Michael's Blog

Absorption Rate? What is this about?

Michael Setunsky (Michael's Commercial LLC) — Sat, 05 Dec 2009 07:58:38 -0600

Absorption Rates are often difficult to understand. Lane's analogy is a simple, but effective way to understand the theory behind the numbers. Thanks Lane.

Via Lane Bailey - REALTOR & Car Guy (Diamond Dwellings Realty):

There are some terms that we toss around in the real estate industry as if people knew what we were talking about... Absorption Rate is one of those terms.

It isn't complicated, but if you are unfamiliar with the term, if can be confusing. And unlike "Bacon Double Cheeseburger", it isn't really self explanatory.

What is Absorption Rate?

There are a couple of components to Absorption Rates.

Inventory Level

Sales Pace over a specified time period

How long the inventory would take to be "used up" at the current level and pace...

That is it in a nutshell. But, let's look at a few examples, as well as some caveats. By the way, this isn't just for real estate, but can apply to anything that might be considered a commodity...

Let's say that your family eats frozen pizza twice a week, and you have 6 Digiorno's Pizzas in the freezer. If you don't go to the store to pick up more, and you continue eating them at the same pace, you have a three week supply of frozen pizza.

Obviously there are a couple of ways that you can alter that situation.

You can start with more pizza

You can alter how often the family eats pizza

Now, maybe you buy your pizzas at Costco, and go there once a month... Even though you have 6 pizzas in the freezer, if you aren't going to be going there for another month, you might want to pick up a few more. If you buy 3 more pizzas, you will have a 4 1/2 week supply, which will carry you through another month.

About that "Specified Time Period"

In order to quantify sales or usage pace, we need to look at a period of time. Back to our pizza...

With Thanksgiving happening recently, the fridge is full of turkey, so maybe in the last week we haven't had any pizza... But, things were really busy before that, so we had 3 pizzas in 6 days. So, if we look at just the last week, we had 0 pizza... theoretically, 6 pizzas would last forever. That can't be right.

So, we look at a longer time period. Over two weeks we had 3 pizzas... 1.5/week. That means that the 6 pizzas would last 4 weeks.

But wait... If we look at the last 4 weeks we had 8 pizzas... that is where we came up with the 2/week consumption level.

How about in Housing?

The generally accepted number in housing for inventory level is 6 months. That means that is 100 homes are selling each month in a given area, then having around 600 homes on the market would be fairly balanced.

If there are only 200 homes on the market, sellers have the upper hand. Basically, supply is smaller than the demand. That is referred to as a seller's market. Sellers have their pick of buyers, can push up their prices and be less willing to offer incentives.

If there are 1200 homes on the market, buyers have the upper hand. Now the supply is outstripping demand. That would be the classic definition of a buyer's market. In this case, buyers can make more demands of sellers and prices are generally pushed down.

Careful though...

Right now in Gwinnett County Georgia there are several markets happening all at once. I compile sales data for a variety of markets and micro-markets and see conflicting data...

In Gwinnett County, overall we have about an 8.6 month supply of homes.

In Duluth, for homes under $200,000, the supply is about 6.1 months.

In Suwanee, for homes under $200,000, the supply is only 4.6 months.

Also in Suwanee, for homes over $1,000,000, the supply is 45 months.

(please note, these are all using a 6 month sales average)

A little more about time frames...

Generally, in real estate we use 3 month, 6 month and 12 month averages. To arrive at these, we look at sales data for the time period (3, 6 or 12 months), divide it out monthly, and then divide that into the number of available homes in that market.

The fun pat is that we can glean additional information by comparing these three numbers. Let's go back to Suwanee...

The 12 month Absorption Rate for homes under $200,000 is 5.2 months of inventory...

The 6 month Absorption Rate for homes under $200,000 is 4.6 months of inventory...

The 3 month Absorption Rate for homes under $200,000 is 4.3 months of inventory... (note, the November sales data isn't yet complete, and this number is actually going to get better...)

Comparing these numbers tells me that that sales in this segment were actually accellerating. As we got more recent, the average sales per month increased. Of course there are a few things to keep in mind...

Limitations and other notes...

To start with there is "seasonality". This means that there is an expected change in the pace of sales because of the time of the year. Here in the Atlanta area, sales generally pick up in the late spring and early summer. They also tend to fall off of a cliff in January. So, just because we see an accelleration doesn't mean that it isn't natural.

The next thing we have to consider is "outside influence". Right now, that would be the First Time Home Buyer Tax Credit. It was originally slated to expire at the end of November. So... there was a rush to get under contract in October. And a rush of closings in November. We'll have to see if the pace holds...

Which brings us to the next point... We can't predict the future. We can look at the past and we can theorize about how outside influences are going to alter future trends. But that is it. How many times has the NAR said that "Now is the time to buy" or that they "see growth moving forward"? Obviously over the last couple of years, they were WAY wrong. I have made my share of mistakes. Sometimes it is because we make wrong assumptions, and in other cases, things change... Maybe the government changes FHA qualifications... Perhaps there is a new tax credit... A large employer could relocate...

