Commercial Real Estate Lending Improves

A few years ago, some investors were scrambling to find sources of capital as banks and lenders were reluctant to fund projects. Fortunately, a new age of more stringent underwriting by banks and other lenders combined with greater diversity in sources of commercial real estate capital has helped ignite a rush of confidence among CRE executives. The 6th annual Akerman U.S. Real Estate Industry Outlook Survey recently found that nearly 60% of real estate executives are more optimistic about the market this year than they were in 2014.

Nearly half of the executives interviewed predicted that banks will drive commercial property financing over the coming year, and for the first time since 2011 they indicated that insurance companies will also be a main source of real estate financing. Foreign capital, already funneling equity into U.S. property deals, will also be a key driver of growth in the financing space as well.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said the days of searching for alternative sources of financing are over.

“During the recession, we worked with a lot of investors who were frustrated by traditional lenders and banks,” he said. “We had to get creative and look for other sources of capital, but now the tables have finally turned and it’s much easier to obtain funding for developments and projects.”

A surge in institutional capital is leading deal volumes, with an upward trajectory predicted in 2015. However, executives believe that foreign capital will continue to pour into the U.S., and CMBS, private equity, REITs and pension funds will serve as sources of an even greater volume contributed through non-traditional investment vehicles. More than half, or 58%, believe multifamily will continue to lead CRE through the recovery. Seven out of 10 agree apartment development will drive multifamily activity.

Executives also said the single-family homebuilding market will be the second most active real estate sector at 10%, followed by hospitality, retail, industrial and office.

Florida’s CRE Brokers Optimistic on Growth

Optimism is running high in the Florida commercial real estate market among those in the business, at least according to the Survey of Emerging Market Conditions conducted quarterly by the Kelley A. Bergstrom Center for Real Estate Studies at the University of Florida’s (UF) Warrington College of Business Administration. UF’s Commercial Real Estate Sentiment Index, an overview of respondents’ opinions about their own businesses, improved to 7.45 out of 10 – its highest level since the third quarter of 2006. Craig Barrett, co-founder and broker with NBI Properties in Fort Walton Beach, said the future for commercial real estate is especially bright on the Emerald Coast.

“The tourism industry continues to grow by leaps and bounds and we’ve also seen a surge in job growth in the area,” he said. “Interest from investors spiked heavily this spring and shows no signs of slowing down during the summer months.”

The survey found that brokers and practitioners throughout the state expected occupancy and rents across property types to remain stable in the next quarter. Multifamily property occupancy continues to be positive, increasing at a rapid pace over the past few years. However, inventory increases from new construction, along with current capacity units, means this trend may level off soon.

Current capitalization rates have remained stable across most property types, though uncertainty over interest rates remains with certain property types. For now, however, low interest rates continue to drive capital to real estate.

Overall, survey participants felt that despite uncertainties, the state’s economy and its real estate markets continue to improve. UF says that trend should hold true for the near future.

The survey included 97 participants representing 13 urban regions of the state and up to 15 property types. The UF Bergstrom Center for Real Estate Studies supports the UF real estate courses and degree programs housed within the Warrington College of Business Administration.

Destin’s CRE Destiny Debated

What’s Destin’s destiny? Some investors mistakenly think there’s no available land for commercial development, but NBI co-founder Craig Barrett disagreed when he was interviewed recently for an article in The Destin Log.

“It may look like every smidgen of land is already developed, but in actuality there are some prime commercial lots still available,” he said. “The lots are designated as prime because in Destin there’s only one main road and everyone wants to be on Highway 98.”

When he was asked to name the top five most valuable properties on the market in the area right now, Barrett brought up five parcels in the space just around the Okaloosa/ Walton County line. He said he believes this is the next area Destin’s commercial buyers are getting ready to move to.

“The growth is growing into each other. It is growing east from the Destin Commons and growing west from the outlet mall. It is just a matter of time,” he said.

Investors looking for other options beyond Destin are frequently inquiring about available land parcels in areas such as Grayton Beach, Miramar, and Santa Rosa Beach. Barrett added that interest in land and properties on Highway 30A has spiked dramatically during the past few years.

“Destin is far from being played out,” noted Barrett. “But investors are realizing there are lots of other opportunities for development in other cities and towns on the Emerald Coast.”

Citizens Announces Rate Increase for Coastal Property Owners

Life’s a beach until sticker shock from insurance rates kicks in for some property owners. And that’s exactly what will happen when more than half of Citizens Property Insurance customers face rate increases next year, according to a proposal going before the insurer’s Board of Governors this week. The biggest increases are expected to hit coastal policyholders throughout Florida.

“We’ve seen increases for commercial and residential property owners on the Emerald Coast,” said Craig Barrett, co-founder of NBI Properties in Fort Walton Beach. “We’ve spoken with several insurers who have confirmed that rate increases are due to more water loss claims and the fact that some property owners have found adequate coverage with private market insurance companies.”

Citizens is proposing an average rate increase of 3.2 percent for personal lines policyholders. However, the actual amount will vary depending on location and home. The proposal includes an average increase of 8.6 percent on coastal multi-peril homeowner policies and Citizens says the rates reflect the higher risks associated with living along the coast.

For inland policyholders, the news is a bit better with a 1 percent drop proposed in multi-peril rates. Of the approximately 573,000 personal lines customers now with Citizens, about 255,000 are expected to see lower rates.

NBI Celebrates 10 Years of Progress on the Emerald Coast

When Jayme Nabors and Craig Barrett founded NBI Properties in Fort Walton Beach 10 years ago, everyone told them the timing was perfect for commercial real estate. As Barrett recalls, in 2005 just about every property imaginable was selling during a historic real estate bubble and everyone was cashing in. Unfortunately, business started off slowly when the region was paralyzed by several hurricanes that brought operations to a halt with no electricity or phone service.

“It definitely wasn’t the grand opening we had envisioned,” said Barrett. “Instead of showing properties and negotiating contracts, we were spending more time talking investors out of buying anything because the timing wasn’t right. We knew when the real estate bubble ended, a lot of people would get hurt if they gambled on the wrong deals.”

Because Barrett and Nabors are sixth generation residents of the Emerald Coast, they didn’t allow a few hurricanes and the end of the real estate heyday to discourage them. Instead, they built a reputation for giving good advice and steering investors and business owners to opportunities with less risk. The strategy paid off, and today NBI Properties is celebrating its tenth anniversary as one of the most highly regarded commercial real estate brokerages in the Southeast.

“All of the people who listened to us during the recession are some of our best clients now,” Barrett noted. “The market has improved considerably over the last two years and we’re working with numerous clients interested in retail, industrial, and professional office space. In fact, we’ve leased millions of square feet of office space since we started the business.”

Barrett added that NBI’s property management division has grown substantially in recent years with the firm currently managing more than 3,000 properties on the Emerald Coast. He said the luxury market is also heating up in the area and cited the Highway 30A corridor as an example of residential and commercial properties appealing to affluent homeowners and business owners.

As both Barrett and Nabors have witnessed continual growth throughout the region, they have made it a priority to give back to the communities they serve. They have sponsored and participated in events such as the annual Billy Bowlegs festival, PAWS Animal Rescue, the YOLO Board Relay Race Series, and the New Year’s Eve celebration for families in Fort Walton Beach. Last year the City of Fort Walton Beach also selected NBI Properties as the city’s Real Estate Broker of Record.

“We’ve been blessed and feel privileged to have been able to work with so many people tha last 10 years,” Barrett said. “The Emerald Coast has the best of everything, so we’re looking forward to seeing what the next decade brings!”

Flood Insurance Required for Some Commercial Properties

With hurricane season fast approaching, there are always plenty of news reports about how homeowners can be prepared for storms, damage and flooding. Business owners and commercial properties are often lost in the shuffle and need to take precautions as well, including insuring buildings in high risk areas. According to Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida, some business owners are not aware of how to protect their valuables or the amount of insurance needed to cover a catastrophe.

“We’ve seen more than a few business owners on the Emerald Coast who had to learn the hard way that insurance policies vary and don’t always cover everything,” he said. “We know people who had minimum insurance coverage during hurricane season and ended up paying thousands of dollars out-of-pocket after storms or flooding ruined the property.”

Insurance premiums vary according to whether a commercial property is located in a high-risk or a moderate-to-low-risk area. Moderate-to-low-risk buildings usually qualify for coverage at a lower, preferred rate and premiums are offered for buildings and contents for one low price. Owners can also choose to insure only the contents if they do not wish to have coverage for the structure. For those who don’t qualify for a preferred rate policy, standard rate policies are usually the norm.

“What some people don’t realize is that although flood insurance isn’t federally required, any business can be financially vulnerable to floods and hurricanes,” Barrett said. “In the last few years in this area, we’ve seen that you don’t have to live in a high risk area to sustain damage and that nearly 25 percent of all claims came from businesses and residents living outside the high risk zones.”

Barrett noted that if a commercial property is located in a high-risk flood area and has a mortgage from a federally regulated or insured lender, the owner is required to purchase a flood insurance policy.
“We tell our clients to check around for the best insurance policies and make sure they understand the fine print,” said Barrett. “It’s impossible to predict the weather, but business owners can rest easier if they have the right insurance policy in case disaster strikes.”

Investors Look Beyond Apartments for Higher Yields

Investors seem to finally be withdrawing from the apartment complex craze that enjoyed steady returns for the past several years. Several real estate studies and surveys show that as apartment rents and occupancy growth tapered off in the face of new supply, owners of multifamily properties considered selling assets or diversifying portfolios with other property types. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida, said that investors on the Emerald Coast are looking for higher yields and occupancy stability.

“We’re not seeing investors getting out of the apartment and condo market entirely as much as they are interested in other options,” Barrett said. “The market has remained strong even with the challenges of new supply and a wave of new construction. “

Barrett added that office, retail and professional buildings are a few types of properties that investors are calling him about, in addition to premium waterfront properties in the area. He noted there is a lot more opportunity in terms of pricing, occupancy and rent upside in some of the other property types such as office and retail space where investors still have the ability to potentially pursue development and value-add deals and some core deals as well.

“We believe the demand for apartments will remain steady because demand is still high,” he added. “But there’s so much new apartment supply right now that’s causing vacancies to go up. With office space, it’s a lot more difficult to obtain financing for office construction. However, with office jobs increasing, vacancy compression and less construction, the office sector seems like a safer haven for many investors.”

Sales of Vacation Homes Reach Record Highs

Sales of vacation homes reached record-highs in 2014 while investment purchases fell for the fourth straight year, according to an annual survey of residential homebuyers released by the National Association of Realtors® (NAR). NAR’s 2015 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2014, revealed vacation-home sales catapulted to an estimated 1.13 million last year, the highest amount since NAR began the survey in 2003. Vacation sales were up 57.4 percent from 717,000 in 2013. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida, said that sales of vacation homes remain steady on the Emerald Coast.

“There’s always been a great deal of interest in vacation homes in this area and a lot of it stems from tourism,” he said. “People travel to this area for vacation and end up wanting to move here, either year-around or just during the winter season. Whether it’s a vacation home for personal use or investors interested in rentals, it’s thriving here.”

Investment-home sales in 2014 declined 7.4 percent to an estimated 1.02 million in 2014 from 1.10 million in 2013. Owner-occupied purchases fell 12.8 percent to 3.23 million last year from 3.70 million in 2013. The sales estimates are based on responses from nearly 2,000 U.S. adults who purchased a residential property in 2014, and exclude institutional investment activity. Vacation-home sales accounted for 21 percent of all transactions in 2014, their highest market share since the survey was first conducted. The portion of investment sales fell to 19 percent (20 percent in 2013); owner-occupied purchases declined to 60 percent (67 percent in 2013).

“As the economy continues to improve, there continues to be a strong demand for vacation homes and vacation rentals,” Barrett added. “The rise in home prices are giving buyers the assurance that vacation homes are a lucrative long-term investment. Baby boomers are also getting closer to retirement age and considering buying vacation homes with the intent of converting them into a primary residence in several years.”

The median sales price of both vacation and investment homes declined in 2014. The median vacation home price was $150,000, down 11.1 percent from $168,700 in 2013. The median investment-home sales price was $125,000, down 3.8 percent from $130,000 a year ago.

Crestview Clears the Way for Affordable Senior Housing

Crestview is joining other cities on the Emerald Coast in addressing the aging Baby Boomer market by offering more affordable housing opportunities. The Crestview City Council recently approved an agreement with the Florida Department of Economic Opportunity that ensures senior rental housing for at least the next 40 years. The DEO reportedly granted $1 million so that Katie Manor Ltd., will contract with the city to buy property for a facility that it will build and operate. Grant funding is allocated to cover the property purchase and an additional $6.4 million in Florida Housing Finance Corporation tax credits will help fund construction, according to public documents. As stipulated in the agreement, the property must be purchased before June 15 and the facility’s construction must begin within six months after that.
Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida, said Crestview is joining other cities such as Fort Walton Beach and Destin to ramp up more affordable housing options for seniors to meet demand in the years ahead.
“We’re dealing with investors who are interested in affordable housing projects and other property types for seniors such as assisted living facilities,” he said. “We are also talking to investors who are interested in healthcare options for seniors, including hospice, cancer treatment centers, and other professional and medical buildings.”
In Crestview, Katie Manor, a limited liability company in Florida, plans to build a three-story, 108-unit building with 55 one-bedroom and 53 two-bedroom units. The senior housing is expected to be available in 2016 or 2017.

Nation’s CEOs Choose Florida as Top State to do Business

The nation’s CEOs once again selected Florida the second-best state in the U.S. to do business, according to results from a new report released by Chief Executive magazine. Southeast states, with their ocean ports and transportation options, dominated the top five rankings.Texas was ranked No. 1 for the second year in a row, followed by Florida. North Carolina, Tennessee and Georgia rounding out the top five.

The magazine surveyed 511 CEOs on states with which they were familiar, rating each one on taxes and regulations, quality of the workforce and living environment. CEOs surveyed favored pro-growth, low-tax states in ranking states as “best” for doing business. Craig Barrett, founder of NBI Properties, said that the many investors he deals with would say Florida ranks first as the best state for business.

“CEOs and investors know that Florida is pro-business,” he said. “Here on the Emerald Coast, we see that many businesses and industrial development are helping to diversify the economy. The investors we work with are well aware that Florida is not just about tourism anymore.”

For the 10th year in a row, California was ranked the “worst state for business” with CEOs commenting that the state is “anti-business” and has an unfriendly regulatory and tax environment. State governments use the annual survey findings to help determine how to improve their regulatory environment to attract new businesses, while corporations use the data to determine where to build offices and other operations.

Demand for Senior Healthcare Facilities Lures Investors

Investors are taking a closer look at healthcare properties, a class of commercial real estate that has been outperforming most others since the Great Recession. A burgeoning population of senior Americans is boosting confidence in the sector’s long-term viability and attracting investor interest nationwide. As a result, development of assisted-living developments in the United States has increased considerably over the last four years as the construction rate of new units doubled.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said his firm has been busy fielding inquiries from investors interested in everything from nursing homes to assisted living facilities and hospice care.

“We have been leasing cancer centers, medical buildings, and professional buildings with offices that cater to seniors,” he said. “Medical offices are great for investors because tenants are far less likely to move or go out of business.”

Contributing in part to the surge in medical office building leasing and construction is the trend of moving medical procedures out of hospitals. Sales of medical office buildings tallied nearly $5 billion in 2014 alone, and experts say medical offices are more stable than other property sectors.These trends in healthcare aren’t likely to go away any time soon considering the number of Americans aged 65 and older is on pace to nearly double by 2050.

CRE Lending Sparks Controversy

As property prices climb continue to increase and surpass their pre-recession peaks, investing and refinancing activity has followed suit as well, fueling brisk borrowing demand in the financial marketplace. The increased CRE financing activity has ignited intense competition among lenders, resulting in great deals for borrowers. However, some banks are expressing concern about pricing and profitability models while others are pulling back from some markets and trying to gain their share of the hyper demand in the marketplace.

“Just as many investors have had to stretch their investment criteria to secondary markets and property types, banks have been forced to expand their lending criteria,” said Craig Barrett, co-founder of NBI Properties in Fort Walton Beach. “In our area, banks were cautious during the recession and holding back on lending, but thankfully for investors that is no longer the case.”

In the last quarter, several top bankers said they were beginning to pull back from deals in some markets and property types. Terms available for multifamily lending were noted as a particular concern. Some banks were also beginning to reconsider the Houston market over energy-related concerns and the San Francisco Bay market with its heady tech-fueled property pricing.

“There is a lot of other people’s money flying into the market and they’re doing things [from the perspective of] cap rates that don’t make a lot of sense to us. It trips our own (lending) policy and our profitability model,” Edward Wehmer, president and CEO of Chicago-based Wintrust Financial, told financial analysts this month. “There are a couple of areas where the circuit breakers have tripped; one is in multifamily, especially (for properties) close to Chicago.”

Poll Shows Real Estate is the Top Investment Choice

For the second year in a row, the largest percentage of Americans surveyed by Gallup (31 percent) cited real estate as the top long-term investment – a sign of mounting confidence in the housing recovery and a rosy outlook for commercial real estate as well. Real estate beat out other long-term investment options, including stocks/mutual funds (25 percent rated it tops), gold (25 percent), savings accounts/CDs (19 percent) and bonds (6 percent).

“Investors are no longer in a cautious or conservative mode,” said Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida. “Many were forced to sit on the sidelines and play it safe during the recession, but now they are ready to get back in the game and look for the highest yields available. While financial security was a top concern for the past several years, investors are now tapping into funds they had tucked away in savings accounts and CDs.”

According to the Gallup poll, Americans’ attitudes about real estate as a long-term investment started to show up in last year’s annual survey, and “continued strength this year indicates it was no fluke.”

“Real estate is historically a sound investment because investors can take their cues from the economy, interest rates, and supply and demand,” Barrett added. “And when it comes right down to it, many people would rather invest in a tangible property than investments they never see on paper.”

Foreign Investors Driving CRE Property Price Increases

Recent reports show that foreign investors are continuing to increase their investments in commercial U.S. properties, resulting in property values increasing at a much faster pace than if the same or similar properties were bought by local investors. The trend has been a boon to real estate markets in many parts of the country, including Northwest Florida and the Emerald Coast.

