Category: Office Investing Education

Commercial Real Estate Trends in 2020

Early in the current economic cycle, the large metro areas like Boston and Washington, D.C. were the fastest growing regions for commercial real estate. They tended to recover faster than other parts of the country, and as a result, saw major construction projects driven by strong economic growth.

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The Sublease Clause

You might chuckle at a three-page sublease clause in a commercial lease, thinking that some lawyers are putting their kids through college billing with this wasted verbiage. The reality is that owners of commercial real estate do need to properly restrict sublease rights to protect their profit, income streams, and property value. It’s important that landlords don’t allow high-profile tenants to weaken these crucial sublease clauses that protect their interests.

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Why Tenant Credit Is So Important

It’s not uncommon for investors to think of large office buildings with dozens of tenants as being broadly diversified, risk mitigated investments. Like an apartment building, it is often assumed that by having a good mix of many tenants without overdependence on just a few, a building can be operated with relative impunity because if one tenant moves out, the impact will be minimal.

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Why Cap Rates are a Blunt Instrument in Office Building Valuation

Cap rates are not an all-encompassing measure of the true value of commercial real estate. It’s common to lean very heavily on cap rates as an indication of value, but it’s only a broad measure that doesn’t take into account the specific circumstances of the building, its tenant mix, length of lease terms, the in-place rents versus the market rents, and the supply demand factors in the local market.

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The Radical Officectomy

How do you make sure you turn a profit with an office building property? There are no guarantees in real estate investment, but some developers have found more consistent success than others. Larry Feldman of Feldman Equities has a laser-sharp focus on office buildings, and he’s managed to keep a stable, profitable business going for 35 years, throughout multiple recessions and market downturns.

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The Ideal Holding Periods for a Real Estate Investment

How long should you hold onto your real estate before selling? While the final decision is up to you personally and your investment strategy, many industry veterans recommend longer holding periods. Larry Feldman has been in the office building development industry for more than 35 years; his family for over 100 years. His long-term hold strategy has helped him weather multiple downturns over the decades while continuing to grow his portfolio of buildings first in New York, and now in Tampa.

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