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

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Portland, OR | 2016 Top #CRE Markets to Watch: Retail

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Retail Markets to Watch. Not the largest or the most actively contested markets, the 2016 Retail Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Retail Market to Watch: Portland, OR

Portland - top retail market to watchPortland has experienced surging new employment in 2015 that has brought the unemployment rate down to 4.7% as of January ‘16, while new jobs are being continually added at an annualized rate of 3.1%, according to the Bureau of Labor Statistics. This is due to a well-diversified economy and quality of life that will also fuel growth in Portland’s retail real estate market. Top sectors for growth include Information, Leisure and Hospitality, Education and Health Services, and Construction, all growing at annualized rates of 9.4%, 4.6%, 4.5%, and 3.9%, respectively. As the population continues to grow as it has done by 6.1% from 2010 to 2014, according the Census Bureau, there will be greater needs for all real estate including retail establishments in 2016 and beyond.

Advisor Insights: SVN | Bluestone & Hockley in Portland, OR

SVN’s Portland-based Advisors at SVN | Bluestone & Hockley have some retail market highlights to share. Here’s what to look out for in Portland’s retail market in 2016:

  • Increase in on-market for sale properties
  • Decline in available SF for lease
  • Gradual increase of retail lease rate

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top retail markets, download the full version of the 2016 Retail Market Outlook report here.

2016 Retail Market Outlook

[bctt tweet=”Portland, OR is one of 2016’s top retail #CRE markets to watch.” username=”svnic”]

Choosing the Right Vendor for Your Property

Property Management Challenges

In our many years as a property manager we have faced numerous challenges with our vendors. Here are a few examples:

  • A sewage pump failed over the weekend and we called a vendor who wanted $5,000 to replace the sump pump. The pump cost was $1,000. We needed it replaced but ended up negotiating with the vendor to reduce the price. This company paid the technicians half of everything they brought in as a commission. You can imagine how they priced their emergency response.
  • A roofer installed a new roof. They issued a warranty on the roof. Within a year, the new roof started leaking and unfortunately the roofer went out of business, so the warranty was worthless.
  • A painter bid a project and asked for half upfront to cover painting expenses. After we paid half upfront, he ignored the project, took the money and went on vacation. We ended up litigating.
  • A drain cleaning company cleared a drain line. Unfortunately, the cutting tool on their drain cleaner destroyed the pipe. Was the pipe old? Or did they destroy the pipe?

As you can tell, there is room for error…and errors cost you money. Your goal is to limit the errors and in turn improve property operating returns.

Vendor Pricing

Most of us are driven by vendor pricing. We want the least expensive price we can find — that is just natural. Unfortunately, the lowest price often produces substandard work due to lack of licensing or insurance, miscommunication or plain old inexperience.

Scope/Specifications (Spec)

First, you need to provide your vendor with clear instructions. Do you really know what you want? In particular, do you have a special siding you want to use, a special roofing system you want installed, or a paint job completed where the paint has a mold inhibitor included?

Your property might need a paint job, but you may not know how to get a vendor to do this correctly. To get help on this you can meet a few vendors and get educated or you can go to a paint store (where they have paint specifications or specs on file to get direction). You can also hire a consultant (an engineer or an architect) to help you with details. In other words, you need to learn how to manage major repairs and get them done right.

It makes sense to meet with at least three vendors and obtain three bids. Make sure they detail what they are going to do. I usually also ask for a hand sketch of the property or the job to help visualize where repairs are going to take place, especially for siding and asphalt repairs. This process is somewhat time-consuming, but the investment in time is worthwhile if we want the best quality we can afford.

This painting scope is an example of a “Spec”:

General:

  • Your contact details
  • Preferred timeframe

Surfaces to be painted: Specify the material of each interior and exterior surface (brick, wood, plaster, metal, cement, render, etc.) and whether they are new or previously painted. The material and condition of the surface will impact the level of preparation required, the sealing process required, and number of finishing coats needed.

Interior:

  • Walls
  • Ceilings
  • Doors
  • Windows
  • Trims
  • Floors

Exterior:

  • Siding
  • Roof
  • Gutters / drain pipes
  • Fence / gates
  • Doors
  • Windows
  • Garage
  • Garden paths

Preparation Required. This is the most time-consuming part of the painting process and most critical for long-lasting results. Preparation items to include:

  • Re-putting of window glazing
  • Mold removal
  • Washing / cleaning of surfaces
  • Dust, grease or scale removal
  • Rust removal
  • Loose or flaking paint removal
  • Patching holes, cracks, broken plaster
  • Sanding
  • Removal of fittings
  • Priming and sealing
  • Caulking of windows and doors
  • Soffit and siding repairs