“Foreign investors are definitely targeting big cities, but we are also noticing the trend here in Fort Walton Beach, Destin, Crestview and other areas in our region,” said Craig Barrett, co-founder of NBI Properties. “Low interest rates, economic development, and more opportunities for raising capital are all contributing to the surge of interest from overseas buyers.”

Foreign investment in U.S. commercial real estate has been growing consistently over the last six years, according to real estate analysts. The volume of deals last year topped $49 billion, surpassing the 2007 peak investment level of $47 billion. Canada was the leading global buyer of U.S. real estate last year with $9.7 billion of direct foreign investment. And before January 2015 was even over, Canadian investors transacted a significant $2.75 billion in U.S. real estate deals.

Barrett said he was not surprised by the strong influx of dollars from Canadian investors. “Florida has always been a hot spot for Canadians,” he noted. “They are interested in everything from vacation homes to commercial properties.”

Analysts believe the appetite for global real estate investment is also increasing as a result of more investors intending to deploy capital outside of their own region this year. Many brokers are predicting investors will move outside the risk curve in search of higher yields, a resulting in a stronger focus on value-add and opportunistic investments.

Spring is the Best Time for Real Estate Investments

In addition to the perfect weather on the Emerald Coast this time of year, we’re noticing that investors are actively combing local listings and striking while the iron is hot! According to NBI Properties co-founder Craig Barrett, buyer confidence is up and more people than ever are looking to make moves and investments.

“Spring is the best time of the year to make moves in real estate,” said Barrett. Prices are up a bit, but more importantly, buyer confidence is also up. We’re working with clients looking to buy now and they’re interested in commercial and residential properties for sale.”

Barrett added that many clients are interested in apartment complexes and condominiums because demand for rentals is skyrocketing. According to the U.S. Census Bureau, homeownership is rising but is still currently at the lowest level since 1996. Compounding this with the annual average rent increase of 8.89% makes renting a lucrative real estate investment for first-time or experienced landlords.

“Apartments and condos are great investments because the tenant makes the mortgage payment while the investor keeps the appreciated value and pockets a monthly profit,” said Barrett. “Investors realize there’s a low vacancy rate in this area and they are eager to take advantage of the opportunities.”

In addition to rental properties, Barrett said that flipping houses is making a comeback and especially in middle class neighborhoods. Investors interested in quick profits are researching Emerald Cost neighborhoods with the fastest appreciating prices as well as ugly duckling homes and fixer-uppers that need repairs. He added that flipping houses is best left to experienced investors who can predict the value of a home after renovations and who have the knowledge and capital to invest in improvements.”

“Flipping houses looks good on paper, but in reality there are many people who get burned doing this or stuck too long with properties they can’t afford.”

NBI Properties Sponsors 8th Annual YOLO Board Relay Series

NBI Properties is a proud sponsor of the 8th annual YOLO Board Relay Series to be held at the Bay Restaurant in Santa Rosa Beach. We are so excited to once again be a part of this event with our friends at YOLO Board because every year it’s a true wonderful celebration of community, family and friends.

Event dates for this year’s Relay Series are May 28, June 18 and July 16. Come out and support the teams or call 850-622-0812 to sign up your own three-member team. Hats off to YOLO Board’s Jeff and Mitzi Archer for making this a great event year after year!

Additional sponsors for the Relay Series are: Garden of Life, 30A.com, Coastal Skin Surgery and Dermatology, Grayton Beer, The Bay Restaurant, Ocean Reef Resorts, Bud and Alleys, Hinano, PT Solutions, 30A Radio, Beach Ready Spa, Thirty A Review, StandUp Paddle Magazine, Copy Systems, and Health Source Chiropractic. We hope to see you there!

Investors Flip Over Crowdfunding

Flipping homes has gotten a lot more sophisticated than the days when casual investors placed “We Buy Ugly Houses” ads online to pick up a few projects. These days, with home prices rising, investors are once again looking to cash in by flipping properties – but many are now using online crowdfunding sites to fund these flips.

Unlike the housing boom days when loan approvals were quick and relatively easy, lenders are currently showing more caution in granting financing to buyers who want to quickly spruce up properties and sell them for a profit. As a result, investors are turning to other financing avenues to fund their flips. In addition, a growing number of online crowdfunding sites offer some financial aid for housing flips.

“It used to be that house flipping was more of a hobby for some people than a serious investment, but then people learned there were quick profits to be made in some areas and it became more popular,” Barrett said.

With crowdfunding, the interest charged is much higher than conventional financing. However, loans backed by Fannie Mae and Freddie Mac are in the 4 percent range while crowdfunding interest rates can average about 11 percent. The higher interest rate isn’t a problem if a home won’t be held for long before the resale. Most investors involved in flipping say they plan to flip houses in three months or less so they only pay the higher rate a short time before paying off the full loan.

“Crowdfunding picked up the slack left by banks and lenders who are slow to approve loans for flipping houses,” said Barrett. “Investors are turning to crowdfunding for,this purposes so that paperwork can be handled with speed and efficiency since time is of the essence when flipping houses.”

CRE Investors Scurrying for Best Interest Rates

The U.S.dollar is soaring and interest rates may soon be skyrocketing along with it. What do commercial real estate investors think about these developments? Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said that investors on the Emerald Coast are paying close attention to interest rates and recognizing that opportunities in 2015 may look a lot different than those in 2014.

“Last year we saw an increase in CMBS availabilities,” said Barrett. “Interest rates and cap rates remained low in 2014, but almost everyone expects this will come to a halt this year when the Fed decides to raise rates again. We don’t have any indication of when this will happen, but investors are expecting it and are structuring deals accordingly.”

Barrett added that cap rates normally follow interest rates, holding all else constant, and as rates rise that will have the effect of reducing values on “flat” rental stream assets such as single tenant credit retail leases with no rent increases.

“We’ve had more closings in February and March this year than ever before,” Barrett added. “Investors are moving ahead with deals so they can take advantage of the best rates possible.”

 

Mini Apartment Complexes Lure Investors and Developers

Bigger is not always better, at least not according to some budget-strapped millennials looking for affordable housing solutions. As a result, the demand for smaller, micro-unit apartments, lofts, and studio rentals is attracting new developers and investors.

Although new housing construction has not recovered since the recession, in 2013 and 2014 developers built about 1,000 micro units with roughly 2,200 more either under construction or proposed. The tiny apartments are especially popular in large technology or media-focused markets with high housing costs, such as Seattle, New York, San Francisco and Washington, D.C., although several sources and analysts say the trend is spreading to smaller metro areas as well. Experts say it’s too early to surmise if the mini-studio concept will be a flash-in-the-pan development fad or if it will catch on in other markets.

Craig Barrett, co-founder of NBI Properties, said that although the mini apartment craze is not prevalent on the Emerald Coast, commercial real estate investors are always considering new projects involving housing for local military families and retail businesses scaling back on showrooms or floor space.

“The popularity of micro units concept will grow as we discover new ways of making small spaces more attractive and efficient,” Barrett said. “Some furniture manufacturers are addressing the trend by offering retractable Murphy beds, convertible sofas, and other furnishings that will make interior spaces and storage more efficient. These features and the ability to retain tenants are making the projects more attractive to commercial developers.”

Developers are typically attracted to rent premiums they can charge on a per square foot basis. A comparison between micro dwellings and standard studio apartments shows that building a denser concentration of tiny studio units on dwindling patches of available land makes better economic sense in many cases. Overall, the apartment market overall is shifting toward a greater mix of smaller studio and one-bedroom units being included in traditional apartment communities, as well as more construction of micro-unit communities, according to a report earlier this year from the Urban Land Institute (ULI).

Investors Showing Renewed Interest in Emerald Coast Office Space

Suburban office properties are once again high on the list for investors after weathering the office market recovery during the past few years. After the recession and corporate downsizing sent suburban office occupancy rates spiraling downward as much as 50 percent in some markets, real estate analysts were writing off suburban office parks, shopping centers and other far-flung properties as spots where no career-minded millennials would want to work, shop or live. However, currently suburban office space is in demand, thanks in no small part to yield-starved real estate investors priced out of expensive CBD assets. Craig Barrett, co-founder of NBI Properties, said that leases for office space is enjoying a comeback on the Emerald Coast in both cities and suburban areas.

“We’re working with investors who are interested in well-leased properties in metro areas such as Fort Walton Beach as well as suburban areas in Crestview and Mary Esther,” Barrett said. “They’re primarily interested in safe, lower risk properties where they can achieve value-add plays and boosted returns.”

In recent months, investors have responded to a plethora of opportunistic and value-add plays, many involving vacancy risk that often accompanies suburban office investments. Buyers have been attracted by the wide pricing spreads between properties north of 90% occupancy and challenged buildings between 50% and 75% occupancy, and the spread has compressed from 144% in 2011 to 97% in 2014.

“This kind of success is appealing to investors and many property owners who managed to hold onto their suburban office assets through the recession,” noted Barrett. “People are eager to test the market by taking advantage of declining vacancy rates and historically low levels of new construction.”

Five Tips for Commercial Real Estate Investors

Whether you are thinking about investing in commercial real estate on the Emerald Coast to diversify your portfolio, create wealth,or provide a passive income stream for retirement, NBI Properties has developed successful strategies and tips to help you be successful. Keep these tips in mind and you will be well on your way to reaping the benefits of your investments.

1. Realize that knowledge of the market is crucial your success. If you are well versed about a specific commercial sector, stay with that sector. On the other hand, if you have no knowledge about a particular sector, obtain the knowledge you need before investing. Even if you’re investing as a landlord, it doesn’t bode well to invest in a restaurant if you don’t know anything about the food service or hospitality industries. This is especially true with the manufacturing sector. It’s wise not to purchase raw land or an industrial strip if you don’t know the best use of the property to maximize cash flow.

2. Be aware of the fact that commercial real estate is valued differently than residential. While residential properties derive their value based on recent comparable sales of similar properties in the area, this does not apply to commercial real estate. The value of commercial property is calculated based on cash flow. Two buildings of the same size and located on the same downtown block may have drastically different asking prices. A single tenant barber shop will have less cash flow than a four-tenant professional building with dentists and pharmacists.

3. In addition to market and sector knowledge, you should make it a point to learn new profit and loss formulas before investing in commercial real estate. These are not difficult to comprehend, but you need to fully understand what each means and how they affect your profitability.

4. Determine the long term impacts before investing. Other than the immediate cash flow, make an effort to understand what is predicted to happen to commercial real estate in the surrounding area in the coming years. For example, if your properties are located in a city where the core infrastructure has been neglected for years, eventually businesses will begin relocating to better areas. Consider the tax base of the community and how major employers are faring. All of these things should be assessed objectively prior to making investments.

5. Stock advisors never recommend putting all of your eggs in one basket, and this advice also applies to commercial real estate. If you’ve experienced success as a residential investor, hang on to some of your holdings in residential. Whether you’re investing in stocks or real estate, savvy investors always aim for a diversified portfolio.

Lower Oil Prices Not Impacting Emerald Coast CRE

Oil prices have been dipping since the end of 2014, and while some industry experts predict the price of oil will never rebound to $100 per barrel again, others believe it will go beyond that figure as early as this summer. Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, says most of his clients think oil prices will definitely rise again and impact commercial real estate in the process.

“Historically, investors know that oil prices are destined to go up again,” Nabors said. “But currently with oil prices dropping, energy companies are holding off on drilling new shale wells and making investments in long-term projects. This is expected to have an effect on commercial real estate in energy markets.”

Reports show that as much as $150 billion in oil projects are predicted to be deferred in 2015 as energy companies align their spending with current cash flow. Oil-producing markets will be the focus of any negative impact from falling oil prices and would include states such as Texas, Oklahoma, Louisiana, Mississippi and North Dakota.

“These negative impacts could include decreased property values and lower rents in these areas,” adde Nabors. “Luckily, investors don’t have to worry about this here on the Emerald Coast.

Emerald Coast Retail Sector is Red Hot!

Shopping centers, outlet malls, grocery stores, and boutiques that reported sluggish sales during the recession are now making a huge comeback on the Emerald Coast. According to Craig Barrett, real estate broker and co-founder of NBI Properties, investors are snapping up retail space throughout the region.

“The retail sector is red hot right now,” said Barrett. “Transactions have picked up in Destin, Crestview, Santa Rosa Beach and along 30A, but we’re handling more leases in Fort Walton Beach than any other area.”

Like many other regions of the country, Northwest Florida has emerged from the recession with job growth and economic strength. Nationwide, retailers absorbed about 13 million square feet of neighborhood and strip shopping center space in 2014 — double the level of demand of the previous year — and retail vacancies have fallen below 10% for the first time since the recession in 2008.

On the Emerald Coast, Barrett said there is renewed investor interest in local neighborhood shopping centers, small businesses and boutique tenants. He noted that while the retail center segment still has a lot of ground to make up relative to faster-recovering power centers and malls, demand is noticeably picking up.

“Vacancies are falling quickly due to the limited amount of new retail construction going on,” he said. “Investors are interested in opening new stores, so the demand is rising.”

Nationally for all retail property, the vacancy rate fell another 20 basis points to 6.3% to close 2014 and net absorption of shopping space totaled 81 million for the year, both are the strongest readings since 2008. Somewhat surprisingly, malls have performed stronger than the overall retail market, with very high-end malls attaining the best sales per square foot and seeing sales productivity rise by 26% over last three years. The recovery among malls remains highly selective, with shoppers flocking to the strongest performers and shunning others.

Emerald Coast Commercial Real Estate Growth Defies Global Outlook

A stabilized U.S. economy is expected to keep commercial real estate demand on the rise for the next several months, although overall growth may be slightly curtailed by overseas weakness, according to the National Association of Realtors® (NAR) quarterly commercial real estate forecast. Analysts based predictions on economic data showing that although conditions have improved domestically, a weakening global economy may impact exports. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said that commercial real estate transactions on the Emerald Coast have increased dramatically since the recovery.

“Overall, there’s a feeling of optimism because businesses are hiring again and consumers are enjoying the benefits of lower gasoline prices,” Barrett said. “The demand for leases for defense contractors, professional buildings and retail space is contributing to the economic growth in this area.”

On the national front, office vacancy rates are expected to decrease a slight 0.1 percent over the coming year as improved hiring increases the demand for office space. The vacancy rate for industrial space is predicted to decline 0.4 percent and retail space 0.3 percent as manufacturers boost production for goods and services and consumers accelerate their spending. A plethora of new apartment construction coming onto the market is forecast to lead to an uptick (0.1 percent) in the multifamily vacancy rate.

Barrett noted that foreign investors dissatisfied with the fledgling overseas economy are diversifying portfolios with commercial real estate projects in the states. With GDP estimated at 3 percent this year, investors are snapping up retail, industrial, office and multifamily complexes.

“Overall, this is the busiest we’ve been in the past three years,” said Barrett. “Investors are looking for 8-10 percent cap rates and buying up retail all over town. We’re getting requests from high tech defense contractors, big box tenants, and passive investors who all want to capitalize on the stable commercial real estate market here.”

Passive Commercial Real Estate Investing on the Emerald Coast

Investing in real estate doesn’t have to mean lots of blood, sweat and tears. Today’s busy investors don’t always have time to be “hands-on” with all of their projects, so many choose “passive” investing and leave the heavy lifting to experienced real estate brokers. Craig Barrett of NBI Properties in Fort Walton Beach, Florida, says his firm regularly works with investors on the Emerald Coast and from other parts of the country who have discovered the advantages of passive investing.

“We work with investors who own multiple properties all over the globe, and they simply can’t devote time to day-to-day management tasks,” Barrett said. “While some investors may choose to work with tenants, make repairs, and renovate properties, most high level investors are content to let real estate professionals handle property management and other chores.”

In addition to saving time, Barrett added that passive investing usually results in having access to quality deal flow. In commercial real estate, there are many sectors that offer opportunities for investment, including multi-family apartment buildings, retail shopping centers, self-storage facilities, and office or professional buildings. Unless an investor specializes in one of these areas and has developed good deal sources, Barrett said that it is usually difficult to develop suitable projects.

“We’re able to help a lot of investors who live in other cities or states because we have ties to the community and have strong relationships with local banks,” Barrett noted. “We regularly review the multiple listing services and scout potential opportunities for our clients. When investors are not familiar with the area, they lose out on lucrative deals and cannot capitalize on the best property listings.”

Another advantage of passive investing is avoiding the potential headaches associated with banks and closing issues. Financing on commercial properties is typically slow, complicated and involves mountains of paperwork. In some cases, long lead times are required in order to get approvals from a bank’s investment committee. Barrett said this is one of the top reasons that passive investing appeals to some clients.

“Everyone knows that closing on a deal can be a nightmare,” he said. “Many investors would much rather hand over the reins to a professional real estate company that is familiar with the entire process and knows the property reports the banks will require for closing. For this reason alone, there are many investors who prefer to sit back and let a professional take care of all the details.”

New Proposal Seeks More Solar Energy for Florida

Harnessing solar energy in the Sunshine State could be profitable for businesses and property owners if a newly introduced amendment passes. Business owners would be permitted to sell a limited amount of solar energy under a recent ballot initiative rolled out by a coalition uniting free-market conservatives, retailers and alternative-energy supporters. Florida’s power companies are expected to oppose the amendment. Supporters of the initiative claim they’re using the constitutional amendment route because large utilities have repeatedly lobbied the Legislature and the Florida Public Service Commission against expanding solar and other alternative-energy choices.

“Using a constitutional amendment to the ballot is not the best way to make energy policy,” said Stephen A. Smith, executive director of the Southern Alliance for Clean Energy. “But if the system is broken, and we have no other way to actually get good policy in the state and allow such a positive thing as solar power to flourish, then we have to take it straight to the people.”

The initiative, which was filed last month with the Department of State, will require Floridians for Solar Choice to get the signatures of roughly 700,000 voters to get on the November 2016 ballot. Also, the ballot language would have to be approved by the state Supreme Court.

Tory Perfetti, chairman of the coalition dubbed “Floridians for Solar Choice,” said it remains to be seen how the utilities will react to the ballot drive, but he expects they will mount a sizable opposition.

