A Statement On Ukraine from Kevin Maggiacomo, SVN President and CEO

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SVN Restaurant Resource Group Gears Up for 2016

Focusing on Mixed-Use Property, SVN Restaurant Resource Group Starts the Year with New Goals in Mind

After a record-setting year of sales and leasing volume, the SVN Restaurant Resource Group is heading into 2016 with refined focus on mixed-use assets. The team has identified 25 ‘high-opportunity’ retail corridors in Chicago and nearby transportation oriented suburbs.

Why Mixed-Use?

SVN Restaurant Resource GroupMixed-use properties in Cook County offer a unique tax advantage over strictly commercial properties. A mixed-use property’s assessed value is based on 10% of market value while a commercial property’s assessed value is based on 25% market value. Based solely on classification, two properties with identical market values may have dramatically different real estate tax liability.

Better federal tax depreciation benefits are also available for mixed-use property owners. For instance, if residential rentals account for more than 80% of the asset’s overall income, the property improvements are depreciated over a 27.5 year period versus a typical 39 year period.

Investors of mixed-use buildings are often entrepreneurial, making it a “natural fit for our personalities and results-driven market strategies,” as described by SVN Advisor Marcus Sullivan.

High-Opportunity Neighborhoods

SVN Restaurant Resource GroupSVN Advisor Tim Rasmussen details the methodology in determining the 25 target corridors: “We recognized several common characteristics in neighborhoods where our team and clients were most successful: well-defined retail corridors, shifting demographics, high walkability scores, and close proximity to rapid transit.”

It is estimated that over 50% of neighborhood retail/commercial space is occupied by restaurant and other food related business. This trend is likely to continue as traditional brick-and-mortar retailers dwindle in the wake of e-commerce. However, the SVN Resource Group concedes the shifting dynamics present repositioning opportunities for savvy investors and restaurateurs.

Top Tier, Middle Market

The SVN Restaurant Resource Group emphasizes assets valued between $500K- $5.0M. According to SVN Advisor, Jim Martin, “These tend to be fairly easy to finance with local and regional banks, i.e., the MB’s and Bridgeview Banks of the world.”

Martin explains the strategy is consistent with the mid-market world where SVN typically contends. “We rarely compete with the likes of CBRE or JLL, yet we’re able to leverage a national platform, the most sophisticated commercial real estate tools in the industry, and ultimately win the business.”

New Blood

Christian Peppler has joined the SVN Restaurant Resources Group and will provide advisory services for mixed-use property owners throughout the Greater Chicagoland Area. Christian brings six years of commercial real estate experience and has overseen $10M in real estate transactions.

About The SVN Restaurant Resource Group

SVN Restaurant Resource GroupThe SVN Restaurant Resource Group provides first-in-class advisory to clients in the foodservice and hospitality industry. Landlords, restaurant and nightclub operators, bakeries, caterers, hotels, food processors and manufacturers rely on the experience, local market knowledge, industry relationships, and technology advantages possessed by this highly specialized team of commercial real estate professionals. SVN has over 200 offices throughout the US, Mexico and Canada.

To learn more, visit the SVN Restaurants website here.

[bctt tweet=”“We’re able to leverage a national platform, the most sophisticated commercial real estate tools in the industry, and ultimately win the business.””]

5 for Friday with Sperry Van Ness Advisor Chris Davis

This week, our 5 for Friday focuses on Chris Davis, advisor with Sperry Van Ness/Investec Services in Jacksonville, Fla. and Sperry Van Ness/Miller Commercial Real Estate in Salisbury, Md.

Chris Davis, advisor at Sperry Van Ness/Investec Services and Sperry Van Ness/Miller Commercial Real Estate
Chris Davis, Sperry Van Ness/Investec Services and Sperry Van Ness/Miller Commercial Real Estate

1. What is your geographic market and product specialty?

My market area is the mid-Atlantic in Maryland and Delaware. I am also licensed in Florida and do business in the Jacksonville market. I specialize in self-storage and hospitality.

