commercial division weigand quarterly · available space 80,566 sf (1.85 acres) year built 1957,...
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COMMERCIAL DIVISION WEIGAND QUARTERLYJune 1, 2020 | 1st Edition
MARKET TRENDS
1)
FEATURED PROPERTY
• Warehouse/Showroom/Manufacturing space available for purchase located in Southwest Wichita.
• Tenant relocating.• Great visibility. • Excellent access to K-42/Southwest Blvd. & West St., and I-135.
2710 W. Pawnee St., Wichita, KS 67213 BUILDING SIZE27,648 SF
AVAILABLE SPACE80,566 SF (1.85 ACRES)
YEAR BUILT1957, 2008, 2011
ZONINGLIMITED INDUSTRIAL
CEILING HEIGHT14’ - 24’
SALE PRICE$1,300,000.00
PROPERTY HIGHLIGHTS
EXPECT THE UNEXPECTED
The real estate business is cyclical and, in most cases, follows the ups and downs of our economy- just like anything else in this world. It does not always have the same effect on everyone or every place. As we face the newest challenge of the COVID-19 Pandemic, we find ourselves trying to predict the future of commercial real estate. Although we have seen market changes in the past, we are experiencing a new challenge, not only to our economy, but also to our health. This is a different time, and it will not follow the same course as earlier cycles. However, I do believe there are similar guidelines or principles we have learned in the past that can be helpful during this time.
I am reminded of three economic changes that affected commercial real estate:• Savings & Loan Crisis (S&L Crisis): 1986-1995• 9/11: 2001• The Great Recession: 2007-2009
With some of the same problems, these three cycles, all caused by different reasons, are those which I have experienced in my life’s work in commercial real estate. However, let us not forget the biggest and most devastating down turn in history being The Great Depression beginning in 1929. Although I have read about it and heard about it from my parents and grandparents, I have always been interested in its history. During my first years at J.P. Weigand & Sons, Inc., I asked Nestor Sr. how it was to be selling real estate in Wichita during The Depression? He offered a story I would like to share. He was selling a property and was embarrassed to bring the seller this offer: the buyer offered 20 gallons of paint, 100 shares of stock from an already defunct company, and $500.00 cash. The seller said, “Young man, did you say $500.00 cash?” A deal was struck!
EXPECT THE UNEXPECTED....CONTINUED ON PAGE 4
Greatness through character and determined expertise.
Grant Tidemann, SIORBradley Tidemann, SIOR
316-292-3908316-292-3947
CRE INVESTOR TIP: 1031 EXCHANGE
2)
FEATURED PROPERTY21st St. North & Braeburn Lane, Wichita, KS 67208 AVAILABLE SPACE
NORTH BUILDING: 2,820 SFSOUTH BUILDING: UP TO 5,680 SF
YEAR BUILT2018
TRAFFIC COUNT18,981 VEHICLES PER DAY
LEASE RATE$25.00/SF, NNN
NNNESTIMATED AT $7.25/SF
PROPERTY HIGHLIGHTS
An Exchange Should be Considered When:
Examples of Situations That May be Appropriate for a 1031 Exchange:• The property owner whose focus
has changed from one type of property to another.
• A real estate investor wants a property that is more passive and requires less time.
• An owner wanting to exit a stabilized operating property to acquire a “turn-around” or
“value added” property.
• To exchange into a property where financing is more readily available and on more favorable terms.
• To diversify a real estate portfolio.
• An investor who wants to move their focus from one region of the country to another.
• The sale of property will generate a substantial gain.
• The property to be sold has been owned as an investment or for use in a business.
• The owner must be willing to re-invest the proceeds from the sale of the “relinquished
property” into a “replacement property.”
Randy JohnstonSales Associate
The 1031 Exchange is a type of real estate transaction that refers to Section 1031 of the Internal Revenue Code. This section of the Code allows for an owner of a business or investment real estate to exchange into other “like kind” property and defer the capital gains taxes. These types of transactions are fairly common in our marketplace as real estate investors take advantage of one of the few remaining ways to shelter capital gains upon the sale of real estate. Experienced investors, by doing some detailed planning, can indefinitely defer capital gains taxes by utilizing this section of the tax code.
