manage- ment firms are on call 24 hours a day - 7 days a week. 6. Vendor Management – Using your management firm as a single point of contact to manage vendors is tan- tamount to found time. Not having to deal with the brain damage of managing multiple vendor relationships is worth its weight in gold. Bottom line…you can go it alone and convince yourself that you’re saving money and spending your time wisely and efficiently, but it is precisely this type of thinking that your competition is hoping you em- ploy. Any reasonable litmus test will reveal that profes- sional management exists for a reason. It improves the lives of property owners, and puts money in their pocket at the same time. Brent Miller, CCIM, CPM is managing director and senior advisor with Sperry Van Ness – Miller Commer- cial Real Estate, Salisbury, MD. n
managed not only perform better on an o p e r a t i n g basis, but in most cases, they y i e l d more at dis- position as well. So why
The fact of the matter is that the professionals you select to represent your in- terests work for you. You are still in control, you call the shots. The following points are just a few representative ex- amples of how you can benefit from the use of professional management firms: 1. Strategic Planning – Pro- fessional management firms
Brent Miller
is it that so many commercial real estate principals attempt to manage their own portfolio? The most common reason usu- ally boils down to the percep-
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Mid Atlantic Real Estate Journal — Professional Services — November 22 - December 5, 2013 — 11A P rofessionAl s ervices
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Commercial Real Estate
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/DQFDVWHU MEAN FOR YOU? 1Pa[ThB]hSTaXb_a^PRcXeTfXcW^daR[XT]c aT[PcX^]bWX_b FTd]STabcP]Sh^daQdbX]Tbb P]SX]SdbcahP]SPRcXeT[h[XbcT]c^h^da ]TTSbR^]RTa]bP]S^__^acd]XcXTb Exceptional commercial real estate solutions and services for businesses who demand more from their space. 559 Main Street, Suite 300 Bethlehem, PA 18018 Phone: 610•332•1100 Fax: 610•332•1111 www.penncapproperties.com ATP[4bcPcT}2^]bcadRcX^]}1dbX]Tbb};XcXVPcX^]}4\_[^h\T]c} General Contractor From GROUND-UP CONSTRUCTION to REMODELS to disaster preparation and REBUILDING , we pride ourselves on meeting any challenge and delivering the highest-quality workmanship and service. A family-owned company, All-Rite Construction has been serving major national retailers for more than 45 years. Team up with the retailer’s choice for construction and maintenance. www.all-riteconstruction.com 800-255-7483 All-Rite-CSA-Spread-02-11-13.indd 1 2/14/13 4:49 PM All-Rite-CSA-Spread-02-11-13.indd 2 2/14/13 4:50 PM 12A — November 22 - December 5, 2013 — The Road to Recovery — Mid Atlantic Real Estate Journal www.marejournal.com T itle I nsurance By Allen Meccia, Jr., First Bergen Title Agency, LLC Title Insurance: A means to mitigating real estate transaction risks T itle insurance is a ne- cessity in today’s real estate marketplace tion (ALTA), about 25 percent of all transactions reveal a critical title matter that, if uncorrected before closing, will impact both the seller’s and the buyer’s finances and/ or use of the property. Although today’s trans- actions are more complex than ever before, there are certain risks that should be mitigated through third- party insurance policies. Title insurance protects owners against historical claims on their property. Additionally, it helps all parties involved in a transaction determine their rights and assures that land transfer is expeditious and secure. In res ident ial , of f i ce , multi-family and industrial transactions, title insurance protects the purchaser and lender against more than 100 types of claims. These include fraud, forged signa- tures on deeds, unknown heirs, liens, survey issues and documentation errors. Historically, the title insur- ance industry has been a good barometer of the country’s overall economic climate. In the late-2000s, as the real estate industry struggled to recuperate from the recession and the effects of the sub- prime mortgage meltdown, demand for title insurance slowed. In 2012, mortgage interest rates dropped to historic lows, which bolstered the real estate industry and, in turn, the title insurance business. ALTA reported a 20.6 per- cent rise in title insurance premium volume during the second quarter of 2013 as compared to the same period last year. According toALTA’s 2013 Second-Quar- ter Market Share Analysis, the title insurance industry generated $3.3 billion in title insurance premiums during the Q2 of 2013 compared to $2.7 billion during the Q2 of 2012. This trend is reflected in First Bergen Title Agency’s current transaction pace. The Hackensack, N.J.-based company, which has been providing title insurance protection and settlement services for homebuyers, real estate professionals, attor- neys, lenders, homebuilders and developers for more than 50 years, is on pace to record its highest Q4 transaction velocity in years. The title industry will con- tinue to rebound with broad recovery in most markets. Given the size and complex- ity of commercial real estate transactions, it is vital to be aware of the various “moving parts” involved with closing a deal to avoid costly holdups or problems after closing. In commercial transactions, title insurance professionals work closely with their at- torney, clients and surveyors to locate any undisclosed but recorded easements benefit- ing neighboring land, as well as subdivision and zoning is- sues. This can involve access, utilities, drainage, airspace, sight