Who’s Talking?
Partner is home to almost 900 employees specializing in the fields of environmental and engineering due diligence, seismic and energy consulting and design, as well as regulatory compliance issues, who can offer information and insight on issues impacting the commercial real estate lending, development, investment, and property management industries. A number of our leading experts are profiled below.
Joseph Derhake, PE, Founder and Chief Executive Officer
Contact Joseph for an interview, article, or speaking engagement.
Bill Tryon, Director of Strategic Development
Contact Bill for an interview, article, or speaking opportunity.
Frank Romeo, President
Contact Frank for an interview, article, or speaking opportunity.
Jenny Redlin, REPA, Principal
Contact Jenny for an interview, article, or speaking opportunity.
Trends We’re Talking About
With our boots on the ground, we are among the first to know what’s hit the streets in the commercial real estate world. Our experts are often called upon to help audiences understand new developments, issues and opportunities, their impact on the industry, and available solutions or best practices. Below are some of the hot topics that we are talking about right now:
• Technology’s Impact on Commercial Real Estate
Technology is changing commercial real estate: it’s making our buildings smarter, enhancing the data we collect during due diligence, improving the way we manage assets, and creating new platforms to appraise, buy, sell, and lend on properties. Mobile technologies, developments in the collection and sharing of “big data”, and predictive analysis are transforming the way we make business decisions. Market forces are driving investments in technology: tenants and investors are demanding upgrades in IT, MEP, and energy efficiency and, as a result, greener and smarter buildings yield better tenant attraction/retention, lower operating costs, and higher rental rates.
New technologies like driverless cars, 5G networks, and the Internet of Things are expected to have a profound impact across the CRE industry. What new risks and opportunities does all of this create for investors, owners, and lenders? What technologies offer the greatest promise of return on investment, and what’s “the next big thing” that should be on our radar? How should the industry address security concerns resulting from technological developments? How do they impact demand, and what asset types are most at risk of obsolescence? What new opportunities does this present for adaptive reuse or value-added projects?
Contact Us to book an interview or a byline, or to get more info about how driverless cars and other technologies are expected to impact the commercial real estate industry.
• What’s next for CMBS?
The Commercial Mortgage Backed Securities (CMBS) industry is in a wave of maturities, with more than $300 billion in debt coming due for renewal between 2015-2017. This is increasing competitive pressures, and a tighter regulatory and credit climate mean these vintage loans will be more closely scrutinized. Rather than letting underwriting standards slip, competitive lenders are turning to creative solutions to address various red flag issues that may arise during the loan renewal process.
What tools are available to help lenders get in front of due diligence issues, including environmental, property, or seismic risks, to close deals while ensuring compliance and adequately protecting against liabilities and losses? How does a proactive approach that fits lenders’ individual appetites for risk and the changing regulatory landscape benefit both financial institutions and CRE owners in the restructuring or assumption process? How will new High Volatility Commercial Real Estate (HVCRE) regulations, which require regulated lending institutions to reserve increased capital for certain higher-risk acquisition, development, and construction loans, impact loan targets and costs?
• HVCRE Rules – What You Need To Know
Real estate development loans may become more expensive and lenders may refocus their loan targets because of new High Volatility Commercial Real Estate (HVCRE) regulations, which require regulated lending institutions to reserve increased capital for certain higher-risk acquisition, development, and construction loans. As a result of the HVCRE rules, which were collectively issued by the OCC, FDIC, and Federal Reserve Board in early 2015, lenders are reporting related costs in the range of 40 to 150 basis points.
To date, the regulations have not been uniformly interpreted and questions remain surrounding their implementation. In this targeted discussion, panelists from across the construction lending space will share insight on managing requirements and the expected impact on construction loan volume, borrowing costs, and development costs. The panel will address questions such as:
o Should additional costs be passed along to borrowers? Will construction borrowers be driven toward non-regulated lenders?
o To what extent should lenders focus on transactions within categories exempt from HVCRE requirements? What are the challenges of proving compliance with such exemptions?
o How do equity contributions affect supervisory LTV ratios that exempt certain CRE loans?
o Without general agreement on implementation, is having a “sound rationale” for your approach sufficient to satisfy regulators?
• Reconciling Sustainability and Profitability
Sustainability is top-of-mind to building owners, investors, and developers, driven in part by regulatory pressures to improve the energy efficiency of commercial and residential assets. Many, however, do not realize that sustainability practices can be directly linked to increased profitability. In fact, a recent Partner/GlobeSt.com survey showed that of all technology and building upgrades, energy optimization is one of the most promising areas of investment. Benckmarking current energy outputs and developing a strategy to implement more energy effective sustainable practices will lower operating costs. Additionally, market forces increasingly reward energy-efficient buildings, which achieve premium asset values and rental rates. To optimize the profitability, what financing mechanisms and incentives are available to offset the costs of implementing energy-efficiency measures? How does improved energy efficiency impact rental rates, operating costs, and tenant retention/attraction? When is it more economically feasible to do a quick “cosmetic” upgrade, and when it is worth overhauling all building systems? How are regulatory pressures affecting and rewarding energy efficiency in buildings? What upgrades does Partner see as having the best ROI for owners/investors?
• Risks and Opportunities of Adaptive Reuse
Adaptive reuse projects are a popular way to revitalize communities and cater to a new generation of consumers but there are factors to consider that may not be present in traditional ground up development projects. With a new generation of renters and buyers who want to “live, work, and play” in urban areas and in spaces that are not only functional but sustainable and characterful, adaptive reuse is a promising solution.
However, these projects bring added risks, and the decision whether to upgrade an existing structure or knock it down to rebuild requires a close side-by-side analysis of the risk factors, opportunities, and various development scenarios. What are specific risks, design considerations, and applicable building and zoning regulations and limitations a developer or lender must be aware of? What grants and tax credits are available, and how can energy efficiency and smart building improvements be incorporated to optimize ROI?
• Minimizing Financial Burden of Seismic Building Codes
Over the past few years, a number of ordinances, including LA’s very recent retrofit ordinance, have been implemented to improve the seismic resilience of California’s building stock. Seismic retrofits can have a hefty price tag, and understanding and utilizing financing mechanisms and incentives available will be critical to ensuring the most cost-effective way to compliance. Exactly what are building owners required to do, and how should lenders and investors cost out the impact of an existing or impending retrofit ordinance? What funding options are available to offset the cost of implementation? How does a retrofit impact asset value, and to what extent do market drivers alleviate the financial burden of mandatory retrofits? When does it pay to be proactive by taking action to meet tightened building standards before they become law? How will cities ensure compliance, and should there be concern that retrofit ordinances can create liability risk?
• New ALTA Codes
With each new year, it is important to recognize the implementation of new ALTA Guidelines. The 2011 requirements have changed so make sure you are well informed as to how these revisions will affect your land surveying procedures and project management.
What We’ve Been Saying
Our experts are in hot demand! Take a look at where we’ve been, where we’re going, and how you can get a hold of us to get insight, explanation, and analysis from some of the industry’s best.
