Jag Grewal

Jag Grewal

Jag Grewal had been with Coldwell Banker Commercial ever since they purchased Arvida Realty in 2001, prior to being recruited by Ian Black Real Estate. He has been involved in a multitude of transactions from investment grade and development to industrial properties representing REIT’s, such as The Lightstone Group and Prime Retail. Jag, a well respected commercial real estate broker, has earned numerous distinctions throughout his career completing sales and leases over $150M in this region. He is the current President of the Commercial Investment Division – an organization that serves all of the commercial real estate practitioners and affiliates in the Sarasota county. He was awarded the prestigious Commercial Realtor of the Year in December, 2007, by his peers.

July 1, 2010

Jack McCabe, real estate commentator, was considered the purveyor of doom a few years ago.  After reading his comments in the Tribune Monday, June 28th article, he now seems to be on the cutting edge of Florida commercial real estate.  Let me just say that I thoroughly agree with his assessment of the market and have been saying exactly the same thing for some time.

The last time I blogged about short sales I talked about my client, Bob.  Bob owns a 2,500 square foot office condo built in 2006 that he was upside down on and he was forced to stop paying his mortgage as his business had slowed significantly. Bob asked me to do BPO to list the property for sale.  Once he took these proactive steps his bank was very receptive to talking with him about how to make the loan current.

Bob holds a $600,000 mortgage and the property is now worth considerably less.  The bank has been working with him and hopefully they will be modifying the loan. The bank’s other option is to look at a short sale. I believe that this scenario is going to become more the standard practice.  Short sales are going to be the way to go with trouble commercial real estate.

The process of a commercial short sales is much quicker than residential short sales in my experience and I believe this is due to the nature of commercial lending in general.  Commercial lending is a much more personal relationship.  usually the borrower has a good relationship with his banker from the onset. Things move much faster and decisions are made quickly.

To summarize, commercial short sales are going to be the future of commercial real estate business.  If you are underwater on your mortgage, call me and I will be more than happy to share my experience and knowledge of the process.

May 26, 2010

There’s a new shift in pricing.

There are many commercial property owners who have got their head in the sand and are still hoping that this economy will change drastically.  Tantamount to getting an oil tanker heading to the South Pole to turn on a dime.  It’s going to take a while to do it.

The point is, the sooner property and land owners recognize and embrace the facts of the market, the better.  Here are the facts:  you are competing against owners who bought buildings at deep discounts and are out marketing the properties at significantly lower lease rates and/or you are competing against owners who have realized that a dollar coming in the door is one less dollar they must find to go out the door and making deals to generate any income at all.  This is the free market and this is the reality.

Consider this chart and decide whom you wish to be, Property Owner A or Property Owner B.  At any fixed point in time, Property Owner A is always pricing just above the market and Property Owner B is just below the market.  Property Owner B will get the tenant, almost guaranteed and as we move forward in time during a down market, he will continue to get the tenants while Property Owner A continues to chase the market.

Can you tell me, what other options than pricing in front of a down market is there.  The idea here, is to beat the market, you cannot pick the market.

April 19, 2010

Has commercial real estate hit bottom? Boy, if I could get a dollar for every time I have been asked that question…. When will this downward spiral end? When will my business turn around? How long do I need to keep holding on before this economy turns? It is going to turn…right???

If you own commercial real estate (that means anyone who owns, leases or runs a business) listen very clearly……. This economy is not going to change any time soon – it is called wishful thinking to bet that is will. All of the decisions that you make today must be based on that previous statement. Shifts need to be made in your business model – either generate more sales, cut costs or re-invent yourself and/or your business.

If I wanted to reinvent myself, there are so many people who can help me from Dr. Phil, Deepak Chopra, Oprah, the list goes on. When it comes to business, why does it feel like only someone like Steve Jobs is capable of re-inventing himself or Madonna? She seems to be pushing the edge of music every time she comes out with an album. I think the reason may be that we feel that only massive change can occur if you have massive amounts of money.