I hope this helps you understand the real estate (and other) markets a little better. Market reports are often dry and full of stats, but understanding them can be a great way to understand why the market is moving. Understanding why helps you better understand what you should do.

from LaneBailey.com

Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2009 Lane Bailey.

I'd love to hear from you...

Commercial Property Market Report – Prince William County – November 2009

Michael Setunsky (Michael's Commercial LLC) — Mon, 30 Nov 2009 12:24:22 -0600

Commercial Property Market Report – Prince William County – November 2009

The Commercial Property Market Report for Prince William County is offered as a service of Michael’s Commercial LLC. The November 20, 2009 market report is categorized by the commercial Prince William County Zoning Districts:

Legend:

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED Commercial

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

The Commercial Property Market Report is the author’s own interpretation of the Prince William County Commercial Real Estate market and makes no warranty or claim regarding the usefulness or implications of this information.

Michael Setunsky is the Broker and owner of Michael's Commercial LLC serving the Northern Virginia commercial real estate market. He has been licensed since 1985 and a Broker since 1990. As a commercial real estate and business broker, he has earned the distinction for being one of the top commercial real estate producers in the Mid-Atlantic Region. He also serves on the Mid Atlantic Real Estate Marketing Association's (MAREMA) Board of Directors, and is a Commonwealth of Virginia licensed Instructor. He teaches Pre-licensing, Post Licensing Education, Broker's and Continuing Education courses. Visit his company web site at http://michaelscommercial.com/.

Commercial Land Absorption Rates – Prince William County – November 2009

Michael Setunsky (Michael's Commercial LLC) — Mon, 30 Nov 2009 12:12:38 -0600

Commercial Land Absorption Rates – Prince William County – November 2009

Commercial Land Real Estate Absorption Rates for Prince William County are offered as a service of Michael’s Commercial LLC. The monthly absorption rates are categorized by the following Prince William County Zoning Districts:

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED

Absorption Rates are established by how many properties have sold during a given period of time (e.g., 365, 180, 90 and 30 days). Absorption rates also allow tracking trends in the market for any given number of days, weeks or months. These trends can indicate whether we may be in a Sellers Market, a Neutral Market or a Buyers Market. A monthly absorption rate of 5-6 is usually considered a Neutral Market. Anything below five is regarded as a Sellers Market and anything above six a Buyers Market.

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on November 30, 2009:

Total Number of Properties on Market. The properties available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

The tables above indicate that the commercial land real estate market in Prince William County has been minimal. There are currently properties on the market, but not much activity. No properties have sold during this reporting period. There are currently 25 commercial land properties on the market. We are currently in a Buyer’s market.

General Business District – No activity – sixteen listings currently in the inventory and no new listings during this reporting period.
Neighborhood Business District – No activity – one listing currently in the inventory and no new listings during this reporting period.
Convenience Retail District – No activity – one listing currently in the inventory and no new listings during this reporting period.
Office Low-Rise District – No activity within this reporting period.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity – one listing currently in the inventory and no new listings during this reporting period.
Light Industrial District – Minimal activity – two listings currently in the inventory and no new listings during this reporting period. Two properties current Under Contract.
Industrial/Transportation District – No activity – one listing currently in the inventory and no new listings during this reporting period.
MIXED – Minimal activity – three listings currently in the inventory and one new listing during this reporting period.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

The Commercial Land Absorption Report is the author’s own interpretation of the Prince William County Commercial Real Estate market and makes no warranty or claim regarding the usefulness or implications of this information.

Commercial Absorption Rates – Prince William County – November 2009

Michael Setunsky (Michael's Commercial LLC) — Mon, 30 Nov 2009 11:54:03 -0600

Commercial Absorption Rates – Prince William County – November 2009

Commercial Real Estate Absorption Rates for Prince William County are offered as a service of Michael’s Commercial LLC. The monthly absorption rates are categorized by the following Prince William County Zoning Districts:

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on November 30, 2009:

Total Number of Properties on Market. The number of properties available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the reporting date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

The tables above indicate that the commercial real estate market in Prince William County has been minimal during this reporting period. There were no commercial property sales within the last 30 days and 27 commercial properties are currently on the market. We are presently in a Buyer’s Market.

General Business District – Minimal activity – 20 listings currently in the inventory and no new listings during this reporting period.
Neighborhood Business District – No activity – one listing currently in the inventory and no new listings during this reporting period.
Convenience Retail District – No activity during this reporting period.
Office Low-Rise District – No activity during this reporting period.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity – four listings currently in the inventory and one new listing during this reporting period.
Light Industrial District – No activity – two listings currently in the inventory and no new listings during this reporting period.
Industrial/Transportation District – No activity during this reporting period.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

The information provided here is the author’s own interpretation of the Prince William County Commercial Real Estate market and makes no warranty or claim regarding the usefulness or implications of this information.

Investor Report: Commercial Investing 2010

Michael Setunsky (Michael's Commercial LLC) — Sat, 14 Nov 2009 09:07:26 -0600

This is great news for us who live in the Washington DC Metropolitian Area. Here is a link to the online report, if you would like to take a look.

http://www.uli.org/~/media/Documents/ResearchAndPublications/EmergingTrends/Americas/2010/2010EmergTrends.ashx

Via Frank Festa NJ Estates Real Estate Group (Weichert Realtors):

If you're a commercial property investor looking toward 2010, where are the most promising real estate markets in the U.S.?

