Some predict that a softening in the market has started and that we are sitting on the brink of another bubble burst. The slowing of real estate value appreciation and an increase in the marketing period to sale are just a couple of the tell-tale signs fueling the aforementioned predictions. I agree that a softening in the market may have begun, but it’s for very different reasons than the downturn that occurred 2008-2010. This time it is due to lack of resources required to maintain the velocity of the current market. The lack of two resources in particular: trades and financing.
In case you haven’t noticed the healthy local economy and young professionals moving to the area in droves, Tampa Bay is in the middle of a growth spurt. The epicenter of this growth spurt is Tampa’s urban core, which is made up of the city’s downtown and its surrounding neighborhoods. This growth and its location have led to an increase of infill development projects, opening up more opportunities for commercial real estate developers. Take Domain Homes’ Urban 360 project for example. The builder partnered with Habitat for Humanity and the CDC of Tampa to provide new affordable housing in the city’s urban core. This new housing is specifically for the people who live and work in the city’s urban core and the entire process has been focused on respecting residents and improving the community. It’s a great example of a successful urban infill project.
Links Financial President Penny Parks was recently featured in the Tampa Bay Business Journal. In this article, Penny recounts her decision to make the move from corporate American into the realm of entrepreneurship and shares her advice on entrepreneurial readiness for those who are thinking about making the same switch.
If you could cut costs, increase equity and continue growing your business, then wouldn’t you? Of course! For business owners looking to maximize opportunity and minimize inefficiency – and that should be all business owners – the best place to start is with your rent.
Recent statistics on business generational transfers follow a 30-13-3 rule – 30% of family owned companies are successfully transferred to the second generation, 13% to the third and only 3% to the fourth. If success and longevity go hand-in-hand, these numbers may seem disconcerting.
One of our past clients who owned a surgical supply company was open to the idea of selling his company to his children. The father/business owner decided that he would put the business up for sale at a fair market price, and if his children could afford to buy it then they could do so. Otherwise the company would go to a third party. Though the children tried, they were not able to come up with the capital needed to purchase their father’s company and it was sold to a third party. One of the children was so furious that he stopped speaking to his father. Did the father, as the business’ owner, make the right choice? (We answer that question at the end of this article.)
Markets don’t like uncertainty, but can you blame them? We all would like to know what’s just over the horizon so that we can plan accordingly, and even more so if something bad is coming. While uncertainty is something our market has experienced a lot of over the last couple of years, the veil has been lifted thanks to recent activity. With renewed certainty, one would expect an increase in M&A activity.
When it comes to buying out minority shareholders, the biggest hurdle is determining the fair value of minority ownership. It’s rarely as simple as purchasing the minority owner’s shares outright. Should a minority owner discount apply? Do minority owners have any rights? What is “fair value”? The answer to all of these questions is, it depends.
As a real estate investor, you can certainly think of a variety of reasons for refinancing commercial real estate. The trick is to know when commercial refinancing makes sense and is a good business strategy.
Business growth is the goal of every business owner. Whether you’re a small business looking to grow into a big one or a major company seeking to dominate the market, the way you grow is critical to your future success. Your growth strategy may be through internal organic growth or by acquisition; both have rewards, and both have perils.