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Newark Connected & Cost Efficient: Why Your Company Should Move to Newark

Recently, Amazon named Newark as one of the top finalists in the company’s HQ2 location search. To those familiar with the Brick City, this came as no surprise; Newark has long enjoyed a host of infrastructural and geographical advantages — it’s just 20 minutes from New York City– that have made it a growing business hub.

Amazon isn’t the only business looking to make moves in Newark. Other established, multinational companies have also turned to the city as a viable option for their corporate headquarters, including Audible Inc., an Amazon-owned company which employs 1,000 workers to produce and sell audio entertainment. Mars Wrigley Confectionary, the chocolate company behind M&M’s, recently announced that one of its U.S. headquarters will open in Newark by July of 2020, bringing with it about 500 new jobs to the city.

In December, Broadridge Financial Solutions, a fintech company that provides technical services to financial institutions moved 1,000 employees in December from Jersey City to 2 Gateway, a building in the heart of Newark. Standard Chartered Bank, a London-based institution, which provides financial products and services to corporations, is another company at 2 Gateway that recently signed a lease extension for 72,319-square-foot office space. The 2 Gateway building has also signed leases with other businesses across multiple industries in 2017, including one with award-winning architectural and design planning firm Minno & Wasko back in December. The list goes on.

The leasing velocity in the Newark submarket has more than doubled year-over-year and that’s because companies are now looking to Newark as a locale that isn’t just practical, but attractive for its executives and employees alike. The city’s downtown is just one stop away from New York City with commercial rent cost at a third of the price of what a company would pay if they were to operate in Manhattan. It’s also less expensive than Jersey City and Hoboken, and effectively just as close to NYC. With a leasing velocity of nearly 700,000-square-feet in 2017, Newark is quickly becoming an attractive destination for businesses throughout the region and beyond.

But unlike other busy urban centers coveted by new businesses, Newark has the space available for interested companies. In fact, 2 Gateway has an unheard of 200,000-square-feet available in their Class A building, perfect for any company looking for a large amount of space, and just one stop away from Midtown, Manhattan.

Not only is Newark emerging as an ideal location at the right price, but it is also uniquely positioned to handle all of the technological needs for companies, large and small, at an affordable cost. The city happens to sit directly above the fiber optic cable network that runs along the eastern seaboard, which allows companies to tap into the fastest internet speeds in the country at an extraordinarily competitive price point. The city took advantage of this network to create Newark Fiber, a program offering the highest-speed fiber for Newark buildings at the lowest cost in the region for comparable connections. 2 Gateway was the first building to tap into Newark Fiber, enabling C&K Properties to offer the connections a la carte to its tenants. This trendsetting nature isn’t foreign to 2 Gateway; in 2014, it became first building in New Jersey to become Wired Certified Platinum by WiredScore, indicating the highest rating for a building’s internet connectivity and technological infrastructure.

When it comes to location, cost and connectivity, Newark is in prime position to strengthen its standing as a regional business powerhouse, with or without Amazon.

Source: commercial

Rock On! This Isn’t Your Father’s Rockefeller

Standing tall at 33 stories high, 75 Rockefeller Plaza was originally built for the Standard Oil Company and known as the Esso Building; it was later renamed the Time Warner Building, serving as the media conglomerate’s headquarters until its lease expiration in 2014. The building’s iconic address and its newly blank canvas was too great an opportunity to pass up for RXR Realty, the owner with a dominant presence in midtown including Class A assets such as 1330 Avenue of the Americas, the Helmsley Building, 450 Lexington Avenue, and 1285 Avenue of the Americas.

When RXR acquired “75 Rock,” it embraced a vision to restore and fully reposition the building to meet the needs of tenants seeking a trophy address and the world-recognized Rockefeller name. Cushman and Wakefield’s Chairman of Global Brokerage, Bruce Mosler, comments on RXR’s completed vision, “This is a building for those seeking both exclusivity and a contemporary environment for their employees. The level of service from lobby experience to overall property maintenance is exceptional.”

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75 Rock was originally constructed with a structural steel frame, concrete slabs, and a limestone façade –  a New York City landmark of the mid-century era. The owner was quick to recognize existing challenges that could warrant typical market pushback – ceiling heights, T-shaped base floor plates, as well as some compromises in views for certain floors.