These are some of the reasons 1031 Exchange transactions make up a significant portion of our commercial real estate sales. There are a number of IRS Code stipulations that must be adhered to in the process of completing a successful 1031 Exchange transaction. Most importantly, the IRS establishes some specific timelines for identifying and closing on the “replacement property.” (Side note: the IRS is providing additional relief for taxpayers affected by the COVID-19 pandemic and is allowing for additional time for identification of and closing on replacement properties).
While the 1031 Exchange process has very stringent rules and regulations that must be followed, deferring taxes is a powerful motivator in purchasing and selling real estate. Not only does the exchange benefit the active investor who is in the business of buying and selling on a regular basis, but it can benefit the passive owner who may utilize the exchange once in a lifetime.
• Unique opportunity to be part of the progressive Wichita State University Innovation Campus.
• Over 15,000 students and 2,500 employees frequent the Wichita State campus daily.
• Separating the two 10,000 square foot retail buildings is the spacious outdoor Central Plaza area that will be used for numerous events throughout the year.
Christi Royse, CCIMKrista Lowry
316-292-3919316-292-3990
[email protected] klowryracine@weigand.
• Property can be built to suits needs. Lot sizes flexible.• Great visablility.• Easy access to 254 Highway.• Small amout of specials.• Could build up to three buildings.
TECH & BUSINESS TIPS FROM OUR INDUSTRY EXPERTS
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FEATURED PROPERTY810 E. Kechi Rd., Kechi, KS 67067 SITE SIZE
UP TO 157,251 SF
SITE ACRESUP TO 3.61 ACRES
ZONINGHEAVY COMMERCIAL
ZONING CODEC-3
TRAFFIC COUNT19,800 VEHICLES PER DAY
LEASE RATETBD BY BUILD-TO-SUIT
PROPERTY HIGHLIGHTS
“Invest in a laser measurer. You can get a good one for $50-$75. It’s faster than
tape, more precise and you can measure ceiling heights and other
tough-to-reach dimensions.”
- Ben Gartner
“To keep up with current real estate trends and national news I recommend Inman News, Bisnow and the National
Real Estate Investor.”
- Whitney Vliet Ward
Kevin HowellSales Associate & Auctioneer
WHY WEIGAND: FULL SERVICE AUCTION DIVISION
Whitney Vliet WardSales Associate 316-292-3900
Ben Gartner, CCIMSales Associate
COMMERCIAL AUCTIONS
Our Auction Division is comprised of professional real estate experts who market real estate throughout Kansas and Oklahoma using an advanced, modern approach to the auction method. Our auctioneers’ primary focus is utilizing auctions for a wide range of properties with innovation and creativity to obtain optimal prices for their clients.
CO-OP ProgramWith J.P. Weigand & Sons, Inc. Auction Division, we appreciate the opportunity to cooperate with Agents throughout the real estate community. Let us be another tool in your toolbox for both buyers and sellers.
Is an Auction Right for Your Seller?Call to schedule a consultation where you will receive the information to decide for yourself. A property can go to auction without being listed for sale or at any time during a listing period.
• Commercial Real Estate
• Agricultural Land
• Farm & Ranch
• Hunting & Recreational Land
• Residential Real Estate
Calvin Klaassen 316-292-3976 [email protected]
4)
MARKET TRENDS
Grant Tidemann, SIORSales Associate
SAVINGS & LOAN CRISIS (S&L CRISIS): 1986-1995
Our government changed the laws of depreciation and sent our commercial real estate business in the tank. The biggest problem was commercial lending completely went away, and banks and lending institutions were forced to merge and/or liquidate. Real estate loans then had to follow strict guidelines set by the Federal Government. The only loans being originated were to clients who did not need a loan. The Federal Government forced the banks to foreclose and take control of the asset. After a time when the assets had not been sold, the government stepped in and took these properties under the control of The RTC - Resolution Trust Corporation. They quickly realized that they had no idea how to run real estate. The end of the S&L Crisis took place after they decided to sell those assets at auction and liquidate. They soon learned the market was set by the buyer, not based upon the previous loan amount.
9/11: 2001
Although not as crippling as the Savings & Loan Crisis, 9/11 was a time when caution was wide spread and business was slowed due to the uncertainty in the market.
