Anthony Graziano, the CEO of Integra Realty Resources, which bills itself as a world-class, comprehensive commercial real estate market research, valuation, and advisory services company, joins America’s Commercial Real Estate Show to discuss his company’s Viewpoint 2021 report. He talks about the effect of vaccinations, stimulus, bank lending, and more. A chart showing risk premiums by property type is particularly interesting, and matches anecdotal evidence as it shows lodging to have the highest risk premium followed by retail. This is the first part of the interview. View part two here.
Did the Biden Administration Just Alter Gas Station Economics?
The Biden administration recently announced an initiative to push the United States toward more electric vehicles, less powered by gasoline. Automotive News covered this in their article suggesting this push gives Detroit the cover they’ve needed and wanted to go electric. This begs a question pertinent to commercial real estate; if there are less gas stations needed, what becomes of existing gas station properties and vacant land where the highest and best use currently is for a gas station?
This question has floating about since well before Biden’s recent push. How electric, hybrid and driverless cars are forcing a revolution in how we fill ‘er up was discussed in a post by Rockland Trust bank; What will the gas station of the future look like? The renowned management consultancy McKinsey brought this up in a post in January 2019; ticket to ride: what will happen to roadside pit stops when cars go electric? Later that year, Real Asset Advisor addressed it in another post; electric vehicles and the end of gasoline stations. Finally, in the prior year, Inverse discussed it in their article; The End of the Gas Station: How Electric Cars Will Transform the Rest Stop.
MarketWatch then asked and answered this question in a post in February 2020; How Many Gas Stations Are In U.S.? How Many Will There Be In 10 Years? Their answer? “If the large car companies have their ways, a decade from now the number of gas stations could be cut by half.” Note that this is February 2020, a full year before Biden set his goal for EV.
Vacant land suitable for gas stations where the highest and best use would be for a gas station tends to be high visibility corner locations. These properties have other high value uses, just not as high value. Owners that have been holding on to such properties may soon find buyers less excited for their properties. Perhaps their is some use that will come along, but I’m at a loss as to what it would be. Some might argue that gas stations will just convert to fuel. Maybe that will be the case. But, isn’t it true that people can just plug in at home at night? And, for supercharger stations, what is to keep grocers, drugstore chains, and discount stores, each of which could seemingly better monetize a visit, from installing them on their lots? For these properties, the argument that an owner is likely to have substantially superior overall returns over time by selling such vacant land and reinvesting it into income producing property becomes even stronger.
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Chart: Miami Commercial Real Estate Sales to List Price Ratio at 16 Month High ~ January 2021 MLS
The sales to list price ratio as reported by the Miami MLS for improved commercial real estate (MLS classification: commercial/industrial) within Miami-Dade county in Florida priced from $1 million to $10 million in January hit 95.1%, the highest level in 16 months. The last time this ratio was higher was September 2019 when the ratio hit 95.7%. This ratio continues to in line with day to day experience with Miami commercial properties; pricing is firm, particularly industrial and multifamily properties.
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Chart: Miami-Dade Commercial Real Estate Sales Volume Characteristically Sluggish for 1st Month of Year ~ January 2021 MLS
The chart herein shows the number of closed sales of Miami-Dade commercial properties, including improved commercial property and vacant commercial land, recorded in the Miami MLS, for the two years ending January 2021. One can see that this is the slowest month since the initial onslaught of COVID-19 in April and May of 2021. Looking further, however, one can also see that this is characteristic for the first part of the year, presumably a lull following the rush to get deals closed before year end. This is only for sales booked in the Miami Multiple Listing Service (MLS). This does not record all commercial property sales, but it records many. Given that it doesn’t record all sales it can’t be said to be perfectly representative of the asset class. Nevertheless, given that it is representative of commercial property sales that have also been so recorded in a prior period versus the current one, i.e. apples to apples, it should be fairly reliable for gauging change.
