The holidays are passed and as I await the dreaded visa bill I reflect on how my own shopping patterns have changed. Last year I bought nearly everything at CVS. There were no lines, ample parking, friendly service and everything was wonderful. This year we went online to find our purchases which were mostly electronic for our teenage children from our cabin in Hayward, WI. By law we are responsible for the sales tax we incur for online purchases. The online retailers that do not have a physical store where we legally reside are not responsible to collect sales tax, although the consumer is still responsible to collect and submit on their tax return. As more and more consumers switch to online purchases, the state loses the revenue normally collected in the past. Consumers are not used to submitting sales tax outside the transaction and they shouldn’t be expected to do so. Brick and mortar retailers like Target, Best Buy and others are at a disadvantage to pay the additional income tax, property tax and capital to occupy prime retail space while Amazon’s prices are typically 7% less—the amount of sales tax collected. The argument against is it is tough on the mom and pop retailers to figure out all the different taxes. One tax rate per state would simplify this issue. Electronic submission and withdrawal would make it easy to implement. The proposed affiliate nexus legislation; Internet Sales Tax Fairness bill would provide $3.5 million in lost sales tax revenues to Minnesota. There are also initiatives being talked about at the Federal level as well that are supported by the International Council of Shopping Centers (ICSC).

Not only would this create a level playing field for retail competition, but would also provide lost revenue at the state legislature.

See this article for the Minnesota Real Estate Journal. Great outlook for small to medium size companies and industrial real estate.

Small and Mid-sized industrial users gain momentum and look long-term
Posted By Staff Writer On December 27, 2011 (4:44 pm) In CIP Column, Home Column

By Dan Brown

President-Brown Commercial Group, Inc.

As the brunt of the recession fades from memory, small to mid-sized businesses are approaching the industrial market with renewed confidence. The result is a focus on long-term planning, which is prompting an uptick in activity and pushing vacancy rates downward.

According to Colliers International, a surge in user demand helped boost industrial leasing activity throughout the Chicago market by more than 27 percent from the second quarter of 2011 to the third quarter. The vacancy rate fell nearly one half of one percentage point during that period, from 11.76 to 11.28 percent.

Many businesses have spent the last two years streamlining operations and paying off debt to protect and enhance their position in the marketplace. As they emerge from the economic downturn with stronger balance sheets, they are feeling more confident and are looking longer term when evaluating space.

During the height of the recession and its immediate aftermath, many small to mid-sized industrial businesses were signing one year leases, as they retrenched and reacted to economic conditions. Those that have weathered the storm are now feeling more secure and willing to plan ahead three to five years.

The long-term horizon is a good move for today’s tenants, as it allows them to leverage existing market conditions and lock in at lower lease rates.

This approach—getting your house in order through an evaluation of a business’ financial and business plans—is as sound today as it was two or three years go. Businesses—and the landlords that lease them space—no longer are willing to take the types of risks in bankrolling space like they did in the past.

Longer term financial planning –of at least three to five years– is essential when weighing today’s real estate decisions, as it allows business owners to see the ups and downs of sales and inventory as well as income and expense streams over a longer time horizon.

High Quality Industrial Space in Short Supply

In markets that are attractive for the small to mid-size user, statistics further demonstrate the market improvement. For example, in the O’Hare submarket, the vacancy rate fell from 13.17 to 12.04 from the second to third quarter. Leasing activity rose by 1.64 millions square feet, a 39.2 percent increase and the highest increase in the past two years.

In the Elgin/I-90 submarket, the vacancy rate dropped from 13.35 percent to 12.17 percent during that period. Leasing activity was concentrated among small users and totaled 185,900 square feet, a 43.7 percent increase from the second quarter, according to Colliers International.

As this recent growth has occurred, companies are finding that high quality industrial space is difficult to find. Buildings catering to users of 50,000 square feet or less with tall ceiling heights and good access to regional transportation are in such short supply and that it is pushing some sales prices upward.

Brown Commercial, for example, represented a company wanting to purchase a well maintained building in a prime Franklin Park location. With few alternatives that met the buyer’s needs, a bidding war occurred and pushed the purchase price to approximately 10 percent more than the list price. While just a snapshot of the overall suburban industrial market, this example shows how basic market fundamentals (good location and good building amenities) continue to drive the market.

