US Contractors Predict Stability & Growth

US Contractors – 2014 Update

US Contractors predict stability and growth, according to Daily Commercial News, on January 27, 2014, “Contractors are more optimistic about 2014 than they have been in a long time,” said Stephen E. Sandherr, the association’s chief executive officer.

“Many firms in the United States plan to start hiring again and most contractors predict demand will either grow or remain stable in virtually every market segment this year, according to survey results released by the Associated General Contractors of America.”

Read the full article here…

APPRO Development is a proud US contractor based in Lakeville, MN, serving the midwest since 1987. As an experienced general contractor, our team is ready to assist you with your 2014 construction needs.

Industrial Production Facility Construction Nears Completion: Mankato, MN

Imperial Plastics Industrial Production Facility Construction Nears Completion in Mankato, MN

The newest industrial production facility construction by APPRO Development, Inc. is nearing completion. A Temporary Certificate of Occupancy (TCO) has been issued on the Imperial Plastics Mankato project (click link to see more project photos). Owner furnished equipment installation (e.g. process piping, racking and cranes) is well under way and the final interior finishes are being installed which include: carpet, paint, and ceramic tile, to name a few.

It does not seem all that long ago that APPRO Development, along with representatives from near and far, came to celebrate the groundbreaking ceremony for Imperial Plastics as they kicked off construction of this 124,000 SF (approximate) manufacturing/production facility. Although, it was a whole lot sunnier and warmer back in August than it is now as we near the end of January 2014, the time has gone by rather quickly and we find ourselves nearing the time to turn over the keys. APPRO Development is targeting the end of February to turn the building over to the owner.

Do you have an existing building in the Mankato area and wondered, “what can I do with an existing warehouse building?” You may need some design ideas or a free market analyis. Or, possibly a new building is in your future, as you address your company needs. It is never too early to contact our professional team. Our no obligation initial consultation may provide just the answers you have been looking for. These were the first steps in working with this client and we would be happy to help you find a solution for your business, too. Contact our knowledgeable, friendly team today.

What to Look for in Investment Properties

Want to know what to look for in investment properties? This is a great place to start.

what to look for in investment properties information from CERRON Commercial PropertiesLove Real Estate? Thinking about getting into Investment Properties?

Most people know the common formula affectionately known as IRV.

Income = Rate X Value

Income is the net operating income (revenues minus operating expenses and before debt service).

Value is the real estate market value.

Rate is the capitalization rate. When you have a higher cap rate, the lower the value for the same amount of income or conversely, the lower the cap rate, the higher the value. Cap rate also reflects risk. Typically the higher the cap rate, the higher the risk. Lower cap rates come from credit tenants who are perceived as less risky. Cap rates run around 4% to 12% with an average of 8%. For easy figuring many use 10%–$100,000 of income is a $1 million value.

The other part of the equation is not reflected here: what does is cost to borrow. If interest rates remain low (as they are predicted to do), then the cost of borrowing will stay low and allow for greater property values that still provide a desirable rate of return. Some investors have recently enjoyed 5 year money for as little as 3% interest. When you can leverage your money, you can make more money, but it is also more risky. I suggest you talk to your banker before looking to buy to find out how much you could borrow and at what terms that work for you. If you don’t have a banker, we can provide several professional contacts we have enjoyed working with over the years.

Other things to look for:

  • quality of the tenants
  • length of the term of the leases in place and renewal terms
  • vacancy (and vacancy allowance)
  • quality of the building, grounds and parking lot
  • condition of HVAC
  • condition of the roof
  • responsibilities of landlord/tenant in the lease
  • property management
  • operating expenses—are they in line?
  • real estate taxes –property tax detail
  • location –ease of access, lit intersection
  • potential changes in roadways or development-contact the city
  • zoning code and allowable uses
  • potential reuse
  • parking stalls—parking ratio
  • visibility
  • signage

The good news is that anyone can be a real estate investor. The key is to have good people to help you with your property: banker, property manager, commercial real estate agent, contractor, accountant and real estate attorney. The APPRO/CERRON team can help with leases, sales, acquisitions, management, market/proforma analysis, architectural design, and construction. We have contacts to cover the other areas to fit your project. Take their professional advice, use common sense and follow the golden rule of real estate: don’t fall in love with it. When it is time to sell, sell.

<em>The information contained on this website and from any communication related to this website is for information purposes only. As with all financial matters, consult your tax, legal or accounting professionals to discuss how investment decisions may impact your specific circumstances.</em>

Warehouse Building Considerations: Midwest Review

Warehouse Building Considerations – What you should know before you buy, build or remodel

Warehouse building considerations have been a topic of discussion of late, as one of the building types APPRO/CERRON is frequently contacted about for real estate and construction projects happens to be warehouse projects. There have been some great deals on warehouses in the last few years, and a potential buyer is often posed with the dilemma of whether it makes the most sense to buy an existing building and spend the money to renovate it to his or her company’s individual needs, or design and build a warehouse custom built to those needs.

To build new, one potentially loses out capitalizing on the devaluation of existing buildings (the availability of which are quickly diminishing on the commercial market). To renovate, however, often means to compromise on some of the features of the building, and/or to invest money into a building whose components might not all last as long as those in a new building.

With APPRO pricing your projects, you can weigh the various pros and cons of either option to come up with a solution that best fits your needs before proceeding to hire us to assist you along whichever solution (buy, remodel, add or build) you choose.

