Office property classification is a somewhat subjective and unscientific process. Industry participants designate buildings as belonging to one of the three classes listed below. A building does not have to meet all the criteria of a particular class to be … Continue reading →
1. Cap Rate Method Cap rate = Net operating income (NOI) / purchase price. NOI = Net income + interest expenses + depreciation. High Cap rates are associated with higher risk and low demand while low cap rates are associated … Continue reading →
Leaseback transactions are expected to reach a value of $328 million in the Twin Cities this year. This is almost a ten-fold increase from 2010, according to a report in the Star Tribune. In a leaseback, an asset is sold … Continue reading →
A brief overview of the Section 1031 exchange rules: 1. The exchange must involve “like-kind” properties. All properties must be held for a productive purpose in business or trade, as an investment. 2. Within 45 days from the day of … Continue reading →
In Iowa, farms are taxed based on production as opposed to land value and residential property is taxed at approximately half its assessed value, according to a report in The Republic. Commercial property, however, is taxed at 100 percent of … Continue reading →
David G. Hunt provides some factors for firms to consider in deciding between purchasing and leasing commercial property: 1. The availability of capital: Firms should evaluate their capital requirements now and in the near future. Real estate should not take … Continue reading →
The global enterprise software company salesforce.com is withdrawing plans to establish its headquarters in San Francisco’s Mission Bay district, according to a report in the Wall Street Journal. Salesforce.com purchased 14 acres in Mission Bay for $278 million in 2010. … Continue reading →
A 2008 paper by Eric Reenstierna argues for the establishment of a standard method of capitalization derivation and he promotes the Appraisal Institute as the organization best suited to set such standards. Inconsistency in the calculation of net income is … Continue reading →
42Floors is a new free search engine for commercial property. It compiles data from multiple sources (brokerages, landlords, craigslist etc…) and provides the public with direct access to these listings so that their first point of contact does not necessarily … Continue reading →
Mike Donnelly writes in The Washington Post that distressed commercial real estate in the United States totaled $166.9 billion in January 2012 – down $4.7 billion since October 2011. Divided by sector the numbers are: Office: $41 billion (decrease of … Continue reading →