In addition to the Southern Alliance for Clean Energy, the coalition includes the Florida Retail Federation, the Florida Solar Energy Industries Association, the Florida Alliance for Renewable Energy, the Christian Coalition of America, the Libertarian Party of Florida, the Republican Liberty Caucus of Tampa Bay and the Republican Liberty Caucus of Florida.

The amendment, in part, would allow businesses to generate and sell up to two megawatts of power to customers on the same or neighboring properties. Smith said that the coalition might have to raise $8 million to $10 million to counter the anticipated opposition. He also estimated that the two-megawatt total would cover the daily use at a typical Wal-Mart

“If we can get this thing on the ballot, it will pass,” said Alexander Snitker, vice president of the Libertarian Party of Florida. “Who is the opposition? The opposition is the people who are profiting off the current monopoly they have right now.”

Utility officials have argued that the economic advantage of conservation has waned as reliance on natural gas has grown, and that the state’s solar-rebate program has not attracted widespread use.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said more businesses on the Emerald Coast are expressing an interest in solar and renewable energy options.

“We are seeing more businesses and property owners using eco-friendly building materials and exploring the use of solar energy,” he said. “We believe that demand for solar energy will increase even more in the next few years, so we’re interested in seeing if the new amendment will pass.”

Florida May Dodge Oil Drilling Plans

Several lawmakers are supporting a proposal that would keep the waters off Florida’s coast free from oil drilling for at least five more years. U.S. Sen. Bill Nelson (D-FL), part of a contingent of lawmakers pushing to ban oil drilling off Florida’s coasts, called the plan a huge victory.

“They left us alone for the last five years, and it looks like they’re going to leave us alone for the next five years,” Nelson remarked in a recent statement.

In 2006, Nelson and then-Sen. Mel Martinez successfully brokered a deal to ban drilling off Florida’s Gulf coast through the year 2022. While Florida’s waters would remain off-limits according to the current proposal, some U.S. senators are upset that the plan could open up other areas in the Atlantic Ocean to drilling, notably off the coasts of Maryland and South Carolina. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said most Emerald Coast residents would not welcome oil rigs back to the region again.

“The BP oil crisis in the Gulf hasn’t faded from anyone’s memory here,” he said. “We have the most beautiful beaches in the country and don’t need to invite oil companies back to screw up our coastline again.”

Senator Nelson also cited other reasons for an oil rig ban off Florida’s coasts, such as the state’s tourism-driven economy that relies on clean beaches, military training areas off Florida’s shore and the launch activities at the Kennedy Space Center and Cape Canaveral Air Force Station.

Recovery Sparks Real Estate Investments in Northwest Florida

Florida is gaining economic ground that was lost during the recession – and particularly in key sectors such as jobs, tourism, housing, and manufacturing. Experts attribute the gains to a plethora of factors, including the surging stock market, lower mortgage rates and falling fuel prices. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said that Northwest Florida is attracting many affluent investors and retirees who have enjoyed the benefits of a bullish stock market.

“We’ve seen an influx of investors and retirees here on the Emerald Coast,” Barrett said. “They’ve been able to invest in new businesses, purchase new homes, and some are cashing out their assets to retire.”

The state added a net total of 712 new residents per day or 260,000 overall last year, according to University of Florida Bureau of Economic and Business Research director Chris McCarty. Low mortgage rates have fueled new development on the Emerald Coast and enabled homeowners in the Rust Belt to sell their homes and move to the Sunshine State. While areas like Destin have seen an increase in residential development, gains have been reported in suburban areas throughout the region as well.

Barrett said that transactions have increased for commercial properties in the area as well as residential. He noted that with military and defense contracts remaining steady, demand for office space increasing and retail getting stronger, his company has been inundated for several months.

“It didn’t even slow down for us during the holidays,” he said. “Our message to everyone is that the economic climate has improved everywhere, but nowhere better than Florida and especially here on the Emerald Coast!”

To view recent transactions handled by NBI Properties, click on this link http://www.nbiproperties.com/status/closed/

Investors Take Advantage of Florida’s Tax Breaks

The Internal Revenue Service started accepting tax returns for 2014 on January 15, so many real estate investors are scrambling to gather documents and determine their tax liabilities. While investors are quick to complain about high taxes in some states, Craig Barrett with NBI Properties in Fort Walton Beach says he advises many clients to move to Florida to save on taxes.

“We tell them there’s a million good reasons to move here such as the great weather, recreation opportunities and beautiful beaches,” Barrett said. “But one of the best reasons investors love to consider is that Florida has no state income tax. That’s music to their ears if they are from places that impose high state income taxes because it can save thousands of dollars.”

One issue investors can encounter is continued income tax assessments from their former state even after they’ve moved away. To avoid this, it’s important for people who relocating to Florida to take steps to establish they have changed their domicile. To accomplish this, experts agree that individuals should spend sufficient time in their new “home” state, register to vote, become involved in a local church or community activities, and change their address.

“We work with some people who have several residences in different states,” said Barrett. “But legally you can maintain as many residence as you wish, but you can only have one domicile.”

Barrett added that in addition to investors taking advantage of having no state taxes in Florida, the state has remained popular with retirees who rave about the fact that Florida also has no estate taxes as well.

Investors Flocking to Emerald Coast’s CRE Market

Commercial and residential real estate markets are booming once again due to a surplus of properties, low interest rates, and new Fannie Mae and Freddie Mac programs that make financing easier for buyers. Although properties are selling well in many cities throughout the Sunshine State, some are experiencing exceptional growth. One example is on the Emerald Coast, where Jayme Nabors, co-founder of NBI Properties says that business has picked up even more since the start of the new year.

“For the last few months, we’ve been working with more investors than usual who are attracted to our particular market,” Nabors said. “Their interest has been sparked by new developments and opportunities as well as the growing luxury market and desire for beachfront properties in Destin, Fort Walton Beach and other prime locations.”

Nabors added that NBI Properties is not only working with investors from within the United States, but those from overseas as well. He said that increased interest from do,estimate and foreign buyers has resulted in climbing real estate prices and that some developers are rushing to meet the demand.

In 2013, 23 percent of all home sales in the state of Florida were targeted by international buyers. At this rate, Florida falls second only to California, a state in which 2013 sales to foreign investors hit 17 percent. Today, with Florida being the top foreign investment market for real estate, foreign capital continues to be drawn to the state. Of the overseas investors who are interested in Florida cities, Brazilians and Argentinians are at the top of the list.
Reports show that 90 percent of foreign buyers in Florida paid cash opposed to securing a mortgage loan. In addition to investors from other countries, the state actually attracts a large number of cash buyers overall. In comparing metropolitan cities with a population of 500,000 or more, the Miami/Pompano Beach/Fort Lauderdale area had more than 64 percent of buyers paying cash in the second quarter of this year.

In addition to Miami and the Emerald Coast, there are other areas in Florida that are also considered hot markets for investors willing to pay cash. For instance, during the same quarter referenced above, Orlando/Kissimmee was at 52.2 percent, Lakeland 53 percent, Clearwater/Tampa/St. Petersburg 54.6 percent, Bradenton/Sarasota/Venice at 61.5 percent, and Cape Coral and Fort Myers at 62 percent.

Nabors added that demand within the housing market on the Emerald Coast continues to grow stronger, indicated by brisk sales and increasing prices. With tremendous demand for condominiums, resale activity has also risen and more construction projects are being completed.

Lower Cap Rates Expected in 2015

Recent reports indicate that cap rates for single tenant net lease properties have fallen steadily for several years, consistently hitting new historic lows each quarter as more investors put in bids. Last year, cap rates for retail properties held steady, according to reports by the Boulder Group, a real estate firm located in suburban Chicago. In the fourth quarter, Boulder found that retail rates were 6.5%, the same as the third but still a historic low. Rates for the office sector, however, compressed by nine bps to a new historic low of 7.31%. And net lease industrial cap rates rose slightly to 8.03%. Craig Barrett, co-founder of commercial real estate firm NBI Properties in Fort Walton Beach, Florida, said several factors have contributed to the falling cap rates everywhere.

“The market has stabilized, so most investors are holding on to retail assets in order to get the best returns,” Barrett said. “And investors are asking for additional premiums for long term leases in core markets.”

Research shows that lower rates has a big impact on who purchases these types of properties. In 2014, 60% of retail transactions were completed by private investors, up from 42% the previous year. Many investors are looking for newly-constructed assets with investment-grade tenants. For example, although overall rates held steady, new Walgreens, McDonald’s and 7-Eleven properties saw cap rate declines of 5, 25 and 13 bps respectively in the fourth quarter.

In 2015, Barrett said he expects the net lease market activity to remain brisk on the Emerald Coast with limited movement in valuations. He noted that private buyers continue to dominate the net lease market in the low cap rate environment as institutions cannot typically pay the cap rate premiums due to yield restrictions.

“We expect the majority of active net lease participants to expect cap rates to remain the same or rise this year,” he said.

Luxury Market Heats Up on the Emerald Coast

As interest rates dipped during the last two quarters of 2014, the real estate market made a small push in an effort to equal its growth from last year. No market felt the resurgence more than the luxury home market, and especially with new construction. The demand for upscale residences prompted NBI Properties to hire Dustin Parkman as a luxury marketing specialist to join the company’s team of commercial and residential realtors.

“Buyers are using their ability to finance at lower rates to improve their residences with newer, larger, and more expensive homes,” said Parkman, who focuses on the Emerald Coast’s 30A corridor, including Destin, Santa Rosa Beach, and Panama City. “We’re working with high net worth clients from all over the country who are interested in coastal properties with premium upgrades.”

In other major metropolitan areas, especially in those where space is at a premium, buyers are flocking to areas where good school districts are located and that feature amenities such as restaurants and parks close by. As the luxury market has heated up, it has left a void in other markets, specifically those that need updating and renovations. For example, in Dallas, because of numerous new developments, very good bargains are available with properties that are not updated.

“As the luxury new home market continues to heat up and becomes more competitive, those who pick up homes in desirable areas that need a few updates could be positioned well in the coming years,” said Parkman. “There’s also plenty of interest in properties on the Emerald Coast in luxury homes priced at $400,000 and up.”

Forecasts Show CRE Rise in 2015

Forecasts continue to show that commercial real estate is on the rise and should continue to improve in 2015. Heavily influenced by core transactions is the value-weighted index that advanced 1.9 percent in September, and 3.3 percent for the third quarter 2014.
In looking at the pre-recession high, this index is now 2.8 percent higher, while continuing to make impressive gains. Influenced by smaller non-core deals is the equal-weighted US Composite Index that jumped 1.3 percent in September and 4.2 percent for the third quarter of 2014.

“There was a notable jump in sales activity in the third and fourth quarter,” said Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, Florida. “According to recent forecasts and economic indicators, this trend should continue throughout 2015.”

The areas experiencing the most growth include property sales expansion, retail, and the multifamily index. With property sales expansion, year-to-date through third quarter 2014 is composite pair volume of $67.3 billion. From the same period last year, this is an impressive 23 percent increase. For repeat sales of distressed asset transactions in September, the numbers dropped to single digits. For the three primary segments of commercial real estate — office, industrial, and retail — numbers in September of this year hit 21.2 percent, 14.4 percent, and 11.4 percent respectively compared to earlier highs. The fastest recovering sector is multi-family, hitting at 1 percent above its previous peak.

“The most encouraging factor of all is that there were price gains for all property types,” said Nabors. “This is proof that commercial real estate is experiencing a positive recovery.”

The strongest annual gains in 2014 were in retail, which over the 12-month period ending September 2014 saw a 15 percent rise in the US Retail Index. Although the Prime Retail Metros Index grew by 8.2 percent in the same period, the overall index outperformed significantly, even as risk tolerance increased for investors and secondary markets were priced out of prime markets.

The market has also been witnessing an increased demand for industrial properties. Triggered by strong fundamentals within most markets coupled with asset qualities, the US Industrial Index continued to grow. For this particular property type, average quarterly growth was 3.4 percent higher than the 12-month period ending in September 2014.

Specific to the Multifamily Index, it surpassed its earlier pre-recession peak in the third quarter of this year. Currently the index is hitting 1 percent higher than its peak in 2007. During the third quarter in 2014, pricing for multifamily grew 4.5 percent. At 14.6 percent above levels in 2007 is the Prime Multifamily Metros Index, surpassing the prior March 2013 peak.

Also predicting growth for commercial real estate is a report recently released by Real Capital Analytics and Moody’s stating that prices peak-to-peak has come full circle in less than seven years, primarily because of easy money that prompted investors to struggle for a commercial lending boom coupled with higher-yield assets.

Court Case May Change Fannie and Freddie Investor Sweep

Many investors were recently surprised to learn that Continental Western Insurance Co., a Des Moines-based regional insurer that owns shares in Fannie Mae and Freddie Mac, recently sued the U.S. Government in federal court. The lawsuit alleges the U.S. Treasury claimed all of Fannie Mae and Freddie Mac’s profits, denying shareholders their share of earned dividends.

“The lawsuit is raising eyebrows because individuals from all over the country are invested in the fate of these companies,” said Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida. “We’ve had several people calling us bout this, including some who are concerned about their retirement and mutual funds because those are some of the largest investors in Fannie Mae and Freddie Mac stocks.”

U.S. District Judge Robert Pratt for the Southern District of Iowa will be ruling on Continental Western’s legal standing and his decision could have a direct impact. According its most recent financial report published last week, the Iowa Public Employee Retirement System has more than $1 billion invested in Fannie Mae and Freddie Mac. The lawsuit stems from the federal government’s decision to place Fannie Mae and Freddie Mac under conservatorship of the Federal Housing Finance Agency (FHFA). As the FHFA’s own website explains this role: “A Conservator is the person or entity appointed to oversee the affairs of a Company for the purpose of bringing the Company back to financial health.” How the government has run the enterprises as conservator is precisely what has precipitated the legal action by the plaintiffs, who represent investors in both Fannie and Freddie.

” We’re interested in the outcome of this ruling because it will determine whether the government’s seizure of Fannie Mae and Freddie Mac’s profits is legal,” noted Barrett.

Property Management Recommended for New Investors

In times like these when the stock market is topsy turvy, NBI Properties hears from many people who are interested in diversifying their portfolios by investing in real estate. Viewed by some as a safer, less risky investment because it is not subject to the volatility of stocks, the right real estate investment can produce a steady income stream and reap attractive returns. However, because there are so many options available, investors often need help figuring out how much risk they should assume and if they have time to adequately manage their properties.

According to Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, his firm works with investors from all parts of the country. He said that most are content to invest in rental properties and hire NBI for property management services

“We have clients in lots of different states, and they don’t have the time or inclination to be hands-on property owners ” Barrett said. “We do everything for them, including screening tenants, collecting rents, and ordering repairs. New investors who make the mistake of thinking they can manage properties from afar are usually unaware of the time consuming responsibilities they will face as property owners.”

As one of the largest commercial real estate and property management firms on the Emerald Coast, NBI Properties provides valuable services to investors by handling work order requests, ordering inspections, hiring cleaning services, and responding to emergencies. Overall, Barrett said he steers investors toward properties that require few renovations or maintenance while offering a dependable source of cash flow.

“We recommend that investors choose properties in need of few repairs instead of trying to improve a rundown house or business,” he said. “Not everyone has the skills required to flip properties and turn a profit, so we advise clients to invest in properties for the long term.”

Hurricane Tax Nixed for Floridians

Florida-owned Citizens Property Insurance Corporation recently announced that policyholders will not be socked with an additional “hurricane tax” even if the state is hit by a “once-in-a-century” storm. As Florida’s “insurer of last resort,” Citizens must levy assessments on all Florida property and casualty policyholders if it depletes its surplus and cannot pay claims after a catastrophic hurricane. However, company executives said they expect they will have enough surplus and reinsurance coverage to protect it’s current customer base and avoid the tax.

The news marked a dramatic turnaround for Citizens, as the insurer faced the prospect of an $11.6 billion assessment only three years ago. However, since then, the company’s customer base plummeted from a high of nearly 1.5 million in 2012 to 727,000 with additional policy decreases expected in 2015. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said the announcement was welcome news for all Emerald Coast property owners.

“The possibility of having to pay extra hurricane taxes has been a question mark for area residents for far too long,” Barrett noted. “It’s the last thing business owners and homeowners should be concerned with in additional to their regular insurance coverage.”

Citizens will begin 2015 with the lowest policy count since 2005 after depopulation efforts, including a takeout program that transferred more than 300,000 of its policies to private companies this year. However, during the past three years, Citizens and other insurers have benefited from calmer hurricane seasons and a global reinsurance market more willing to offer cost-effective coverage to the Florida market.

NBI Properties Sponsors New Year’s Celebration at The Landing

After the hustle and bustle of the holidays dies down, NBI Properties would like to invite all of our beloved family, friends, and clients to ring in the New Year with us at The Landing in downtown Fort Walton Beach! NBI is a proud sponsor of this family-fun event, which begins on December 31 at 6 p.m.at The Landing. Presented by the City of Fort Walton Beach, Apex Broadcasting and other local sponsors, the event promises plenty of fun for all ages.
The party kicks off with a 5K run at 6 p.m. and deejays from B-Boy Productions will be spinning your favorite tunes from 7 p.m. until 1 a.m.! In addition, you can hear the band Continuum performing live from 8 to midnight and then stay for the grand finale – a spectacular fireworks display when the clock strikes twelve to ring in 2015!
Free shuttle service is available if you indulge in a little too much champagne, so we encourage you to put this on your calendar and be a part of this special New Year’s Celebration. See you there!
Happy Holidays!
Jayme Nabors and Craig Barrett
NBI Properties

Holiday Key Lime Chicken Salad

Going to holiday pot lucks, church gatherings or other social functions and need a good recipe? Try our Florida-inspired healthy Key Lime Chicken Salad and you’ll be the hit of the party! This recipe is good for 4-6 people as an appetizer, so double or triple the ingredients if you need it for a crowd. Here are the ingredients you will need:
3 key limes (squeezed for 1/3 cup of juice)
2 tablespoons raw honey (use local honey from the farmer’s market!)
1 cup organic coconut milk
½ teaspoon salt
¼ teaspoon pepper
¼ teaspoon hot sauce (we like Frank’s Wing Sauce!)
2 free range boneless chicken breasts
1 cup shredded red cabbage
½ cup chopped celery
1 cup shredded carrots
3 cups organic Hearts of Romaine lettuce, shredded
2 tablespoons chopped cilantro
To Prepare:
Whisk lime juice and honey in a small bowl until smooth. Add coconut milk, salt and pepper. Mix until well blended and set aside.
Preheat oven to 350 degrees. Place chicken breasts in a 8½ x 11 glass baking dish and pour half of the mixture on top. Marinate chicken for 5-10 minutes, turning to coat all sides.

