WINTER 2024 2024
Happy New Year!
Commercial Building Consultants CBCbuildingsolutions.com Redefining Commercial Real Estate Consulting and Due Diligence
Good Reads A START TO THE NEW YEAR Happy New Year!
BRIDGING THE GAP Consulting that Brings Together the Unexpected
FLASHBACK TO THE 80'S It Really Isn’t the Same
COVERING YOUR ASSETS Ensuring the Equity Value
CBC PAST PROJECTS Quality Suites - Maryland Multifamily - Minnesota
“THAT’S HOW WE’VE ALWAYS DONE IT” And Now It’s Time For Change
EMPLOYEE SPOTLIGHT Meet Arturo Martinez CBC’s Director of Project Operations
Commercial Building Consultants 3670 Maguire Boulevard Suite 110 Orlando, Florida 32803 407.447.5881
CBCbuildingsolutions.com
A Start to the New Year Happy New Year! The new year always brings celebrations, resolutions, and a chance to plan for a brighter year ahead. But for some, the new year offers hope and an opportunity to have a reset from the past year. As we begin to navigate our way through 2024, it is important to recognize that we have a chance to make the correct
The first step towards getting somewhere is to decide you're not going to stay where you are. - J.P. Morgan choices by moving forward and not looking back. What the future holds is always an unknown, but what we hold for our future is up to us. We have heard a lot of chatter about how 2024 is just going to be a year to sustain. We can appreciate that, but we can also appreciate those who believe that it is time to change and move forward. CBC is here to help our clients in either situation.
Here is to a wonderful New Year of Sustainability and Moving Forward!
Bridging the Gap Consulting that Brings Together The Unexpected
CBC is a multi-faceted CRE Consulting firm who is consistently retained by borrows and lenders, at different times, on different projects, to provide them with consulting and due diligence services. We consult and perform due diligence tasks, oversee project construction and renovations, provide owner’s representation, budget and plan reviews, and more. Many times, our consultation is requested for a better understanding of the current health of an asset in order to prepare for its exit plan. We work closely with Asset Management teams consulting on how to enhance, preserve, and protect the equity value of their assets.
We know our clients and their assets inside and out which allows us to provide the much appreciated consulting services that our clients need. This also allows us something that other firms don’t have, the ability to bridge together two different sides through consulting. CBC’s Acquisition Consulting Services can provide our clients with an opportunity unlike others. CBC understands our clients, we understand the projects we work on, and we are trusted by our clients. This allows us to provide consulting on bridging the gap between clients and their assets, and clients who may be interested when those assets are ready for an exit. To find out more about CBC’s Acquisition Consulting Services contact our office at 407.447.5881.
CBC’s
Flashback TO THE
80'S
The year was 1980. President Jimmy Carter and Governor Ronald Reagan were in a battle for the Presidency with Ronald Reagan winning in a landslide. The US defeated the Soviet Union in ice hockey at the 1980 Winter Olympics coining the phrase “Miracle on Ice” as they then lead 65 nations to boycott the 1980 Summer Olympics in Moscow due to the USSR’s invasion in Afghanistan. Chrysler received a $1.4 billion bailout from the US Government, and the first transmission of the Cable News Network (CNN) takes place. China’s population hits one billion people, and the US Interest Rate average is around 12.9%. This is the beginning of what would be known as “The Decade of Excess”. Although we find ourselves in similar situations today, and the comparison to the conceived similar economy of the 80's, it really isn’t the same. In 1980, the residential 30-year mortgage rates ranged from 11% to 18%. Commercial real estate construction lending rates were above 20%. The carrying costs of a loan were too high to be feasible to develop a property, so commercial real estate development stopped. The only commercial construction was local, state, or Federal government-funded projects. HUD-funded multifamily projects were the lifeline for many contractors in the 80's. The HUD aid programs kept construction alive. The unemployment rate averaged around 7.5% and the country was predicted to be heading into a recession.
So, here we are today. For some, it feels like we have been in a recession. The commercial real estate market declined by 90 percent for property acquisitions starting in the last quarter of 2022 and continuing through 2023. The last quarter of 2023 was nothing like we saw in the 1980's though. Today, the 30year fixed rate is around 8%, and unemployment is around 3.8%. Real Estate froze because of our low-interest rates for the past few years. From nothing to 8% is a shock to the market. The market will learn to adjust, and interest rates look like they may start to lower in the near term. I believe that there will be an uptick in all real estate sectors in 2024. Location will drive where, how much, and when.
Flashback to the 80's There have been seven recessions/real estate crashes, starting in 1980. It seems like it will take forever, but the rebound will happen. It takes time for the mindset of real estate buyers and investors to adjust to the new normal. Considering two wars are going on, the market seems stable. A positive change in the economy's direction will improve unless hostilities increase or a black swan event happens. Historically speaking, things are not bleak. Commercial Real Estate investments are usually financed based on a five-year hold and are either sold or refinanced. That clock is ticking. Properties constantly need to be bought and sold. Opportunities should come out of the woodwork soon and waiting for the right price will not always be an option for sellers. 2024 looks promising for an economic rebound, and eventually we will forget about the downturn of 2022-2023. In the meantime, stay in the game. Greg Trotter, President CBC
Covering Your Assets Ensuring the Equity Value
We like to think that all the energy, stress, and headaches are done when we finish with a closing. But that is not always the case, sometimes it is just the beginning. We all know that for an asset to meet expectations it needs to be well-nurtured. Your teams’ stewardship and expectations are set, and plans are laid to ensure success during the expected hold period. But does your laid out plans include a longer term understanding of the property’s condition and how to ensure that it stays a healthy asset? As your team takes over the asset, you begin to understand all the unique features that the property may entail. At the beginning, you address all the life safety issues and improvements, make a plan to address all known immediate needs, implement your Capital Expenditures (CapEx) planning, and move forward with any renovation plans. As year one ends, all of the immediate needs projects have been completed or are in the final planning, and most if not all of the renovation plans have been completed. So, now it is time to just sit back and let your asset make you money - or is it This is the time to put in place an asset management plan, one that will coincide with your planned hold period. The best tool for an asset management team is to have at hand the ability to understand the health and condition of a property, and its longer term operational needs and costs. This type of understanding and monitoring helps to ward off any surprises or potential conditional risk that a property can experience. Knowing and understanding a property outside of just regular maintenance can help to preserve and protect the equity value of your assets.
