written by
Alec Spencer

“Why do I need a Tenant Rep Broker?”

Commercial Tenants will often sign leases without a broker- unfortunately, it’s unlikely those tenants get the best deal. Having a broker advocate for your terms is crucial. 

Commercial landlords have goals for their property and above all, they want maximum returns and higher rent. Property owners typically hire listing brokers who handle the day-to-day leasing activity and get compensated in the form of a commission after the deal is executed. When a tenant searches for commercial space on their own, it is important to remember the lessor broker has a fiduciary duty to the property owner, not you the tenant.

Maybe the most common industry misconception is a tenant operating without broker representation will save the landlord money by eliminating one side of a commission. While that may be true, listing agents are far savvier than that. What actually happens when a tenant is unrepresented, is the listing agent ends up receiving a larger commission for less work on their part as listing agreements typically provide full market commission regardless of whether or not the tenant has a broker.

 

“So where is the value in hiring a real estate professional for Tenant Representation?”

 

Maybe the most valuable is by saving the tenant time and energy. As a business owner, you don’t always have time to search available properties, schedule tours, contact listing brokers, or negotiate rates and terms. An experienced and driven Tenant Rep Broker is there to handle all the busy work so you can focus on your expanding business venture.

Your Tenant Rep Broker also lends their market knowledge and has the ability to effortlessly navigate the moving parts of a lease. A well-versed Tenant Rep Broker knows what is available, who represents the owner and submarket rental rates. A deal is really an equation for these landlords so good Tenant Rep Brokers know how to calculate what is available and suggest where the ‘give’ is for each space. For example, a property with a high vacancy rate may have flexibility in its asking rent, whereas the final vacancy of a property may be firm on the asking price, but willing to offer a tenant improvement allowance to build out the space.

Tenant Rep Brokers also know the complicated dynamics of leasing and facilitate the process from start to finish. Including, finding and touring available spaces, presenting offers and letters of intent with credit statements and proof of financials, negotiating terms to get to a lease draft, reviewing a lease with an attorney when needed, advising on the time and cost estimates if there is a buildout, guidance on required permitting through the city- all these of which are done with the tenant’s best interest in mind.

Lessor Rep Brokers are unconcerned with tenant needs and will not be of use to a prospective or hopeful tenant, which is why it’s important to remember who is on your side.  Working with a professional and having someone advocate for you through such a large life milestone is invaluable.

To learn more about Tenant Representation, please reach out to Alec Spencer at aspencer@intersectioncre.com 

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Rocco Cortese

Intersection is pleased to announce the sale of a fully leased and stabilized internal investment fund property managed by Intersection

Experiential Poway Retail Center Closes for $13.5 M

Senior Directors, Kyle Clark, and Dan McCarthy along with Senior Associate Alec Spencer, represented the seller in the sale of the North County retail center, Old Poway Village at 14005-14055 Midland Road, Poway CA. The 35,191 square-foot award-winning center consists of a selection of carefully curated retail tenants.

The property was sold as a fully leased and stabilized investment. After acquiring the property in 2017, Intersection established a new vision for the center that focused on building a destination lifestyle center for the Poway Community. To accomplish this, Intersection replaced several non-performing tenants with new, carefully curated businesses to create a retail experience conducive to the family neighborhood of Poway and surrounding North County residents.

Artisan Food and Beverage tenants The Hop Stop, Smokin’ J’s, and Mission Cellars anchor the center, and they are complemented with users such as the Bark and Collar, Poway Music Academy, Poway Pilates, and a lineup of other local tenants that support a unique dining and shopping experience.

“This has been a true passion play for Intersection.” Said Mark Hoekstra, Managing Director of Intersection. “I grew up in this neighborhood and always felt that this center could become something special. It has been an amazing journey seeing this property transform”.

The property was sold to a 1031 Exchange Buyer who closed within 45 days of opening escrow. “We positioned this asset to sell with clean triple net leases, good lease term on the rent roll, and have maintained the property impeccably.”, shared broker Kyle Clark “The Escrow was smooth with no surprises.”

The buyer plans to hold the asset long-term drawing upon the stabilized cash flow. “This property performed very well during the pandemic.” Stated broker Dan McCarthy. “Our tenant base was resilient, and the many outdoor areas benefited our food and beverage tenants significantly.”

To learn more about this deal please reach out to Kyle Clark at kclark@intersectioncre.com or Dan McCarthy at dmccarthy@intersectioncre.com

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Anton Myskiw

Intersection Makes First Nevada Acquisition Adding to a Diverse Portfolio of Value-Add Properties in Attractive Growth Markets

LAS VEGAS, Nevada. – Intersection officially announced the close of escrow on a 100% occupied 18-unit flex industrial property in Las Vegas, Nevada for $4,525,000. This property is the seventh acquisition made by the company crossing $70M of total capitalization.