Cover with foil and bake 30 minutes.

To make the salad:
In a large bowl, combine carrots, celery and cabbage. Pour in the remaining half of the marinade mixture. Toss to coat and set aside for 10-15 minutes. Add lettuce and cilantro and toss well. Refrigerate until ready to serve.
Remove chicken from oven and cool. When cool, slice chunks about ½” in thickness. Put salad on plates and top with chicken. Enjoy!

Florida Ponders New Boat Anchoring Laws

Complaints and issues related to anchoring boats are on the rise, so executives of the Boat Owners Association of the United States (BoatUS) are expecting a renewed effort for local anchoring control in Florida’s 2015 legislative session. A state online survey is seeking comments until December 8 to assess what Florida residents and boaters think about potential restrictions on near-shore anchoring.

The survey, posted on the Florida Fish and Wildlife Conservation Commission (FWC) website, asks for opinions on possible rules that could force anchored boats to move 150 feet offshore, ban boats “in a condition of disrepair or poor maintenance” or require that stored boats at anchor be moved several miles every few weeks. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said new anchoring laws would be advantageous to many of the firm’s clients on the Emerald Coast.

“Numerous waterfront businesses in this area risk damage whenever a storm blows through because there’s always a chance that boats anchored close by can be set adrift,” he said.
“New anchoring laws would help alleviate these fears.”

Waterfront businesses aren’t the only ones hoping for stricter anchoring laws. The FWC has received complaints about popular water-skiing areas made unusable because of boats anchored there; “public nuisance” boats left to sink and become derelict; and boats anchored “for extended periods of time, a bit closer to waterfront residences than many people would agree is appropriate.”

The online survey seeks to assess public opinions on a range of anchoring “concepts,” including:

A setback distance for anchoring near boat ramps, marinas and other areas that need water access.
A ban on anchoring overnight near a waterfront home, with 150 feet listed as one suggested distance.
Stronger rules against anchoring a boat considered at risk of sinking.
Require “stored” boats be moved within a certain period, and moved at least a fair distance away.
The online survey became active Nov. 21 and will close at 11:59 p.m. Dec. 7. Take it at https://www.surveymonkey.com/s/AnchoringSurvey.

Florida’s Net Lease Activity Heats Up

Net lease sales are on the rise in Florida, according to a to 2014 Net Lease Florida Report just released by Calkain and Beshears & Associates. According to managing partner and executive Vice President David Sobeleman, the data is important because it marks the first comprehensive net lease market report focused on the state.

“This report is the first of its kind for Florida net lease assets,” Sobelman said. “We feel that our footprint and success in the State of Florida allowed us the privilege to comment firsthand on the net lease market dynamics for the entire state.”

The report details the reason Florida is one of the most active net lease markets in the nation. For starters, population growth, tourism, and strong consumer spending have propelled demand for retail space and new development projects. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said the report’s findings are an accurate reflection of leasing activities on the Emerald Coast.

“Net leases are increasingly popular due to several factors and trends,” he noted. “There’s more demand for retail space, an uptick in consumer spending, no state income tax, more jobs coming to Florida, and construction is noticeably picking up as well. All of these things have resulted in considerably more clients interested in making investments in Florida net leased properties.”

Florida hosts a diverse pool of investors comprised of high net worth individuals from the northeast United States, foreign investors and perennially active local owners. The Calkain report concluded these investors all consider the Florida market as a familiar safe haven for their investment dollars. Additional statistics and facts gleaned from the report include:

Net lease retail cap rates averaged 6.52% for Florida tin 2014, roughly 50 basis points lower than the national average; McDonald’s state wide average is a 4.24% cap rate; Wawa’s state wide average is a 5.49% cap rate; pharmacies lead all sectors with the highest ask and sales price; banks lead all sectors with the lowest ask and sales cap rates.

Analysts Predict Rosy 2015 Real Estate Market

Top real estate analysts and economists are predicting the home-purchase market will strengthen along with the economy in 2015, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for November. Freddie Mac economists have made the following projections in housing for the new year:

Mortgage rates: Interest rates will likely be on the rise next year. In recent weeks, the 30-year fixed-rate mortgage has dipped below 4 percent. But by next year, Freddie projects mortgage rates to average 4.6 percent and inch up to 5 percent by the end of the year.

Home prices: By the time 2014 wraps up, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent last year. Appreciation is expected to drop further to an average 3 percent in 2015. “Continued house-price appreciation and rising mortgage rates will dampen affordability for home buyers,” according to Freddie economists. “Historically speaking, that’s moving from ‘very high’ levels of affordability to ‘high’ levels of affordability.”

Housing starts: Homebuilding is expected to ramp up in 2015, projected to rise by 20 percent from this year. That will likely help total home sales to climb by about 5 percent, reaching the best sales pace in eight years.

Single-family originations: Mortgage originations of single-family homes will likely slip by an additional 8 percent, which can be attributed to a steep drop in refinancing volume. Refinancings are expected to make up only 23 percent of originations in 2015; they had been making up more than half in recent years.

Multi-family mortgage originations: Mortgage originations for the multi-family sector have surged about 60 percent between 2011 and 2014. Increases are expected to continue in 2015, projected to rise about 14 percent.

Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, Florida, said that residents and businesses on the Emerald Coast have been expressing optimism about the economy for the last several months.

“Investors and businesses are more confident overall and very excited about growth and opportunities,” he said. “With the economy on the upswing and better-paying jobs coming to the area, the overall feeling is that 2015 may be the best year for real estate that we’ve seen in a long while.”

Florida CRE Boosted By Foreign Investors

Commercial real estate is heating up in Florida, largely thanks to with foreign investors snapping up multifamily and hospitality properties. Brokers and lenders have their hands full dealing with foreigners from around the globe who are much more comfortable investing here than in their homelands where political unrest is much higher. Although South Florida has long been a favorite repository for cash moved from Latin America and South America, prices have risen so high that foreign investors are venturing north into central Florida and Tampa Bay in search of better values and cap rates. Craig Barrett, co-founder and CRE broker at NBI Properties in Fort Walton Beach, said his office has been working with several clients from other countries to find suitable investments in the area.

“We are frequently contacted by foreign clients, and in many cases it is because of referrals from our existing clients,” Barrett said. “They have heard that not only will we help them find properties, but we will guide them through the process of working with local lenders to obtain financing.”

Barrett noted that while a few investors pay with cash, others are using existing investments and properties as collateral for other deals. He added that foreign investors continue to prefer multifamily and hospitality properties because they are more familiar with the business models, but banks definitely deserve some credit for finally loosening their purse strings.

“Lenders are now much more willing to grant loans than they were in recent years,” Barrett said. “Banks that made it through the recession are finally relaxing stringent loan requirements.”

Lenders are stepping up on loans for industrial and hospitality properties, as they expect demand for warehouse space and hotel rooms to increase with favorable economic activity. They are not as eager to finance retail and office properties due to the perceived threat of Internet shopping overtaking retail and an oversupply of properties to lease. In contrast, the newest lenders working with investors are less concerned about risk and are more inclined to lend money for acquisition, development and refinancing. These lenders are supporting urban infill, smaller retail developments, and re-development.

RECIPE FOR A HAPPY THANKSGIVING FROM NBI PROPERTIES!

HAPPY THANKSGIVING FROM NBI PROPERTIES!

This time of year we always want to remind our families, friends and clients how special they are to us. We are thankful for each and every one of you! On behalf of NBI and our entire staff, Jayme and I would like to wish you and your loved ones the best Thanksgiving ever! Enjoy this joyous time with your family and friends, and try out our Pumpkin Cornbread recipe if you have a crowd of hungry ones!

Best wishes,

Craig Barrett, Jayme Nabors and the NBI staff

Pumpkin Cornbread

Ingredients:

1 1/4 cups corn meal (any brand)
1 cup all-purpose flour
1 cup of canned pumpkin or pumpkin purée
1 tsp baking powder
1 tsp baking soda
1/4 tsp salt
2 eggs
1/4 cup sugar
1 cup buttermilk
1 T unsalted butter
1/4 tsp cinnamon
1/8 tsp nutmeg

Preparation:

Preheat oven to 400 degrees. Whisk together corn meal, flour, baking powder, baking soda, cinnamon, nutmeg and salt in a bowl.

In another bowl whisk together eggs, sugar, buttermilk, and pumpkin until thoroughly combined. Slowly add in the dry ingredients and mix well.

Melt butter in a skillet. Pour the batter in the skillet and bake 25-30 minutes or until golden brown on top. Cool 10-15 minutes before cutting into slices. Enjoy with butter, honey, or prepare this easy Cinnamon Maple Butter:

2 sticks of butter, softened
2 T good quality maple syrup
1/4 tsp vanilla
1 tsp cinnamon
1 tsp brown sugar

To prepare: Beat all ingredients until smooth. Pour butter into a small container and chill 2-3 hours.

Wounded Air Force Vet Gets New Home

Here at NBI Properties, we have a tremendous respect for all of the local military families who make sacrifices to serve our nation. Recently our hearts were warmed by a story in the Northwest Florida Daily News about Ret. Air Force Master Sgt. Joe Deslauriers getting a brand new home. Building Homes for Heroes built the home in Destin for Joe, a triple amputee,and his family. Last week they saw it for the first time and it was a dream come true. Joe and his wife, Lisa, moved into the fully-customized home with their son, Cameron, while many volunteers and community members welcomed them.

The house warming ceremony marked three years since Joe and his wife, Lisa, were homeowners. Previously the couple lived in Fort Walton Beach where Joe was an explosive ordinance disposal technician before he was deployed to Afghanistan in 2011. At the time, Lisa was pregnant with their first child and was due in December. But their dreams were shattered on September 23 when Joe lost both legs and part of an arm in an accident while clearing an area of improvised bombs to get to an injured Marine.

Since the accident, it’s been a long road of recovery for Joe, as he’s been shuffled in and out of hospitals and rehab facilities. and temporary housing. Since he returned home from the Walter Reed National Military Medical Center in Washington, D.C., the family has been living in a cramped, two-bedroom apartment in Destin. That was before Building Homes for Heroes stepped in to build a new home for the Deslauriers. Board member Kelly Hallman said that the home was built from the ground up by volunteers and the family would not owe dime when they moved in.

Florida Senate President Don Gaetz spoke briefly at the ceremony, noting that no matter what he and state Rep. Matt Gaetz were able to do in the Legislature, they weren’t doing the “heavy lifting.”

“The real heavy lifting was done by Joe Deslauriers and his family and everyone who has worn the uniform and stood in harm’s way,” Don Gaetz said.

The family is grateful and wants to show their appreciation by giving back to the community. Next month, Joe will be speaking with area students on Veterans Day. Through Building Homes for Heroes, he and Lisa have become part of a support network for other wounded service members.

Source: Northwest Florida Daily News

Horses Grow in Popularity on the Emerald Coast

If you’re one of the locals or visitors to the Emerald Coast who think horses are popping up everywhere, you’d be right! From horseback rides at sunset on the area’s sugar white beaches to horse farms, boarding stables, and dressage competitions, the area has seemingly gone wild for horses.

A search for all things horse-related in the area turns up dozens of options. You can easily buy a thoroughbred from a reputable horse dealer, find a stable for boarding your horses or rent horses by the hour from numerous pleasure riding businesses. There are also several equestrian centers where you can learn how to ride horses, train them for competitions, and buy tackle and supplies. Craig Barrett, co-founder of NBI Properties, watched horseback riding grow in popularity on the Emerald Coast for years before finally catching the bug and buying two Tennessee Walkers. He said the area is ideal for horse enthusiasts and owners alike.

” The climate here is ideal for horses because it’s never terribly cold,” he said. ” There are so many recreational spots and scenic areas here, and to be able to experience it all on horseback is a unique experience. Tourists love to add horseback riding to their vacation schedules because it’s a memorable way to enjoy the trails and beaches here.”

Barrett said that his firm is getting more inquiries about horses from investors and residents contemplating a move to the area. He said most people want to know if there are plenty of places designated for riding and if there are numerous options for boarding.

“I think some people are surprised when they see the number of businesses devoted to horses here,” he said. “It’s not just one or two stables, because people here are making horse part of their lifestyle.”

Barrett and his wife board their two prized Tennessee Walkers, Dollar and Denali, at Bayside Stables in Santa Rosa Beach. He said the owner, Judy Ammons, is fantastic, the rates are reasonable, and he’s met several fellow horse lovers there.

“There’s nothing better than visiting these beautiful animals every day, even when there’s no time to ride them,” he said. “I like to go to the horse barn every day after work and take them apples and treats. Any stress of the work day quickly melts away.”

For more information about Bayside Stables, call (850) 585-0728.

Investors Flocking to Office Sector

Commercial real estate reports indicate that things are definitely improving in the office sector: Falling vacancies, rising net absorption, a controlled supply of new office space, and rising rents are all contributing to the upswing and investors report they are seeing higher property incomes on their office property investments. The end result is that the office vacancy rate has dropped to 11.6 percent from 12.1 percent a year ago.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said that leasing activity on the Emerald Coast is strong and the brokerage is seeing steady interest from investors.

“Savvy investors are recognizing this is the best time to invest in the office sector and are making moves before the end of the year,” he said. “Rents are rising and occupancy growth is spiraling upward, so it’s a good time to invest now without assuming much risk.”

Average office rents have risen 3.6 percent year-over-year, a rise from the 2.5 percent increase reported in the third quarter of 2013 from year-over-year. Although energy and technology tenants are driving growth in large markets like San Francisco, Houston, and Boston, medical office and educational facilities are also increasing in demand.

“Even smaller ,arrest and suburban areas are experiencing an uptick in office space leasing now,” said Barrett. “As the economy continues to improve and more jobs are created, this is a trend that could carry over into 2015 and beyond.”

CRE Investors Mulling Over Future of Malls

Plenty of commercial real estate investors are pondering the future of shopping malls since almost half of the 1,100 malls across the U.S. have either closed or have been revamped for other uses. While online sales continue to grow, some investors optimistically feel malls will find a way to stay popular with customers while others believe malls will be almost non-existent by the next decade. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, says that malls are alive and well on the Emerald Coast, but he is aware of dwindling traffic in other areas of the country.

“We’re aware that lots of malls are closing their doors as the recession forced lots of customers to look for better deals online,” he said. “The competition from online retailers has forced malls to reinvent themselves and take a closer look at how they can continue to attract customers, whether it’s with special events, sales, or other marketing techniques.”

If malls manage to survive another decade, store sizes are expected to dramatically shrink. The current brick and mortar trend leans toward reducing operating costs by reducing expensive square footage in malls. This means that some commercial investors are going to see more vacancies in the future and little need to expand and build new retail space.

“We don’t think consumers are going to stop going to malls any time soon,” noted Barrett. “But retail is changing and the look of malls is also expected to change. We think some extravagant displays will disappear as stores morph into mini-distribution centers. Merchandise will need to be displayed in smaller spaces as all stores downsize and study ways to use smaller areas more efficiently.”

Barrett added that it’s been a good year for retailers at malls and outlet malls all over the Emerald Coast. He said that tourists and residents also frequently flock to mixed-use developments that offer the convenience of shopping for everything in one spot.

“The most popular retail centers here offer grocery stores, gyms, dry cleaning, shopping and more services all in one place,” he said. “Time-pressed consumers want to get everything done in one spot instead of making five or it different trips to get everything done.”

Investors High on Florida’s Business Climate

Florida is open for business, and this time it’s not just politicians making promises. According to a survey of U.S. corporate executives released recently at the International Economic Development Council (IEDC) Annual Conference, Texas, Florida, Georgia and North Carolina are viewed as having the best business climates in the United States. The Development Counselors International (DCI) has conducted the survey of corporate executives and site selection consultants every three years since 1996.
The Sunshine State ranked second with 18.1 percent of survey respondents praising the state’s pro-business climate. Georgia and North Carolina tied for third with 17.6 percent of the votes, followed by South Carolina and Tennessee.
Texas has consistently held the No. 1 spot since 1999, and it was the clear-cut favorite among the respondents to the survey: 49.7 percent said the Lone Star state has one of the most favorable business climates in the nation.
When asked why they selected Florida and the other top five states as best for business, the corporate executives frequently cited tax climate, “pro-business environment,” incentives/financial assistance and workforce quality/availability.
NBI Properties co-founder Craig Barrett said he has nothing against Texas, but obviously thinks Florida and the Emerald Coast should be ranked number one.
“Things might be bigger in Texas, but that doesn’t necessarily mean they are better!” Barrett joked. “I can’t remember the last time we had an investor trying to decide whether to acquire properties in Texas or Florida. If we did, I’m sure they picked Florida!”
All kidding aside, Barrett said that commercial real estate investors frequently mention they are pleased with Florida’s friendly business environment, tax breaks, and workforce, not to mention the beautiful weather.
“It’s hard to beat what we have to offer in northwest Florida, although we admit we are biased since we’ve lived here for four generations,” Barrett added.
The survey also found that 44 percent of corporate executives said that their firm would make a location decision in the next 24 months – whether it is a move, expansion or consolidation of a manufacturing plant, office, distribution center or other facilities. Forty percent said they would outsource a portion of the site selection process to a real estate broker or site selection consultant.

