September 2009
Increasing NOI in a Down Market
Presented by Mark J. Mayfield, CCIM & Randy Graham
Managing Directors, Sperry Van Ness – Rock Hill, South Carolina
Declining commercial real estate markets created by turbulent economic times and worries of an uncertain future can vex even the most experienced property owners. While it’s very easy to get caught-up in the herd mentality of the pundits and other industry naysayers who portray a doomsday mentality, it’s considerably more profitable to get creative in your approach to increasing your cash flow. Remember that more significant and lasting wealth is created in down markets than is ever created in robust markets. However, the opportunities that exist in today’s market climate only go to those willing to adapt their operating philosophies to creative an flexible strategies and tactics. In the text that follows, I’ll provide you with 7 different strategies to increase your cash flow now…
Accelerate Your Depreciation: Even though Cost Segregation is nothing new, I’m amazed at the numbers of commercial real estate owners who have not taken advantage of the financial benefits so easily available to them. In a down market where times are tough, Cost Segregation is one of the few operating tactics that can immediately decrease your tax burden while increasing cash flow. The reason cost segregation is so valuable is that it can be applied when constructing a building, buying an asset, to an existing asset you currently operate, or in certain circumstances, years after disposing of a building so long as the year of disposition still is open under the statute of limitations.
Renegotiate with Lenders: In many cases today, lenders have no idea what your property is worth, and whether or not they’re underwater on your debt. It is not uncommon to find properties where the current debt far exceeds the current market value. If you find yourself in a situation like this, it is quite possible to restructure your debt via a loan modification that can both reduce the principal amount of the debt you owe, while immediately improving your NOI.
Use Creative Signage: If you view signage as just another item to negotiate with tenants, then you may be missing a significant opportunity. Depending on the size and location of your property, there are any number of companies who will pay you for the privilege of placing advertising on your building. The creative use of wallscapes, traditional and digital billboards, banners, and other forms of signage afford the possibility of increasing your revenue.
Just Listed For Sale or Lease!
Free-Standing Office Building
+/- 7,275 SF
Sales Price: $795,000
Lease Rate: $10.00 SF, Mod. Gross
Just Reduced!
96,000 SF Industrial Bldg.
Sales Price: $1,290,000 (was $1.5 M)
Lease Rate : $1.95 SF, NNN
In 1996, Mark Mayfield and Randy Graham started in business together and in 1999 started their own company Southern Commercial Real Estate, LLC (“SCRE”) in Rock Hill, South Carolina located 15 miles south of Charlotte, NC. With a successful track record and established entity, SCRE expanded its services and national reach on January 1, 2007, by joining forces with a nationally recognized leader in commercial real estate brokerage, Sperry Van Ness, to form Sperry Van Ness/Southern Commercial Real Estate, LLC.
- Sperry Van Ness was founded in 1987, when Rand Sperry and Mark Van Ness created a commercial investment real estate firm with one key mission: To create unprecedented value for commercial real estate investors. Today Sperry Van Ness is one of the largest, most respected and fastest growing commercial real estate brokerage firms in the industry.
- Sperry Van Ness currently has more than 1004 advisors internationally.
- Sperry Van Ness is located in more than 150 cities across the US, as well as in Costa Rica and Panama.
- Sperry Van Ness completed over $11.6 billion in sales and leasing transactions in 2007.
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Mark J. Mayfield, CCIM
Managing Director|BIC
Randy Graham
Managing Director
1926 India Hook Road | Rock Hill, SC 29732
803.325.1000 | 803.325.1214 | www.svn-scre.com | info@svn-scre.com