The property, located at 4355 -4375 W. Reno Ave., Las Vegas, NV 92105 is a two-building project in West Las Vegas and was purchased in an off-market transaction from a local ownership group. The deal was sourced off-market through a local broker Erik Sexton of NAI Excel Las Vegas.

“This was a property that needed institutional quality management and an entrepreneurial strategy. Intersection recognized the value and moved quickly.”

Said Sexton. Intersection Senior Analyst Anton Myskiw added, “We have been working diligently to find industrial/flex assets in this market. We’ve already completed 3 new leases and will execute a value-add plan that improves operations as well as the curb appeal of the property.”

The asset is currently 100% leased by a wide cast of both local and regional tenants, with 72% of the building’s occupancy rolling in the next 12 months. Las Vegas is an attractive industrial growth market, given its positioning as a centrally located logistics hub for the Western region of the states. With 8.5M SF of industrial space under construction in the second quarter of 2021- Intersection is confident this property is a prime candidate to attract auxiliary/complementary users servicing the larger projects-general contractors, material vendors, and other development-focused tenants.

To learn more about this transaction or to inquire about how to invest in a portfolio property please contact Senior Analyst Anton Myskiw at amyskiw@intesectioncre.com

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Steve Gildred

Helpful Tips to Become a Skilled Networking Professional

When it comes to networking, commercial real estate is no different than any other industry; the better you take care of your network, the better your network takes care of you. While the brokerage side of the business may seem like an individual operation, you’re only as strong as your network and networking is a craft that requires patience and dedication to fully master. The following are just a few helpful tips and suggestions to help you become a premier networker in commercial real estate:

Play Your Cards Right

As a broker, you find yourself on the go often. Since you never know when you might stumble across your next client, it’s an absolute must to have your business card handy at all times. Just as important as handing out business cards, however, is taking them. A card given puts you on someone’s radar but a card taken gives you the power to initiate a relationship. To properly maximize your business card collection, it’s important to log every new entry into a database of contacts that can be tracked and monitored. Next, you must create a plan for when and how you intend to initiate contact. Last but not least, be mindful of timing; each new contact carries with it a limited window of opportunity, and business cards have a propensity to stack up on your desk if you’re not proactive with them.  

Invest in Your Network

The greatest gift you can give someone is your time and nobody is more keenly aware of this concept than a premier networker. Relationships are not born from the mere initiation of contact but by logging meaningful time and establishing a genuine connection. This may sound simple enough but it becomes infinitely more complex the larger your network grows. As a result, prioritizing relationships is critical as one only has so much time to offer and must be cautious about which relationships to allocate your time towards. The balance of maintaining old relationships while developing new ones is a careful song and dance that requires a strong sense of priorities and self-awareness. 

Establish Yourself in the Local Community

A great way to expand your professional network is by attending local networking organizations such as the Commercial Real Estate Alliance (CRA), Building Owners and Managers Association (BOMA), and National Association for Industrial and Office Parks (NAIOP). These organizations typically meet monthly and will provide you with exposure to other local professionals and business owners. In order to maximize your affiliations and create a consistent presence within these organizations, it’s important to attend as many networking events as possible. This is especially true of your initial years as a new member of the organization.

Have Fun

Whether you’re exchanging business cards, cultivating close relationships, or mingling at networking events, remember to always have fun with it. At its core, networking is designed to be a uniquely rewarding experience and should be taken as such. The more people you can plug into your network that you genuinely enjoy, the more satisfying your experience will become. At some point, networking will stop feeling like work altogether as it eventually becomes second nature. And that’s when the real fun begins because, in the famous words of Mark Twain, if you can “find a job you enjoy doing, you will never have to work a day in your life”

To discuss networking strategy in more detail or if you would like more information about Intersection, please reach out to Steve Gildred at sgildred@intersectioncre.com

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Rocco Cortese

A Detailed look into general partner investing and navigating a deal through a pandemic

Throughout my years raising capital for our real estate investments, I have encountered a few investors who ask how they can be the General Partner instead of the Limited Partner in a deal. The first thing that would come to mind when I heard those questions is: Invest thousands of hours in learning a complex industry, and hundreds of thousands of dollars into people and technology, and you will be just getting started. Putting together a successful commercial real estate deal is not for the faint at heart or the inexperienced. It takes years of hard-work, talented people and you have to actually find the right deal in a very competitive market. That said, Ingenuity, Collaboration, and Stewardship are core values of our firm so we always tried to find a way to give our investors a taste of the General Partner “like” returns by targeting value add properties with higher return scenarios.

 

During the Pandemic, we were raising our second Fund and in March of this year (2020) we purchased an office property. Bad timing? Not really. We still love the deal and our basis, and in fact, feel very bullish about the long-term opportunity to generate a strong return for our investors. The structure in that deal, however, was a little different. We had a joint venture partner in that property, and our Fund was acting as the General Partner. All of the returns from the Joint Venture, including carried interests that we would be able to earn in excess of the property level returns, were set up to inure to the Fund. This structure effectively put all of the Fund investors in the role of General Partner. Normally, this scenario is structured a little differently with investors only earning a percentage of the carried interest. However, because we were using Fund equity as the General Partner capital, we felt that sending 100% of the carried interest to investors was the right thing to do. Considering the risk that the Pandemic has thrown into the market, we’re happy to have that structure in place and are optimistic that the returns will ultimately play out in a significantly positive way for our Fund.