A holistic renovation plan, including both structural improvements and lifestyle innovations, was needed to attract tenants and produce a building worthy of 75 Rock’s stature and location. To address this, RXR created and deployed a $150 million redevelopment plan. The first step was restoring the building’s limestone façade, staying true to the building’s original design. The same limestone is found in the through-block lobby connecting entrances between 51st to 52nd Streets and also includes terrazzo floors, an elemental designed 24’ ceiling, a skylight, bronze concierge desk, and gallery space for public art.

RXR also set out to increase the efficiency of the building by reconfiguring its core, making it more efficient and spacious for tenants. 12 new passenger high-speed elevators with marble interiors have been equipped with a destination dispatch system to minimize wait-times, and new HVAC and electrical systems were installed to continue the building’s modernization.  RXR addressed the environmental impact of the asset during the renovation process, implementing new optimized windows. The property anticipates LEED Gold designation.

Additional features that continue to create leasing traffic at 75 Rock include extensive terrace opportunities on the tenth floor with a dramatic floor-to-ceiling solarium, as well as modernized mechanical systems that increase finished ceiling heights above 9 feet throughout the tower.  Building-wide fiber optics, an internet-based tenant work order and visitor processing system, bike storage, augmented loading dock, and messenger center all contribute to the functional modernization that satisfies today’s tenants. Tara Stacom, Executive Vice Chairman of Cushman & Wakefield, praised RXR’s work, “the impact of the significant renovation is immediate and apparent upon entering the lobby and carries throughout the entire building.”

The progressive ownership of RXR goes beyond making physical improvements, offering a service model far ahead of the competitive set – one that is tailored to the profile of its buildings and the tenant mix within them. At 75 Rock, RXR hosts a lively integrated art program, punctuated by the permanent 7ft by 90ft Markus Linnenbrink installation of poured resin, an invigorating use of color. The attention-grabbing Paparazzi Dogs, the four bronze sculptures by celebrated contemporary artists, Gillie and Marc, engage both tenants and the plethora of people walking through. Above the lobby, 75 Rock’s pre-built full floors and marketing spaces also include an array of contemporary art.

RXR’s ownership comprehensively addresses all of the signature elements of being in a world-recognized business and tourist destination at the crown of Rock Center, and tenants like Bank of America/Merrill Lynch have taken notice. The institution’s Wealth Management division occupies 185,000 square feet in the base with multiple terraces. Responding to the tremendous foot traffic, and more specifically, the family foot traffic from Rockefeller Center, RXR staged a major retail coup, bringing American Girl Doll off of Fifth Avenue, and into its rejuvenated 40,000 square foot retail experience.

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75 Rockfeller Plaza

The remaining retail space is experiencing a surge of traffic by “world-class dining and ‘foodie’ establishments,” states Michael O’Neill, Cushman and Wakefield’s Senior Director of Retail Services. “With popular bridge retail such as Warby Parker and Blue Mercury now on Avenue of the Americas, the success of the Baccarat and new boutique hotels like The Whitby, interesting, desirable retail and dining options are peppering midtown side streets. 75 Rock has a triple-threat advantage being amid prime shopping, business, and tourism, as well as luxury mixed-use and residential towers.” The strategic and fully segregated through-block entrances for office tenants also keeps dense shopping foot traffic away from the office occupants.

“Office activity has been extremely strong,” explains Mosler, “the full floors in the tower satisfy many of the boutique financial firms migrating from Fifth and Park Avenues. Ownership is committed to making deals happen and is efficient in the process.”

Contributing to the robust pick up in interest at 75 Rock is RXR’s own office expansion onto two full floors, signaling the management team’s support for the asset and its fully modernized, ultra-equipped office environment, and an address synonymous with status. It has been noted that other tenants in the area have vocalized the personable nature of the building staff when entering or passing through the building.  Mosler continues, “Today, ‘state-of the-art’ goes beyond the physical improvements. Tenants pay up for the amenities and service model, which – when done well – requires hands-on, dedicated ownership to see it through.”

While Manhattan’s midtown trophy towers see the ebbs and flows of market interest, tenants at 75 Rock are meeting ownership’s pricing due to the quality of the physical asset and the level of service. Ira Schuman, Vice Chairman of Savills-Studley, explained, “our clients recognize that beyond the successful transformation and major redevelopment of the property, the building has so many practical advantages – proximity to east and west transportation lines, excellent management, and access to first-class amenities.”