The Urban Land Institute teamed with consulting firm Pricewaterhouse Coopers and asked more than 900 investors, developers and lenders that question recently, and came up with some intriguing answers.

The top market for heads-up investors among literally hundreds around the country turns out to be Washington D.C.

The nation's capital, where you send your tax money and where your federal government continues to grow, turns out to be the only truly "recession proof" market in the U.S., according to the real estate experts polled in the study.

Why? Because Washington thrives when the economy falls apart, thrives when the country is at war, and does really well when the political party in power believes in big government, more agencies and more federal spending.

And that's precisely where we are right now.

"While hard pressed lenders pull back in most cities," according to the Urban Land Institute's summary of the study, in Washington "major insurers and banks have taken a long term view and are actively providing financing for new (commercial real estate) deals. "

No shortage of equity or debt for the right project -- if it's in D.C.

And it's not just the city itself that's prospering. The Virginia and Maryland suburbs are adding high tech, defense and scientific jobs by the thousands.

According to the study, "Bethesda (Maryland), home to the National Institutes of Health, should benefit from increased biomedical (federal) spending," and the close-in Virginia suburbs are expected to grow defense-related jobs and new construction as well.

Ranking number two after Washington for commercial property investment in 2010 is San Francisco, with especially good prospects for apartments, warehouses, offices and hotels. Metropolitan San Francisco not only is a tourist and convention magnet, but combines strong center-city employment with the high-tech industry in suburban Silicon Valley.

The third rated top investment prospect in the survey might be a surprise to some: Austin, Texas, with lots of technology businesses growing and needing more space. The survey ranked it near the top because of the city's pro-business political climate and low taxes, both of which should, it said, "contribute to future growth and continuing corporate relocations. Austin fits the "brainpower" model that attracts investment even when the national economy is soft.

Rounding out the top ten hot spots for commercial and income-property investors for the coming year, by rank: Boston, New York, Houston, Seattle, Raleigh/Durham North Carolina, Denver and San Jose, California.

Paul Stillwaggon,
For All Your Real Estate Needs
Contact New Jersey Estates
Real Estate Group
E-mail: njestates@gmail.com
Web: http://www.newjerseyestates.net
908-561-5492 (Paul S) 908-310-1358 (Cell)
NJ Estates Real Estate Group
Weichert Realtors
908-561-5492
55 Stirling Road, Watchung, N.J. 07069

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Commercial Property Market Report – Prince William County – October 2009

Michael Setunsky (Michael's Commercial LLC) — Sat, 31 Oct 2009 13:01:34 -0500

Commercial Property Market Report – Prince William County – October 2009

The Commercial Property Market Report for Prince William County is offered as a service of Michael’s Commercial LLC. The October 31, 2009 market report is categorized by the commercial Prince William County Zoning Districts:

Legend:

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED Commercial

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Land Absorption Rates – Prince William County – October 2009

Michael Setunsky (Michael's Commercial LLC) — Sat, 31 Oct 2009 12:50:27 -0500

Commercial Land Absorption Rates – Prince William County – October 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on October 31, 2009:

Total Number of Properties on Market. The properties available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

General Business District – No activity – sixteen listings currently in the inventory and no new listings during this reporting period.
Neighborhood Business District – No activity – one listing currently in the inventory and no new listings during this reporting period.
Convenience Retail District – No activity – one listing currently in the inventory and no new listings during this reporting period.
Office Low-Rise District – No activity within this reporting period.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity – one listing currently in the inventory and no new listings during this reporting period.
Light Industrial District – Minimal activity – four listings currently in the inventory and no new listings during this reporting period. Two properties current Under Contract.
Industrial/Transportation District – No activity – one listing currently in the inventory and no new listings during this reporting period.
MIXED – Minimal activity – three listings currently in the inventory and one new listing during this reporting period.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Absorption Rates – Prince William County – October 2009

Michael Setunsky (Michael's Commercial LLC) — Sat, 31 Oct 2009 12:14:21 -0500

Commercial Absorption Rates – Prince William County – October 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on October 31, 2009:

Total Number of Properties on Market. The number of properties available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the reporting date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

General Business District – Minimal activity – 20 listings currently in the inventory and one new listing during this reporting period.
Neighborhood Business District – No activity – one listing currently in the inventory and no new listings during this reporting period.
Convenience Retail District – No activity during this reporting period.
Office Low-Rise District – No activity during this reporting period.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity – three listings currently in the inventory and no new listings during this reporting period.
Light Industrial District – No activity – three listings currently in the inventory and no new listings during this reporting period.
Industrial/Transportation District – No activity during this reporting period.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

MAREMA Elects 2010 Board of Directors

Michael Setunsky (Michael's Commercial LLC) — Sat, 10 Oct 2009 10:30:23 -0500

MAREMA Elects 2010 Board of Directors

The Mid Atlantic Real Estate Marketing Association (MAREMA) is a non-profit commercial real estate organization servicing the Mid-Atlantic Region which includes the States of Delaware, Maryland, Pennsylvania, Virginia, West Virginia and the District of Columbia.