and other types of ease- ments, as well as many types of liens. The importance of title insurance as part of a com- mercial property purchase or loan is so the insured can look to another party – the title insurer – to compensate for any losses. Commercial transactions often are ex- tremely complex. Title pro- fessionals have to consider the unique circumstances of each transaction to produce the best outcome for all par- ties involved. Working with a reputable title insurance company that routinely closes large and intricate residential and commercial deals is one of the best means to ensure success for small, traditional transactions to larger, multi- faceted property trades. It also offers peace of mind, particularly in today’s ever- changing market. Allen Meccia, Jr. is a managingmember of First Bergen Title Agency LLC in Hackensack, NJ. n and for good reason – it c a n me a n the di f fer- encebetween c l o s i ng o r abandoning a deal. Seri- ous title is- sues are not Allen Meccia, Jr. only expensive, they are more common than even the most seasoned property owners might think. According to The American Land TitleAssocia- Where every Closing Counts • Providing title insurance protection and settlement services • Specializing in residential, commercial and industrial properties • Single-source solution for real estate purchases, refinances and leasehold transactions • Designated qualified intermediary for 1031 exchange transactions through First Bergen Deferred Exchange LLC • Affiliated underwriters include Chicago Title Insurance Company and Commonwealth Land Title Insurance Company, members of the Fidelity National Financial family of title companies, as well as Old Republic National Title Insurance Company Court Plaza North, 25 Main Street, 2nd Floor, Hackensack NJ 07602 201-343-3121 www.firstbergentitle.com Mid Atlantic Real Estate Journal — The Road to Recovery — November 22 - December 5, 2013 — 13A T ax I ssues www.marejournal.com By Bruce A. Johnson, Bedford Cost Segregation, LLC Permanent repair versus capital regulations T his past September, the IRS issued its long awaited permanent of these tools is critical to ensure proper application of them as well as claiming the depreciable cost basis of in- terior lighting systems that were replaced during a full or roughly a $150,000 tax savings. This deduction rep- resented almost 10% of the projects capital cost, which greatly enhanced the clients return on investment. In addition, the client was able to clear up potential ghost assets on their tax books, which is one of the objectives of these new regulations. The benefits of these regu- lations pair quite well with other depreciation derived federal tax incentives such as cost segregation and EPAct 179D initiatives. The combined effects can be sub- stantial, and perhaps make a marginal renovation project exceed the required financial performance requirements. In closing, these regula- tions can provide a substan- tial benefits to tax payers going forward. In preparing for your 2013 tax filings, be sure to cover this topic with your tax professionals and consultants to start the process of implementing a strategy that is right for you and your organization. Bruce A. Johnson is a partner with Bedford Cost Segregation, LLC. n repair ver- sus capital regulations. These regu- lations will affect most b u s i n e s s o w n e r s , particularly those with commercial The benefits of these regulations pair quite well with other depreciation derived federal tax incentives such as cost segregation and EPAct 179D initiatives. The combined effects can be substantial, and perhaps make a marginal renovation project exceed the required financial performance requirements. Bruce A. Johnson real estate, creating new ar- eas of compliance as well as opportunities to take advan- tage of potential benefits. The regulations officially take effect on January 1, 2014, so it will be important for this to be a tax plan- ning topic of discussion with business owners and their CPA’s. The compliance aspect of these rules may require existing expensing policies to be altered to meet the new outlined processes, and perhaps the need to make elections for things such as for partial disposition or one of the levels of de mini- mus, which creates a process which allows a tax payer to expense all items under the regulations specified level; $5,000 or $500. While these regulations have added a level of com- plexity to tax payers business operation’s, they do provide potentially significant op- portunity to reduce tax lia- bilities. The best way to take advantage of these tools is to plan ahead of any invest- ments that are foreseen, be it the construction of a new facility, purchase of a new property or improvement to an existing one. An example of how tax pay- ers can leverage these rules could be the writing-off of assets currently capitalized that are being replaced as part of a renovation proj- ect. Another would be the preparation of asset descrip- tions to comply with the regulations new concept of unit of property. The unit of property is the amount you compare the current expense to in determining whether to expense new costs or capital- ize the new and dispose the replaced/retired asset. These are just a few of the many strategies that can be employed to take advantage of these rules. Not to be over- stated, planning for the use full benefit provided. Recently, one of Bedford’s clients was able to justify writing-off the remaining building energy retrofit proj- ect. The result of this effort was the generation of an ad- ditional $450,000 deduction
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