Archive for September 2010

To Abandon your Lease or Not To Abandon your Lease

An attorney friend -- who I frequently hack golf balls with -- has a dilemma.

The office he leases is in an office park that was recently taken back by the bank.  And, out of the 12 office buildings in the park, he is leasing +/-4,500 SF in the largest (+/-40,000 SF) building.  AND, he is one of three remaining tenants in the building.  He is paying about $2.00 NNN per SF per month.

Recently, several medical offices closed, a bank moved out, a financial services company closed and there seems to be No Tenants on the horizon.  Walking to and from his office sounds as if the entire building is vacant.  I can honestly tell you that there is at least 70% vacancy there if not more.

But, here is his rub: He met with the "new" property managers (PM) and a "bank representative. (BR)"  During the meeting, he expressed his desire to reduce his rent by at least half to a $1.00 per SF per month.  The PM said that he would have to supply three years taxes to see if he qualified for a temporary rent reduction.  He said he laught at the response.  The PM defend it's position saying that that was the norm for any tenant requesting relief on lease payments.

The attorney asked if they know of any of the other landlords going to tenants and offerring to reduce their lease rates just to have the tenants stay.  Of course, the PM had never heard of that.  (This PM manages about 95 properties in and around the Las Vegas Valley.)

Now, full disclosure: I had told the attorney that many landlords in the Las Vegas Valley are offerring reduced rents to tenants in an effort to get them to stay.  Many tenants are seeing competing properties with offerred rents lower than the tenants are paying.  And even these are NOT being leased up.  So, tenants are seeing blood. 

I have talked to tenants that they have asked for a reduction from their landlords.  They tell me if their landlord refuses, they move out and rent at the proeprty offerring the lower rents.  (Remember, this is a calculated risk for the tenant because, if you have a performance clause or a guarantee in your lease, the landlord can sue for damages. (Contact your attorney for legal advise prior to making any decisions.))

Now, my wife's company was giving back several suites of SF to her landlord because she had to downsize.  Her landlord surprised here by personally going to her office and asked her to stay saying he would do a "new" lease if she agreed to stay at least two years at HALF the rent she was paying.  And, other landlords are doing this -- regardless of what the PM is saying.

Now, if you are in a lease with a performance clause or personal guarantee, you are in a trickier situation.  My wife did NOT have either so she could have left and the landlord could have sued, but you can NOT get blood from a stone.  Especially, if she bankrupt her company, and formed a new company at the new location.

Now, I am NOT saying you should walk out on your lease.  What I am saying is that Landlords should reduce rent for tenants that are still in business after two years of this recession.  Continuing to squeeze high rents from tenants is bad business -- even if they are holding valid leases.

It's NOT much to ask.  Since banks own a lot of these properties.  And, competing RE Brokers are telling banks what they want to hear -- as the PM above -- just so they get the business.  The bank either made the bad loans in the first place or bought them from Wall Street; and they have received at least 65% or both the Bush and Obama stimulus packages.  So, you can NOT tell me they are NOT in a position to provide more help than they are.

For Information about Las Vegas Commercial Investment Property, contact David Howes at:

Respironics Leases 78,000 SF in Greensburg

Takes Former Delallo Food Distribution Center

Respironics Inc., producer of electronic medical products, has leased the 77,980-square-foot building at 1592 Roseytown Road in Greensburg, PA.

Located in the Westmoreland County Industrial submarket, the former Delallo Food Distribution Center features 3,530 square feet of office space and sits on five acres of land. Renovated in 1996, it offers 13 loading docks, seven drive-in bays and a clear height of 23 feet.

Rob Blackmore of CB Richard Ellis represented the tenant. Jeff Adams and John Bilyak represented the landlord, Francis X Delallo.

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region click here.

Realisticterms dot com

A so called "Celebrity Real Estate Agent" has released a video of himself giving his point of view or take on commercial property that is or seems to be going into foreclosure in Las Vegas, NV.

The problem is he has a layman's (residential Agent's) view of the situation.  His example of Deutsche Bank having so many properties in and around the "Strip" that are in trouble is laudable.  But, he doesn't understand the commercial mortgage market right now -- as I write this.  Deutsche Bank has written a lot of commercial loans on "Strip" properties, but that doesn't mean they or the property owner will have a significant interest in these properties for years to come.  And, their investments will pay off in time. 

For example:  He mentions Town Square as being in foreclosure.  Yes.  It is on the Notice of Default list.  BUT.  I have had the opportunity to discuss this shopping center's financial situation with representatives of the owner.  It all boils down to: this foreclosure notice is a power play by the bank.  I know first hand that Turnberry has been for more than a year been trying to refinance their debt for better terms, reduced loan amount and monthly payment.  And, I don't blame them for doing this.

