By: Peter Setaro, NAI Global
Broadcasted March 10, 2010
The readers of Private Equity Real Estate (PERE) magazine named NAI Global the Global Broker of the Year in the PERE Awards 2009.
“Each year, the readers of PERE magazine and PERENews.com nominate and choose the firms, individuals and deals they believe stood out from the crowd the previous year,” said Zoe Hughes, Senior Editor, Real Estate. “2009 was a year in which the private real estate investing world experienced a tremendous amount of turmoil, so to be selected in this year’s awards is a tremendous accolade from our readers and a vote of confidence in what lies ahead for NAI Global.”
“This award is a testament to the quality and commitment of NAI Global and its professionals around the world in serving the private equity and financial sectors,” said Jeffrey M. Finn, NAI Global President & CEO. “Looking ahead, we will continue to innovate and add value with focused service offerings like our Special Asset Solutions group or the Commercial Property PowerSale™ program, to deliver exceptional results for clients around the globe.”
NAI Global offers a wide range of services for the commercial real estate investment sector, including asset management, acquisition/disposition, property management, leasing/agency services, valuation and advisory, market analytics, auction and portfolio optimization. The Global Broker of the Year award from PERE serves as recognition that NAI Global is the best at identifying and anticipating a client’s investment and brokerage needs.
Thursday, March 11, 2010
Monday, March 1, 2010
Valuing Commercial Real Estate in 2010
By: Tom Knapp, CCIM, MAI
NAI Ruhl & Ruhl Commercial Company
Original article published by the Iowa Bankers Association on February 26, 2010
The principles of valuing commercial real estate in a recession may be similar to ordinary times, but the importance of being in touch with the market and what its participants are thinking becomes heightened dramatically. Interpreting what terms market participants are willing and able to accept in any given transaction is the key to real estate valuation.
The three commonly accepted appraisal methodologies — the Cost Approach, Sales Approach and Income Approach — each represent their own challenges in today’s market.
The Cost Approach is a good check for the Sales and Income Approaches but is not reliable by itself. When speculative developments are not considered feasible, estimating the different forms of depreciation becomes increasingly difficult. Total accrued depreciation is more accurately represented in the Sales and Income Approaches.
Recent sales of similarly-improved properties are an indication of market value after adjusting for differences. This recognizes the availability of competitive substitute properties in the market. Accuracy of the Sales Approach depends substantially upon demand. There must be an active market for the subject property. During stable times sales that occurred 12–36 months ago can still provide a reasonable indication of value. However, a sale that occurred at the market peak in 2007 could be quite misleading today. There is a significant price gap between buyers and sellers today, and as a result, there are few transactions. If your appraiser is using sales that all occurred more than 12 months ago, look for a significant amount of discussion and market support for their market conditions adjustment.
The Income Approach is the best valuation tool we have in our current market. Comparing current lease rates and terms to previous periods provides a good indication of the reduction in gross revenue from the market peak. As an example office lease rates in central Iowa are down 20 to 30 percent. This reduction can be less in prime locations and more in distressed properties. The main premise of the direct capitalization approach is that a market derived overall capitalization rate (OAR) when consistently derived and applied to similarly derived net operating income, provides a reliable tool to estimate market value. Further, if the OAR is applied to net income which includes similar expense, and reversion components as the sales from which it is derived, it also includes investor’s expectations of changes in NOI and reversion value over the future holding period. Consequently, given a stabilized property and anticipated cash flow, direct capitalization provides an analysis tool which can be used in most situations.
Utilizing this method to value a property that has above market vacancy or contract lease rates significantly different than current market rent will result in a substantial error. This is the most common mistake made by real estate professionals in valuing commercial real estate. When cash flows are anticipated to be irregular, or when there is a lease-up period, prior to stabilized occupancy, a discounted cash flow analysis is necessary.
To summarize current market conditions, I believe the market will return to fundamental principles of valuation for income-producing real estate and be primarily driven by fear instead of greed or the “greater fool theory” we experienced over most of the past 10 years. There will likely be a period of 12 to 24 months in which we experience a further reduction in value as investors consider the risk associated with this type of investment to be high. The large number of distressed properties will even have a negative effect on the value of stable, well-located properties.