The mission of MAREMA is to provide the real estate professional with the essential tools, resources, information and ideas to help better serve clients and the public in general.

MAREMA is committed to provide first rate service to all members on a timely and professional basis and make available those tools with which to improve the membership’s ability to assist clients.

MAREMA strives to help improve the knowledge, professionalism and profitability of all of our members.

This year at the 2009 MAREMA Annual Meeting held on October 2, 2009, the Membership elected the Board of Directors for 2010. The new 2010 Board of Directors:

OFFICERS
President	Michael Setunsky Michael's Commercial LLC
Vice President	Donald Blouch Landmark Commercial LTD
Vice President (Associate Members)	Jimmy Norton Brock-Norton Insurance Agency
Past President	Joseph Labow Long and Foster Commercial
Secretary	Karen Taylor Washington Workplace
Treasurer	Stephanie Reger Samson Commercial Properties and Business Brokers
DIRECTORS
	Harry Kettmer Kettmer and Associates
	Conrad Koneczny, CCIM Sperry Van Ness
	Brian Ginter REVAC, INC

The Board of Directors looks forward to a profitable and challenging coming year for the membership. As in previous years, we will continue to promote the needs of our clients, the membership and the Association.

If you are a licensed real estate agent and wish to break into the field of commercial real estate, ask about the MAREMA Intern and Mentoring Programs. For more details and membership information, visit the MAREMA web site at http://marema.com

Michael Setunsky is the Broker and owner of Michael's Commercial LLC serving the Northern Virginia commercial real estate market. His more than 25 years of experience as a commercial real estate and business broker has earned him the distinction for being one of the top commercial real estate producers in the Mid-Atlantic Region. He also serves on the Mid Atlantic Real Estate Marketing Association's (MAREMA) Board of Directors, and is a Commonwealth of Virginia licensed Instructor. He teaches Pre-licensing, Post Licensing Education, Broker's and Continuing Education courses. Visit his company web site at http://michaelscommercial.com/.

Investing in Commercial Real Estate – Use a Commercial REALTOR®

Michael Setunsky (Michael's Commercial LLC) — Tue, 06 Oct 2009 16:34:00 -0500

Investing in Commercial Real Estate – Use a Commercial REALTOR®

Not all commercial real estate agents can call themselves Commercial REALTORS®. Only commercial real estate agents who are members of the National Association of REALTORS® are allowed to use the term Commercial REALTOR®. Commercial REALTORS® subscribe and abide to a strict Code of Ethics and are easily recognized as those who wear the Commercial Real Estate REALTOR® pin.

When employing a commercial real estate agent, engage the agent who wears the Commercial Real Estate REALTOR® pin.

If you still need convincing, click here for twelve reasons why using a Commercial REALTOR® can help you with your next commercial real estate transaction.

Commercial Absorption Rates – Prince William County – September 2009

Michael Setunsky (Michael's Commercial LLC) — Wed, 30 Sep 2009 15:33:47 -0500

Commercial Absorption Rates – Prince William County – September 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on September 30, 2009:

Total Number of Properties on Market. The properties that were available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

General Business District – No activity during this reporting period and 19 listings currently in the inventory.
Neighborhood Business District – No activity during this reporting period and one listing currently in the inventory.
Convenience Retail District – No activity during this reporting period.
Office Low-Rise District – No activity during this reporting period.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity during this reporting period and three listings currently in the inventory.
Light Industrial District – No activity during this reporting period and three listings currently in the inventory.
Industrial/Transportation District – No activity during this reporting period.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Land Absorption Rates – Prince William County – September 2009

Michael Setunsky (Michael's Commercial LLC) — Wed, 30 Sep 2009 15:25:28 -0500

Commercial Land Absorption Rates – Prince William County – September 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on September 30, 2009:

Total Number of Properties on Market. The properties that were available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

The tables above indicate that the commercial land real estate market in Prince William County has been minimal. There are currently properties on the market, but no activity. No properties have sold within this reporting period. We are currently in a Buyer’s market.

General Business District – No activity during this reporting period and there are eighteen listings currently in the inventory.
Neighborhood Business District – No activity during this reporting period and one listing currently in the inventory.
Convenience Retail District – No activity during this reporting period and one listing currently in the inventory.
Office Low-Rise District – No activity within this reporting period.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity during this reporting period and two listings currently in the inventory.
Light Industrial District – No activity during this reporting period and four listings currently in the inventory.
Industrial/Transportation District – No activity during this reporting period and one listing currently in the inventory.
MIXED – No activity during this reporting period and two listing currently in the inventory.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Property Market Report – Prince William County – September 2009

Michael Setunsky (Michael's Commercial LLC) — Wed, 30 Sep 2009 15:06:23 -0500

Commercial Property Market Report – Prince William County – September 2009

The Commercial Property Market Report for Prince William County is offered as a service of Michael’s Commercial LLC. The September 30, 2009 market report is categorized by the commercial Prince William County Zoning Districts:

Legend:

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED Commercial

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Investing in Commercial Real Estate - Buyer Representation

Michael Setunsky (Michael's Commercial LLC) — Tue, 08 Sep 2009 13:37:32 -0500

Investing in Commercial Real Estate - Buyer Representation

When Michael's Commercial or another Broker lists a property or business opportunity for sale, our fiduciary responsibility is always to the Seller. This means we owe our allegiance and loyalty only to the Seller throughout the whole transaction process.

