Plant City Commercial & Industrial Real Estate Transaction Summary- Analysis

2012 Transaction Information and Analysis

(Data Extracted from MLS Only – Does not include additional transaction information from Non-MLS Listings/Sales)
 

18 Commercial Property Sales in the Plant City Market

·         12 Commercial Property Sales labeled as No Special Sale Conditions

o   66.66% No Special Sale Condition Property Sales

·         6 Commercial Property Sales labeled as REO/Bank-Owned Transactions

o   33.33% REO/Bank-Owned Property Sales

·         0 Commercial Property Sales labeled as Short-Sale Transactions

o   0% Short Sale Property Sales

Property Pricing Analysis

·         Sale Prices Ranging from a low of $70,000 to a high of $1,000,000

o   Sale Price Average was $251,417

o   Sale Price Median was $190,000

o   There were more property sales in the lower tier price segments or more sales that were less than the average sale price indicated above.

o   More Specifically 12 of the 18 Plant City Commercial Property Sales (67%) were below the average price of $251,417.

Sale Price/SF Analysis

·         Sale Price/SF Ranging from a low of $15.07/SF to a high of $182.38/SF

o   Sale Price/SF Average was $65.42

o   Sale Price/SF Median was $51.91

o   There were slightly more property sales in the lower tier price/SF segment meaning there more sales with a Price/SF less than the average Price/SF.

o   More Specifically 10 of the 18 Plant City Property Sales (62%) were below the average price of $65.42.

Sale Price to List Price Analysis

·         Sale Price Compared Lowest Listing Price Comparison revealed a range:

o   The Low was 64.24% Sale Price to Listing Price

o   The High was 100% Sale Price to Listing Price (1 Sold for 100% of Listing)

o   Average Sale Price to List Price was 80.41%

o   Median Sale Price to List Price was 79.69%

o   Most properties are selling near 80% range of their final listing price or to put it another way a 20% discount from the final/last listing price for a property is being realized by sellers in this market.

Note – The above sales included a range of property types such as: Warehouse, Office-Warehouse, Office, Medical Office, Motel/Hotel, Vehicle Related, Day Care, Church, Retail, General Commercial, etc.

The above information helps display the state of the commercial and industrial sales market in Plant City, as represented by the sold properties that were listed in MLS.  Two-thirds of these sales were typical transactions, but approximately 1/3 of the sales were bank-owned inventory. Bank-owned and/or distressed type sales continued to be part of the local commercial and industrial real estate sales market but made up less the ½ the sales within the MLS data for Plant City.

For more detailed information regarding the Plant City market or to have us perform an analysis or appraisal of your property please feel free to contact us.

Mike Cliggitt, MAI, MRICS

863-661-1165 (Direct)
mcliggitt.mai@verizon.net

Cliggitt Valuation, Inc.

Real Estate Analysts, Advisors, & Appraisers

www.cliggitt.com

Plant City Commercial,Industrial, and Investment Real Estate Appraisals

Plant City Land Appraisals

Commercial & Industrial Real Estate Sales Analysis in Mulberry, Bartow, Lake Wales, FL - '12

The commercial and industrial real estate market along the State Road 60 corridor in Polk County, which includes the cities of Mulberry, Bartow, and Lake Wales, Florida had a mix of transactions in 2012 with more than half typical property sales (60%) and the remaining 40% of property sales from the local MLS database were bank-owned or short-sale type transactions. Bank-owned inventory has impacted pricing of many property types within most areas in Central Florida. Industrial and commercial property market has not been immune from distressed real estate asset sales. Below is an overview of the commercial and industrial property sale transactions from the three cities in Polk County that are along the S.R. 60 corridor - Mulberry, Bartow, Lake Wales, Florida.

2012 Real Property Transaction Information and Analysis
(Data extracted from MLS Only - Does not include additional transactions from Non-MLS listings and property sales)

12 Commercial Property Sales in the Mulberry, Bartow, Lake Wales Market

· 7 Commercial and Industrial Property Sales labeled as No Special Sale Conditions

o 58% No Special Sale Condition Property Sales

· 5 Commercial and Industrial Property Sales labeled as REO/Bank-Owned Transactions

o 42% REO/Bank-Owned Property Sales

For more the complete article visit:

http://www.cliggitt.com/Blog.html?entry=mulberry-bartow-lake-wales-florida


Mike Cliggitt, MAI, MRICS (PDF of Cliggitt Professional Qualifications)
863-661-1165 (Direct Line)
Cliggitt Valuation, Inc.
Real Estate Analyst, Advisor, Appraiser
www.cliggitt.com
Real Estate Appraisers in Mulberry, Bartow, Lake Wales, Florida

Commercial and Industrial Property Sales Analysis in Winter Haven, Florida - '12

The commercial real estate market in Winter Haven, Florida continued to have a mix of transactions, consisting of both regular commercial and industrial property sales and bank-owned/short-sale type transactions. The bank-owned transactions continued to put pressure on pricing of commercial and industrial real estate. Below is is a quick synopsis of the 2012 transaction breakdown for the Winter Haven market.