Rent Concessions are Easing

This renewed interest in expanding or upgrading space has translated into increased activity in certain markets. This starts a positive chain of events: vacancy rates are beginning to drop and, consequently, rent concessions are starting to ease.

Improvements in the Lending Environment

The lending environment also is improving, as banks become more willing to take modest risks. Further, there is an increased level of activity with the various SBA loans, as they require only a 10 percent down payment from the business and a smaller funding level from the local bank. The combination of incentives available and low interest rates means that capital available has never been more attractive. Consequently, the volume of loans being made to small businesses looking to acquire or renovate real estate remains strong.

While the market still has a ways to go to return to “normal,” there are many signs that Chicago’s industrial market has turned a significant corner. For users of 50,000 square feet and under, those signs are steady corporate growth, renewed interest in facility upgrades and building purchases, and a focus on expansion.

These small to mid-sized users are important to the long term viability of the market. As we see positive signs of momentum, it bodes well for the entire market as we head into 2012.

Dan Brown is president of Brown Commercial Group, Inc. a privately held commercial real estate company in Elk Grove Village specializing in leasing and selling industrial, office and investment property, and assisting clients with land acquisition and new construction projects.

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Article taken from REJournals.com – http://www.rejournals.com
URL to article: http://www.rejournals.com/2011/12/27/small-and-mid-sized-industrial-users-gain-momentum-and-look-long-term/

When showing your property, you only get one chance to make a good first impression. Here are some suggestions to increase the desirability of your property to potential buyers & tenants, and help you sell or lease at the best price, in the least amount of time.

Curb Appeal is Essential

A buyer’s first impression is formed by viewing the outside of your property. A mowed lawn and a well maintained landscape all help create a good first impression.

Inspect the exterior of your property starting with the entrance. Buyers are usually waiting in the entry while the door is being opened and have plenty time to make an assessment of the overall upkeep of a building.

Neatness Counts

Vacuum the carpet if it hasn’t been done recently, clean windows, clean restrooms, pick up any trash and remove any items left behind by previous tenant.

If it’s Broken, Fix it

Repair such as a loose door knob, dripping faucet or leaking overhead door seals all detract from the property’s value.

Small Additions Make a Big Impression

With minimal expense, you can improve the appearance of any property. Consider replacing worn carpet; add a fresh coat of paint and sealcoat parking lot.

In a competitive market these improvements can be the deciding factor to a Buyer.

I think this article from the Business News Daily says a lot about the impact of small business driving impacts throughout our economy !

http://www.businessnewsdaily,com/small-business-real-estate-1905/

It is another example of how we all benefit from encouraging small businesses to thrive. Even our home values benefit!

1. The buyers commissions are paid by the seller

2. Buyer’s agent has resources to assist you in your search. MNCAR (commercial listing data base available to agents only), Networking with fellow agents, receiving information on new listings prior to them hitting the market and faster than you’ll find on your own. Let a Buyer’s agent do the leg work for you!

3. Buyer’s agent will assist you in selection process by providing information on each property; utilities, zoning, taxes and current market conditions.

4. Buyer’s agent can show you properties and make suggestions that will make the property more suitable for your use. (Build-out or modification of current plan) Two eyes are better than one…a buyer’s agent can point our potential problems or other defects that you might not have noticed.

5. Buyer’s agent will help you negotiate. Several factors to consider, price, financing terms, possession, inspection, post inspection repairs and terms of Due Diligence period

6. Buyer’s agent will help you understand ALL of your financing options and refer you to qualified lenders who are honest, reputable and have current market knowledge

7. Buyer’s agent can help you through the Due Diligence Period providing referrals to inspectors, surveyor, contractors, and help negotiate any problems that may arise

8. Buyer’s agent will refer you to a title company that will do a thorough title search and provide insurance against any future claims once you take ownership

9. Buyer’s agent will help coordinate the closing to make sure everything flows together making a smooth transaction

10. Buyer’s agent can help you with current market updates on the property that you purchase