CRE Investor Sentiment Remains High for Emerald Coast Properties

Although the stock market has been topsy turvy and difficult to predict the last few months, investors are confident about the outlook for commercial real estate and are proving it by investing more capital. Results from a recent survey of investor sentiment by Marcus & Millichap revealed that a whopping 70 percent of respondents said they are planning to increase their commercial real estate investments during the next year. Only 24 percent said they would keep their holdings about the same while 4 percent said they expected their portfolio would decline over the next year.
Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said interest from investors remains high due to fluctuations in the stock market and many desirable locations and listings on the Emerald Coast. He said the firm has been busy fielding inquiries and offers on a number of prime waterfront properties, raw land, and multi-use buildings.
“There are plenty of opportunities here for investors and we regularly work with them from all over the country and overseas,” Barrett said. “We have been much busier than we were last year at this time with commercial real estate listings, closings and property management.”
The Investor Sentiment Index measured views on fundamentals such as rising property values and plans to increase real estate holdings. Survey findings showed that commercial real estate properties will continue to command higher rents, occupancies, and property values. The conclusion is that sentiment remains high due to attractive yields commercial real estate is delivering compared to other investments. Nearly three-fourths of the respondents said they strongly agreed that commercial real estate offers favorable returns compared to other investment opportunities. Twenty-four percent disagreed with the statement while 2 percent had no comment.
Barrett said that another reason commercial real estate has been on the upswing in Destin, Fort Walton Beach, Crestview and other areas of the Emerald Coast is because investors have capital ready to invest. He said in previous years during the recession, this was definitely not the case.
“Investors are having an easier time getting the capital and the financing they need,” he said. “Because of the steady economic recovery, they are no longer waiting months to get alternative financing or approval on loans. This has resulted in more investors interested in everything from apartment buildings to luxury resorts.”
For more information on commercial real estate offerings on the Emerald Coast, contact NBI Properties at 850-243-0007.

Dustin Parkman Joins NBI as Luxury Marketing Specialist

NBI Properties announced that Dustin Parkman has recently joined its team of commercial and residential realtors as a luxury marketing specialist. With demand for luxury residences and vacation homes increasing on the Emerald Coast, Parkman will focus on expanding NBI’s growing portfolio of lifestyle properties

A resident of Santa Rosa Beach for more than a decade, Parkman studied finance at Troy University and was previously a managing partner of CPV Hospitality. In his new role with NBI he will utilize his expertise in marketing to high net worth individuals and investors interested in luxury properties. His responsibilities will include working with clientele on new developments, luxury residential, and lead opportunistic/investment commercial properties.

“We are excited to have Dustin join our team,” said Craig Barrett, co-founder of NBI Properties. “He will be focusing primarily on properties on the 30A corridor, including Destin, Santa Rosa Beach, and Panama City, and providing a high level of personalized customer service for our clients.”

Founded in 2005 by Jayme Nabors and Craig Barrett, NBI is the fastest growing commercial real estate firm in the Southeast and manages more than 2,500 properties on the Emerald Coast. For more information about the company and its services, visit www.nbiproperties.com.

World’s Luckiest Fishing Village Hosts Annual Rodeo

Whether you’re an angler or not, chances are you’ve heard about the Destin Fishing Rodeo. This popular event draws thousands of participants and spectators from the Emerald Coast and all over the country and lasts the entire month of October. Our friend and co-founder Jayme Nabors has been hooked on sport fishing for years and has had some great catches all over the world, but he’s the first to admit that you can’t beat Destin when it comes to fishing!

As longtime residents of this area, we enjoy watching these “lucky” and skilled anglers show off their catches when they return to the docks for weigh-ins every afternoon. It’s also fun to enjoy the Destin Seafood Festival, which kicks off the Rodeo with three, fun-filled days of music, activities, seafood and exhibits. One of our favorite spots is The World Famous AJ’s Seafood and Oyster Bar at 116 Harbor Blvd. Make sure to try the Wild Buffalo Oysters, Seafood Gumbo or Shrimp N’ Grits for a real treat – although everything there is delicious!

Whether you live nearby or own a vacation home in Destin, now is the time to enjoy the Emerald Coast. We think the weather is better than anywhere else in the country, as it’s still warm enough now to feel like summer, but it’s cooling down at night and gradually ushering in fall. If you’ve been thinking about investing in property here, give us a call and we will show you the best the area has to offer. We’ll even meet you at the Rodeo!

NBI Leads Emerald Coast’s Property Management Surge

NBI Properties reports that its property management division is booming, due in part to stable job growth and increased interest from investors in the area. The company’s co-founder, Craig Barrett, said he has hired several new employees to keep up with the demand.

“NBI is known throughout the Emerald Coast for our expertise in commercial real estate,” he said. “But we’ve also been building up our reputation for awhile as leaders in property management, and now we’ve reached the point where it is a significant portion of our business.”

With job growth reported to be steady on the Emerald Coast and much of it attributed to the leisure and hospitality sector, investors are taking advantage of the demand from renters for affordable housing as well as luxury properties in Destin, Fort Walton Beach, and 30A. Barrett said that occupancy rates are typically highest during the summer, but job growth is responsible for keeping properties occupied all year.

“Investors are happy because we’ve been able to get max rents for them during the summer season and also keep properties occupied all year due to the demand from working class families,” he said. “In addition to investors, we work with families who buy vacation condos or homes and hire us to manage the property while they live up north. Military families also buy homes here and rely on us when they are suddenly stationed in another state or country.”

Barrett said that NBI’s property management services offer peace of mind to owners who do not have the time or experience to carry out the extensive responsibilities of a landlord. He said there are endless stories from owners who signed up renters and thought the process would be as easy as collecting a check every month. In reality, numerous problems can arise and cause nightmares for owners.

“Savvy investors and owners don’t have time to collect rent and late fees, assess property damage, do background checks on renters, refund security deposits, or fix a broken air conditioner in the middle of the night,” he said. “But we handle all of these things and more at NBI, and our clients know we are going to make sure their property is protected as if it’s our own.”

For more information on NBI’s property management services, call the office at 850-243-0007.

Area Counties Qualify for HUD’s $1Billion Resilience Competition

The U.S. Department of Housing and Urban Development (HUD) Secretary Julián Castro and Dr. Judith Rodin, president of the Rockefeller Foundation, announced a $1 billion National Disaster Resilience Competition. The competition will make $1 billion available to communities struck by recent natural disasters to promote risk assessment and planning. It will also fund innovative projects to prepare communities for future storms and other extreme events.

“This competition will help spur innovation, creatively distribute limited federal resources, and help communities across the country cope with the reality of severe weather that is being made worse by climate change,” said Castro.

Funding for the competition comes from the Community Development Block Grant disaster recovery appropriation under the Disaster Relief Appropriations Act in 2013. It’s a response to requests from state, local and tribal leaders for help, according to HUD. Prior to the competition, representatives from eligible communities will have an opportunity to attend Rockefeller-supported Resilience Academies to strengthen their funding proposals submitted to the competition. Applicants must tie their proposals to their area’s eligible disaster. For example, a community that suffered a flood might want to offer flood buyouts in distressed areas and then create wetlands that limit future flooding, while simultaneously creating a nature preserve or recreation area.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said that storms responsible to millions of dollars in property damage that swept through the area last March would definitely qualify for the resilience program.

“In our area, Okaloosa, Walton, Santa Rosa, and Escambia counties all suffered major damage,” he said. “Any funds awarded from the resilience program could greatly benefit communities here in the future.”

The $1 billion National Disaster Resilience Competition has 67 eligible applicants, including Florida. To qualify, a state must have a major disaster declared in 2011, 2012 or 2013. HUD says Florida had three major declared disasters in that time that impacted 45 counties.

The Rockefeller Foundation will provide technical assistance to eligible communities. More information on the National Disaster Resilience Competition can be found on HUD’s website.

 

 

 

E-Commerce Challenges Retail Sector

The rise of e-commerce has challenged retailers for several years, and coupled with the recession it’s spelled gloomy sales for bricks-and-mortar businesses. With online sales rising every year, consumers are making it clear they love the convenience of shopping online, leaving franchises and mom and pop stores scrambling to attract customers.

“There’s no doubt that e-commerce is impacting bricks-and-mortar businesses,” said Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida. “New devices and apps make it easier for consumers to shop online all the time, and many choose to do so despite the fact that the risk of having their credit card information hacked is at an all-time high. There are also plenty of folks who believe it’s cheaper to order products online instead of driving to stores when the price of gasoline increases.”

With stores such as Blockbuster Video and Borders going out of business, retailers have had to adapt to e-commerce threats by working harder to win customers with savvy marketing, exclusive in-store offers, and loyalty programs. Many retailers are reconfiguring stores so they won’t need as much space for inventory. According to Barrett, banks in particular seem to be implementing new strategies to use space more efficiently.

“The days of big banks with numerous offices, spacious foyers, and waiting areas are over,” he said. “The trend now is for banks to build or lease smaller branches of 600-700 square feet with tellers greeting customers with iPads. Banks are betting on getting more exposure with two smaller banks than larger buildings at a single location.”
Aside from banks staying ahead of the curve, the industrial real estate sector is also  using space more efficiently in order to compete with e-commerce. Many are choosing to establish new distribution centers instead of changing the footprint of their retail space.

Barrett added that retail businesses have a rosier outlook on the Emerald Coast due to the throngs of tourists who visit the area year-around.

“When tourists are on vacation, they love to shop at all the area’s brick-and-mortar stores, outlet malls, and boutiques,” he said. “I believe this is why we still have a lot of investors interested in retail space as well as industrial space and raw land in our area.”

Banks Lower Military Mortgages

A new government agreement with five of the nation’s largest banks is helping active-duty military service members save hundreds of dollars or more each year on their mortgages. Banks also pledged to make enrollment easier, notify service members who qualify for lower rates, and simplify the entire process to help more military families own homes without overwhelming debt. Research from the Government Accountability Office (GAO) found that many military service members fail to take advantage of the benefits available under the Service Members Civil Relief Act because they’re unaware of them or they don’t want to complete the paperwork.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said that under the previous law in 2003, active-duty service members could have mortgage rates and other debt fees capped at 6 percent.

“With so many military families residing here on the Emerald Coast, we learned that many were simply not taking advantage of benefits that could lower their mortgage payments,” he said. “In most cases, families were unaware they qualified for these benefits.”

Five of the country’s largest mortgage lenders – Wells Fargo, Bank of America, Ocwen Loan Servicing, CitiMortgage and Quicken Loans – all agreed to make the application process easier and take a more proactive approach to notifying those who are eligible. The lenders have pledged to make frequent checks of the Defense Department database to see if their customers qualify for any unclaimed benefits.

“This is great news for military families in this area,” stated Barrett. “Reducing mortgage interest rates can result in saving thousands of dollars.”

 

CRE CLOs Offer Investors More Options

Investors searching for higher yields have been flocking to CRE collateralized loan obligations (CLOs) for the past two years. Driven by target yields in the mid-teens for equity investors, real estate insiders say momentum continues to grow due to favorable stock market performances over the last several years.

“The market is on a roll, despite all kinds of predictions that the bull market will collapse any day now,” said Craig Barrett, co-owner of NBI Properties in Fort Walton Beach. “The investors we are working with are taking advantage of reduced borrowing rates and more loan options from lenders.”

Barrett added that commercial real estate CDOs were the financial vehicle of choice prior to the recession, but disappeared during the recovery. He said the new CLOs have an improved, simplified structure that is preferred because they are secured loan transactions.

Moody’s reported that 2013 closed with an estimated $2 billion in CRE CLOs issued, with an even bigger volume anticipated for 2014. However, CRE brokers say one of the biggest hindrances for the growing CLO market is the need to educate investors and discourage familiarity with CDOs, which are largely blamed for contributing to the 2008 financial crisis.

Barrett said there are there are important differences between the CDO structure and CLOs pertaining to commercial real estate.

“Before the recession, CDOs offered B-piece buyers a way to get leverage off of their double B and lower unrated portfolios,” he said. “People should know the new CLOs only include loans, and interim financing suitable for three, five and seven-year loans. What we’ve noticed is that
CLOs are not dominating commercial mortgage interim financing, but they still play an important role in the market.”

Recently issued CLOs have typically targeted loans on properties in transition. For instance, a typical loan could be structured for a class-C apartment building with an upfront reserve or future funding for renovation. The property would likely have a high occupancy level and be located in a tight market, but could possibly be in need of an upgrade in order to maintain and improve cash flow.

“Overall, CLOs are a good option for borrowers,” said Barrett. “We’re happy to help investors with the rules and regulations involved in order to take advantage of CLOs.”

 

 

Florida Property Owners Benefit from Credit Score Leniency

While many people are aware that lower credit scores make it difficult to qualify for loans, homeowners in most states are discovering that bad credit increases the cost of homeowners insurance. However, a recent study by CNBC revealed that Florida is one of only four states that do not penalize borrowers with low credit scores by raising property insurance rates.

According to the study’s findings, only Florida, Maryland, California and Massachusetts quote low credit score homeowners the same rates as those with high credit ratings. Nationally, homeowners who have poor credit pay an average of 91 percent more for homeowners insurance than those who have pristine credit reports, according to a new report by insuranceQuotes.com. According to Craig Barrett, co-owner of NBI Properties, insurance rates are just another reason why more people are relocating to the Sunshine State and to the Emerald Coast.

“When we speak with prospective buyers, they will say it’s not their mortgage or their commercial lease that is killing them, but it’s the insurance,” said Barrett. “On top of that, so many people are dealing with less-than-perfect credit scores since the recession a few years ago, so paying 91 percent more for insurance doesn’t help these folks one bit. We love to be able to tell them that in 46 other states they would have to pay more based on their credit rating.”

The report also concluded that homeowners with credit scores in the fair or “median” range may pay 29 percent more for their insurance than someone with an unblemished credit record. Findings also revealed that how insurance companies weigh the significance of a person’s credit score can vary greatly from company to company and even state to state. Insurers started using credit-based insurance scoring in the early 1990s when FICO studies discovered a correlation between a person’s credit and his or her likelihood of filing a claim.

“There’s no denying that credit scores still have an enormous impact on an individual’s overall finances,” said Barrett. “Everyone knows that maintaining a good credit history is very important. But for those who are just starting out with no established credit or for those who went through some rough times and saw their scores drop, it’s good to know that Florida is one of the few states where they might be able to get a break.”

 

 

Florida Reels In A Cool BILLION in Settlement

Comedian Mike Myers and his goofy Doctor Evil character always liked to stress the importance of one BILLION dollars. But unlike the fictional comedy, nearly 17,000 Floridians will receive more than $1 billion in relief as part of a record-setting settlement with Bank of America. The Florida Attorney General’s Office recently made the announcement, calling it a “historic” resolution. Overall, the state is earmarked to receive about a seventh of the settlement’s $7 billion in aid to communities and homeowners hit hard by the housing market crash that led to the Great Recession.

Bank of America Corp. agreed to pay $16.65 billion to end federal, Florida and other state investigations into the sale of toxic mortgage securities during the subprime housing boom. Consumer relief will include principal reduction and forgiveness, loan modifications and new loans to credit-worthy borrowers struggling to obtain loans. Financing will also be available for affordable rental housing to help communities still recovering from the financial crisis that affected thousands of families statewide.

“We’ve learned that some of the details are still being finalized as far as who in Florida will be receiving aid,” said Craig Barrett with NBI Properties in Fort Walton Beach. “Programs are being organized and set up in order to help eligible borrowers.”

Many of the bad loans that backed the securities came from firms Bank of America acquired in 2008, including Countrywide Financial Corp. of Calabasas and Merrill Lynch & Co. Prior to the fallout, Bank of America had already incurred approximately $60 billion in losses and legal settlements from its purchase of Countrywide, which was one of the nation’s biggest subprime mortgage lenders during the housing boom of the mid 2000s.

Why Online Websites Won’t Replace Brokers

On the heels of recent news that Zillow, the most popular real estate listing website, has plans to acquire its biggest competitor Trulia for $3.5 billion, lots of questions are looming about the possible merger. Namely, people are wondering what this will mean for buyers and how if will affect real estate firms, agents, and brokers. Insiders say that once Seattle-based Zillow acquires Trulia, the companies will dominate the real estate listings market, accounting for 48 percent of web traffic for listings (not including local websites).

NBI Properties co-founder Craig Barrett said that online websites such as Zillow offer an alternative to the traditional MLS listings that agents and brokers have used for years. He said the online services offer a wealth of information for buyers, but have not disrupted the function of real estate brokerages.

“In my experience, websites like these are useful in the initial phases of research when buyers are browsing or shopping around to see what kind of properties they are interested in,” Barrett said. “It gives buyers a head start because they can meet with us at NBI and tell us specific types of properties they have checked out in the area. Based on what they have seen online, we can research the availability of their selections or recommend similar properties they may wish to see and compare with their findings.”

Once the Zillow and Trulia merger is finalized, Zillow stated that both brands will retain their own identities and continue to offer buyers, sellers, and renters access to information about properties at no charge. The company also said it will provide advertising and a software solution designed to help real estate professionals grow their business. By implementing these solutions, Zillow said the company will benefit consumers and the real estate industry, even though the service is bound to drive some traffic away from real estate brokerage websites.

“Overall, we look at this as innovation and not competition,” said Barrett. “Numerous studies prove that the majority of consumers and investors still prefer to buy real estate through an agent. Also, at NBI we use a lot more of the commercial real estate databases.”

Barrett also said consumers using online real estate databases should be aware that listings are not always up to date or accurate. He added that he had experienced several instances of buyers who called to inquire about a property they had seen online, only to be disappointed to learn it had been sold months earlier.

“The bottom line is the websites are good research tools, ” he said. “But overall, nothing can replace local realtors who have inside knowledge about the area and often know the history of a property and its condition. Buyers also rely heavily on realtors for price negotiations, guidance with the loan process, and contacts with inspectors, insurance underwriters, property appraisers and much more.”

 

Commercial Real Estate Rosy in Third Quarter

If the Real Estate Roundtable’s third quarter Sentiment Survey is any indication, commercial real estate markets in the States continue to enjoy a slow but steady recovery. Slight increases over the second quarter in two of the survey’s indices, “Overall” and “Current” quarter are in line with overall economic growth detailed in a recent positive report about higher-than-predicted gross domestic product (GDP) in April, May and June. Craig Barrett, co-owner of NBI Properties in Fort Walton Beach says the survey results are reflective of what his firm has been experiencing on the Emerald Coast.

“We’re busier than we were at this time last year,” noted Barrett. “We’re leasing properties to new businesses, franchises, and to professionals relocating to this area. Also, financing options have definitely improved since last year and investors are finding it easier to obtain sources of capital.”