Maintenance is one of the most crucial parts of preserving an asset, but truly understanding the longer-term needs and conditions is what can help protect the equity value of your assets.
At the pivotal 18–24-month juncture, it is crucial to have a reassessment of the previous findings, otherwise known as an Asset Condition Assessment. At this point the focus shifts towards understanding the changes that have unfolded and confirming that all immediate needs have been diligently addressed. This is also the time to reevaluate the CapEx budget and to recognize the significance of CapEx projects as catalysts for long-term success. CBC’s experienced Project Managers delve into the heart of these projects, evaluating their progress and identifying potential pain points that may not have surfaced in your team’s plans. This comprehensive approach ensures that your assets remain on a trajectory of growth and prosperity. To find out more about CBC’s Asset Management Services and how we can work with your Asset Management Team to help preserve and protect the equity value of your assets, please contact us at 407.447.5881, email us at info@CBCbuildingsolutions.com or visit us at CBCbuildingsolutions.com
PAST PROJECTS SPOTLIGHT
CBC was retained to perform a Property Condition Assessment (PCA) on an extended stay hotel just north of Baltimore . The client was looking at a change of use on the property to turn it into a Multifamily Property. The project was a success!
Past Project Spotlight CBC
ventured
perform
a
into
Minnesota’s
Property
Great
Condition
White
North
Assessment
on
to a
Multifamily project for our client. This 231-unit complex sits on 6.6 acres and was originally constructed in the late 1980's. Today, the community has been renovated and is enjoying a successful, invigorated life.
Minnasota Multifamily
“THAT’S HOW WE’VE ALWAYS DONE IT” AND NOW IT’S TIME TO CHANGE Legacy companies like Lord & Taylor and Sears & Roebuck represented some of the best in retail for over a hundred years. But, when a company does not understand how to adapt to changes and innovations, it is set to be doomed. The old adage, “That is how we have always done it”, can be the kickstart to a fast company demise. Change and innovation is a given in everyday life. The ability to adapt is a must if you want to survive. For companies that are stuck in their ways and are unable to see the need for change, they are destined to fail. CBC has always tried to understand and embrace that change is inevitable, in doing so we are able to respond quickly, accurately, and with ease in order to help our clients with their investment opportunities and asset protection in a way that no one else can.
CBC has always been a leader in the industry. Understanding and acting upon the things that helps and protects our clients. We are the protectors, the experience, and the knowledge that our clients need. But we are also the innovators, the ones that see and understand things from a different perspective. A perspective that not everyone understands at first but is revealed when things could go wrong. CBC is moving into 2024 with some new service offerings. We have been watching and listening to our clients while monitoring the economy and our industry. This has allowed us to have a better understanding of what is expected in 2024 and what our client‘s needs are going to be in the market.
By thinking ahead and having a better understanding of this new economic need; CBC’s over 20 years of experience, background, and knowledge in the Commercial Real Estate consulting and due diligence sector has placed us in a position as an industry leader for assistance with sustainability and recovery. And that is what we are doing in forging forward with our own changes. We are ramping up our Distressed Property consulting and Receiverships We are strengthening our Asset Management services with some new offerings We are working on developing a Construction & Engineering Division We are expanding our Owner‘s Representation and Construction/Project Oversight services We are developing a Subscription Service program We are providing Acquisition Consulting on Off-Market opportunities Contact us for more information on how we can help you.
Companies that Failed due to a lack of Change, Innovation, and Quick Action Lord & Taylor - 195 Years A&P Supermarkets - 156 Years Sears - 131 Years Kodak - 123 Years JC Penny - 118 Years Stein Mart - 112 Years Kmart - 110 Years Toys R Us - 69 Years Pan Am Airlines - 64 Years Pier 1 Imports - 62 Years Tower Records - 44 Years Boarders Books - 40 Years Blockbuster - 25 Years Circuit City - 25 Years Compaq Computers - 20 Years Teavana - 20 Years Years in Business
Winter is not a season, it's an occupation. SINCLAIR LEWIS
Team Member Spotlight Meet Arturo Martinez - CBC's Director of Project Operations Arturo has been an official part of the CBC team since November of 2015. However, his ties to CBC go all the way back to 2008 when he and has dad were a part of the crew that worked for CBC on the renovation of the Treasures on the Bay Condominium project.
Arturo
is
originally
from
Caracas, Venezuela when his parents moved to the United States in 2000. Arturo enjoys working in his garden, outdoor
activities,
sports,
and
spending time with his wife and family.
Have a Wonderful New Year!
COMMERCIAL BUILDING CONSULTANTS 3670 MAGUIRE BLVD, SUITE 110 ORLANDO, FLORIDA 32803 407.447.5881 INFO@CBCBUILDINGSOLUTIONS.COM Redefining Commercial Real Estate Consulting and Due Diligence