THE GREAT RECESSION: 2007-2009
The subprime mortgage crisis contributed to The Great Recession wherein the real estate economy was brought downprimarily through foreclosures and bad lending practices. Real estate loans were originated for buyers who could not afford to buy. These loans were bundled and sold to the secondary market, unsecured and became non-performing. The domino effect had a devastating effect. Again, the banks were not lending, and foreclosures and bankruptcies were prevalent. The one difference from the S&L Crisis is the lenders were not taking possession of the assets. They kicked the can down the road and worked with the borrower to reduce the deficiency and kept the bad loan off their books. This became problematic for the commercial real estate agents because everything was placed on hold until the economy turned around and banks started back lending.
In the present environment with the government extending credit and working with banks to turn the economy around, this could be different from the previous downturns. The question becomes, how will this affect the banks and commercial real estate loans in the future?
• Listings: If we are not closing deals, put more effort into listing. When the market turns, you are in a position to turn those listings into deals.
• A good time to buy is when the market is soft-recovering.• Be creative.• Be positive-the glass is half full, NOT half empty.• Seek out others, work together-two heads are better than one. Work as a team.• Know what is going on in town.• Become familiar with force majeure.• No deal is too small, nor commission too big!
LOOKING FORWARD BEYOND THIS DIFFICULT PERIOD, WE CAN REFLECT UPON WHAT EXPERIENCE HAS TAUGHT US:
Change is good for the real estate business; although it creates challenges, it also creates opportunities!
EXPECT THE UNEXPECTED.... CONTINUED FROM PAGE 1
As we begin to watch our City, State, Country and World work its way back from an unprecedented global pandemic due to COVID-19, we face the question; What’s next? Does anybody really know what to expect? It may seem that most “expert opinions” telling us what to expect are tainted by political bias or otherwise trying to support some position.
So, what is next for South Central Kansas and the commercial real estate market? We think there are brighter days ahead. Kansans are resilient and resourceful. During this time, we saw businesses of all kinds learn to operate outside the box. Office users were thrust into working from home and using new technology to communicate and work virtually. Restaurants adopted delivery systems and curbside pickup. Retailers also established curbside pickup options, as a way to keep sales alive. Businesses and their operators dug deep to find ways to continue operating and remain viable even in the midst of the most impossible circumstances.
Many financial experts are forecasting a Rapid “V” Recovery. That is the best-case scenario. Many experts in our industry anticipate a strong recovery, but the timeline might be a little longer. We are optimistic the CRE industry and the economy overall will recover fully, but expect investors to be cautious. It might take time for some to feel confident about investing in businesses again, until they once again feel confident in the strength of our economy and that the pandemic is behind us.
Opportunities are still out there, even in a struggling economy, and you can still invest and grow your portfolio effectively. At J.P. Weigand & Sons, Inc. our associates work hard to find new and better ways of doing things and at keeping knowledge and skills up to date. They are well prepared and ready to serve their clients when an opportunity presents itself. We are still seeing movement in the market, deals are still being done, and our agents remain optimistic.
If you are considering how you should move forward, keep in mind that real estate is traditionally the strongest option, even in a troubled economy. Consider the commercial real estate market and what opportunities might exist during these times. This might be your best time to make a move. Our experts can help guide you and provide the data and expertise to help you make the right choice at the right time.
Sincerely,
5)
REAL TALK WITH JOSH
A WORD FROM OUR ELECTED OFFICIALS
Cindy Claycomb, Ph.D.Vice Mayor & City Council Member
District VI
The pandemic crisis has created unprecedented challenges in every sector of our economy. The City of Wichita is no different. The City’s budget is projected to suffer an $8-$10 million deficit in 2020, and at least that much in 2021. The City of Wichita delivers many services we expect from local government—including police, fire, street maintenance, neighborhood inspection, parks and recreation and libraries. These activities are funded by property taxes, sales taxes, franchise fees, motor fuel and vehicle taxes, and various other sources. Property taxes account for 35% of the City’s revenues, with sales taxes and motor taxes contributing an additional 12% and 11%, respectively. While the projected budget deficit is large, property valuations are generally not as volatile as sales tax collections and there is a timing lag in the County Appraiser’s valuation process. This could mitigate decreases to City services; however, because people aren’t shopping and driving as much as before the crisis, these revenues are expected to decrease. This crisis presents opportunities for City Hall to assist businesses as the economy reopens. Are there City regulations that could be reasonably adjusted to accommodate developers, real estate, building sectors and other small businesses? Are there regulatory processes that can be streamlined? As our City and the economy reopen, please reach out to me with your ideas.
Contact Cindy:[email protected]
316-268-4331
Joshua TurnerV.P. & General Manager
Commercial Division