Leading the way in employee well-being and professional success, RXR is currently working with Convene to launch a new concept at 75 Rock, which combines Convene’s existing conferencing amenities on one full tower floor, with a private member experience to drive business networking, wellness and education series, and one-of-a-kind dining experiences on the building’s entire top floor. Michael Burke, Convene’s VP of Real Estate and Development explains the collaboration, “today’s office tenants demand a more evolved workplace, and even the most iconic real estate must adapt. Convene is thrilled to expand on our partnership with RXR as a driving force for the re-imagined employee experience at Rockefeller Center.” This partnership will benefit both co-working entrepreneurs, and the usual suspects of Fifth Avenue financial institutions.

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Paparazzi Dogs by Gillie and Marc

“The building is an ideal fit for foreign banks, wealth management, and boutique financial users,” according to Schuman, who recently represented Austria’s leading bank, Erste, in leasing the entire 12th floor. “Tours are impressive to prospective tenants and RXR is terrific through the transaction process.” RXR’s commitment to customer service and meeting the expectations of future decision makers is apparent.

“Ownership is breathing a new spirit and energy into a Class A trophy building, making it approachable and desirable to the new shifting users and office cultures,” asserts Mosler. RXR’s adoption of forward-thinking leasing and marketing trends further demonstrates management’s foresight surrounding tenant psyche. Pronouncedly so, the current marketing campaign emphasizes the changing face of today’s female executive and speaks to the many female decision-makers touring space at the building. 75 Rock also features a newly completed pre-built collection ranging from 4,000 to 7,500 square feet utilizing a high-end and hospitality-inspired design palette. Management recognizes the demand for such space and anticipates building more of it. Tara Stacom affirms, “the economic value of this level of turnkey space outranks competitive availabilities in the market.”

On a final note, RXR recently completed a $300 million refinancing with TH Real Estate – another piece of the plan to adapt this marquee asset for today’s tenant. The modernization of 75 Rockefeller Plaza demonstrates the power of an owner and developer when it is committed, not only to leasing space today, but to investing in the holistic success of its tenants tomorrow.

Source: commercial

5 Reasons Why Outer-Borough Multifamily Properties Should Dominate Demand In 2018

The New York City investment sales market appears to be rebounding in the first quarter of 2018 in terms of volume and the number of transactions. Prime outer-borough locations will likely capture more demand from institutional and international investors in 2018 compared to previous years as an array of factors, both fundamental and technical, heighten their appeal.

During 2017, dollar volume in the multifamily market slowed considerably, falling 48% year-over-year, according to our company’s newly released report: “Multifamily Year In Review.” To view, click on: http://arielpa.com/report/report-MFYIR-2017

We believe the outer-boroughs will garner greater attention in 2018, driven by the following five key factors:

Strong Rent Fundamentals In Outer-Boroughs

Rent affordability and easy commutes to Manhattan have made neighborhoods in the outer-boroughs, such as Williamsburg, Long Island City, and the South Bronx, hotbeds for tenant migration and rental growth. To that end, the average monthly rent for an apartment in Manhattan was $4,158 as of December 2017, according to Douglas Elliman. That is substantially higher than the median rent in Brooklyn and Queens, where apartments fetched $3,001 and $2,831, respectively,

During 2017 rent concessions have been reported at 36.2% for Core Manhattan, while outer-borough neighborhoods, such as Flushing, experienced increases in rents, rising 2.9% in 2017. While we are not concerned about the long-term viability of Core Manhattan’s rents, investors are finding the short-term fundamentals challenging.

Scant Institutional Capital Opportunities 

Institutional investors’ appetite for Manhattan properties, has been voracious. For investors, Core Manhattan presents “gateway city” status, large-scale opportunities, and rental upside. However, rent concessions create uncertainty about rent growth, and increased competition from foreigners has left investors with fewer opportunities.

However, the outer-boroughs, specifically Brooklyn, present unique opportunities that were once exclusive to Core Manhattan. Invesco’s involvement with Kushner in DUMBO made plenty of headlines, but they are far from alone. Between 2016 and 2017, TIAA-CREF, World Wide Holdings and Bentall Kennedy (U.S.) LP have collectively invested more than $425 million in the borough.