As we approached the structure of our last deal, we started to consider the concept in a more meaningful way for future deals. Our research returned that the GP Co-Investment structure seemed very appealing for us as we continued to build our investment practice. We had just built out a new strategy for acquiring logistics based industrial in markets west of Denver and realized that we could lever our personal capital more effectively if we brought in GP-Co Investors in multiple deals. They would have the opportunity to earn a 10% piece of our carried interest effectively allowing the individual investor to earn greater returns than our institutional limited partners when measured against project-level returns.

Sometimes unexpected situations create opportunity. Not only did we develop a new and exciting investment strategy, but we were also able to create an investment structure that helped us address the requests of those who wanted to be General Partner in some of our deals. The thousands of hours, and hundreds of thousands of dollars invested in people and technology, along with a little entrepreneurship, helped us put our private investors one step ahead. We’ll still do all of the heavy lifting of course and continue to focus on enriching the lives of those we serve (whether they be GP’s or LP’s)!

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Kyle Clark

Addressing Common Misconceptions on San Diego Ballot Measure E

Next month, San Diego voters will have the opportunity to weigh in on Measure E which, if approved, will eliminate the 30-foot height limit in the Midway Planning Area surrounding the Sports Arena. Over the past couple of months, we’ve heard loads of discussion about this measure and what effect it will have on our community. Aside from the traditional media sources, local internet discussion boards like NextDoor are alive with commentary and like most propositions, the information being shared ranges from “Interesting” to “You’ve Got to be Kidding?”. As a local specific to the measure’s zipcode, and commercial real estate agent with over 20 years of experience, I want to neutrally shed light on the common misconceptions surrounding measure-E and hopefully offer insight in contrast to local fearmongering

Misconception- ‘This measure will expose all of our coastal areas to unlimited building heights, which will result in a landscape similar to Waikiki Beach offering no views available more than a block inland from the shore.‘

Fact- “This measure pertains Only to the zoned area within the Midway Community Planning District. It will not have any effect on the regulations affecting other properties in the Peninsula, Ocean Beach, Pacific Beach or Bay Heights neighborhoods. The current 30 ft. limits will continue to apply in all these other areas”

Misconception- ‘If this measure passes, developers will have no limit to how much they can build.‘

Fact- “While the 30-foot height limit will be removed, any new development will still need to obtain approval from the Midway Planning Group and the City of San Diego. The City Zoning ordinance incorporates a Floor Area Ratio (FAR) factor, which limits how much density can be placed on a particular property. If you want to build to a 200 foot height, the FAR will prohibit that. For instance, if the FAR is 3.0 and the land parcel is 10,000 square feet, the developer cannot legally build more than 30,000 square feet on the parcel (3.0 x 10,000 ft.). This FAR is the true limiting factor to how much can be constructed on a site, not the building height”

Given the over-cautious and FAR constraints, the developer cannot build any more on the land regardless of the height restriction. The key difference is the mass of what would be constructed. With a three-story limit, the builder would build three stories at 10,000 feet per floor, effectively covering 100% of the land parcel. If the height limit were removed, the builder could build a six-story structure that covered 50% of the land area. This would be preferable since we now have 5,000 feet of open, landscaped space.

The City has already designated Brookfield as the preferred developer for the Sports Arena site. We can assume that they will continue with their efforts to eventually redevelop this massive site. Surely, this will spur additional redevelopment on other properties in the area. So, what are the options? What would you like to see in our community in 10 years, with the assumption that any developer will see to maximize the utility of their land given the development constraints and regulations in-place?

The mantra we keep hearing over and over is our desire for open space and walkable communities with plenty of public-access to the various amenities. With the 30 ft. limitation in-place, the chances of this are slim since the builder will need to maximize the footprint while complying with the FAR regulations. Imagine a 30-foot wall of uninterrupted structures all along Sports Arena Blvd, with an intermittent break where the side streets intersect. You will not be able to see the new sports arena because of the wall’s obstruction. In contrast, imagine a series of taller structures offering the same square footage of space yet with greenbelts and walking/biking paths in between offering view corridors throughout.

The passage of measure-E, will not open the floodgates and allow the developer to construct any more building area than they can under the current in-place regulations for permitted floor area. What it will do is allow for the development of taller buildings, which will then allow for the open space and amenities we all desire.

The pressure to come together for measure-E is heavy as this decision will have a multi-generational impact on Midway and the sports arena area.

If you have any interest in learning more about local market updates reach out to Kyle Clark at kclark@intersectioncre.com

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