2012 Transaction Information and Analysis

(Data Extracted from MLS Only – Does not include additional transaction information from Non-MLS Listings/Sales)

21 Commercial Property Sales in the Winter Haven Market

· 12 Commercial Property Sales labeled as No Special Sale Conditions

o 57% No Special Sale Condition Property Sales

· 7 Commercial Property Sales labeled as REO/Bank-Owned Transactions

o 33% REO/Bank-Owned Property Sales

· 2 Commercial Property Sales labeled as Short-Sale Transactions

o 10% Short Sale Property Sales

 

To read more visit:

http://www.cliggitt.com/Blog.html?entry=winter-haven-fl-2012-commercial

 

 

Mike Cliggitt, MAI, MRICS  (PDF of Qualifications)

863-661-1165 (Direct)

Cliggitt Valuation, Inc.

Real Estate Analysts, Advisors, Appraisers

www.cliggitt.com

Real Estate Appraiser in Winter Haven, Florida

 

Contract Rent vs. Market Rent in Appraisals

Contract Rent versus Market Rent in "Real Estate Appraisals"

The short version of this discussion is that contract rent is what is agreed to in a lease - " the contractual lease agreement" and market rent rent is what is the most likely rental rate based on market evidence/comparable rentals/leases. This is a very similar concept to the price vs. value discussion/blog. In relation to the prior price vs. value discussion, contract rent is the price an owner of property agrees to lease and the price a tenant agrees to pay as stipulated in the lease agreement. This could be based on market rent levels/market evidence or any number of factors not related to market rent. Where as, market rent is the opinion of what a property should or would lease for based on other comparable properties that have leased or are available for lease. Market rent is the most likely lease rate for a property based on the specifics of that property and how those property specifics relate to the market/other comparable rental properties.

The Appraisal of Real Estate published by the Appraisal Institute defines Contract Rent and Market Rent, as follows:

"Contract Rent is the actual rental income specified in a lease."

"Market Rent is the rental income that a property would probably command in the open market; indicated by the current rents that are either paid or asked for comparable space as of the date of the appraisal." 
 

How is this applied in the appraisal process.

The income/rent the property generates and/or can generate is analyzed in the Income Approach to value. In a standard "commercial real estate appraisal" (non-single family property) the Income Approach is one of three approaches to derive value of real estate and the analysis of market rent is only one step in the Income Approach in deriving a value for a property.

Depending on the type of assignment and the specifics of the property, both the contract rent and market rent can be analyzed, or just one may be analyzed. If market value is sought then market rent should typically be determined and analyzed and if the property is leased then market rent should be compared to the contract rent as the market value can be impacted by a difference in the terms of market rent vs. contract rent. If interested, see the previous discussion/blog on fee simple interest for how contract rent and market rent can impact the fee simple and/or leased fee values of property.

Beyond a typical appraisal, a "market rent study" or "market rent appraisal" can be conducted if only the appropriate rent is in question or sought. In this case an "independent, third party - appraiser" is brought in to estimate/derive fair market rent only and the value of the property is not needed.

There are many reasons why a market rent study is requested, such as in a business partnership situation where one partner owns the real estate and the fair market rent is needed to confirm that the appropriate amount is being paid. A tenant in a property may request to have a rent study done to help in negotiations with the landlord when nearing a lease renewal or when signing a new lease for a property to make sure they are not paying more than typical or to provide to shareholders in the business that the lease rate being paid by the business is appropriate. An owner/landlord may want to confirm that they are charging appropriate rents to their tenants based on comparable properties in order to minimize the risk of vacancies or to know their potential income exposure if a lease renewal is approaching. An investor may want to know what the most probable rents for a potential investment are in order to utilize in their investment calculations as part of their due diligence prior to closing on an investment property. There are a multitude of reasons for having an "independent, unbiased, third party - appraiser" determine the appropriate market rent for a property. If the fair market rent is in question, then a market rent study may be in order.

If you have questions regarding market rent and/or contract rent or if you think that you might need a market rent study and/or appraisal we are available to assist.