When you are as strong financially as Trunberry, and you are seeing nationwide "other" developers re-negotiating their loans successfully, you follow suit.

Will Turnberry lose Town Square to foreclosure?  I can't answer that.  (As a proper disclosure, Turnberry did fail miserably with The Las Vegas Fountainbleau and it eventually Sold to Carl Ichan.)  However, Town Square was built at the right time, in the right location, and with the progressive future development of pads and other buildings in their overal plans, this property has a promising future regardless of the loan status that will go a long way into the future.) 

And, Jeffrey Soufer knows this.  (I think he got in over his head with The Las Vegas Fountainbleau.) But, Town Square is more in line with his true development experience.  He will fight the good fight and NOT let the bank take this property back.  (They will most likely file bankruptcy -- as they did on The Fountainbleau and reduce the debt significantly just as other companies have over the last two years.)

That leads us to whether investing in Las Vegas is still a viable option.  I firmly believe it is.  Even if prices of homes are still trickling down, there are still worth while commercial investments that may require some capital to re-tooling a property.  And that is when you can get back a good return on your investment.

Also, if you are an owner of a commercial type building, you need to visit:  Yes, it is a little bit of a pain to hear some one explain to you again how to save your property, but these guys got it right.  And, they have been doing it for several years before it became fashionable.

If you have any interest in Las Vegas Real Estate contact me at (702) 501-9388 or by email at

To Loan Re-Negotiate or Not to Loan Re-Negotiate 2

Unfortunately, I placed the wrong website in the blog.

here is the correct website:

My Apologies.

To Loan Re-Negotiate or Not to Loan Re-Negotiate

Since about a month ago, I have seen many property owners just walk away from their Las vegas Valley Commercial Real Estate Property.  Repeatedly, I have called owners and left messages for them to return my calls so that I can get a first hand account of what they are going through.  Unfortunately, I have only talked to very few of them.

It seems the problem with the Las Commercial Real Estate Market is that Banks with all the U.S. Government money, are least likely to help a small businessman save his over-encumbered property -- that is essentially their last hope of financial freedom.

Almost everyday, I see another property hit the Notice of Default List.  And, a few weeks or maybe a month later, that very same property is on the Notice of Sale List.

The problem is that they first try to re-negotiate the loan themselves.  This puts them at a disadvantage because the lenders are NOT required to help anyone -- except themselves.  Then, they hire a local attorney who is -- let's be honest -- unfamiliar with loan modifications.  The Owner is charged by the attorney to "try" to re-negotiate their loan.

When they fail, the Owner is essentially down to pocket money and they can NOT afford the proper person who has had extensive experience at re-working loans successfully.

Just about every Las Vegas Commercial Property owner, regardless of how many properties they own, are in a sinking boat in an ocean of desert sand.  As tenants are unable to maintain their business -- let alone pay their leases, they move out.  The landlord is unable to re-lease the space, so they end up behind in payments. 

Here is what they should have done in the first place.

There is a web site that explains the loan re-negotiation process.  It is: If you are willing to login and view the 7 minute loan re-negotiation process, it does explain with excellent clarity how to go about re-negotiating your commercial loan. 

And, Yes.  You have to: LOG-IN.  Giving the site Owner an idea of just who is visiting his site and viewing his intellectual information, is a small price to pay to learn about the process that most people do NOT really know.

Oh!  If you have any questions, write a comment.

Gas drilling sparks real estate windfall

Pittsburgh Tribune Review
by: Sam Spatter

September 13, 2010

The natural gas-rich Marcellus shale has created a surge in real estate activity in Southwest Pennsylvania.

It's not confined to leasing acres of land for natural gas drilling operations, but extends to the rental of housing and the leasing of office, industrial and warehouse space since the boom in gas exploration in the mile-deep shale began here two years ago.

"I estimate at least 400,000 square feet of new and existing warehouse space has been leased or purchased — and that's probably a low figure," said Dan Petricca of Coldwell Banker Commercial, who has been actively leasing space to companies.

Dan Adamski, executive vice president, Jones Lang LaSalle Americas Inc., has an even larger estimate. "There is in excess of 1.1 million square feet of office/warehouse space leased by the firms involved in the Marcellus Shale," he said.

That approaches a whole year's worth of leasing activity for the entire Pittsburgh region, figures show. Reports from Grubb & Ellis Pittsburgh show that in 2009, total office and industrial space leased in the region was 1.26 million square feet. Suburban locations — including Southpointe, Washington County, which has seen much of the shale-related growth — contributed significantly to that total.

