Month: March 2020
Greenway Tower Featured in Bisnow: CRE Industry Keeps Deals Afloat Through VR Technology, Skype and FaceTime
March 30, 2020 Kerri Panchuk, Bisnow Dallas-Fort Worth
All the intangibles revealed during commercial property tours, like a building’s patina or its interior design, or how it just feels to walk into the lobby, help landlords win over potential tenants.
But what happens when an international pandemic like the coronavirus makes it impossible for brokers to invite prospective tenants and clients on-site for personalized tours? For some, it means business activity subsides until the crisis ends.
Others are sealing the deal from the comfort of their own homes. While virtual reality and remote building tours aren’t new to the brokerage industry, the pandemic may hasten their move into must-haves.
Sergey Zolkin/Unsplash Texas-based landlord Boxer Property decided to go full-throttle into the virtual realty space when the COVID-19 pandemic forced potential tenants away from the company’s office buildings.
Boxer had already deployed virtual reality tech tools that allow tenants to capture realistic, multidimensional views of its properties online.
“Years ago, we started taking pictures of suites, and then we started doing videos,” Boxer Properties Marketing Director Heather Shuttleworth said. “Then, we recently got a Matterport camera, and we are doing the full 360-virtual tour experience at several of our properties.”
Even though 3D tours are effective, Boxer still wanted a more personalized approach during the COVID-19 crisis, so the firm upped the ante and now offers live Skype property tours hosted by Boxer employees. “They can talk to [the leasing agent] face to face and see the space through the camera,” Shuttleworth said. “If they want to walk through it on their computer they can, but we are kind of missing the personal touch there and people often have questions and want to look at something more closely in the space.”
The Boxer team is already receiving positive feedback; and at least one Skype tour recipient signed up for a lease right after taking a remote interactive tour. Unsplash/Kentaro Toma Co-living and microstudio multifamily provider Common says 30% of its rental applications come from the firm’s online virtual tour experience, which the firm has operated in some form since its inception five years ago.
But Vice President of Operations Eric Rodriguez said Common, much like Boxer Property, kicked its existing remote solutions up a notch when the coronavirus crisis sent New York and other areas into lockdown mode. With the firm already offering FaceTime and Google Hangout tours with live specialists prior to the crisis, the transition to conducting everything remotely was an easy one.
“It has always been part of our concept,” Rodriguez said of the firm’s tech-first approach. Rodriguez said Common has always believed its mission is to get more people inside the property at all times of the day. In good times, that involves both in-person tours and VR-guided tours. In bad times like these, it means doing everything remotely without missing a beat.
The firm believes all multifamily leasing in the future will depend heavily on remote access and virtual reality components to stay competitive.
“Generally the property management industry is shifting toward that convenience-first perspective,” he said. Real estate brokerage Younger Partners out of Dallas has been offering virtual tours of its Greenway Tower listing in Irving, Texas, for quite some time. The brokerage doesn’t view remote-viewing or virtual tours as new concepts, nor do they see their emergence as related to COVID-19.
“I think it’s becoming more and more a must-have,” founding principal Sean Dalton said. “Everything is changing in our society as far as [everyone] wanting things now and quicker. Everyone wants things to get done faster … and I think these virtual tours allow people to be more efficient with their time.” Greenway Tower’s owner poured millions of dollars into renovating the property, and the virtual tours were put into place with the help of an app to simply get more eyes on the building and all its improvements, Dalton told Bisnow. This is exactly where virtual technology succeeds best. “We felt that this was an opportunity to really get the building into [prospective tenants’] hands rather than pulling them out to Las Colinas.”
Here’s a link to the virtual tours available at Greenway Tower.
You can find the Bisnow article here.
CoStar: Younger Partners Brokers 185k SF Building Sale to Texas Investor
By Candace Carlisle
CoStar News
March 27, 2020 | 03:44 P.M.
A Texas-based real estate investment and services firm has made its latest buy in North Texas and plans to renovate the office building.
Dallas-based Sunwest Real Estate Group bought the building from iStar, a New York City-based real estate investment trust, according to CoStar data. The three-story, 185,148-square-foot office building is at 2901 Kinwest Parkway in Irving, Texas.
Terms of the deal were not disclosed, but the Dallas Central Appraisal District last valued the property at $13.6 million.
“We’ve been working on [the deal] since November in starts and stops,” Marc Grossfeld, managing principal at Sunwest Real Estate Group, said in an interview. “For all intents and purposes, we are buying a vacant building. We think repositioning a vacant building in this submarket will have long-term potential.”
The Irving office building has been the home of operations for AllianceRx Walgreens Prime, a home delivery pharmacy collaboration between Walgreens and Prime Therapeutics. But the company is in the midst of moving out of the office building into about 90,000 square feet of space in Dallas as part of a larger real estate strategy for the home delivery pharmacy.
In looking at the building, Sunwest Real Estate Group knew the pharmacy would no longer be leasing space, but given the firm’s knack for renovating and leasing up value-add office buildings, Grossfeld said he wasn’t concerned and still isn’t concerned going forward. That being said, a lot has changed since the firm began looking at the building with the coronavirus pandemic bringing a new level of uncertainty into the investment market.
“I am nervous with the current environment and leasing has slowed down, but this is the building for us and we are going to renovate the building and market it as a low-cost back office call center,” he added. “It’s a very attractive value proposition for call center users in today’s environment.”
Some office tenants, such as dentists, unable to work for what could be months, he said, have begun asking for special lease considerations in existing office buildings Sunwest Real Estate Group manages. So far, he said, the team has been able to handle those requests.
“There is no standard operating procedure,” Grossfeld said. “These are unprecedented times and we are looking at this on a case-by-case basis. Right now, we are evaluating April, but haven’t evaluated anything beyond that.
“A few of our dentist tenants can’t practice right now and whether that’s six months or 45 days, it’s hard for us to make a decision like that today,” he added.
In future deal making, Grossfeld said he believes the market will create some buying opportunities, but those buyers will have to carefully underwrite rent growth and manage for potentially extending lease up time. For sellers, they may need to set more realistic expectations, he said, and not expect pricing from months ago to return anytime soon.
“Something we still have going for us is the really low interest rates,” he added. “We are still going to be buying.”
For the Record
Sunwest Real Estate Group represented itself in the deal. Scot Farber and Tom Strohbehn of Younger Partners represented the seller.
Online Sales/Returns Creating Growing Reverse Logistics Problems
By Steve Triolet, Younger Partners Director of Research
The Dallas-Fort Worth industrial market continues to perform well, thanks to the Metroplex’s robust job and population growth and the continued strength of the regional and U.S. economy. The market continues to deliver an incredible amount of industrial supply.
The metroplex has averaged more than 20 million SF of net new supply annually over the past few years. In 2019 alone, the DFW market has added 27.1 million SF of new industrial product (flex properties not included), with another 30.5 million SF currently underway. This is driven by a number of factors. First is just sheer population growth (DFW has seen more population growth than any other metro area over the past several years), but in addition to local population growth, DFW serves as a regional distribution hub for a good portion of south central United States, particularly for online retailers (Amazon, Wayfair, etc.).
As online sales has continued to boom, there’s been an inevitable side effect: more merchandise is getting returned, boosting costs and complexity for retailers and increasing the need for additional warehouse space. See the slides below that give further info. on this trend.