Relative Price Per Foot Cost

The valuation metrics used for the multifamily asset class include: Capitalization Rate (Cap), Gross Rent Multiple (GRM), Price Per Unit (PPU) and Price Per Square Foot (PPSF). When comparing Cap and GRM for Core Manhattan versus outer-boroughs the difference is 27%, according to our “Multifamily Year In Review.” This means investors expect to receive a higher current yield in the outer-boroughs.

On a PPSF basis, the average difference is much wider. The average multifamily building in the outer-boroughs sells for $334 PSF, representing approximately 1/3 of the cost of the $945 PSF for the same assets in Core Manhattan. Lower price per square foot provides a big advantage when discussing replacement cost and suggests that this wide pricing gap could allow for significant room for growth in the outer-boroughs.

Uberization Of Outer-Boroughs & Local Economic Growth

Access to mass transportation has always been a factor when buying real estate, but two main factors have lowered this need. First, the ability to travel economically and second, that all of the boroughs have been experiencing local economic growth, with less reliance on Core Manhattan and commutes. Uber and Lyft, for example, have made inconveniently located areas, such as Industry City in Brooklyn and Cornell Tech in Queens, more desirable. Less reliance on subways and buses has also benefited Northern Manhattan, where Columbia University has attracted many new businesses.

Rezoning Poses Significant Upside

Mayor Bill de Blasio’s administration has rabidly rezoned large swaths of New York City, with their sights squarely set on outer-borough regions. East Harlem, East New York, and Far Rockaway have recently been approved for rezoning, while Inwood, The Bronx’s Jerome Avenue and Gowanus are in the pipeline. In Inwood, for example, proposed rezoning is expected to spur the creation of 4,348 new apartments by the year 2032. The building of thousands of apartments should lure a large inflow of tenants, landlords and developers, posing significant upside for owning a multifamily asset in these areas.

In conclusion, based on the five points stated above – whether it be relative affordability or the massive influx of institutional capital – we believe outer-borough multifamily assets are positioned to perform extremely well versus Core Manhattan in 2018, and investors are already taking heed.

Source: commercial

Meridian Sells Over 1,000 Parking Spaces and Lists Apthorp Garage Condo

Meridian Investment Sales, the commercial property sales division of Meridian Capital Group, is pleased to present the exclusive offering of The Apthorp condominium parking garage located in the Upper West Side neighborhood of New York, NY. Senior Executive Managing Director, David Schechtman, Managing Director, Lipa Lieberman, and Managing Director, Abie Kassin are representing the seller in this transaction.

Meridian’s Investment Sales team has proven expertise in selling similar properties, including three garage condominium units on the Upper West Side for $50 million, and a parking garage condominium at the Moxy Times Square Hotel for $21 million, which together total over 1,000 parking spaces.

Designed by architects Clinton & Russell for William Waldorf Astor, the Italian Renaissance Revival building was built in the early 1900s and occupies the full block between Broadway, West End Avenue, West 78th Street, and West 79th Street. The monumental building was designated as a New York City landmark in 1969 and was added to the National Register of Historic Places in 1978. The Apthorp was constructed around a large interior courtyard and features life-size limestone sculptures representing the Four Seasons above the building’s central barrel-vaulted entrance, where elaborate wrought-iron gates display a pair of gazelle heads. The property was named for Charles Ward Apthorp, who owned Apthorp Farm, which encompassed about 300 nearby acres of Manhattan in the late 18th century.

Known for its high concentration of cultural and architecturally significant buildings, the Upper West Side is one of New York City’s premier neighborhoods and covers one of the largest geographical boundaries of any Manhattan neighborhood. Operating as a shipping, transportation, and manufacturing corridor throughout much of its early history, the Upper West Side experienced heavy development in the late 19th Century. Today, it is known for its pre-war architecture, eclectic restaurants, and rich cultural life. The property is also just several blocks west of Central Park, two blocks east of the world-renowned Julliard School and the Fordham University Lincoln Center, and is in close proximity to the American Museum of Natural History.

David Schechtman, Senior Executive Managing Director, can be reached at (212) 468-5907 or DSchechtman@meridiancapital.com and the listing for 33-35 West 14th Street may be viewed here.

Source: commercial

Meridian Exclusively Lists West 14th Street Development Site

Meridian Investment Sales, the commercial property sales division of Meridian Capital Group, is pleased to present exclusively for sale 33-35 West 14th Street, a development site with a clear path to vacancy, steps away from Union Square in New York, NY. Senior Executive Managing Director, David Schechtman, Managing Directors, Lipa Lieberman and Abie Kassin, and Senior Associate, Harrison Hochman are representing the seller in this transaction.