Once we have realized the bottom of the market, I anticipate a slow recovery ranging from three to five years to achieve what investors will consider a healthy market. The two largest variables in achieving a stable market again, in my opinion, are employment and availability of capital.
About the Author
Tom Knapp is an associate with NAI Ruhl & Ruhl Commercial Company. He earned a B.A. in Finance with an emphasis in real estate from the University of Northern Iowa. He earned his MAI designation from the Appraisal Institute in 1997 and achieved CCIM (Certified Commercial Investment Member) designation in 1999. Contact Tom at tknapp@ruhlcommercial.com.
NAI Ruhl & Ruhl Commercial Company
Original article published by the Iowa Bankers Association on February 26, 2010
The principles of valuing commercial real estate in a recession may be similar to ordinary times, but the importance of being in touch with the market and what its participants are thinking becomes heightened dramatically. Interpreting what terms market participants are willing and able to accept in any given transaction is the key to real estate valuation.The three commonly accepted appraisal methodologies — the Cost Approach, Sales Approach and Income Approach — each represent their own challenges in today’s market.
The Cost Approach is a good check for the Sales and Income Approaches but is not reliable by itself. When speculative developments are not considered feasible, estimating the different forms of depreciation becomes increasingly difficult. Total accrued depreciation is more accurately represented in the Sales and Income Approaches.
Recent sales of similarly-improved properties are an indication of market value after adjusting for differences. This recognizes the availability of competitive substitute properties in the market. Accuracy of the Sales Approach depends substantially upon demand. There must be an active market for the subject property. During stable times sales that occurred 12–36 months ago can still provide a reasonable indication of value. However, a sale that occurred at the market peak in 2007 could be quite misleading today. There is a significant price gap between buyers and sellers today, and as a result, there are few transactions. If your appraiser is using sales that all occurred more than 12 months ago, look for a significant amount of discussion and market support for their market conditions adjustment.
The Income Approach is the best valuation tool we have in our current market. Comparing current lease rates and terms to previous periods provides a good indication of the reduction in gross revenue from the market peak. As an example office lease rates in central Iowa are down 20 to 30 percent. This reduction can be less in prime locations and more in distressed properties. The main premise of the direct capitalization approach is that a market derived overall capitalization rate (OAR) when consistently derived and applied to similarly derived net operating income, provides a reliable tool to estimate market value. Further, if the OAR is applied to net income which includes similar expense, and reversion components as the sales from which it is derived, it also includes investor’s expectations of changes in NOI and reversion value over the future holding period. Consequently, given a stabilized property and anticipated cash flow, direct capitalization provides an analysis tool which can be used in most situations.
Utilizing this method to value a property that has above market vacancy or contract lease rates significantly different than current market rent will result in a substantial error. This is the most common mistake made by real estate professionals in valuing commercial real estate. When cash flows are anticipated to be irregular, or when there is a lease-up period, prior to stabilized occupancy, a discounted cash flow analysis is necessary.
To summarize current market conditions, I believe the market will return to fundamental principles of valuation for income-producing real estate and be primarily driven by fear instead of greed or the “greater fool theory” we experienced over most of the past 10 years. There will likely be a period of 12 to 24 months in which we experience a further reduction in value as investors consider the risk associated with this type of investment to be high. The large number of distressed properties will even have a negative effect on the value of stable, well-located properties.
Once we have realized the bottom of the market, I anticipate a slow recovery ranging from three to five years to achieve what investors will consider a healthy market. The two largest variables in achieving a stable market again, in my opinion, are employment and availability of capital.
About the Author
Tom Knapp is an associate with NAI Ruhl & Ruhl Commercial Company. He earned a B.A. in Finance with an emphasis in real estate from the University of Northern Iowa. He earned his MAI designation from the Appraisal Institute in 1997 and achieved CCIM (Certified Commercial Investment Member) designation in 1999. Contact Tom at tknapp@ruhlcommercial.com.
Tuesday, February 23, 2010
Community Life: Vice-President Stafford selected for "Forty Under 40"
Written by: Charlotte Barta, marketing coordinatorDes Moines, Iowa: Selected for professional achievements, community contributions, and personal character, hundreds of central Iowans apply but only forty are nominated as, "Forty Under 40."