When a typical purchaser asks, "How much will they really take?" or "Are they flexible?" Our answer is always, "They will take the List Price." Why, because our fiduciary responsibility is to the Seller to get them the best deal.

However, don't get discouraged or give up because we can now represent you the purchaser with a Buyer Representation Agreement. What does this mean for you the Buyer? It means we can pledge our allegiance and loyalty to you; therefore, our fiduciary responsibility would be to you the Buyer. It also means we can do a market assessment based on an analysis of the property or business to help you formulate an offering price. We can even negotiate on your behalf to get you the best possible terms and price for your purchase. With an agreement, Michael's Commercial can represent you the purchaser throughout the whole transaction process.

What are the advantages of signing a Buyer Representation Agreement?

Michael's Commercial will

. . .help you search and find the right property or business that is just right for you.

. . .expand the search beyond MLS properties to For-Sale-By-Owner, For-Lease-By-Owner properties, foreclosed properties, bank trusts and new construction that fits your criteria.

. . .attempt to discover and reveal to you facts about specific properties and the owner's motivation that will strengthen your negotiations.

. . .help you value the property or business to obtain the best possible price in your best interest.

. . .help you sturucture an appropriate offer to purchase or lease a specific property or business.

. . .present the offer to the Seller's Agent or Leasing Agent on your behalf.

. . .negotiate on your behalf to obtain the best possible terms and conditions to purchase the property or business.

. . .recommend and assist you in securing appropriate financing.

. . .help you overcome any obstacles to insure a smooth transaction to closing.

. . .represent you on a confidential basis.

. . .represent you the Buyer throughout the whole transaction process.

A Broker who represents a purchaser without Agency Representation is in violation of their fiduciary responsibility to the Seller.

It is to your advantage to have a Buyer Representation Agreement. Let Michael's Commercial represent you on your next transaction.

Image Courtesy of David Niblack

Michael Setunsky is the Broker and owner of Michael's Commercial LLC serving the Northern Virginia commercial real estate market. His more than 23 years of experience as a commercial real estate and business broker has earned him the distinction for being one of the top commercial real estate producers in the Mid-Atlantic Region. He also serves on the Mid Atlantic Real Estate Marketing Association's (MAREMA) Board of Directors, and is a Commonwealth of Virginia licensed Instructor. He teaches Pre-licensing, Post Licensing Education, Broker's and Continuing Education courses. Visit his company web site at http://michaelscommercial.com/.

Commercial Land Absorption Rates – Prince William County – August 2009

Michael Setunsky (Michael's Commercial LLC) — Mon, 31 Aug 2009 12:58:30 -0500

Commercial Land Absorption Rates – Prince William County – August 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on August 31, 2009:

Total Number of Properties on Market. The properties that were available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

General Business District – No activity during this reporting period and there are seventeen listings currently in the inventory.
Neighborhood Business District – No activity during this reporting period and one listing currently in the inventory.
Convenience Retail District – No activity during this reporting period.
Office Low-Rise District – No activity within this reporting period.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity during this reporting period and two listings currently in the inventory.
Light Industrial District – No activity during this reporting period and three listings currently in the inventory.
Industrial/Transportation District – No activity during this reporting period and one listing currently in the inventory.
MIXED – No activity during this reporting period and one listing currently in the inventory.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Absorption Rates – Prince William County – August 2009

Michael Setunsky (Michael's Commercial LLC) — Mon, 31 Aug 2009 12:44:53 -0500

Commercial Absorption Rates – Prince William County – August 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on August 31, 2009:

Total Number of Properties on Market. The properties that were available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

The tables above indicate that the commercial real estate market in Prince William County has been minimal during this reporting period. There were no commercial property sales within the last 30 days. One property is currently Under Contract. We are currently in a Buyers Market.

General Business District – No activity during this reporting period and 22 listings currently in the inventory. One property is currently Under Contract.
Neighborhood Business District – No activity during this reporting period and one listing currently in the inventory.
Convenience Retail District – No activity during this reporting period.
Office Low-Rise District – No activity during this reporting period.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity during this reporting period and two listings currently in the inventory.
Light Industrial District – No activity during this reporting period and four listings currently in the inventory.
Industrial/Transportation District – No activity during this reporting period.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Property Market Report – Prince William County – August 2009

Michael Setunsky (Michael's Commercial LLC) — Mon, 31 Aug 2009 12:30:54 -0500

Commercial Property Market Report – Prince William County – August 2009

The Commercial Property Market Report for Prince William County is offered as a service of Michael’s Commercial LLC. The August 31, 2009 market report is categorized by the commercial Prince William County Zoning Districts:

Legend:

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED Commercial

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Investing in Commercial Real Estate – Property Valuation

Michael Setunsky (Michael's Commercial LLC) — Mon, 10 Aug 2009 15:53:37 -0500

Investing in Commercial Real Estate – Property Valuation

Valuing property in commercial real estate is quite different from doing a Competitive Market Analysis (CMA) in residential real estate. Although the market dictates property values for both residential and commercial properties, that’s where the similarity ends.