Situated at the convergence of New York University and Greenwich Village, 33-35 West 14th Street is a development site boasting 50 feet of frontage on one of the most important East-West thoroughfares in Manhattan. Zoned C6-2M, the two contiguous buildings present a blank canvas for investors; the as-of-right development site offers the immediate opportunity to capitalize on strong demand and exceptional neighborhood fundamentals. Development options include a mixed-use residential building with ground floor retail, a class-A office building, a hotel, and an inclusionary housing development.

A well-traversed destination for residents and visitors alike, the 14th Street Union Square corridor is one of the most trafficked locations in the city and a defining live-work-play neighborhood with unrivaled entertainment, retail, and restaurant selections. Union Square is also one of New York City’s premier cultural hubs, consisting of many architectural and social landmarks. The property is located less than two blocks from the R, W, and N subway lines and the 4, 5, and 6 subway lines at Union Square, and the L, F, M, and PATH trains on 14th Street and Sixth Avenue.

David Schechtman, Senior Executive Managing Director, can be reached at (212) 468-5907 or DSchechtman@meridiancapital.com and the listing for 33-35 West 14th Street may be viewed here.

Source: commercial

Tax Reform Dilemma: Uncertainty Surrounds Business Interest Deduction

There’s an old adage: “Don’t ask how laws and sausages are made.” Seldom has this been more relevant than with the recently enacted Tax Cuts and Jobs Act (“TCJA”). Due to incomplete drafting, the TCJA raises as many—if not more—questions as it answers.

One example of this uncertainty that is of particular relevance to the real estate industry is the new business interest deduction provision. Broadly speaking, the TCJA limits a taxpayer’s business interest expense deduction to 30 percent of its “adjusted taxable income.” A real property trade or business may elect out of this limitation but at a cost. And here is where it gets interesting.

“Electing” real property trades or businesses will be required to depreciate any residential rental property, nonresidential rental property and qualified improvement property under the Alternative Depreciation System (ADS), rather than the “regular,” or Modified Cost Recovery System (MACRS). At first glance, one could assume that the decision to elect out would be based on weighing the additional interest expense against the less accelerated depreciation under ADS. (ADS provides for depreciable lives of 30 years for residential rental property and 40 years for nonresidential rental property, compared to 27-and-a-half years and 39 years respectively under MACRS.)

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Alan Blecher

A wrinkle in the analysis is that “bonus depreciation” (i.e., immediate expensing of certain assets) is not available to taxpayers under ADS. Although residential rental property and nonresidential rental property is not eligible for immediate expensing, it was intended that qualified improvement property would be. However, there is a glitch in the law as it was drafted, regarding the depreciable life of such property. This glitch must be corrected (via what is known as a “technical correction”) in order for qualified improvement property to be eligible for immediate expensing.

Another issue to consider when deciding whether to elect out of the interest expense limitation and thereby become subject to the ADS is, What do I do with assets that are already being depreciated under MACRS? Generally, a change to ADS depreciation involves assets “placed in service” after Dec. 31, 2017. However, for electing real property trades or businesses, the change is effective for “tax years” after Dec. 31, 2017, thereby creating uncertainty as to how ADS depreciation will be calculated.

For example, how does a taxpayer that is 25 years into the 39-year MACRS depreciable life period switch suddenly to the 40-year ADS life? Does one take the remaining unadjusted basis over the former remaining ADS life, or start the clock over? Will taxpayers be required to file for a change in accounting method? None of these answers are clear, and IRS guidance is needed. You can expect your business tax returns to be even more complex.

Adding to this complexity are some additional issues to consider with respect to the business interest expense limitation, such as the following:

  • Certain “small” taxpayers are exempt from the business interest expense limitation and do not need to elect out. Such taxpayers must have annual average gross receipts of less than $25 million (certain related taxpayers are combined in calculating this limitation).
  • “Tax shelters” are not eligible for the small taxpayer exception. This definition includes, among others, limited partnerships or LLCs with losses—if more than 35 percent of the losses are allocated to partners who are not actively involved in management.
  • If a taxpayer is subject to the limitation, the disallowed interest expense is carried forward indefinitely. In the case of a partnership, the carry forward is at the partner level. Any remaining disallowed interest expense is freed up when an activity is disposed of.