Some of the other considerations that we’ve seen owners look at include more detailed considerations (or checklist), like the following:

  • What are the clear height dimensions and door size dimensions that will work best for you?
  • Are super-flat floors a requirement for forklift traffic, more typical of higher clear height warehouses?
  • Are steel fibers or a special floor coating required for wear?
  • Will high-speed racking be utilized?
  • What height will the product be stored to, and what will be stored in the warehouse, as this affects sprinkler coverage, and associated cost?
  • How susceptible will the walls be to damage from forklifts, which will affect whether the exterior walls are precast, metal or something else?
  • Will rail access be a consideration?
  • Will a loading dock be needed, as is typical, or just drive-in doors that close at pavement height?
  • If a loading dock is needed, will the design include locks to attach the truck to the dock while loading or unloading?
  • Is it important for the truck to be able to engage its dock and park, and then open truck doors (drive through docks); or is it OK to open truck doors before backing into its dock space?
  • Will there need to be a stop and go light system in place for trucks?
  • Will a canopy be needed above the overhead doors?
  • What kind of grade is acceptable driving in and out of the docks for trucks?
  • Will the warehouse need to be heated and/or cooled? Insulated?

There are more considerations, of course, than those above. But take a look at the list and consider which of these options are important to you when you make that all-important decision to buy or design/build.

Whether you are just starting the process or have been considering your building needs for a while, allow our team to assist you with any questions you may have about the construction (remodeling, additions or new building) process. We are here to help!

Secrets, secrets are no fun… Changes to LEED v4

Changes to LEED v4 – APPRO Architect Casie Radford Discusses Recent LEED Activity

 

LEEDBuilding-APPRO Development discussion of recent LEED v4 changes LEED Building. Source: Oregon-DOT (Flickr)

LEED (Leadership in Energy and Environmental Design) has been the primary program for certifying the sustainability and “greenness” of buildings for the past 15 years. Now LEED v4 has come out and the focus on the building industry has been expanded to include the manufacturing industry, particularly as it relates to materials and resources. The focus and responsibility is not off the building and construction industry, but will trickle down the line to understand more clearly where and how materials (and the raw materials involved) are manufactured and with what they are manufactured. Sustainability reporting is no longer the exclusive responsibility of the building industry.

Manufacturers and materials suppliers will now have stronger motivation to complete life cycle assessments (LCA) or they could see a decline in demand, as the use of their products for more than just one LEED credit won’t be allowed. Best to take care of LCAs, EPDs, and HPDs (mentioned later), before the requirement goes into full effect and LCAs may be harder to complete in a timely or cost effective manner. Don’t worry though, projects can file under the previous version of LEED up until 2015.

One interesting factoid about the revised credits are that one LEED point can be obtained if a manufacturer of a building product discloses information related to environmental and health impacts – even if it is not environmentally friendly or healthy. I understand the importance of honesty here and also that “transparency drives improvement for business”, but what about the point of LEED in the first place. Isn’t there another way to promote safe materials? Why should a product be rewarded by being honest if not an otherwise LEED credit acceptable material?

Utilizing LCA as a tool to assess products is an important tool for evaluating the true energy and environmental impacts a product has. A new tool created for product assessment is the Environmental Product Declarations (EPD) which is a third-party verified LCA. This tool will enable a product to achieve additional points if the impacts to the environment are below industry averages. This goes to show that a peer review is never undervalued. Similar to the transparency point, you can still get one LEED point for just having an EPD.

Supply chain information, for certified wood for example, is often viewed as highly confidential. To achieve a credit for the responsible sourcing of all raw materials; however, manufacturers are required to report extraction locations and supplier commitments for 90% of a product’s raw materials. The aim for LEED is to reward those who already openly disclose and communicate with suppliers to avoid future issues.

LEED v4 will also address hazardous materials by requiring companies to declare every ingredient more than 0.1% (by weight). For declaration alone one LEED point can be achieved, while another point can be had by proving they are dodging hazardous materials as determined by the government. The Health Product Declaration (HPD) has been created as a format for reporting a product’s ingredients.

Have concerns about commercial or industrial building materials or manufacturers; or, want to know more about how LEED has an impact on your next building project? Contact the APPRO Design and Architecture team for more information HERE.

“Safety First”

“Safety first” has been a popular catch phrase for years, and is used in the public and internal literature of many companies, especially those in fields where it matters the most, like in construction. Too many construction sites have personnel that treat it as an afterthought, however, if they give any thought to safety at all.

Why do people who have the most to lose if a job site is unsafe, the workers themselves, seem to be the people most likely to display a don’t-care or slack attitude about safety? You would think these people would be the most diligent about safety. There are, of course, many foremen and trades people who look at a safe working environment and planned construction method as paramount in doing their jobs properly, safely, and can therefore execute their work with confidence. But there are still too many others not following that example!

A site where everyone automatically includes elements of safety into each day’s construction plan can be the norm, however. A culture of safety can be grown in crews and companies by teaching, reminding and enforcing commonly known OSHA safety measures that everyone on a site should, and most do, know. But how does one grow such a culture?

It starts with a company’s commitment to safe work procedures and a well written safety plan; it continues with signs, checklists, and feedback for any crew’s plan for working safely on any given day. It is enforced by giving verbal and written warnings, and where necessary, taking action to remove individuals from the site that refuse to take safety rules seriously. Companies that continue to send such people to a site should be replaced by other companies who will send safe workers.

Safe workplace procedures like those listed above are a must in today’s construction world, as there are too many life, health and financial repercussions for those companies that don’t do so. I urge everyone, no matter what level of authority, to look at what your company is doing to keep everyone in your workplace safe. I bet you’ll come up with at least one suggestion that leads to a safer and more peaceful workplace for all. After all, the life you save or health you protect may just end up being your own.

APPRO Development, Inc., a Lakeville based commercial construction company, is committed to “safety first” on all its construction projects – large or small. You may review our safety mission statement for more information on APPRO’s policy, and as always, please contact us with any questions.