Please feel free to contact us.

Mike Cliggitt, MAI, MRICS

Cliggitt Valuation, Inc.
Real Estate Analysts and Advisors
Based in Central Florida (Lakeland, FL)
863-661-1165
www.cliggitt.com

    

New - Industrial Buildings For Sale - 16,000 SF on Triangle Street - Lakeland, Florida

Now Off Market

Attention Business Owners and Investors - New Lakeland, Florida Industrial Property on the Market For Sale

Recently Listed for Sale - 1019 & 1029 Triangle Street Industrial Warehouses

Priced to sell at $400,000 or $25/SF. Very versatile industrial/warehouse property.

For more information visit:  

http://lakelandenterprisezoneindustrial.blogspot.com/


Or for a complete property package/brochure visit:

Off Market



7,000 SF Office/Warehouse Building

 



9,000 SF Mini-Storage Building

Real Estate Appraisal - The Fee Simple Interest

"Real Estate Appraisal" - The Fee Simple Interest
The term fee simple in an appraisal is describing a group/bundle of rights associated with the ownership of the property.

Fee Simple is defined as "absolute ownerhsip unencumbered by any other interest or estate, subject only to the limitations imposed by governmental powers of taxation, eminent domain, police power, and escheat." definition from The Appraisal of Real Estate, Appraisal Institute

In essence, fee simple interest ownership in property is a complete form of ownership, subject only to standard goverment power. It is the most wholistic form of legal ownership there is.

So in an appraisal, when the appraiser states that he/she is appraising the fee simple interest in the property, they are stating that they are appraising the property unencumbered, except regarding the 4 governmental powers described above. The complete group of rights or many times referred to as a bundle of rights included with fee simple ownership are:

• The right to sell or sell an interest in the property
• The right to lease or lease an interest in the property
• The right to mortgage the property
• The right to give away/gift the property or an interest in the property
• The right to do none or all of these things

Doing any of the above, except of course for the last bullet of doing none of the above, will create a fractional ownership interest in the property that will typically need to be analyzed or discussed in an appraisal. For instance - when a property owner leases a property to a tenant for say a 5 year period, the property owner has given up the right of use/occupancy of the property and the tenant has gained that right for the 5 year lease period. However, the owner - now landlord - has given up that right for the right to receive income/rent from that tenant over the 5 year term of the lease. The leasing of the property to a tenant for 5 years has created a leased fee interest in the property for the owner and a leasehold interest in the property for the tenant.

Leased Fee Interest is defined as - "An ownership interest held by a landlord with the rights of use and occupancy transferred by the lease to others. The rights of the lessor (leased fee owner) and the leased fee are specified by contract terms contained within the lease" - Appraisal of Real Estate, Appraisal Institute

Leasehold Interest is defined as - "The interest held by the lessee (the tenant or renter) through a lease transferring the rights of  use and occupancy for a stated term under certain conditions as specified in the lease" - also from the Appraisal of Real Estate, Appraisal Institute

Leasing a property does create a form of fractional interest in real property. This is one example of how a partial interest in a property is granted/conveyed by an owner of property.

So does leasing a property change the value of the property, since some of the fee simple interest - bundle of rights - have been granted to a tenant? This is a very good question and one that is encountered often when appraising a property, however the answer is not yes or no but, it depends. It depends on the difference between contract rent and market rent, as well as the value of the fee simple interest (unencumbered), the length of the lease, the amount of lease (lease rate), and how that compares to market lease rates and terms. It also depends on investor perceptions, and a range of other issues.

If you have questions regarding how a lease could impact the value of your real estate or any other questions regarding a whole or fractional interest in real property, we are available to assist.

Please feel free to contact us.

Mike Cliggitt, MAI, MRICS

Cliggitt Valuation, Inc.
Real Estate Analysts & Advisors
Based in Central Florida (Lakeland, FL)
863-661-1165
www.cliggitt.com

What is a Triple Net Lease?

When leasing a property, the rental rate and expense sharing/responsibilities shared between a tenant and landlord are important items that should be considered in the leasing decision process and negotiations. Some rental rates may appear to be lower than others but the tenant is responsible for a larger amount of the property expenses, where as other properties have a higher quoted rental rate but that rental rate includes all property expenses with nothing passed through to the tenant. Below, is a discussion of the triple net lease, where property expenses are passed through to a tenant.