While the TCJA appears to offer the real estate industry a clear advantage in its ability to elect out of the business interest deduction limitation, the value of this benefit is far from clear. Tread carefully and consult your tax adviser to understand the potential positive and negative implications of this new provision on your individual and corporate tax returns.

Alan M. Blecher is a Principal specializing in Real Estate tax services at Marks Paneth LLP. He can be reached at (212) 201-3197 or ablecher@markspaneth.com.

Source: commercial

How a New Way of Working Is Ushering in Short-Term Rental Offerings

Over the past few years, the offsite has been gaining traction among lean startups and large enterprises alike. The thinking behind it is simple: Whether brainstorming

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Credit: Breather

a product launch strategy, planning out the quarter or year ahead or strengthening the bonds between teammates, getting out of the office and into a new physical context (hence offsite) can inspire new thinking and break down the barriers that keep workers from collaborating effectively.

 

 

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Credit: Breather
Successful offsites leave participants feeling optimistic, engaged and motivated to tackle new challenges—critical outcomes in a world where roughly one in four employees report feeling completely disengaged from their work. But a successful offsite doesn’t just happen: It takes careful planning, a clear idea of what you want to accomplish and a comfortable space that encourages communication.

 

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Credit: Breather
However, finding the right space to meet outside the office isn’t always easy. Shared office and coworking companies like Regus and WeWork and peer-to-peer marketplaces like LiquidSpace do offer private meeting rooms. But they’re accessed through bustling office environments and often completely visible to outside passersby. One of the major reasons to host an offsite is to escape the everyday distractions of the office, which can sap motivation and eat up half the typical office worker’s day; this makes a distraction-free environment a must-have for a successful offsite.
 
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Credit: Breather

Hotel meeting rooms are a common option, but they too come with caveats. There are often sizable minimum spends, mediocre-yet-mandatory catering, limited equipment for presentations and conference calls, and stuffy decor that does little to inspire creative thinking. It can be hard to think outside the box while you’re trapped inside of one, after all.

 

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Credit: Breather
As the world’s leading provider of private, temporary workspace, Breather understands what types of spaces empower teams to do their best work. Founded four years ago by Canadian entrepreneurs Julien Smith and Caterina Rizzi, Breather’s network of on-demand workspace has expanded to 10 cities worldwide, including New York City, San Francisco, Los Angeles, London, Montreal, Toronto and more.
 
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Credit: Breather

With Breather, there are no long-term agreements or commitments; clients can instantly reserve any tech-enabled space for a few hours, a day or even many months. This flexibility allows Breather to serve a wide variety of workspace needs, from team and client meetings to small events, individual work, product sprints and spillover space.

 
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Credit: Breather

More crucially, Breather can ensure an experience that’s quiet, tidy and productive because there are no middlemen and no user-to-user marketplace; every space is leased, designed and operated in-house. And because the spaces are private suites accessed through a common corridor (like a typical office), there’s no need to pass through another company’s office or communal space to get to it. Just show up, type in your access code on the door’s keypad and get to work.


Source: commercial

Selling a Problematic Property? Ten-X Has the Answer

Jay Lucas, a senior director at Cushman & Wakefield in Dallas, was tasked with selling a 60,000-square-foot office building that his client had on the market for more than five years.

“The property became tired,” he says. “The ownership either didn’t have the capital or didn’t want to do renovations and update the property. So, trying to position the property to achieve its potential value, was difficult to do.”

To meet the challenge, Lucas turned to Ten-X Commercial, the nation’s leading online real estate marketplace, which has facilitated the sale of over $50 billion in real estate.

Ten-X, which has transacted over 300,000 properties in the U.S., allows brokers to supercharge the sales process with deals that close twice as quickly as the average commercial real estate transaction.

By leveraging Ten-X Commercial, Lucas was able to sell the property for his client in less than four months, for over $4 million. “It was like I’d called Santa Claus,” he says. “It was perfect.”

With its vast reach in the real estate market, Ten-X exposed the property to a global set of buyers. Lucas’ client suddenly had interest from a variety of markets and, in a sign of Ten-X’s value to sellers, sold the building to an unknown buyer in its own market.

“We had never met. We knew nothing about them,” he says. “The property had a financing contingency, or it probably would have sold in 90 days. It worked out great.”