2. What’s your latest best practice tip that you can share?

Make sure you have a strong presence in your market and strive to keep it. Utilize all your contacts, and you will be surprised how fast your database will grow.

3. What’s been the biggest changeover on how you run your business in the past decade?

Technology has really changed this business – so embrace it. I am trying to keep up with it and learn how to use it effectively. It will make you more efficient and productive.

4. What business book do you like to recommend to your colleagues?

“Brokers Who Dominate” by Rod Santomassimo. It’s a great book for all brokers to read.

5. What’s a fun fact that not everyone knows about you?

Even though my body lets me know I have gotten much older, I still try to play soccer with the kids I coach. In the early 80’s I received a full soccer scholarship to play for the nationally-ranked division one Philadelphia Textile (now Philadelphia University and division two). Our program dominated during that time and a lot of great players played there. I still stay in touch with them even though we all have moved on.

 

*All Sperry Van Ness® offices are independently owned and operated.

 

2013 Hospitality: Q1 Review & Q2 Outlook by Tom Hamm

Hotel occupancy rates

Nationally, hotel occupancy is currently running about 64%, up from 62% last year, while Average Daily Rates (ADR) continue to climb: $110 versus $105 last year.

Viewed from a chain scale perspective, Luxury is the most robust both in terms of absolute numbers and the rate of increase. In this segment, occupancy stands at 79% versus last year’s 76% and ADR is at $297 versus $278.  Luxury is followed  by Upper Upscale, Upscale, Upper Midscale and Independents. Midscale and Economy are at the bottom, with occupancy for economy properties of only 55% versus 54% and ADR of $53 versus $51 last year.

The strongest locations  are urban and resort, followed by airport. Among the top 25 markets, Miami is a standout with more than 89% occupancy presently and a $235 ADR (no doubt contributed to by the Sperry Van Ness 2013 National Conference). Other markets enjoying more than 80% occupancy include: New Orleans, New York, Oahu, Orlando Phoenix and Tampa.

Norfolk was at the bottom with only 48% occupancy, representing a 3% decline.  San Diego lost 3.2% occupancy points, down to a still healthy 71%. These markets  are heavily influenced by military and defense contract business,  and thus, are beginning to feel the effects of sequestration.  Sequestration also mean automatic spending cuts, including all non-essential government travel,  making the pinch felt in places like San Antonio, where the September National Defense Forum and Expo was cancelled, and in Northern Virginia and Washington, DC, where more than 30% of the market is government and government contractor business.

Transactions

From a transactional viewpoint, 2013 looks promising. Smith Travel Research (STR) projects hotel transactions of between $15 and $20 billion, up from about $12.5 billion last year but down from 2011’s $19 billion, which was driven by major hedge fund and REIT transactions. To give some perspective, five of the last ten years’ volume was under $15 billion.

Until now transactions were powered by cheap debt and commensurately low cap rates. This was coupled with very limited lending for new hotel construction that kept supply growth at only about 0.3%, which in the face of increasing demand, allowed hotels to increase their average rates. However, according to STR’s latest numbers, hotels in construction are up 39.9% year-over-year. The active pipeline includes  more than 320,000 new hotel rooms, equal  to a whopping 10% increase. Nevertheless, STR predicts that demand growth will continue to outpace supply growth through 2014, with RevPar increasing between 5.7% and 6%  through next year.

The bottom line is that hotel owners who have enjoyed a rebound, even if not to the extent of 2007 peak levels, should consider the opportunity to sell in the near term on the strength of improved revenue before the effects of sequestration, supply growth and inflation bring down hotel values.

 

Prepared by:

Tom Hamm
Tom Hamm, Council Chair of Hospitality Properties

Tom Hamm

Council Chair of Hospitality Properties

Sperry Van Ness/Hamm & Company

 

 

*All Sperry Van Ness® offices are independently owned and operated.