Painting Materials and Colors: Some colors will require more coats than others. The more specific you can be about colors and materials, the more likely they will be able to achieve the desired outcome. Include in the brief:

  • Color schedule
  • Brand of paints
  • Gloss level
  • Depth of paint application
  • One or two coats?
  • Paint samples

Method of Application: The best method of application will depend on the type of finish being applied, the desired results, the type of surface and your budget. The three methods are:

  • Brush
  • Roller
  • Spray painting

Clean Up: Ensure that the quotes include information on clean-up procedures including:

  • Rubbish removal
  • Paint disposal
  • Splatter removal
  • Landscape / outdoor furniture protection

Vendor Relationships

Over the years of owning and managing property you will have developed special relationships with vendors you trust, i.e. those that come back and repeatedly do a good job. Most of the time you will have received a referral from a friend, or through a rental owners organization, like the Rental Housing Association (RHA) or the Metro Multifamily Housing Association (MMHA).

You might search online or turn to online directories such as Angie’s List. I caution you to be careful when using the internet exclusively. Vendors who are very tech savvy will have stacked the deck and may be paying to maintain their web reputation.

Smaller, more cost-effective vendors will be harder to find on the internet. You may have to rely on word of mouth. Always ask the question if the referral source is getting paid for referring the vendor.

Other key items to consider as you chose vendors to work on your property:

Professionalism

  • Do they care that the job is done in a professional manner?
  • Will they do it right the first time, using products and parts that will last?
  • Will they limit their work to repairs authorized by the Landlord?
  • Does their staff have the right skill set? Are they well-trained?
  • Will they issue a warranty or guarantee for more than 30-days?
  • Do they have general liability and worker’s compensation insurance?
  • Do they have a contractor’s license and are they bonded?
  • If they hire sub-contractors to perform the job, who is responsible for liens and quality control?

Emergency Vendors (such as plumbers, electricians, basic carpentry/handy person)

  • Are they available 24 hours a day, 365 days a year?
  • How much extra do they charge for emergency response?

Recalls

  • Is your vendor willing to admit their mistakes?
  • Will they give you a credit?
  • If required, will they redo the job?

Cleanliness

  • Will the job site be cleaned before they leave?
  • Will they protect tenants’ possessions?

The Fine Print

Make sure you understand the language on the back of the bid.

  • The vendor’s rules they ask you to comply with
  • When the late fees kick in and at what rate they accrue
  • Collection procedures if you do not pay
  • Mediation to solve disputes
  • Lien releases for large jobs

Summary

We use most vendors over and over again. They are part of our team and we need them to deliver a quality job on a consistent basis. Therefore, it is our responsibility to be clear in our instructions and expectations. We also need to acknowledge excellence and pay them on time. Vendors have bills, employees, health insurance and taxes to pay. If we expect them to deliver for us, we should behave responsibly as well.

The vast majority of vendors are trustworthy. What differentiates vendors is their experience, their tools and equipment, their overhead, the quality of their staff and their problem solving techniques. Your job as a property owner is to clearly spell out the job scope and pick the best vendor for the job. Unfortunately, this is not easy, but the tips in this article will simplify the process for you and improve your maintenance results.

To read about the benefits of franchising for property managers, click here.

SVN PM Value Prop

Finding the Right Property Manager for Your Rental Property

How does the “right” property manager enhance the value of your rental property?

No property manager can execute perfectly, but the “right” property manager knows how to keep properties functioning and making money 24 hours a day, 365 days a year.

What sets these property managers apart?

The most important thing the “right” property manager can do for you is to keep your property rented. 

  • In order to do this, they need to manage the tenant mix. The wrong tenant mix can destroy a property. Tenants with felony records, a history of evictions and poor credit do not help in building a strong, positive cash flowing property. At the same time, the manager has to comply with all federal credit and fair housing practices including the requirements for accepting medical assistance (companion) animals.
  • It helps if the property is located in a great location, but even if a property is located in a “C” location surrounded by crime, the right tenant selection can save it. Of course, a property that is surrounded by barbed wire to keep the “bad element out” can be a bit intimidating. Property managers are not miracle makers, but they are tasked with helping owners and tenants to make a property as safe as possible. Renting to drug dealers, sex offenders or tenants without a visible way of making an income does not assist in making a property safe. A tenant’s number one requirement is to feel comfortable in their rental home/apartment and the property manager’s job is to do their best to achieve that.

Property managers need to make it easy for a potential tenant to rent a property.

  • Clear and easy web access is critical
  • Online applications make it easy to apply
  • Ease of access to a rental unit and meeting with an on-site manager who wants them as a tenant and welcomes them to the property
  • Signage at the property that makes it easy to find the on-site manager
  • On-site flyer boxes with current rental information

Does the property look good?