A triple net lease is a lease arrangement where the landlord passes through property expenses to the tenant. The term pass-through is regularly used in the real estate leasing environment and just means an expense item that is being passed on from the owner/landlord to the tenant. It can be passed through in a yearly annual fee or the actual specific bills for each pass through item can be handed over to the tenant to pay directly to the billing entity (i.e. property taxes, insurance, etc.). If the building is a multi-tenant property than the pass-through should/will be based on a pro-rata share of the tenant’s percentage of occupied space in relation to the entire building/property. Example – If a tenant occupies 10% of a building then their pro-rata share of the expenses will be 10% of the total expenses being passed through. The term “Tripe Net”, also known as “Net Net Net” or “NNN” are all used interchangeably and typically mean that certain/specific property related expenses are passed through to the tenant. Under this type of lease the tenant will be responsible for the agreed rental rate, as well as additional property related expenses. The primary expenses typically passed through in a Triple Net lease are property taxes, building replacement insurance, and property maintenance. So the term Triple Net or NNN, means the rental rate is net of (or does not include) three expense items, hence Net Net Net. So Triple Net means the rental rate is net of property expenses, net of property insurance, and net of maintenance and repairs – Net Net Net.
 

Example:

NNN Lease Includes:

Negotiated/Agreed Base Rent
+ Property Taxes (Pro-Rata Share)
+ Property Insurance (Pro-Rata Share)
+ Maintenance & Repairs (Pro-Rata Share)
= Total Lease Costs/Responsibility of Tenant

Triple Net Lease (with real $) Example:

$15.00/SF – Base Rent
+$2.00/SF – Property Taxes
+$0.60/SF – Property Insurance
+$1.00/SF – Maintenance & Repairs
= $18.60/SF - Total Lease Costs/Responsibility of Tenant

So a triple net lease passes through the cost of certain property expenses, as well as the possible risk of future increases or decreases of those expenses over the term of the lease to the tenant. Landlords typically prefer this lease structure as it helps limit uncertainty/risks related to property expense increases and many large property owners (REIT’s, institutional investors, etc.) lease property to tenants on a triple net basis or similar terms.

Just as the triple net lease typically refers to exclusions of three property expense categories, the term double net or single net refers to the exclusion or pass-through of two property expense items (Double Net or Net Net or NN) or a single property expense item (Single Net or Net or N). There are also other ways to refer to leases/lease expense sharing such as a Net Lease, Modified Net Lease, Gross Lease, Modified Gross Lease, Full Service Lease, etc. Each of these various categories refers to how expenses are classified/paid for/shared between the landlord and tenant. Some are utilized interchangeably and may vary from region to region based on local terminology and expectations within various markets around the county. When contemplating entering into a lease, understanding how the property expenses are being paid for/shared is an important item and hiring an attorney to draft a lease or provide clarification and interpretation of a lease is highly recommended.

As a business owner/tenant or prospective tenant understanding the structure of the lease agreement and total cost (base rent and expenses) of a lease is important business decision. Some leases on the surface may look cheaper but when factoring the various pass through expenses end up costing more than other leases.

Our firm performs comparable rent analysis and studies, comparable expense analysis, total lease cost analysis for a single year or multi-year lease contracts, leasing versus owning cost analysis. We also provide negotiation services for tenants and/or landlords with market based evidence/support of our recommendation used as a basis for negotiation or renegotiation of a lease. For all non-legal lease related questions, we are available to assist so please feel free to contact us. We can also recommend an attorney to help with drafting and/or legal interpretation of a lease.

 

Mike Cliggitt, MAI, MRICS

Cliggitt Valuation, Inc.
Real Estate Analysts & Advisors
Based in Central Florida
Lakeland, Winter Haven, Bartow Commercial Property Specialists
863-661-1165
www.cliggitt.com

Price vs. Value in Real Estate Valuations and Appraisals

In real estate "Price" is the amount a purchaser agrees to pay and a seller agrees to accept under the specific circumstances surrounding their transaction. Sometimes the price is reflective of "Value" as determined by an appraiser/appraisal but sometimes it can be substantially different depending on the circumstances of a specific transaction. For instance, if a seller offers financing at attractive terms to entice the buyer to purchase at a price different than most other potential buyers may pay under a normal financing arrangement, than that price has been affected and would need to be quantified and adjusted to reflect the value of the property/transaction. In essence, in the above described situation, the favorable financing led to an increase in the purchase price and is not considered typical of the market. This is just one brief example of how price and value can differ.