Overall, the survey reported that commercial real estate is on the upswing, although some respondents voiced concern over policy matters on Capitol Hill that could affect the industry. Notably, some said they feared recovery is threatened by policy-related risks such as the scheduled expiration of the federal Terrorism Risk Insurance Act (TRIA) on Dec. 31 and the looming prospect of higher interest rates.

“We’re somewhat concerned about the TRIA expiring because it could cause a wave of economic setbacks and problems,” said Barrett. “I think we’d definitely see difficulties with banks and lenders again, which would mean that funding for new projects could come to a halt.”

The U.S. Senate voted resoundingly (93-4) for a seven-year reauthorization of the TRIA on July 17. House legislation countering with five-year extension program reforms cleared a key committee in June, but remains in limbo until Congress meets again in September.

 

 

 

 

 

CFPB Clarifies Rule for Inherited Homes

The Consumer Financial Protection Bureau (CFPB) recently clarified a rule that has been perplexing for heirs of mortgaged homes. A new interpretive rule stipulates that when a borrower dies, the name of the borrower’s heirs may be added to the mortgage without triggering the CFPB’s Ability-to-Repay rule. The new action is important because it allows heirs and surviving family members to acquire the title to a property, assume the mortgage, or apply for a loan workout.

The Ability-to-Repay rule, which was enacted in January, was intended to protect consumers from irresponsible mortgage lending by requiring lenders to verify that borrowers are financially able to repay their loans.

Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, said the new rule is significant because it affords heirs the opportunity to work with a lender to pay off the mortgage.

“Specifically, surviving family members can work directly with lenders to pay off loans or seek loan modifications,” he said. “The rule can also apply to other family-related transfers such as those occurring due to living trusts or divorce.”

The CFPB requires mortgage servicers to have procedures in place to promptly identify and communicate with heirs and surviving family members.

 

CRE Investors Benefit from 1031 Exchange

 

At NBI Properties, we’re fielding lots of questions from investors interested in the IRS tax code 1031 exchange. This important tax code is attractive to investors because it permits the sale of one investment property to in order to purchase a higher-priced investment property — all without paying capital gains taxes and depreciation recapture taxes. The 1031 exchange is popular with investors because it can be used in multiple ways, according to Craig Barrett, co-founder of NBI Properties.

“By taking advantage of the 1031 exchange, investors can sell properties while taking part of the profits out,” he said. “However, when most of the profit is rolled over into a new property, investors may defer taxes on the amount that is rolled over.”

Since tax codes tend to be complicated and confusing, it’s important to retain a highly qualified real estate broker and tax expert. A few basic guidelines about the 1031 Exchange to consider include:

Properties qualifying for a 1031 exchange must be for business use or investment (“productive use” as descrIbed by the IRS).

Property must be of “like-kind” (also broadly interpreted by the IRS).

A qualified intermediary is required.

The investor cannot have constructive receipt of sale proceeds at any time.

The 45-day identification period and 180-day closing requirements must be met.

Price of the replacement property must be equal to or greater than the relinquished property.

The amount of mortgage on the replacement property must equal or exceed that on the relinquished property.

All of the funds from the sale must be reinvested in the replacement property.

In addition to these general guidelines, many investors consider the time restrictions the most difficult part of a 1031 exchange, and especially if transactions involve commercial real estate. As stipulated in the tax code, investors must identify a replacement property within 45 days of completing the sale of the property they are exchanging for a more expensive property.

The other major requirement is that a Qualified Intermediary must be used. This is a person holding a specific license allowing them to make the financial transactions on an investor’s behalf.

“The entire process sounds overwhelming, but it’s worth it because the tax savings for investors is huge,” explained Barrett.

 

 

Diversifying Investments With Real Estate

Many people accustomed to investing in the stock market are aware of the age-old advice that it’s wise to practice diversification. The idea is to minimize risk by not putting all of your eggs into one basket (or one particular stock) and to aim for a mix of different stocks, bonds and mutual funds. While all of these options will help diversify your portfolio, there are several reasons why adding real estate to your investment strategy is a good idea.
“Owning real estate is a tangible investment,” explained Jayme Nabors, co-owner of NBI Properties in Fort Walton Beach, Florida. “Instead of passively owning stocks and depending on a company’s performance to rack up gains, real estate offers investors more control over their profit margins.”
Real estate is typically a long term investment, although some investors prefer short term “flipping” transactions. Investors can purchase commercial or residential properties with a traditional mortgage, seller financing, or private loans. The silver lining is that tenants pay rent to cover the cost of repaying the loan and investors build up equity.
“The beauty of investing in real estate is that someone else pays for your property while you reap the benefits of ownership, including tax deductions and building equity,” said Nabors. “At NBI, we’ve found that once investors get involved in real estate, they are interested in adding more properties to their portfolios.”
Investors who own just a few properties may choose to manage tenants themselves while others opt for property managers to take care of all the details. Unless you have ample time to make improvements, collect rents, and take care of maintenance and repairs, it’s easier to hire a reputable property management firm to handle these important details.
“In our area, we currently manage more than 3000 properties,” said Nabors.”Many of the investors we work with live in other states and rely on us to handle the day-to-day business of keeping their properties we’ll maintained. For investors who own multiple properties, hiring a competent property manager is a necessity and eliminates a lot of headaches.”
For more information about real estate investment opportunities or property management, contact NBI Properties at 850-243-0007.

FEMA Allocates Disaster Assistance for Northwest Florida

Two months after a storm system brought massive flooding to Northwest Florida, $66.5 million in disaster assistance has been approved by the Federal Emergency Management Agency (FEMA) to help homeowners, renters and business owners recover. Residents with property affected by the storms and flooding from April 28 to May 6 in Escambia, Jackson, Okaloosa, Santa Rosa and Walton counties have until Monday, July 21, to register for disaster assistance with FEMA.”The deadline is fast approaching, so we are encouraging all of our clients, friends, and neighbors to register claims with FEMA as soon as possible,” said Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach.

Those needing assistance can register online at DisasterAssistance.gov or at m.fema.gov on a smartphone. To apply by phone, call 800-621-3362 or TTY 800-462-7585.

To date, more than 14,200 people have been in touch with FEMA seeking help or information on disaster assistance following what local officials called the worst flood in Northwest Florida in decades.

Since the May 6 disaster declaration, more than $32.1 million in financial assistance has helped more than 6,600 homeowners and renters who were affected by the spring storms and flooding. This amount includes more than $26.6 million in rental expenses and essential home repairs and nearly $5.5 million to help cover other essential disaster-related needs, such as medical and dental expenses and lost personal possessions. In addition, the U.S. Small Business Administration has approved more than $34.4 million in low-interest disaster loans for qualified homeowners, renters, businesses of all sizes and private nonprofit organizations.

FEMA is continuing to work with state and local partners to connect people to recovery resources in their communities. Those who need extra help are encouraged to call Florida’s 2-1-1 information helpline or visit HelpNWFLrecover.org.

Several voluntary agencies, local community- and faith-based organizations and other non-profit groups are also helping those affected by the flooding with long term needs. Among these voluntary agencies are the American Red Cross, United Way, Volunteer Florida, Operation Blessing, Florida Baptists and Samaritan’s Purse.

More than 3,300 local residents and business owners have met with FEMA mitigation specialists at disaster recovery centers and home improvement stores for advice and tips on how to rebuild safer and stronger. An additional 62 requests have been made for FEMA’s Public Assistance program by eligible state agencies, local governments and certain private non-profits. Requests for public assistance start the process of getting eligible costs reimbursed, which helps get communities back on track following a disaster. The nine counties designated for public assistance are Bay, Calhoun, Escambia, Holmes, Jackson, Okaloosa, Santa Rosa, Walton and Washington.
For more information on Florida disaster recovery, survivors can visit fema.gov/disaster/4177, the Florida Division of Emergency Management website at FloridaDisaster.org or the state’s Facebook page at facebook.com/FloridaSERT.

 

 

 

U.S. Job Market Picking Up Steam

The overall job market is finally picking up steam, and this time it’s to just projections or false optimism. With reports indicating employers added 288,000 jobs in June, it marked the fifth straight monthly gain above 200,000 since the infamous tech boom in the late nineties.
The hiring flurry in June helped cut the unemployment rate from 6.3 percent to 6.1 percent, the lowest since 2008. The numbers are surprising to some because of how poorly the year began. The economy shrank at a steep 2.9 percent annual rate in the January-March quarter as a harsh winter contributed to the sharpest contraction since the recession.
“Obviously we don’t experience setbacks here due to harsh winters,” said Craig Barrett, co-owner of NBI Properties in Fort Walton Beach, Florida. “We actually benefit from residents and business owners interested in relocating here due to milder weather. We have been busy working with new businesses who are setting up shop here and bringing new jobs to the area.
As an example, Barrett added that NBI Properties recently executed a five-year lease with Baker Distributing at 101 Lovejoy Road in Fort Walton Beach. The company is engaged in the sales and distribution of HVAC, refrigeration, food service equipment, parts and supplies for both residential, commercial and marine applications.
“They have plans to add numerous jobs in sales and distribution, so it’s a nice boost to the local economy,” Barrett noted.
During the past 12 months, the economy has added nearly 2.5 million jobs — an average of 208,000 a month, the fastest year-over-year pace since 2006. With the job market surging, the stock market is following suit with the Dow Jones industrial average recently jumping 92 points to top 17,000 for the first time. Economists say it’s a clear sign the U.S. economy is improving while major economies are plummeting in Europe.

NBI Sponsors 7th Annual YOLO Relay Series

NBI Properties is a proud sponsor of the 7th Annual YOLO Board Relay Series. The three-part monthly relay series features race events at The Bay, South Walton’s newest waterfront dining destination located at the southern the foot of the 331 bridge. The events will include relay-style competition between male, female and co-ed teams of three in a recreational division.

“We love sponsoring the Relay Series because we are all paddle board enthusiasts at NBI,” said Craig Barrett, co-owner of the real estate firm. “We’ve been huge supporters of YOLO Board ever since they joined our community two years ago and we leased them the property for their beautiful store. It’s been very exciting to watch them grow and to host fun-filled events such as the Relay Series.”

The events include racers of all ages and skill levels competing for the coveted champion title, all the while rallying in friendly competition on local waters. Paddlers will compete on YOLO 12’ recreation boards provided for complimentary use to racers by YOLO Board during each event.
This year’s event will include giveaways, refreshments (including local craft beer Grayton Beer Company, available for purchase), and kids activities, as well as a welcomed new division to the race program dedicated to Special Olympics Florida SUP athletes from Okaloosa and Walton Counties. A strengthened supporter of Special Olympics since 2012, YOLO Board’s mission is to make SUP accessible and easy for area athletes.

The first Relay Series event was held June 19th and was an overwhelming success, with hundreds of people cheering on the racers. The next two scheduled races (weather permitting) are set for July 17th and August 7th at the following times:

Schedule of events:

4:30 Special Olympics Athletes Relay

5:30 Women’s Relay

6:00 Men’s Relay

6:30 CoEd

For general details on the event, visit http://www.yolorace.com/. The Bay restaurant is located at 24215 Highway 331 South in Santa Rosa Beach, FL.

 

 

 

 

 

 

 

NBI Welcomes von Herder Haus Kennels!

 

NBI Properties is pleased to welcome von Herder Haus Kennels to the area! NBI leased the 6300 square foot indoor training facility located at 180 Lynn Drive in Santa Rosa Beach to Steve Kotowske, who describes his business as a “one-stop shop” for dogs.

“We have two kennels for boarding, a large training area for our obedience classes, a Sniff Check program for training drug detection dogs, and a small retail shop for holistic supplements,” said Kotowske, a certified trainer who has worked with all types and breeds of dogs. “This building is perfect for us because there’s plenty of room for all the services we offer.”

Prior to leasing the space from NBI, Kotowske was operating out of his home and offering some private in-home training classes for dogs. The business quickly grew, so he started looking for locations that would be suitable for boarding, training, and all aspects of his business.

“NBI helped us find the ideal spot,” said Kotowski. “My wife and I looked at a lot of buildings that we’d have to spend thousands of dollars to renovate and make major improvements to fit our needs. Finally, NBI showed us this location and we knew right away it was exactly what we needed.”

One look at the facility and it’s evident that this is not your average boarding kennel. There are basic boarding options, but also plenty of upgrades for owners who like to pamper their pooches. In some areas, dogs are not kept in cages, but have their own rooms with natural lighting and a common play area for socializing. For the super spoiled pet, there are expansive 20 x 20 “Home Sweet Home” doggy condos furnished with all the comforts of home, including cable television that is always tuned to the Dog TV channel.

The main focus, however, is the What’s Up, Dog training program which offers professional dog training from puppies through competition obedience. Kotowske continues to provide in-home private training to the Destin, Fort Walton Beach area including Rosemary Beach, Sandestin, Pensacola, Freeport and Panama City Beach.

Whether it’s a new puppy who needs to learn rules and stop chewing shoes or an older dog with some bad habits, Kotowski can help with proven training methods. A longtime trainer and breeder of world class German Shepherd show dogs, he loves the challenge of training any dog to be a better pet.

In addition to obedience training, protection dog training is available for approved dogs and handlers. Kotowske describes this as a serious endeavor and not something every dog is capable of. He says that most people don’t need a ‘protection’ dog; they merely need a deterrent, and there is a big difference.

“A well-trained dog can be a great deterrent to crime,” he said. “An uncontrollable dog is a distraction to the owner and can actually allow crime to happen right under your nose.”

If that isn’t impressive enough, Kotowske works with the Walton County Sheriff’s Department and other law enforcement agents to train their drug detection dogs. The program is called Sniff Check, and also offers drug detection services to regular business and drug rehab centers who want to achieve a certified drug-free workplace.

“Businesses are interested in this because they can avoid expensive drug testing and also save money on Worker’s Comp and insurance,” he said.

Kotowske also gets calls for home drug detections, mainly from parents concerned their children may be taking drugs. He no longer charges for this service, as he believes the welfare of a child is more important than his fees.

Lastly, he said the kennel sells top-notch nutraceuticals for dogs from Nature’s Pharmacy.

“We really do have everything for dogs here,” Kotowske added. “There is no place like this anywhere in this region.”

For more information about von Herder Haus Kennels, call 850-420-2894 or check out the web site at www.vonherderhaus.com.

 

Disaster Relief Deadline Approaching

According to the Federal Emergency Management Agency, (FEMA) area residents have less than two weeks to apply for disaster assistance from recent devastating storms and floods. Residents in Escambia, Jackson, Okaloosa, Santa Rosa and Walton counties are eligible to apply for disaster assistance that may include money to help pay for temporary housing, essential home repairs or other serious disaster-related expenses. The deadline to register for assistance is Monday, July 7.

Another option for residents is to submit loan applications to the U.S. Small Business Administration for low-interest disaster loans, which is the primary source of federal funds for long-term recovery. The quickest way to apply for an SBA disaster home or business loan is filling out an online application at DisasterLoan.SBA.gov/ela. The deadline for applying for these low-interest loans is also July 7.
“We’re trying to get the word out about FEMA assistance and low-interest loans because some people are not aware they can qualify for aid,” said Craig Barrett. “We saw a lot of property damage in many communities throughout our area, so we are encouraging people to get relief for these disasters so they can repair or rebuild.”
Those who sustained damage from the storms and flooding from April 28 to May 6 can apply for assistance online at DisasterAssistance.gov or use a smartphone at m.fema.gov/ until midnight July 7. Residents may also apply by phone at 800-621-3362 or TTY 800-462-7585 until 10 p.m. July 7. Recovery assistants remain available from 7 a.m. to 10 p.m. (CDT) daily.
For more information on SBA low-interest disaster loans, call the SBA disaster customer service center at 800-659-2955 or TTY 800-877-8339, send an email to DisasterCustomerService@SBA.gov or visitSBA.gov/Disaster.

Retirement Communities Boast New Amenities

Baby boomers are redefining retirement by remaining busy and active during their golden years. They have little interest in traditional retirement communities, which is forcing developers to thinking more creatively about housing options for people over 55. As a result, many builders are seeking to attract older people who want to remain active or continue with their jobs.
“Seniors are a major force in the housing market now because they have built up equity in their homes and they can use it to move,” said Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, Florida. “But instead of quiet retirement communities, they are looking for places with amenities so they can socialize and remain active.”
Pleasing retirement-age clients is becoming increasingly crucial for developers as projects catering to this group rank among the hottest sectors. Last year, there were approximately 21,000 starts of age-restricted homes – an increase from 13,000 in 2012, according to the National Association of Home Builders.
Most agree that demand for age-restricted communities will continue to grow rapidly over the next 10 years or so due to the aging population. The number of people 60 to 75 years old is projected to jump to 56 million in 2025 from 46 million currently.
Nabors added that builders catering to retirees on the Emerald Coast are catering to active seniors who want fitness centers, clubhouses, swimming pools, and tennis courts.
“Boomers are interested in taking advantage of the Florida lifestyle by playing tennis, swimming or bicycling year-around,” Nabors said. “Builders are responding by developing communities where seniors can pursue their interests without leaving home.”

 

Boomers Shaking Up the Housing Market

Boomers are making a splash with cash in the housing market with a record number of them using cash to purchase homes. Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida, said his brokerage is seeing more boomers plunking down cash for homes on the Emerald Coast than ever before.
“We are seeing more homeowners taking advantage of the increased equity in their current homes to purchase another home,” Barrett said. “In our region, many are opting for second vacation homes near the beach while others are looking for the perfect spot to retire. But we’ve found they are choosing to pay cash rather than taking on another mortgage.”
A recent study by Bloomberg also confirms that 29 percent of non-investment buyers used cash to fund their housing transactions in the first quarter of this year, marking the highest numbers ever compiled.
Barrett added that the economic recovery, attractive interest rates and the stock market in a bullish mode have all contributed to the influx of boomers paying cash for new residences. He said that boomers tend to have more equity than other generations because they owned homes during the 30-year housing bull market.
“Boomers have a lot of clout right now because they can tap into decades of accumulated equity from their existing mortgages,” he said. “Facing their retirement years, they are skipping the hassles of having a mortgage in favor of paying cash.”
Reports confirm that in April, the median price of an existing-home was $201,700 compared to $67,800 in 1982 when many boomers had purchased their first properties. Census data also shows that 16.3 million Americans older than 60 owned their homes outright in 2012, which is up from 12.1 million in 2009.
“The data shows that baby boomers will be a strong influencers driving the housing market for years to come,” Barrett said. “Boomers today are generally more active and in better health than their parents, so they are living longer and focused on enjoying retirement.”