With residential properties, an Appraiser or REALTOR® will usually locate three similar properties to compare with the subject property. Appropriate price adjustments for bedrooms, fireplaces, decks, size of lot, financing, etc. are made for the comparable properties to make them equal to the subject property. Once the adjustments are made, the Appraiser or REALTOR® will choose the property that is most like the subject property and place the appropriate value on the subject property. That is why the home down the street may have sold for more money because it had for example more bedrooms or a larger deck. Please note in Virginia, a REALTOR®, unless he or she is a licensed Appraiser is not allowed to appraise properties by law. REALTORS® however can provide sellers with comparable property data known in the industry as a CMA.

Valuing Income producing properties such as apartment buildings, shopping centers, office buildings, businesses, etc. are based on the income stream the property produces. For example, if a building had a net operating income after expenses of $10,000.00, would you pay $500,000.00 for it? Probably not; however, depending on the market, you may pay $100,000.00 for the building. As you can see, the value is based on the income the building produces and not the value of the structure. The structure will come into play when doing the due diligence. The price may be right, but if the building is falling down the cost for fixing up the building will have a bearing on the purchase.

I stated earlier that the market will dictate for how much a property will sell. This is where the CAP Rate or Capitalization Rate will play a role in property valuation. The CAP Rate is the rate of return an investor can expect in year one of the purchase. The CAP Rate is determined by looking at the market and establishing the rate of return for comparable type properties. For example, the CAP Rate for an apartment building will be different from the CAP Rate for a shopping center.

Let us look at the example above again. If you decided to pay $100,000.00 for a building that has a net operating income of $10,000.00, the CAP Rate would be 10%. What if other buildings in the area were selling with a CAP Rate of 12%? You would have over paid more than $15,000.00 for the property. However, if the CAP Rate was 8%, you would have gotten a very good deal because the comparable value would have been $125,000.00.

As you can see, knowing the market CAP Rates for various types of properties is an important aspect when purchasing a commercial investment. Do you want to over pay your next purchase?

This is just one facet for analyzing a commercial property prior to purchasing. There many other factors involved in making an informed decision when putting together that important purchase.

Note: Laws vary in different States, always seek legal counsel and work with an experienced Commercial Real Estate Broker.

Image Courtesy of David Niblack

Commercial Property Market Report – Prince William County – July 2009

Michael Setunsky (Michael's Commercial LLC) — Fri, 31 Jul 2009 11:29:05 -0500

Commercial Property Market Report – Prince William County – July 2009

The Commercial Property Market Report for Prince William County is offered as a service of Michael’s Commercial LLC. The July 31, 2009 market report is categorized by the commercial Prince William County Zoning Districts:

Legend:

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED Commercial

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Land Absorption Rates – Prince William County – July 2009

Michael Setunsky (Michael's Commercial LLC) — Fri, 31 Jul 2009 11:19:03 -0500

Commercial Land Absorption Rates – Prince William County – July 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on July 31, 2009:

Total Number of Properties on Market. The properties that were available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

General Business District – No activity during this reporting period and there are fifteen listings currently in the inventory.
Neighborhood Business District – No activity during this reporting period and one listing currently in the inventory.
Convenience Retail District – No activity during this reporting period.
Office Low-Rise District – No activity within this reporting period and one listing currently in the inventory.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity during this reporting period and two listings currently in the inventory.
Light Industrial District – No activity during this reporting period and two listings currently in the inventory.
Industrial/Transportation District – No activity during this reporting period and one listing currently in the inventory.
MIXED – No activity during this reporting period and one listing currently in the inventory.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Aborption Rates - Prince William County - July 2009

Michael Setunsky (Michael's Commercial LLC) — Fri, 31 Jul 2009 10:57:18 -0500

Commercial Absorption Rates – Prince William County – July 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on July 31, 2009:

Total Number of Properties on Market. The properties that were available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

The tables above indicate that the commercial real estate market in Prince William County has been minimal during this reporting period. There were no commercial property sales within the last 30 days. One property is currently Under Contract with a Contingent/No Kick Out clause. We are currently in a Buyers Market.

General Business District – No activity during this reporting period and 22 listings currently in the inventory.

Neighborhood Business District – No activity during this reporting period and one listing currently in the inventory.
Convenience Retail District – No activity during this reporting period.
Office Low-Rise District – One property currently has a Contingent Contract with No Kick Out and no available listings currently in the inventory.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity during this reporting period and two listings currently in the inventory.
Light Industrial District – No activity during this reporting period and four listings currently in the inventory.
Industrial/Transportation District – No activity during this reporting period.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Investing in Commercial Real Estate - Property Types

Michael Setunsky (Michael's Commercial LLC) — Thu, 23 Jul 2009 14:57:37 -0500

Investing in Commercial Real Estate – Property Types

Commercial properties are principally defined as; if it isn’t residential it’s commercial. This meaning is rather simple, but defines it categorically. Within this grouping, commercial properties are primarily classified by its specialized usage. Property types are typically described as:

Office
Retail
Industrial
Warehouse/Flex
Multi-Family
Hospitality
Medical
Commercial Land

Prince William County classifies these property types into six major categories:

1. Commercial Districts

2. Office Districts

3. Industrial Districts

4. Planned Business District

5. Planned Mixed Use District

6. Suburban Residential High and Urban Residential Districts

Commercial Districts. The Commercial District is broken down into three specific areas:

1. General Business District (B-1) – Planned to provide areas for community-scale retail, office and institutional uses. There are currently 61 uses by right within this District, three secondary uses and an additional 36 uses which require a Special Use Permit. Maximum building is height 45 feet.