As for housing, about 80 percent of the activity in Washington and adjoining counties has been in rentals, said Betsy West, president of the Washington-Greene County Association of Realtors. The boom in shale gas exploration, however, has not had a major impact on home sales, she said.

The industrial and residential real estate boom has come from new companies bringing jobs and people to the region, West said.

There has been no exact count of jobs created in Southwest Pennsylvania from the natural gas boom, but one estimate has 44,000 jobs being added statewide.

A survey by the Marcellus Shale Coalition, a trade group representing gas companies, found that 10 companies with operations in Southwest Pennsylvania now have 2,076 employees, and they expect to add 5,185 new jobs through 2011.

Moon-based Atlas Energy Inc., has been on a hiring spree since it announced in April a $1.7 billion joint venture with Reliance Industries Ltd. of India. Atlas has added 158 people to its roster this year, bringing its total to 677 in Pennsylvania, said spokeswoman Claudia Koloski. Most of the hires have come from this region, she said.

Kelley Hoover, director of brokerage services at Burns & Scalo Real Estate, said nearly 70 percent of her recent leases have been with companies that drill for natural gas or support them. She has worked with about 11 who have leased more than 50,000 square feet of space in local office buildings, with more than 33,000 square feet alone in the Southpointe 1 complex in Washington County.

A combined 21,000 square feet has been leased in areas such as Neville Island, Montour Business Park and Bridgeville, she said.

There are at least 50 companies involved locally in shale operations, and more are coming here, she said. "Every week I hear from another company, usually located in the nation's southwest, who wants to locate an office here," she said.

Hoover said a shortage of leasable space may be developing at Southpointe. "It depends on the amount of space the company needs for its office, but currently it's difficult to find 2,000 square feet available," she said. That's about the size of a GetGo station and pumps.

Because of the influx of natural gas companies into the Southpointe area, the office vacancy rate there is about 8 percent, said Adamski. And some companies are considering adding more space.

Universal Pegasus, based in Houston, Texas., opened an office with 10,000 square feet five months ago at 601 Technology Dr., Southpointe. The company, which employs 15 engineers, project managers and surveyors, expects to add between 50 and 70 mostly local employees over the next 18 months and double its space, said CEO John Jameson. The company provides energy consultation services to the oil and gas industry.

"Southwestern Pennsylvania is projected to be our fastest-growing area in the years to come," Jameson said.

Range Resources Inc. is planning to build its own building, as are others. Developer Horizon Properties has proposed a 180,000-square-foot building for Range in the Southpointe II complex, also in Washington County.

Besides Washington County, other areas are seeing activity. Examples are:

• Megnablend Inc., of Waxabachie, Texas, purchased the former Mars Petcare warehouse in Everson, Fayette County, from Everson Development LLC for $1.25 million.

"The reason we moved here was because of the Marcellus Shale operations, but that was not the only reason," said spokewoman Theresa Taylor.

Megnablend supplies custom chemical blends to the gas and oil industry, and has products for agricultural companies, with several customers here, she said. Megnablend will open its warehouse with six employees, and expects to employ 30 within three to five years.

• Talisman Energy Corp. of Calgary, Canada, decided to relocate its U.S. headquarters from Long Island, N.Y., to Pittsburgh because of the shale boom. The company leased a 50,142-square-foot building at Pennwood Commons, a two-building complex located in Thorn Hill Industrial Park, Cranberry. It is on track to hire 60 employees.

Many of Talisman's employees transferred to the area and buying homes here or renting apartments, said Hoover of Burns & Scalo.

• Allied Technology Inc., which serves the oil and natural gas industry with equipment used from the wellhead to the refinery, plans to build a $7.5 million facility at the Industrial 70 Park at Fitz Henry, South Huntingdon Township, in Westmoreland County. The company anticipates creating about 100 jobs at the plant within three years.

Allied Technology selected the site about a mile off Interstate 70 because of its proximity to the drilling that is occurring in Western Pennsylvania and West Virginia, and the easy access, said CEO Wendell Brooks. "We did a pretty careful search," he said.

The influx of workers has had a significant impact on local rental apartments in the past 18 month, said Northwood's West. Most available rental space has been leased. Some workers are knocking on house doors, asking if the owner would they like to rent a room there, she said.

Another phenomenon is the use of mobile homes leased to workers, she said.

"We are seeing an influx of families coming from Texas, Oklahoma, Wyoming, Virginia and Kentucky," she said. "These individuals, who usually have families and homes in their hometown, aren't interested in buying here unless they are able to sell their current home and relocate their family."

"We have seen several workers pool their resources and purchase a small house when rentals could not be found," she said.

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region click here.