Consider this… the destiny of this country depends on you re-inventing your business. Forget the past – that hyped up, cocaine infused real estate roller coaster ride is over. Get up, dust your self off and get going. I am relying on you to do this because we need to support anyone out there who is willing to risk, sacrifice and do whatever it takes to get an idea, a product or a solution out to the world. If you are in business, what other avenue could you venture into that will support or add to your current business? An example of this is my client Bob who has a good business in town who expanded his business from a 2,000sf space to a 5,000 sf space, sub-leased a portion of that space to a business that is complementary to his. His thinking was that they two businesses could feed off each other and grow revenues. Good move right? He took the risk of expanding and collaborating with another business owner. But it gets better. Through this expansion, he found another revenue opportunity to add to his business. It took risk to expand and it may reap rewards that he is very excited to pursue. This is a small but crucial example of re-inventing your business.

The time is here and the time is now.

Here’s what you can count on with me. The best possible deal in town. Our company has some of the best talent in our industry in our area. It is our goal to assist you in all of your real estate needs. Don’t wait until you have run out of ideas, run out of money or get run out of town! We are focused on solutions – keep an eye out for us.
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April 12, 2010

In my work as a commercial real estate broker, I talk every day to a myriad of businessmen, business owners, tenants and investors that are simply out of money, time and ideas to get out of this trap.

The trapped investor

The recurring theme from these calls is business is tough enough as it is without having to deal with other real estate distractions.  Professionals were lured into the expanding commercial real estate market and it is now causing a major drain on their businesses.  Whether it is an attorney who bought a spec house or a physician who invested in a shopping center as a partner, or a financial advisor that used his savings to by an apartment complex – a lot of people out there are “feeding” real estate problems and using their cash to do so. By doing this, it is diverting much needed funds required to operate their primary business.

They are trapped and the trap is how do I maintain my credit, maintain my commitments and still focus on expanding my business. This is causing an erosion of wealth that we have not seen in a long, long time.

The tragedy of hope

If you find yourself in this situation right now, what you need to do is sit down in the cold light of day and analyze:  Do I want to keep feeding an asset in the HOPE that this market will recover or do I want to consider alternatives.  This is the key question we are all faced with right now.

Commercial real estate needs to be looked at in a very cold and unemotional light.  Is this a good investment today?  With all of the involvement I have keeping my primary business afloat, is putting my precious resources into this investment wise or am I better off reallocating these resources into another area of my business?

Your options

1.  If you are a tenant, you need to renegotiate with your landlord. Get an idea of what market rates currently are – NOT the listing, public market rates.  There are so many deals that are being done that are not reported way below listed market rate.  To be honest, you’ll have better luck with a qualified broker representing you.  With a third party, one knowledgeable of what the actual going rates is, your efforts at approaching your landlord and negotiating a compromise is greatly increased.  Sometimes, providing your company financials to prove that you cannot keep paying the current rate may be enough.  Most landlords, if not all, will contemplate a reduced rate during these difficult times. Remember, they are in the SAME situation as you – no matter what they may tell you.

2.  If you are a property owner that occupies the space, the question is:  Does it make financial sense to occupy the space completely; do I need to think about subleasing; what is the property worth today.  How can I offset my carrying costs to keep this asset and is it really worth keeping.  Am I better off considering my other options?  There are options, there are always options even you can’t see them today.

3.  If you are a business owner with a real estate investment, ask yourself:  How much is this investment really costing me?  What is my rate of return today?  What is the likelihood of the tenants giving me a rate of return that I am comfortable with?  At what point do I just say, this looked like a good investment at the time I bought it and clearly, that is not the case today.

The first call to make is to the person or entity you are financially responsible to – landlord, lending institution, and partners.  Tell them you’re situation and concerns.  See if they have solutions.  Banks these days are very proactive to trying to figure out a solution.  Remember though, what you don’t want to do is prolong the death of a diseased asset because you are only delaying the inevitable with no upside, and depleting your resources.

There are success stories in this market. Recently, a tenant called needing help renegotiating a new lease with his landlords.  He had been trying for 9 months with no success.  He asked me to help him with the negotiations.  Within 4 weeks I was able to negotiate a savings of $150,000 in rent the first year.  I did this because of my knowledge of comparable rental rates. The rent was no longer an issue for the company and the financial burden relieved. The landlord retained his tenant who was seriously considering simply relocating.

Contact a good commercial real estate broker who has experience with commercial real estate negotiation and short sales –  he can be your best friend during this time.  You don’t have to go it alone.