2. Neighborhood Business District (B-2) – Intended to provide for areas of neighborhood-scale retail and to a lesser extent office and institutional uses but particularly consumer product and service centers. There are currently 44 uses by right within this District, one secondary use and an additional 11 which require a Special Use Permit. Maximum building height is 45 feet.

3. Convenience Retail District (B-3) – Designed to serve nearby residents, rather than pass-by or regional traffic. There are currently 19 uses by right within this District, one secondary use and an additional three which require a Special Use Permit. Maximum building height is 35 feet.

Office Districts. The Office District has four subcategories.

1. Office Low-Rise District O(L) – Designed to provide areas for low- to mid-rise office buildings, and research and development facilities. There are currently 17 uses by right within this District, 18 secondary uses and an additional eight which require a Special Use Permit. Maximum building height is 45 feet.

2. Office High-Rise O(H) – Planned to provide areas for high-rise and institutional uses with limited supporting retail and service uses. There are currently 20 uses by right, 20 secondary uses and an additional seven which require a Special Use Permit. Maximum building height is 100 feet.

3. Office Mid-Rise District O(M) – Designed to provide areas near appropriate transportation facilities for mid-rise office and institutional uses with limited support for retail and service uses. There are currently 18 uses by right, 20 secondary uses and an additional eight which require a Special Use Permit. Maximum building height is 70 feet.

4. Office/Flex District O(F) – Intended to provide areas for research and development centers, office, institutional and minimal impact industrial uses with limited supporting retail and service uses. There are currently 24 uses by right, 28 secondary uses and an additional 21 which require a Special Use Permit. Maximum building height is 45 feet.

Industrial Districts. The Industrial District is divided in three areas:

1. Heavy Industrial District (M-1) – Planned to provide areas for and to encourage development of heavy and intensive industrial processing, manufacturing and storage with limited retail and service uses. There are currently 67 uses by right, four secondary uses and an additional 23 which require a Special Use Permit. Maximum building height is 75 feet/

2. Light Industrial District (M-2) – Designed to provide areas for research and development centers, light industrial manufacturing, warehousing, wholesaling and related office and institutional uses. There are currently 38 uses by right, 14 secondary uses and an additional 17 which require a Special Use Permit. Maximum building height is 60 feet.

3. Industrial/Transportation (M/T) – Intended to provide areas for and encourage development of heavy industrial uses including those which generate considerable truck and/or heavy equipment traffic, or which require access to more than one mode of transportation. There are currently 69 uses by right, four secondary uses and an additional 22 which require a Special Use Permit. Maximum building height is 75 feet.

Planned Development. There are two Districts in this category:

1. Planned Business District (PBD) – Designed to implement the regional employment center, office and flexible use employment center land use classifications designated in the Comprehensive Plan. Non-residential areas shall be established in accordance with the following zoning Districts:

a. General Business - B-1

b. Neighborhood Business - B-2

c. Office Low-Rise - O(L)

d. Office Mid-Rise - O(M)

e. Office High-Rise - O(H)

f. Office/Flex - O/F

g. Light Industrial – M-2

There are currently 24 uses permitted in the above Districts which are not permitted in the Planned Business District.

2. Planned Mixed Use District (PMD) – Designed to provide a single zoning district which promotes an integrated business community within which business and residences are conveniently linked. Non-residential areas shall be established in accordance with the following zoning Districts:

a. General Business - B-1

b. Neighborhood Business - B-2

c. Office Low-Rise - O(L)

d. Office Mid-Rise - O(M)

e. Office High-Rise - O(H)

f. Office/Flex - O/F

g. Light Industrial – M-2

There are currently 21 uses permitted in the above Districts which are not permitted in the Planned Mixed Use District.

Suburban Residential High and Urban Residential Districts. These three Districts include Multi-Family dwellings:

1. Suburban Residential District (R-16) – Designed to provide for and encourage quality development at urban densities in locations well-served by public utilities and roadways not to exceed 16 dwelling units per acre. There are currently four uses by right, two secondary uses and nine uses which require a Special Use Permit.

2. Urban Residential District (R-30) – Intended to provide and encourage quality Multi-Family development at urban densities not to exceed thirty dwelling units per acre. There are currently four uses by right, three secondary uses and an additional eight which require a Special Use Permit.

3. Urban Residential District (R-U) – Planned to provide and encourage quality Multi-Family development at urban densities not less than 31 units per acre. There are currently five uses by right, three secondary uses and an additional eight which require a Special Use Permit.