Appraisers spend lots of time researching transactions and figuring out how price was determined and how it relates to determining an opinion of value. An appraiser typically tries to mirror the market when determining an opinion of value for a property. Although many variations of the definition of value exists, a very brief description of value can be summed up as: value should be a reflection of the collective market as to how it relates to a specific property including consideration of a variety of market based evidence/data that reflects the combined/collective value judgement of market participants (buyers, sellers, tenants, owners, brokers, etc.). So an opinion of value usually results from the culmination of analyzing a number factors, including: comparable sales, rental rates, land sales, construction costs, current economic conditions, economic forecast, available properties and listings (inventory), various other supply and demand factors, etc.

For more information about real estate pricing, value, or the appraisal/valuation process, please visit our website and contact us with your questions.

Mike Cliggitt, MAI, MRICS
Cliggitt, Valuation, Inc.
863-661-1165
www.cliggitt.com

Real Estate Appraisals for Estate Planning

There are many reasons to get an appraisal of commercial property, including when planning to make a purchase, planning to sell, obtaining financing, estate planning, gifting property to heirs or charity, partnership transfers, divorce settlement, foreclosure, bankruptcy, obtaining appropriate insurance coverage, financial reporting requirements, investment analysis, just to name of few. In all of these situations, obtaining an accurate value is paramount and should be entrusted only to a highly skilled appraisal professional.

A spike in appraisal activity occurred around the last quarter of 2012 much of which was for the estate planning and/or property gifting scenarios mentioned above. The main reason behind this flurry of appraisal activity had to do with the fiscal cliff and the looming adjustment to the estate tax laws.  Many property owners needed current valuations of their assets to help plan and make appropriate arrangements in light of the potential change in the laws and tax rates that were being anticipated. Although the final result of the fiscal cliff negotiations resulted in very limited changes to the estate tax, having a current accurate appraisal of property for long-term family estate planning is prudent a decision.

Appraisals can be utilized in estate planning a number of different ways. Many times intrafamily transfers of either minority or majority ownership in property is necessary and knowing the current market value helps everyone involved feel comfortable that the value associated with the transfer is accurate. Additionally, a variety of tax strategies and planning can be accomplished in advance of major family changes and having an up to date appraisal when plans are being put in place helps in the planning and structuring process. Gifting property to heirs and/or charitable organizations is another instance when having a qualified appraiser perform a current market appraisal of your property is a good idea. 

Anytime an appraisal is needed by a property owner or family estate, only a highly qualified appraiser should be hired, but it should also be noted that for many issues surrounding estate planning, gifting, charitable donation, and any number of other reasons that the IRS requires an appraisal, the appraiser selected must meet IRS requirements as a "Qualified Appraiser" (See IRS Publication 561 for complete details). A brief description from the IRS website states that a Qualified Appraiser is an individual who meets all the following requirements:

The individual either:  

1. 1. Has earned an appraisal designation from a recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised, or
   2. Has met certain minimum education and experience requirements. For real property, the appraiser must be licensed or certified for the type of property being appraised in the state in which the property is located. For property other than real property, the appraiser must have successfully completed college or professional-level coursework relevant to the property being valued, must have at least 2 years of experience in the trade or business of buying, selling, or valuing the type of property being valued, and must fully describe in the appraisal his or her qualifying education and experience.                              
2. The individual regularly prepares appraisals for which he or she is paid.
3. The individual demonstrates verifiable education and experience in valuing the type of property being appraised. To do this, the appraiser can make a declaration in the appraisal that, because of his or her background, experience, education, and membership in professional associations, he or she is qualified to make appraisals of the type of property being valued.
4. The individual has not been prohibited from practicing before the IRS under section 330(c) of title 31 of the United States Code at any time during the 3-year period ending on the date of the appraisal.
5. The individual is not an excluded individual.

For the highest qualified appraisers select a MAI Designated Member of the Appraisal Institute.



Mike Cliggitt, MAI, MRICS
Cliggitt Valuation, Inc.
Commercial Real Estate Analysts and Advisors
Central Florida Real Estate Valuation Firm
Available in Lakeland, Auburndale, Lake Alfred, Winter Haven and numerous other cities
863-661-1165
www.cliggitt.com

Mike Cliggitt, MAI Awarded MRICS Real Estate Designation

Mike Cliggitt, MAI, commercial real estate appraiser, real estate broker, and property tax appeal consultant at Cliggitt Valuation, Inc. has been awarded the prestigious internationally recognized MRICS professional designation.

Mike Cliggitt, MAI, MRICS - Link to Full Web Page Press Release


Mike Cliggitt, MAI, MRICS - Link to Full PDF Press Release
For additional information please visit www.cliggitt.com.