Las Vegas Commercial Property Owners Give Up!

In my recent hunt to help commercial property owners in the Las Vegas valley, I have run into a wall of frustrated owners and dissolutioned financial institutes. The problem is: The owners have seen the future and have given up! The financial institiutes are just downright dissolutional.

Since 2000, when Las Vegas was on the cutting edge of developing property and moving forward so rapidly, the whole Las Vegas Valley was expanding infrastructure, building homes, commercial property, and roads so rapidly, that it was most likely Las Vegas had the best roads, and infrastructure, etc. in the entire nation.

However, when Wall Street finally realized that they wouldn't be able to re-sell their inflated and over-priced CDO's and CMBS' at a profit anymore, Las Vegas Investment dried up. And the property owners just investing in Las Vegas because it was an easy FLIP for 5 to 6 years were stuck with their over-leveraged and over-paid for property. (It was easy for the FLIPPERs to walk away.)

Now, since most commercial property owners are aware that they really, really over-paid, they began walking away from these properties without even a glance backward. (Of course, it was the commercial property FLIPPERS at first.) Then, when job loss started mounting, SFR owners walked. The financial institutes were beginning to hurt. Then, that lead to the commercial financial institutes finding out that they really, really over-financed these over-priced commercial properties through their CDO's or CMBS' to begin to see they were the ones now stuck through foreclosures with an over-paid for, over-financed commercial property.

The problem is: Las Vegas values have plummeted. But, these financial institutions continue to believe that they will be able to re-capitalize these commercial properties through their asset managers. Unfortunately, these financial institutes are so far dissolutional from the reality of the situation, it is really, really sad.

At least the commercial property owners that have realized they need to TAKE THE LOSS, are walking away.

Unfortunately, the asset managers of these financial insitutions are the ones who have been telling their financial insitute clients that they can do the impossible: Re-capiltalize the property -- e.g. Bring back the over-value of three to four years ago.


The proof of what I am saying is in taking a second look back at SFR/Condo reposessed properties.

These properties are selling -- foolishly -- to buyers who think that they are getting great deals. (As far as I can tell, SFR/Condo prices should be heading down again. Soon. I think.) But, so far this year, SFR property had been a regular sellable commodity. (Until, recently.) And, most are at extreme losses to the financial institutions.

But, commercial property, is NOT selling. Office complexes are the least attractive right now. Shopping Centers with National Credit Anchors are hangin in there, but the in-line tenants can't survive. Smaller retail centers, may hang on -- if the owner didn't do anything as foolish as maximizing his financial leverage in the past years. Industrial property is almost as vacant as office. It is a sad state of affairs for Las Vegas.

How does this change?

Well, 1.) Lenders -- and their asset managers -- have to realize that they are NOT going to re-coup anywhere near as much money as they believe they can. They have to sell at what the current value is. Playing the waiting game to find a qualified tenant willing to pay them the rent from two to three years ago, is foolish. (Now, I understand why asset managers are promising the unrealistic: the longer they asset manage a property, the more money they will make long term.)

And, 2.) Lenders have to lend -- even though they are sufferring. Recently, a lender told me that my buyer of an 80 unit apartment complex had to guarantee the loan even if my client put 30% down! What? Tightening lending now for qualified buyers is a massive mistake.

A 70% LTV (Loan-To-Value) never required a guarantee in the past. It wasn't even on the lenders lips when they were issuing vast amounts of money in the early 2000's.

3rd.) OR, they need to re-negotiate the existing loans on commercial property so that the current owners will NOT GIVE UP! and walk away.

I really think that a financial institute willing to do this is just around the corner. The problem, none want to be the first.

Luke Hingson is taking a One Year Sabbatical


Luke Hingson is taking a one year sabbatical to pursue a Masters of Real Estate Finance at Georgetown University.

PITTSBURGH, PA (September 2, 2010)

NAI Pittsburgh Commercial is pleased to announce that Investment Sales Associate, Luke Hingson will be taking a one year sabbatical to pursue his Masters Degree in Real Estate Finance at Georgetown University in Washington, DC. Following his completion of the program, he will be returning to NAI Pittsburgh Commercial.

Luke has been with NAI Pittsburgh for two years and has specialized in investment sales and retail leasing. Earning a Masters in Real Estate Finance from one of the top universities in the country will allow Mr. Hingson to better serve his clients in the investment real estate arena, both locally and nationally.

Gregg Broujos, a Founding Principal and Head of the Investment Services Group at NAI Pittsburgh said “NAI Pittsburgh Commercial places a high priority on quality education and training for its Associates. Luke will return from Georgetown better equipped to assist our valued clients.”

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region click here.