These categories and subcategories are specific to Prince William County. Other City and County zoning ordinances may and more likely classify these property types differently. It is always important during the due diligence process to check with your City/County Planning Office prior to purchasing a property.

Note: Laws vary in different States, always seek legal counsel and work with an experienced Commercial Real Estate Broker.

Image Courtesy of David Niblack

Investing in Commercial Real Estate

Michael Setunsky (Michael's Commercial LLC) — Thu, 02 Jul 2009 13:14:08 -0500

Investing in Commercial Real Estate

Investing in commercial real estate may seem like a challenge, but it is really no different than investing in residential real estate. The typical office, retail, industrial, etc. properties are obviously commercial type properties. However, there is a major distinction when it comes to multi-family properties. Multi-family properties with four or fewer units are considered residential and properties with five or more units are considered commercial properties. Why is there a distinction?

One difference is how lenders look at these two categories. Four or fewer units are financed like residential properties and the lending criterion is based on the strength of the borrower. Does the borrower have sufficient resources and do they earn enough money to cover the mortgage? Five or more units are considered commercial real estate and the lender will usually finance the property based on the income the property produces. If the property has a positive cash flow, and the income can cover the expenses and the mortgage, the lender may overlook the borrower’s credit worthiness.

Is there a risk when investing in commercial real estate? Like any investment, there is always a risk. However, there are ways to help minimize this risk.

Do appropriate due diligence. Work the numbers and make sure the deal makes sense. Does the property have a positive cash flow? Is the property free of hazardous materials? Does the property have clear title?

Get accounting advice. Make sure the deal doesn’t have tax implications. Everyone’s tax situation is different.

Get legal representation. Closing a real estate deal requires several legal measures. Have an attorney review the Offer to Purchase. This will insure the purchaser’s best interests are looked after.

Work with a lender. A lender who will work to get the deal done and assist in getting underwriting approval in a timely manner is crucial to a successful transaction.

Get buyer representation. Maximize the investing experience by working with someone who can assist in finding an appropriate property, analyzing the numbers and negotiating on the purchaser’s behalf.

Investing in commercial real estate can be very profitable and rewarding. Insure your first or next commercial transaction runs smoothly from the initial offer to a successful timely closing.

Note: Laws vary in different States, always seek legal counsel and work with an experienced Commercial Real Estate Broker.

Image Courtesy of David Niblack

Commercial Property Market Report – Prince William County – June 2009

Michael Setunsky (Michael's Commercial LLC) — Tue, 30 Jun 2009 11:44:12 -0500

Commercial Property Market Report – Prince William County – June 2009

The Commercial Property Market Report for Prince William County is offered as a service of Michael’s Commercial LLC. The June 30, 2009 market report is categorized by the commercial Prince William County Zoning Districts:

Legend:

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED Commercial

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.

Commercial Land Absorption Rates – Prince William County – June 2009

Michael Setunsky (Michael's Commercial LLC) — Tue, 30 Jun 2009 11:33:10 -0500

Commercial Land Absorption Rates – Prince William County – June 2009

B-1 (General Business District)
B-2 (Neighborhood Business District)
B-3 (Convenience Retail District
O(L) (Office Low-Rise District)
O(M) (Office Mid-Rise District)
O(H) (Office High-Rise District)
O(F) (Office/Flex District)
M-1 (Heavy Industrial District)
M-2 (Light Industrial District)
M/T (Industrial/Transportation District)
MIXED

Sellers Market 1-4 Months Supply
Neutral Market 5-6 Months Supply
Buyers Market 7 Plus Months Supply

The following tables reflect the Monthly Absorption Rates* for respective Zoning Districts in Prince William County ending on June 30, 2009:

Total Number of Properties on Market. The properties that were available on the market during the reporting period.
Total Number of Sales. The total number of Sold properties during the given reporting period.
Monthly Absorption Rate. The rate at which the Sold properties were absorbed in the market on a monthly basis.
Inventory. The number of available properties as of the report date.
Months Supply. The number of months it will take the properties to sell based on the number of properties that have sold during the reporting period.
Chance of Selling. The rate at which the properties in the inventory will sell based on the percentage of the total properties on the market and the total number of sales.

The tables above indicate that the commercial land real estate market in Prince William County has been non-existent. There are currently properties on the market, but no activity. No properties have sold within this reporting period.

General Business District – One property is currently Under Contract and there are twelve listings currently in the inventory.
Neighborhood Business District – No activity during this reporting period and one listing currently in the inventory.
Convenience Retail District – No activity during this reporting period.
Office Low-Rise District – No activity within this reporting period and one listing currently in the inventory.
Office Mid-Rise District – No activity during this reporting period.
Office High-Rise District – No activity during this reporting period.
Office/Flex District – No activity during this reporting period.
Heavy Industrial District – No activity during this reporting period and two listings currently in the inventory.
Light Industrial District – No activity during this reporting period and two listings currently in the inventory.
Industrial/Transportation District – No activity during this reporting period and one listing currently in the inventory.
MIXED – No activity during this reporting period and one listing currently in the inventory.

No commercial land real estate properties have sold within this reporting period. One property is currently Under Contract. We are currently in a Buyers Market.

*The data presented here is compiled from information provided by the Metropolitan Regional Information System.