Every year the Des Moines Business Record sets out to find central Iowa's forty most reputable professionals under the age of 40 and honor them for their achievements. In the 10 years the Business Record has been inducting these professionals, NAI Ruhl & Ruhl Commercial Company has now had five associates welcomed into this prestigious class:
President Kurt Mumm, 2000
Regional Vice President John Viggers, 2001
Vice President Marcus Pitts 2007
Every year the Des Moines Business Record sets out to find central Iowa's forty most reputable professionals under the age of 40 and honor them for their achievements. In the 10 years the Business Record has been inducting these professionals, NAI Ruhl & Ruhl Commercial Company has now had five associates welcomed into this prestigious class:
President Kurt Mumm, 2000
Regional Vice President John Viggers, 2001
Vice President Marcus Pitts 2007
Vice President Matt Lundberg, 2009
Vice President Christopher Stafford, 2010
The newest inductee, Vice President Christopher Stafford, was recognized for his retail work in the Des Moines Metro, the development of Willow Creek in Mason City, and continued involvement with various reputable community organizations such as the Junior Achievement Mentoring Program and Habitat for Humanity.
NAI Ruhl & Ruhl Commercial Company is proud of its “Forty under 40” associates. The company congratulates and applauds all of them for striving to do their best on the job and in the community. This continual desire for achievement is not only a reflection of the company; it also displays the drive of the associates who comprise it.
To read more about Christopher Stafford, or the original article, please visit, the Business Record’s, "Forty under 40."
Vice President Christopher Stafford, 2010
The newest inductee, Vice President Christopher Stafford, was recognized for his retail work in the Des Moines Metro, the development of Willow Creek in Mason City, and continued involvement with various reputable community organizations such as the Junior Achievement Mentoring Program and Habitat for Humanity.
NAI Ruhl & Ruhl Commercial Company is proud of its “Forty under 40” associates. The company congratulates and applauds all of them for striving to do their best on the job and in the community. This continual desire for achievement is not only a reflection of the company; it also displays the drive of the associates who comprise it.
To read more about Christopher Stafford, or the original article, please visit, the Business Record’s, "Forty under 40."
Tuesday, February 9, 2010
Ames Tribune: "Former Home Furniture Site to be Commercial Center"
Original Article By: Bob ZientaraStaff WriterPublished: Ames Tribune, Thursday, January 28, 2010 10:59 AM CST
"The site of the former Home Furniture store, 400 S. Duff Ave., will become a new commercial center later this year, according to a Des Moines real estate agent. Christopher Stafford, vice president for West Des Moines-based NAI Ruhl and Ruhl Commercial Co., said in place of the recently demolished Home Furniture building, a new, 8,500-square-foot building will be constructed this year.
The property is owned by Ames-based Tomco LLC and negotiations are on going with potential tenants, Stafford said. He also stated the property owners plan to break ground this spring, and the goal is to occupy the building with tenants by fall.
The building was sold last summer by NAI Ruhl and Ruhl Commercial Company. It briefly housed a mattress liquidation business before being demolished.
A fixture in the Ames retail community, Home Furniture opened for business in 1954 at 128 Lincoln Way, according to the Ames Historical Society. It was later moved to the South Duff location, and closed in the spring of 2009.Bob Zientara can be reached at (515) 663-6961 or rzientara@amestrib.com."
To view original article please click, here.
Wednesday, January 6, 2010
Community Life: Downtown Des Moines retains city gem located at the Partnership Building
Thanks to the diligence of NAI Ruhl & Ruhl Commercial Company associate, Keith Olson, and President, Kurt Mumm, the Greater Des Moines Partnership will remain at 700 Locust Street for 5 more years. Ruhl Regional Vice-President, Gary Haverkamp, was appointed receiver in April of 2009, when the former owner, DBSI, filed for bankruptcy November, 2008.The grueling 14-month closing process was drawn-out due to uncertainty of the property and it's future. The closing, however, locked in 19,161 square feet of prime office space in Downtown Des Moines, Iowa. The Greater Des Moines Partnership has been located at 700 Locust Street for over 10 years. It is not only a compliment, but a staple to the downtown environment.
If you would like to relocate your retail or office to this superior Downtown location, please contact NAI Ruhl & Ruhl Commercial Company associate, Keith Olson, for leasing information.
Keith Olson, associate
tel 515 309 4002
fax 515 309 4040
kolson@ruhlcommercial.com