 

 

Emerald Coast Cancer Center Leases New Location in Destin

NBI Properties is pleased to announce the expansion of Emerald Coast Cancer Center (EMCC) to a new location in Destin. ECCC has been serving Okaloosa and South Walton County for more than 20 years, treating cancer and blood patients from Destin, Fort Walton Beach, Freeport, Mary Esther, Navarre, Niceville, Santa Rosa Beach, Shalimar and Valparaiso. Established at 1024 Mar Walt Drive in Fort Walton Beach, ECCC leased a second 3,000 square foot state-of-the-art facility from NBI Properties at 7720 US Highway 98 West in Destin.

“We were pleased to be able to find a great location for them,” said Craig Barrett, co-founder of NBI Properties. “This location makes it more convenient for many of their patients who don’t have to travel as far for regular appointments and treatments.”

The Emerald Coast Cancer Center is a member of the Emerald Coast Health Alliance, an organization formed and owned by local healthcare providers. It is an Independent Practice Association (IPA) established to provide patients, employers, and payors in the region with a multi- specialty network of high quality physicians and other healthcare providers. Services include:

Physician Consultation on cancers
Physician Consultation on blood diseases
Chemotherapy by certified oncology nurses
Referrals for services not provided by our practice
Referrals to home care or Hospice care when needed
Financial / Insurance Counseling

For more information on ECCC, call the Destin office at 850-622-8165 or the Fort Walton Beach office at 850-863-3148.

 

 

 

Investors Taking Advantage of Rising Rents

Think it’s taking longer to buy a new home? Try looking for a rental and you may be surprised to find it’s taking just as long. That’s because rental prices are soaring in most parts of the country, and especially in Florida where many are still recovering from the housing crisis in recent years. Although rising rates are bad news for renters, it’s good news for investors who are cashing in on the national trend,

“Several investors we worked with in 2010 or 2011 when rental real estate was a great deal are telling us they are reaping the benefits now,” said Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, Florida. “These clients are now able to get a nice return on their investments by taking advantage of the national trend and raising rents accordingly.”

A recent study from Harvard University found that half of all renters in the U.S. are currently spending more than 30% of their income on housing, which is up 12 percentage points since 2000. Nabors said that while rental prices on the Emerald Coast have increased to keep pace with the trend, he believes prices in the area are a bargain compared to other parts of the country.

“Of course there’s always a demand for beachfront rentals in this area and owners are able to command top dollar for those coveted spots,” he said. “But overall, statistics show that major cities have been hit the hardest with soaring rental prices, so it’s not much of a problem here now.”

If you’re interested in investing in commercial real estate, including rental properties and multifamily units, please call NBI Properties at 850-243-0007.

 

Private Lending Popular With Investors

Private lending is all the rage again with investors who are looking for high returns. With many banks still not lending enough to keep up with demands, investors are turning to hard loans or short term loans to finance deals.

Hard money lending is a popular option for investors because it helps generate passive income from real estate investing. Private contracts are drawn up for the benefit of both the borrower and the lender, but there are rules that dictate the hard money market. One such rule is that these are short term loans with lifespans averaging between six months and two years. Because hard money loans earn more interest than longer term loans, these can be extremely lucrative for investors.

Another plus for hard money loans is that hard money lenders mostly aren’t as concerned about the credit rating of the borrower. Instead, lenders are more interested in the value of the property securing the loan. In today’s economy, the majority of hard money lenders refuse to lend more than 70 percent of the appraised value of the property. This results in a 30 percent buffer to secure the loan.

Jayme Nabors, co-owner of NBI Properties in Fort Walton Beach, Florida, said his brokerage works with many investors on financing and lending alternatives, including hard money lending and short term loans.

“We work with people who are interested in real estate investing as a hard moneylenders suggest options for them,” he said. “Some people set up their retirement account as a source of funds to make loans with a self-directed 401K or self-directed IRA account. Many people don’t realize that with a self-directed IRA, they can make hard money loans with the earnings going back into your retirement account tax deferred until they begin making withdrawals.”

In addition to hard money lending, short term loans appeal to lenders because they derive the maximum interest. They are also repaid in full long before the principal is reduced in order to lower the amount of interest being generated. Borrowers prefer these loans because they are typically granted within a few days, making all cash offers for properties possible. Cash offers are critical to nearly all distressed sellers, which becomes an actual benefit for the seller. Short term loans are seen as good options because they offer a win-win-scenarios to both parties involved.

“Overall, moneylenders can achieve an average of ten to twelve percent above the prime interest rate and short term loans will come in at around twelve to fourteen percent,” Nabors said.

NBI Welcomes Momma Goldberg’s Deli to Fort Walton Beach!

NBI Properties is pleased to announce the opening of Mama Goldberg’s Deli in downtown Fort Walton Beach. NBI leased the 2,200 square foot space to the Alabama-based franchise that specializes in sandwiches, salads, soups, and other freshly prepared deli items. Centrally located at 184 Miracle Strip Parkway Southeast, Mama Goldberg’s spent more than $300,000 on a customized buildout and other enhancements to the property.

Mama Goldberg’s first opened in Auburn, Alabama, in 1976 and has always been a family owned and operated business. For more than 37 years, it has proven to be a successful player in the fast-casual dining market and loyal customers have grown accustomed to the delicious food and relaxed, sociable atmosphere. The “old school” deli theme allows customers to create their own sandwiches and salads as well as choose from the appetizing specialty menu. All sandwiches, soups, and salads are made with the freshest ingredients to ensure a high-quality dining experience.

According to owner Steve Sutherlin, the new restaurant in Fort Walton Beach caters to locals, tourists, and the military. Favorite menu items include the Big Momma and Big Daddy submarine sandwiches and the Cajun Turkey Wrap. Mama Goldberg’s also offers catering at affordable prices for local events. The restaurant is open Monday through Saturday from 10 a.m. to 10 p.m. and Sundays from 10 a.m. to 4 p.m.

“We’re proud to welcome Mama Goldberg’s to the community,” said Craig Barrett, co-owner of NBI Properties. “We can already tell that it’s a very popular spot for lunch and dinner.”

Investors Backing Off Fannie Mae and Freddie Mac

Many investors assumed Fannie Mae and Freddie Mac were history after the government seized control of both mortgage giants in the 2008 financial meltdown. Their stocks plummeted and many shareholders exited their positions.
What a difference a few years can make! Currently, both Fannie and Freddie are on the upswing again and reporting more than $200  billion in profits in the past two years as the housing market slowly recovered. Last week, Fannie and Freddie reported a whopping additional $9 billion in profits for the first quarter. Investors who stayed the course are now looking to reap their rewards.
“We’ve heard from some investors who have owned shares in Fannie or Freddie for a long time,” said Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, Florida. “They’ve been patiently waiting for years and now they are optimistic their diligence is going to pay off in spades. We’ve been cautioning them that waiting for Fannie or Freddie to pay off might not be a wise decision.”
This week, a Senate panel is scheduled to vote on a bill that could dismantle the companies in order to shift the risks of mortgage lending from taxpayers to the private sector. If passed, the bill, which has the support of the Obama administration, would leave Fannie and Freddie’s loyal shareholders with nothing.
Other political insiders say the bill may not reach the Senate floor this year. They recall how the government suspended generous dividends in 2008, and four years later ruled that the firms send all of their profits to the U.S. Treasury, eliminating any chance of shareholders recovering value from their long-held investments.
Fannie and Freddie once traded at $80 and $70 a share on the market. Their stock has remained in the $1 to $6 range during the past year.
“There are too many unknowns with Fannie and Freddie and lots of investors are no longer willing to take a wait-and-see approach,” said Nabors.”There are plenty of better ways to invest right now.”

After the Storm: Getting Back to Business

It’s been a few days since one of the worst storms The Emerald Coast has ever seen swept through our area and caused unfathomable damage. With roads crumbling, motorists stranded, houses collapsing into sinkholes, and water damage to hundreds of homes and businesses, it will be awhile before things get back to normal. At NBI Properties, our office in Fort Walton Beach was flooded with four inches of water. While we’ve lived here for more than five generations and know how bounce back from storm damage, many of our friends and neighbors are overwhelmed and don’t know where to start. Here are a few tips to get your property or business restored as soon as possible – or to prepare for any storms in the future:
Business owners all have a common goal of returning to “business as usual” as quickly as possible. If you have lots of staff or volunteers to help you, that’s great. If not, consider hiring a disaster recovery service. It’s usually better to hire professionals instead of tackling the muddy damage yourself, and it’s useful to have someone else to point out necessary repairs. A disaster recovery service can also offer advice on how to prevent problems in the future.
Act quickly for document recovery, as timing is crucial before mold sets in. Mold can begin growing in 48 hours and can make it difficult to return documents to a usable form. With computers, remove your hard drives and consult a company that specializes in recovery. For copy machines, wet toner should be carefully removed.
Reduce humidity by increasing air circulation. Run air conditioning 24 hours a day and use fans and dehumidifiers to keep as much air flowing through your space as possible.
While clearing your office or building of debris or muck, look for items that can be recycled rather than dumped. Dry out all areas as much as possible to prevent the growth of mold and micro-organisms.
Take pictures of the damage as soon as possible if you are reporting it to a landlord or to an insurance company.
We wish all of our friends, neighbors, clients and tenants the best as we do whatever it takes to get back on our feet. After all, our area has survived storms worse than this, and we will survive this one!

Sincerely,
Craig Barrett and Jayme Nabors
Co-founders, NBI Properties

Rising Interest Rates Impact CRE Investments

Commercial real estate investors have been quick to notice that interest rates have been slowly trending upward since the Federal Reserve announced it would suspend it’s bond-buying program last December. Since then, long term interest rates have inched up from one percent to three percent with mortgage interest rates now in the four percent range. However, rising interest rates do not always spell trouble for commercial real estate investing because economic factors typically play an important role as well.

“The investors we are working with now are more interested in overall economic growth, as well as how the economy continues to improve in this area,” said Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida. “Economic growth is good for investing because it leads to new construction, higher rents, and higher occupancy rates.”

Barrett added that more investors are interested in apartment buildings and condominiums due to the option of raising rents as interest rates rise. With most tenants signing one-year leases, investors feel comfortable with raising rental prices to keep up with costs and interest rates.

“In this area, apartment buildings and condos have been selling at prices above market value,” he said. “We also work with investors who want a turn key operation and come to us to broker the deal and continue with us for property management.”

Overall, Barrett said most investors are looking for strong positive cash flow that generates income along with property value appreciation as a hedge against inflation. Ideally, he noted that sound investments should offer protection against inflation and rising interest rates.

Investors Cite Real Estate As Best Investment

Americans have not lost their love affair with real estate as a sound investment, as evidenced by a new Gallup poll. Of more than 1,000 adults surveyed, more participants cited real estate as their favorite long-term investment, followed by gold, stocks, mutual funds, savings accounts/CDs, and bonds. The poll differed from a similar Gallup poll in 2011 that found Americans believed gold was the best long term investment.
Jayme Nabors, co-founder of NBI Properties, said the survey results mirror the economic performance of the times.
“In 2011, everyone was interested in buying gold, silver and precious metals because they were at all-time highs and real estate values were lower,” he said. “Now everything has reversed and investors are showing a voracious appetite for real estate, especially since interest rates are still relatively low and prices are improving.”
The Gallup poll found that survey participants with higher incomes were more inclined to say real estate and stocks are the best investments. Those in higher income brackets are also more likely to say they are homeowners (87 percent), followed by middle-income earners (66 percent) and lower-income earners (36 percent).
The survey concluded that homeowners are slightly more likely than renters to choose real estate as the best choice for long-term investments – 33 percent versus 24 percent, respectively, according to the poll.

Commercial Lending Increases

The Mortgage Bankers Association (MBA) issued commercial loan numbers for last year in it’s recent “2013 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation.”According to MBA, commercial and multifamily mortgage bankers closed $358.5 billion in loans. Commercial banks and savings institutions were the leading investor groups with $100.5 billion. CMBS (commercial mortgage-backed securities) had the second highest volume, $79.8 billion, followed by life insurance companies and pension funds; Fannie Mae; REITS, mortgage REITS and investment funds; and Freddie Mac.

“For the past several years, investors have been waiting for lenders to make moves and be more active,” said Jayme Nabors! co-founder of NBI Properties. “Last year was finally the turning point when we started seeing more banks excited about commercial lending.”

According to the MBA report, multifamily properties had the highest origination volume at $136.9 billion, followed by office buildings, retail properties, hotel/motel, industrial and health care. First liens accounted for 97 percent of the total dollar volume closed. Driven in part by increased coverage, the report’s dollar volume for commercial and multifamily mortgages closed in 2013 was 47 percent higher than the volume reported in 2012. Among repeat participants, the dollar volume of closed loans rose by 22 percent.

Nabors added that he expects commercial lending on the Emerald Coast to remain on the upswing due to rising property values and low interest rates.

Consumer Demand, Infrastructure Drive CRE

A recent survey of public and private-sector leaders conducted by the Urban Land Institute and EY Global Real Estate concluded that the the quality of infrastructure systems – including transportation, utilities and telecommunications – is a key factor influencing real estate investment and development decisions in cities around the world. Consumer demand was also cited as a top concern.
Conducted in January 2014, the survey tallies the opinions of 241 public sector officials and 202 senior-level real estate executives (developers, investors, brokers, lenders and advisors) based in large and mid-sized cities across the globe.
The survey found that 88 percent rated infrastructure quality as the number one influencer of real estate investment and development. Public leaders rated infrastructure quality as the highest influencer (91 percent) while private leaders ranked it second highest (86 percent).
Demographic forces, including consumer demand and workforce skills, ranked as another top consideration determining real estate investment locations. Consumer demand was listed as the top factor by the private sector (90 percent).
Strong telecommunications systems (including high-speed internet) led the list of infrastructure categories that drive real estate investment, along with good roads, bridges, and reliable and affordable energy. Public transit led the list of infrastructure investment priorities. Seventy-eight percent of survey respondents’ said public transit systems, including bus and rail, should receive top priority for infrastructure improvements, followed by roads and bridges (71 percent) and pedestrian facilities (63 percent).
Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, Florida, said that infrastructure is the first thing investors ask about when they are interested in commercial properties on the Emerald Coast.
“Of course they know we have excellent roads and highways here since we don’t have snow or sleet to deal with half of the year,” he said. “That’s a huge plus, but we also rank high in other categories such as telecommunications and utilities.”
The public’s willingness to pay for infrastructure was ranked as the top factor shaping both infrastructure and real estate development over the next 10 years, followed by consumer demand for compact, walkable development, and the prevalence of families with children. The cost and availability of energy and the use of innovative pricing systems to fund, manage and operate infrastructure ranked slightly lower.
Nabors said that investors he works with at NBI Properties are also impressed with the area’s quality of life, schools, and recreational facilities.
“One of the first things investors from out of town comment on is the fact that we have so many beautiful public places, parks, and common areas,” he said. “Investors or business owners who are thinking about relocating are usually impressed that this is such a great place to live and work.”

Five Things to Consider Before Investing

Research the Property

This is an important first step for new or experienced real estate investors. Although you’ll be dealing with brokers, attorneys, and other professionals for any commercial real estate transaction, it’s good to do your own due diligence for peace of mind and to avoid any surprises that could crop up later in the deal. Do web searches about the property you are interested in, talk to others who own businesses in the area, and visit the property at different times of day and during the evening to get a better sense of the area. Although having a broker you can trust is a huge plus, you’ll feel better about the transaction if you thoroughly research the property beforehand.

Don’t Buy From a Picture

After researching a property, don’t even think about buying it until you’ve seen it — in person! We’re still amazed by investors who see a few images of a property on the Internet and then say they are ready to buy it. Our advice is just common sense. Don’t buy properties sight unseen! Whether you live across the country from the property or reside in the same town, make time to go see it and do a walk through with the broker. Not seeing a property before buying it is risky business.

Hire A Professional to Inspect the Property

We’ve worked with some investors who think they can skip this step because they have been buying properties for years and can easily spot repairs that need to be made and estimate the costs. An professional inspection will usually only run you a few hundred dollars and can pay for itself if faulty plumbing, wiring, or other problems are uncovered. No matter how new a property may be or how great everything looks, don’t take chances by doing your own inspections. What you could miss could end up costing you thousands of dollars to rectify later on.

Avoid “Great Deals”

If you’re an experienced investor, you know the type of brokers we are talking about. Instead of offering sound advice and attractive properties for fair values, they like to steer you to the “great deals or steals” that can make you rich overnight. Of course they don’t want you to pay too much attention to the fact that some of these great, discounted properties have been on the market for months or longer. They’ll tell you it’s just because no one else has been smart enough to see the full potential of the property. If you’re still willing to listen to these kinds of brokers who operate more like used car salesmen, then we’re willing to bet they also have some nice waterfront property in Arizona to show you! Bottom line, if someone is trying to pressure you into a deal that seems too good to be true, start running like Forrest Gump because this is a deal you probably don’t need!

Always Have Extra Cash For a Rainy Day

One of the things that new investors learn quickly (and sometimes the hard way!) is the need to always have enough cash reserves. Things can and will happen, and properties will need plenty of upkeep, repairs and maintenance. Properties require maintenance and repairs. Failure to have enough cash reserves to properly maintain the property will almost always result in the investor losing money when the property deteriorates and loses value over time.