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Commercial Property Borrowing Cost Quarterly 2020 Q4: 5-Year Treasury Rates Remain Hovering Over Zilch
Yields on 5-year U.S. Treasury Notes continue to remain at lows reached as COVID slowed economic activity, driving rates lower. As can be seen in the chart above, these rates, most closely tracked for commercial real estate financing cost, remained near zero percent, closing at 0.36%, barely in excess of a third of a percent per year.
Borrowing costs have not followed this point for point, but suffice it to say that they’re lower. In deals where I’ve been involved, I’ve seen rates around 3%, perhaps a touch above, depending on the type of financing involved. Banks are being careful, however.
This low interest rate environment is a powerful force on real estate prices. There are of course ongoing concerns about vacancy rates and rent growth with a slower economy, but lower interest rates means lower debt service. Plus, real estate income becomes relatively more attractive to fixed income investments. Vacancy and rent growth effects remain unknown, but lower debt service is known.
The interest rate environment has the ability to affect commercial real estate values in a number of different ways.. Borrowing cost, i.e. debt service, is of course affected directly, as higher interest rates increase the cost of borrowing and thus negatively affecting demand. Cap rates tend move over time, but not always in the short term, in line with interest rates, with considered analyses generally concluding that cap rates move on average in the same direction as 10-year rates, but by about a third as much. Interest rates also affect the economy, which in turn affects vacancy and rental rates.
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Chart: Miami Commercial Real Estate Sales to List Price Ratio Ends Year About Average ~ December 2020 MLS
The sales to list price ratio as reported by the Miami MLS for improved commercial real estate within Miami-Dade County from $1 million to $10 million in December was 91.50%, just above the 10 year average of 91.04%. Coincidentally December’s 91.40% ratio is exactly, to the fourth decimal point (2nd of a percentage, thus the 4th), that of the median of this ratio for the prior ten years. This ratio continues to in line with day to day experience with Miami commercial properties; prices are holding relatively firm, with industrial properties even showing strength. COVID what?
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Chart: Miami-Dade Commercial Real Estate Sales Volume Ends Year on a Solid Note ~ December 2020 MLS
The chart above displays the trailing two years ending December 2020 of closed sales of Miami-Dade commercial properties, including improved commercial property and vacant commercial land, recorded in the Miami MLS. After a bit of a pullback in November, sales rebounded to closed out the year fairly strong, registering the sixth strongest month of the prior 24. This is for sales booked in the Miami Multiple Listing Service (MLS), which does not record all commercial property sales and thus can’t be said to be fully or perfectly represent the asset class (as not all commercial sales are booked here). Nevertheless, it does record sales, and given that it is representative of commercial property sales that have also been so recorded in a prior period versus the current one, it should be reasonably, though not perfectly, reliable for gauging change.
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Accepting Backup Offers: 27,350 sf / 0.55 acre Opa-Locka DMU Downtown Mixed Use Overlay District Tri-Rail Station Adjacent TOD Site; 650 Ali Baba Avenue, Opa-Locka, FL 33054
This property is under contract, to close on or before May 31. We are accepting backup offers. Contact James Hawkins for details.
Related Destinations:
- Listing at LoopNet
- Zoning Map
- Zoning Code
- Excerpt: Increased density of up to 100 units per acre is permitted for affordable housing developments as defined by Section 420.0004, Florida Statutes.
- 2030 Comprehensive Master Plan
- Excerpt: Maximum 150 units per acre. Areas in the Corridor Mixed Use Overlay Zoning District may be developed with residential-commercial mixed use at up to 200 units per acre.
- Excerpt: Provides for multiple-family residential dwellings, a wide range of commercial uses, select recreation and entertainment uses, mixed residential and commercial uses, vertical mixed use buildings, select public and institutional uses, public and charter schools and places of assembly. Residential uses should make up no more than 80 percent of the total floor area in any vertical mixed use building. Where feasible, residential uses should be located above street level office, retail
- HawkinsCRE Opa-Locka Zoning Links, Searches
- The Real Deal: Opa-locka eases code for mixed-use district
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Video: Core Green Technologies Chief Development Officer Michelle Murdock Discusses Technology for Clean Air in Your Property
Michelle Murdock, Chief Development Officer with Core Green Technologies, joins America’s Commercial Real Estate Show host Michael Bull to discuss HVAC technology that utilizes Needlepoint Bi-polar Ionization in order to make offices, restaurants, and other commercial proerty facilities safer and cleaner. She quotes some interesting results versus COVID that seem worthy of checking into.