After closing this transaction, Lucas was a believer in the Ten-X platform. He used the marketplace to sell three buildings in Dallas, totaling approximately 250,000 square-feet. He began working on the deal this past March and, using Ten-X Commercial’s Offer Select transaction solution, closed the deal six month later for more than $12 million.

This time, Ten-X was part of his marketing strategy from the get-go.

“I told my client, this is the way to go—here’s what we’ll do, and here’s why it works,” he says. “They were thrilled with it. We had a lot of buyers come through, and my seller was thrilled with the whole process.”

Currently, Lucas has another deal in the works on Ten-X Commercial, and another he’s just getting off the ground.

After selling real estate for 38 years, Lucas knows the potential buyers in his market well. But Ten-X is now a key aspect of his sales process for its ability to help him identify buyers even he hadn’t come across before.

“With all my experience, there’s lots of people I know. But we don’t know everybody,” he says. “Ten-X’s online marketplace brings in so many potential buyers from around the world. Once a buyer shows an interest in a specific property or property type, Ten-X curates and matches similar properties a buyer might be interested in. That’s a major advantage to us. Plus, when somebody goes into the Ten-X platform and registers interest in a property, I know who they are, and I know how to contact them immediately.”

The most exciting part of using Ten-X Commercial for Lucas, though, comes in real time, during the bidding process with the Live Bid transaction solution.

“When you’re on the phone with the Ten-X team and potential buyers are bidding live—and the seller can see it—it’s an exciting and intense moment,” he says.

“When you hit the reserve and you start getting incremental bids above that, your seller is just grinning so big. They’re just like, ‘This worked.’ ”


Source: commercial

Partnership Agreements and LLC Operating Agreements Need to Be Amended Now!

Effective Jan. 1, 2018, the IRS changed its audit rules as they relate to any entity taxed as a partnership.

Under the new rules, the concept of Tax Matters Partner (TMP) no longer exists. The IRS has created a Partnership Representative (PR).

A PR does not need to be a partner or member of the entity and can be anyone the entity chooses, as long as the individual has a substantial presence in the U.S. and the capacity to act on behalf of the partnership. If an entity is chosen as the PR, the partnership must choose an individual with a substantial U.S. presence to act on behalf of such entity and therefore the partnership.

Many, if not most, partnerships will be subject to the new audit rules. Possible exceptions may include instances where the partnership only has individuals, C-Corporations, eligible foreign entities, S-Corporations or an estate (only for 2 years) as its partners and has fewer than 100 partners. When counting the number of partners, if the partnership has an S-Corporation as a partner, then the S-Corporation counts as 1 partner, and the number of shareholders it has counts as additional partners. Should a shareholder of the S-Corporation not be an individual then the partnership will be subject to the new audit rules.

“This change should inspire substantial review and revision to partnership agreements,” says Marc Wieder, Partner and Real Estate Group co-Leader at Anchin, Block & Anchin LLP. “It applies to partnerships as well as LLCs that are taxed as partnerships.”

What are the new audit rules?

The key and most important change is that now the PR will bind the partnership when agreeing to any settlement of adjustment with the IRS. No longer will the IRS deal with multiple individual partners. In addition, any adjustment the IRS makes is an adjustment to the partnership and is the partnership’s liability and obligation to make the payment.

Things to consider when amending your agreements:

  1. Selection and replacement of your PR
  2. Indemnification of the PR
  3. Scope of PR’s authority
  4. How to deal with former partners that were partners in the year under audit

“There are clearly many factors to consider when selecting the PR,” Wieder explains. “Since the PR can bind all partners, some factors could include which partner has the largest holdings (and thus the most incentive to try to settle for as little as possible) or has the best understanding of tax law.” Whether choosing a partner or an outside advisor, it is likely that the new PR will want to include some provisions in the partnership agreement to indemnify them in the event that other partners are dissatisfied. The other partners may also want to revise the partnership agreement to require that a process be carried out, such as a meeting of the partners, in the event of a challenge from the IRS.

While this serves as an overview of the changes, it is best to consult with your accountant and attorney to determine all the decisions and amendments that need to be made to your agreement. Do not wait!


Source: commercial

CRE Market Outlook Takes Slight Dip Nationwide

The supply-demand outlook in commercial real estate markets took a slight dip nationwide for the first time since early 2016 and financing for some CRE property types is getting more difficult to arrange. This article appeared on National Mortgage News. To read the entire article, click here.


Source: commercial