Florida Leads Nation in Recovery

Although Florida was one of the first states to feel the sting of a national recession with job losses starting in 2007, economist Sean Snaith said the state now leads the nation in recovery. In his First Quarter Florida Economic Forecast, Snaith noted that the national recovery began in June 2009, but Florida was slow to join in and lagged behind the pace of the rest of the nation for several years. Today, that’s all changed as the state is definitely a front-runner as well as a magnet for economic growth.
“This has been no small accomplishment,” said Snaith. “Looking forward, Florida will extend its lead over the national economy the next several years as we expect the Florida economy to continue to outpace the nation as a whole.”
NBI Properties co-founder Jayme Nabors said the Emerald Coast has been showing strong signs of economic growth in the past three years.
“Around here, we’ve seen that construction is up and lots of new jobs are being created,” he said. “Eveything was at a standstill during the recession, but things are really clicking now and more places are hiring.”
According to Gov. Rick Scott, the state has created more than 500,000 new private sector jobs since December 2010. “That’s half a million jobs in just over three years,” Scott says.
The sectors expected to have the strongest average growth during 2014-2017, he says, are construction (10 percent); professional and business services (4.3 percent); trade, transportation and utilities (4 percent); education and health services (2.3 percent); and leisure and hospitality (1.8 percent).
Snaith also notes housing starts that jumped in 2013. In 2014, total starts will be more than 108,000, he projects. That will rise to just under 144,000 in 2015, hit 161,600 in 2016, and go up to 165,500 in 2017. He says the growth in residential activity will catalyze growth in the commercial sector and push employment growth in the construction sector into double digits.
Nabors added that his brokerage, NBI Properties, is getting more interest from investors in commercial real estate listings as well as residential communities.
“We’re hearing that housing starts will average 32.5 percent growth during 2014-2017, with the most rapid growth in 2014 and 2015,” he said. “That’s going to be a huge boost for this area.”

Know the Facts About Short Sales

Realtors routinely get calls from home buyers who are misinformed about short sales. Often the buyers believe a short sale means a property will be a good deal and is being sold by a distressed seller, particularly in areas where prices have already begun to rise quite substantially. Some buyers also mistakenly think the sale will happen quickly, when the reality is that short sales can take a long time to complete.

“A short sale simply means that a home is being sold for less than the amount of the outstanding mortgage,” said Craig Barrett, co-owner of NBI Properties in Fort Walton Beach, Florida. “It doesn’t mean the transaction will happen any faster, as the sellers’ bank has to approve the sale before the closing and confirm that the seller can no longer afford to pay for the property.”

Before a short sale can be approved, banks will evaluate the seller’s finances as well as the buyers. This process isn’t quick, and can actually take far longer than buying from a motivated seller. The mountain of paperwork and signatures required to complete a short sale can often mean paperwork becomes lost and the process is delayed. Often banks will not allocate the same level of resources to short sales as they would for other bank procedures that are considered to be more profitable, and as a result the entire process can be cumbersome and time-consuming.

“The worse case scenario is when a short sale involves two different loans,” said Barrett. “This can mean a major loan is being settled as a short sale while the second loan may be smaller, such as a line of credit, and can be completely wiped out. If these loans are from two different banks, then the process can get even more complicated, as each bank will have its own system and is unlikely to communicate with the other bank.”

Sellers interested in a short sale should look for an agent who has experience with this process so they will be more able to push the sale through. Buyers interested in short sale homes should find out if an agent is experienced with short sales and can advise if the purchase will be a long drawn out process.

Maximizing Real Estate Tax Deductions

The tax deadline of April 15 is just around the corner, and even though deductions for homeowners remain largely unchanged since last year, it’s worth checking to make sure you have all your deductions in order. It’s also good to keep in mind that if Congress doesn’t take action, some of your real estate deductions will expire for the 2014 tax year. Since many people prefer to do their own taxes or use popular software programs, it’s worth reviewing these tips to make sure you’re getting credit for all of your deductions.
As usual, mortgage interest deduction is the top tax deduction for homeowners. This applies to primary home values up to $1 million. Congress has been considering limits to this deduction for high-income earners, but no laws have been passed yet. The latest proposals are that households with incomes above $400,000 may see a limit placed on them in the future.
If you’ve embarked on any remodeling projects, it’s important to know that home improvement loans have a limited deduction. If you take out a loan secured by the equity of your home, you can deduct the interest paid in many cases. However, routine maintenance such as replacing carpets or painting are not qualified interest deductions.
Something else you don’t want to overlook is mortgage point deduction. These are also known as origination fees, generated when you first buy a home or when you decide to refinance. The fee is charged by mortgage underwriters to originate the loan. For example, a one percent origination fee on a $100,000 house would be $1,000. For an original loan, the entire fee can usually be written off for the tax year the purchase was made. For refinance loans, the fee can be written off in proportion to the amount paid during the tax year.
If you decided to “go green” and use eco-friendly materials in your home, you may be entitled to deduct energy efficiency tax credits. Improved insulation, energy efficient windows, furnaces, hot water heaters, and solar panels can add up to a nice tax credit. This is not a reduction in your taxable income. Instead, it’s a full credit that lowers your tax bill by the full amount of the credit. Generally, an energy efficient tax credit is 10 percent of the total cost with a cap of $500. There are also caps for specific items such as a $150 cap for a furnace.
Private mortgage insurance is often overlooked by homeowners that might not be aware they are paying for it. Home buyers who have less than a 20 percent down payment for a home are typically required to purchase private mortgage insurance that can cost a couple of hundred dollars each month. This cost of homeownership is deductable if the loan originated after January 1, 2007. However, just like other real estate deductions, there are limits. For households with an income between $100,000 and $109,000, the deduction is phased out at 10 percent for every $1,000 in income above $100,000 and not available above $109,000. Something else to consider with private mortgage insurance is that you can stop paying it when your equity reaches 20 percent of the home value. This is accomplished by making monthly payments and/or when the market value of the home increases above the 20 percent threshold.
Did you sell a home in 2013? If you sold a primary residence in 2013, you are exempt from paying capital gains on the first $250,000 of profit. For a couple, the limit is $500,000. If your profit from a sale exceeds $250,000 for an individual or $500,000 for a couple, there may still be deductions to reduce your tax bill. You can deduct several costs associated with the sale, such all fees paid at closing and capital improvements you made while you owned the home. Other possible deductions include damage repairs and marketing costs to sell the home.
Did you work at home in 2013? If so, you may be entitled to claim a home office deduction. You can write off the expenses associated with a home business office that you use exclusively for business. Starting in 2013, there is a simplified procedure that allows you to deduct $5 per square foot and up to 300 square feet.
Finally, if you were delinquent on taxes, check to see if you qualify for debt forgiveness. Until 2007, the IRS considered any debt that was forgiven to be income that taxes were due on. The Mortgage Debt Forgiveness Relief Act of 2007 canceled this debt tax for the short sale of a primary residence up to $1 million for individuals and $2 million for couples. This may also apply in the case of a foreclosure when the mortgage company does not recover the full loan amount and does not require the ex-homeowner to repay the balance owed.

Survey Shows Optimism for Spring Sales

More real estate professionals are feeling optimistic about the coming spring season and that sales will get quite lively. The MRIS Spring Real Estate Outlook Survey collected the responses from more than 1,300 real estate professionals within Northern Virginia, Baltimore, Washington DC, and parts of Pennsylvania and West Virginia.

According to the survey, more than 71% were more optimistic about the coming spring season compared to 2013, and are predicting that sales transactions will increase this year compared to last year. Some 82% of those surveyed think average sales prices will also increase this spring. Experts point out that the housing market in the mid-Atlantic region began to stabilize last year, and this year they expect to see increased inventory and stabilizing house prices. The survey also looked at the challenges faced by home buyers and sellers, including inventory levels and new mortgage rules.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, FL, said that sales are expected to pick up even more when the northern states thaw out.

“We’re into the best time of the year with a lot of tourists coming to the area for spring break and vacations with families,” he said. “That always spurs a lot of interest in second homes, vacation homes and people who want to relocate here and enjoy the Emerald Coast lifestyle.”

Buyers Seek Energy-Efficient Mortgages

According to a recent survey by U.S. News & World Report, more of today’s buyers and homeowners are interested in the benefits of obtaining a “green” mortgage. The survey found that buyers are finding energy-efficient mortgages attractive because they allow homeowners to roll the cost of “green” home improvements – such as solar panels, geothermal heating, tank-less water heaters and more energy-efficient heaters or air-conditioning systems – into their mortgage financing.

Fannie Mae, the Federal Housing Administration (FHA) and the Veterans Administration (VA) offer loan programs that include energy-efficient mortgages. The loans come with a few restrictions, however. On FHA loans, the cost of improvements usually can’t exceed 5 percent of the property’s value and is capped at $8,000 while with VA loans, veterans can usually add up to $6,000 in energy-efficiency improvements. On conventional loans, funding for energy improvements is often capped at 10 percent of the appraised value of the completed property.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, Florida, said his realtors have been fielding more questions lately from buyers interested in green mortgages.

“Right now we’re getting more questions and interest in energy-efficient mortgages because it’s tax-season and buyers are looking for deductions,” he said. “They want to know how much they can lower their taxes by making certain improvements or buying a home that qualifies as energy-efficient.”

Lending experts warn borrowers to be make sure they’re comfortable with the higher monthly mortgage payments spurred by a bigger loan. But over the long-term, the decrease in a home’s energy costs may make up the difference. In fact, many lenders won’t even process an energy-efficient mortgage unless it will result in a net cost savings. Often the savings can be significant because the average homeowner spends about $2,200 annually on energy bills, according to the Department of Energy’s Energy Star Program. The Environmental Protection Agency says that adding insulation and improving the sealing of a home has the potential to curb total energy costs by 10 percent.

According to Energy Star, programmable thermostats can save homeowners $180 annually; replacing single-pane windows can offer a $500 annual savings; solar water heaters offer a $140 savings; and energy-efficient HVAC systems can offer $200 or more in savings.

CRE Outlook Positive

According to the National Association of Realtors® (NAR) quarterly commercial real estate forecast, market fundamentals in commercial real estate are continuing to improve — but at a slower pace. However, NAR chief economist Lawrence Yun said fundamentals are still experiencing an uptrend.
“Growth in commercial real estate sectors continues at a moderate pace from a very slow pace of absorption, despite job additions to the economy,” said Yun. “Companies appear hesitant to add new space. Office demand is expected to see only slow and gradual improvement. Demand for retail space is benefiting from improved household wealth, while industrial real estate is stable with increasing international trade, which requires warehouse space.”
National vacancy rates in the coming year are forecast to decline 0.2 percentage point in the office market, which has the highest level of empty space, 0.1 point in industrial, and 0.3 point for retail real estate. With rising apartment construction, the average multifamily vacancy rate will edge up 0.1 percent, but this sector continues to experience the tightest availability and strongest rent growth of all the commercial sectors.
“Of course, the apartment market fundamentals are the strongest, as nearly all of the new household formation in the past 10 years has come from renters, and not homeowners,” Yun added.
Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, said the demand for condominiums on the Emerald Coast remains strong and that commercial real estate transactions have only been hampered slightly by weather conditions.
“Florida has been the only state that has not had snow this year, so we’ve always got that going in our favor,” he remarked. “We’re also optimistic that there will be renewed interest from investors if the bill to eliminate commercial real estate taxes passes.”
NAR’s latest Commercial Real Estate Outlook offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.
Office markets:
Vacancy rates in the office sector should decline from an expected 15.8 percent in the first quarter of 2014 to 15.6 percent in the first quarter of 2015.Office rents are projected to increase 2.3 percent in 2014 and 3.2 percent next year. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 44.6 million square feet this year and 50.0 million in 2015.
Industrial markets:
Industrial vacancy rates are anticipated to fall from 9.0 percent in the first quarter to 8.9 percent in the first quarter of 2015. Annual industrial rents should rise 2.4 percent this year and 2.6 percent in 2015. Net absorption of industrial space nationally is seen at 106.1 million square feet in 2014 and 110.6 million next year.
Retail markets:
Retail vacancy rates are expected to decline from 10.2 percent in the first quarter of this year to 9.9 percent in the first quarter of 2015.Average retail rents are forecast to rise 2.0 percent in 2014 and 2.3 percent next year.

Emerald Coast Real Estate Figures Strengthen

The latest figures show the real estate market on the Emerald Coast continued to strengthen due to continued demand as last year drew to a close. According to NBI Properties co-founder Craig Barrett, in Fort Walton Beach the average price per square foot is $109, an increase of 9% compared to the same period last year.

“It’s been a good year throughout the area,” Barrett noted. “If you look at prices and sales in Destin, Fort Walton, Crestview or just about anywhere in the area, the numbers are very encouraging.”

The median sales price for homes in Fort Walton from November 13 to February 14 was $140,000 based on 133 home sales. Compared to the same period one year ago, the median home sales price increased 1.1%, or $1,550, and the number of home sales decreased 15.8%. The average listing price for homes for sale in Fort Walton Beach FL was $258,785 for the week ending Feb 12, which represents a decrease of 1.7%, or $4,398, compared to the prior week.

“Demand for homes in this area is strong, and we continue to get a lot of interest from local, domestic and international buyers,” Barrett said.

Statewide the median prices for homes in Florida also increased during the fourth quarter, as the price for a single-family home was up 13.3% to $170,000, compared to the fourth quarter in 2012. The price for condominiums increased to reach $133,000, up 18.8% compared to the same quarter for the previous year.

Sales of existing single-family homes for the whole of Florida reached 54,845 during the fourth quarter, an increase of 4.7% compared to the same period a year ago. Sales of condominiums reached 24,538, a decrease of 2.1% compared to the same period a year earlier. The percentage of people paying in cash declined slightly down to 60% compared to 63.3% a year earlier. All cash sales accounted for 71.5% of condominium sales, and 45.4% of single-family home sales.

Top Economist Calls Home Prices “Low but Fair”

U.S. home prices soared 13.7 percent in the 12 months through November, according to the S&P/ Case-Shiller index of home prices for 20 cities. However, Nobel Laureate economist Robert Shiller, co-creator of the index, isn’t worried about the surge. That’s because while prices are only 7 percent below their 2006 peak in nominal terms, they’re actually 30 percent away in real terms.

“Prices are still low, but their level is fair at the moment,” said Shiller. “If we examine the history of prices since World War II, we can see that over time, in real terms, prices have not risen, but have been stable. We have therefore returned to the nominal area in terms of prices.”

In any case, upward price momentum has weakened, Shiller notes. “Prices may continue to rise over the next couple of years, but not by much.”

Craig Barrett, co-owner of NBI Properties in Fort Walton Beach, Florida, said that stable home prices on the Emerald Coast have made homes more attractive than ever to buyers.

“We’ve seen a lot of cash buyers, but financing is also getting a bit easier for borrowers,” he said. “Compared to other markets and home prices throughout the country, people are still finding that buying a home or property here is a very sound investment.”

When it comes to U.S. stocks, Shiller shies away from calling them a bubble. “U.S. stock markets are a bit overpriced, but they’re not super expensive,” he explains. “Profit forecasts are still good, so there is no need to dump all the shares. I advise keeping part of a portfolio in shares, of course on the basis of the risk level that each person wants.”

As for the economy, “we’re still licking the wounds of the great crisis, and it will take us more time to recover. The administration’s policy has improved the economy,” Shiller added.

Home Builders’ Confidence Blamed On Weather

Noticeable declines in U.S. builders’ confidence levels in the housing market are blamed on severe weather that has affected much of the country and has kept many buyers at home. The relentless cold weather and winter storms have affected builders’ projections of sales before the spring home selling season begins, and this could impact the rate of home construction.

The National Association of Home Builders/Wells Fargo builder sentiment index was recently released and dropped to 46, compared to a reading of 56 in January. This is the lowest level reported since last May, and readings below 50 indicate that builders think the sales conditions are negative rather than positive. In fact, the outlook for sales of single-family homes during the next six months and the outlook for traffic by would-be buyers have both declined since last month.

Craig Barrett, co-owner of NBI Properties in Fort Walton Beach, said chilly weather also affected construction and residential sales on the Emerald Coast this year.

“Of course we don’t have lots of snow to shovel like most areas of the country, but it’s been colder than usual this year and that always affects sales,” he noted. “The winter storms also affect potential buyers who cancelled trips when they were unable to get here to look at vacation homes or commercial properties.”

The weather has also had an effect on the general economy as retail and auto sales have both declined. In addition, builders are still struggling with a shortage of ready to build land, a lack of readily available building materials and skilled labor. In spite of the latest index, economists anticipate property prices and sales will continue to rise this year. Over the past two years the property market has been steadily recovering, boosting economic growth and job creation. Even though home construction rates slowed in December, this year was still the best since the housing crisis began.

New home construction only represents a tiny proportion of the real estate market, but It’s estimated that each new property creates three jobs in a year and generates around $90,000 in tax revenue.

FL Governor Proposes Cuts to CRE Sales Tax

Governor Rick Scott recently submitted his fiscal year 2014-2015 budget and made many of the state’s realtors happy and hopeful in the process. In addition to proposing a $100 million reduction in the state’s sales tax on commercial leases, the budget also included money to expand the Florida Division of Real Estate’s oversight of license infractions.

Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, Florida, said the reduction of sales taxes for commercial leases would be welcome news.

“With all of the many advantages that investors love about Florida, the sales tax imposed on commercial leases has been just about the only deterrent we’ve had to deal with during the past few years,” he said. “Now we can eliminate the last objection to anyone who is interested in commercial real estate in Florida.”

Scott said Florida businesses pay about $1.4 billion a year in sales taxes on their rent payments, and he said the tax cut — which equates to 1/2 of 1 percentage point — will make it more affordable for businesses to lease space. In addition, the proposed tax reduction would amount to savings of $104 million a year.

“Florida is the only state that imposes this tax, and we must keep working to make Florida the best place in the world to start and grow a business,” the governor said in a statement.

Scott was made the announcement in Orlando where he was joined by several small business owners and representatives from the Florida Realtors, the trade group that has been lobbying for several years to exempt commercial rent from the state’s sales tax. The organization has given more than $225,000 over the last two years to “Let’s Get to Work,” a political committee organized to help Scott win re-election.

Under the budget that the Florida Legislature will consider as they create a spending plan for the next fiscal year, Scott included $106,676 in additional funding for the Division of Real Estate, which falls under the Florida Department of Professional Regulation (DBPR).
The money, if approved by the Florida Legislature, would add two OPS staff (“Other Personal Services” – a temporary employee for short term or intermittent tasks) and additional funding to obtain subject matter expertise.