 Tenants and owners both judge a book by its cover. The potential tenant will drive on by if:

  • The property does not look clean and picked up
  • The property looks worn out and needs touch-up paint
  • The asphalt looks old and the parking lot is not seal coated
  • The landscaping is tired, overgrown or packed with litter
  • The decks are cluttered
  • The rental units are not cleaned, do not smell great and are not rent-ready
  • The manager is not available

Behind the Scenes

Like a movie director, a property manager has to direct many pieces of the puzzle to get a property to operate properly.

  • Property owners want to see monthly checks
  • They want clear reporting/accounting systems that help them track the progress of their properties
    • Rent roll
    • Balance sheet
    • Profit and loss reporting
    • Aged receivable reporting
    • Clear monthly property summaries
  • They want their property manager and vendors to be honest

This week a client told me a story of a competitor who spent $30,000 on repairs to properties. They even supplied the bills. But when the owner inspected the property unit by unit, the repairs were not completed. Appliances were billed for but not installed, nor were the floor repairs.

Property managers should:

  • Have excellent, reliable vendors who are licensed and bonded
  • Make sure invoices are clearly marked by unit
  • Spot check property inspections to prove that the work has been completed as invoiced
  • Have vendor policies in place that protect clients, properties, and the property manager
  • Make sure vendors get paid on time. Vendors that are not paid on time don’t have the financial resources to do the job right the next time

Excellent property managers:

  • Train their staff continuously in the following areas:
    • Customer service
    • Landlord-Tenant laws
    • Federal laws
    • Maintenance terminology
    • Emergency response
    • Use of property management software and technology

The “right” property manager focuses on:

  • Preventative maintenance
  • Staff availability 24 hours a day – 365 days a year
  • Planning ahead:
    • Using an annual management plan
    • Developing an annual budget and managing to that budget
    • Using experience to help set a property into the marketplace so it can compete for new tenants, increase value through careful expenditures, well-planned property upgrades and rental increases

All of these items build the basis for a consistent and thoughtful property management process, but one person cannot do them all by themselves. It takes the right property management company, with the right infrastructure, vision and team of professionals.

Successfully coordinating these items with the client’s priorities in mind makes for an exemplary property manager and property management company. Property owners in search of a property manager can use this summary as a checklist to establish a short list of companies that meet their needs. Good research should lead to good results.

Does that mean you will be hiring the least expensive property manager in the marketplace? Probably not. 

To maintain all of the above policies and procedures takes time, staff, experience and money. A low-cost provider will have a hard time delivering these items on a consistent basis. Rest assured, the marketplace can deliver competitively priced property managers who do an excellent job. It is these property managers who will be consistently focused on increasing the value of your property.

Sperry Van Ness® property managers are dedicated to providing excellent service. To read about the benefits of franchising for property managers, click here.

SVN PM Value Prop

5 for Friday with John Brandhorst of Sperry Van Ness/Bluestone & Hockley

Five for Friday turns the spotlight on John Brandhorst, a senior advisor at Sperry Van Ness/Bluestone & Hockley in Portland, OR.

John Brandhorst, Senior Advisor, Sperry Van Ness/Bluestone & Hockley
John Brandhorst, Senior Advisor, Sperry Van Ness/Bluestone & Hockley

1.     What is your geographic market and product specialty? 
My geographic market is the Portland MSA and my product specialty is office and industrial sales and leasing.

2.     What’s your latest best practice tip that you can share? 
I can’t emphasize enough the power of a team. Studying Mike Lipsey’s material and reading Rod Santomassimo’s book, “Brokers Who Dominate” recently, a common thread among highly successful brokers is that they were able to break through to the next level by building strong teams. I’ve teamed up with Steve Hagan in our office and we brought in Matt Simpson to help round out the team. Our skill sets complement each other well and we’re quickly realizing the efficiencies of working within a team environment. We’re excited about what we can do together in 2013!  The best advice I found was to be patient and seek out team members who have differing but complimentary skill sets so that the whole is greater than the sum of its parts.

3.     What’s been the biggest change over on how you run your business in the past decade?
Things are so much different in this business than they were when I started just ten years ago and I’d say that the majority of those changes are directly related to the advent of new technologies – smart phones, iPads, new software programs and the like. They’ve allowed us to become so much more efficient than we used to be.

4.     What business book do you like to recommend to your colleagues?
From above, Brokers Who Dominate by Rod Santomassimo.

5.     What’s a fun fact that not everyone knows about you? 
When I was supposed to be a freshman in high school, I dropped out for a year to hang out in Thailand with my dad, who was on a Fulbright exchange as a professor at Mahidol University and I spent a year traveling and having fun in Southeast Asia. I had to make up the year of school but it was well worth it – it was an incredible opportunity and definitely helped develop my love of travel and exploring other cultures.

 

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