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Stalking Horse Bids Due in Metronomics Properties Auction: Map and Summary Info
As has been reported extensively in the press, a number of Metronomic properties are being auctioned. Stalking horse bids are now due by February 24, 2021. The properties being auctioned are available for purchase individually or in any combination, or one can bid on the entire package of properties. As can be seen, these are generally located in Little Havana and Coconut Grove, two of the more desirable areas in Miami-Dade county. In the map, click any icon for rough details and a link to the address on Google Maps from where one can access their Streetview of the property.
Property Info
Below is a quick and dirty table of relevant information on these Metronic properties by assemblage (“Grp” below). The Miami-Dade county value tends to be at or below market value, and thus may provide a good starting point for considering these. Where the last sales price (Lst Amt) says “^multi” a sale is believed to be included in the amount above for that assemblage (Grp) as part of a multi-parcel sale. Independently confirm any data below. Do not rely on this to make an investment decision.
| Grp | Folio, Info Links | Address | Lot SF | Adj’d SF | Last Sale | Last Amt | County Val |
| 1 | 01-4116-043-0020 HCR MD |
2967 BIRD AVE Miami, FL 33133 |
7,875 | 0 | 2016 | $1,900,000 | $788,967 |
| 1 | 01-4116-043-0010 HCR MD |
2961 BIRD AVE Miami, FL 33133 |
7,875 | 0 | 2016 | ^multi | $787,500 |
| Total this Assemblage | 15,750 | 0 | $1,900,000 | $1,576,467 | |||
| 2 | 01-4121-047-0190 HCR MD |
3100 COMMODORE PLZ Miami, FL 33133 |
2,824 | 0 | 2020 | $1,500,000 | $847,200 |
| 2 | 01-4121-047-0180 HCR MD |
3102 COMMODORE PLZ Miami, FL 33133 |
2,500 | 0 | 2020 | ^multi | $750,000 |
| 2 | 01-4121-047-0230 HCR MD |
3106 COMMODORE PLZ Miami, FL 33133 |
1,843 | 0 | 2020 | ^multi | $552,900 |
| Total this Assemblage | 7,167 | 0 | $1,500,000 | $2,150,100 | |||
| 3 | 01-4121-007-4530 HCR MD |
3280 GRAND AVE Miami, FL 33133 |
13,050 | 0 | 2020 | $1,500,000 | $2,610,000 |
| 4 | 01-0202-000-1050 HCR MD |
526 SW 2 St Miami, FL 33130 |
7,500 | 0 | 2017 | $425,000 | $450,000 |
| 5 | 01-4102-006-2070 HCR MD |
1259 SW 3 ST Miami, FL 33135 |
7,500 | 0 | 2018 | $750,000 | $300,000 |
| 5 | 01-4102-006-2075 HCR MD |
1251 SW 3 ST Miami, FL 33135 |
7,500 | 0 | 2018 | ^multi | $300,000 |
| Total this Assemblage | 15,000 | 0 | $750,000 | $600,000 | |||
| 6 | 01-4111-014-0110 HCR MD |
857 SW 14 AVE Miami, FL 33135 |
6,250 | 0 | 2018 | $337,500 | $219,363 |
| 7 | 01-4103-021-0010 HCR MD |
503 SW 18 AVE Miami, FL 33135 |
6,801 | 0 | 2017 | $549,000 | $306,045 |
| 7 | 01-4103-021-0020 HCR MD |
1780 SW 5 ST Miami, FL 33135 |
6,800 | 0 | 2017 | ^multi | $306,000 |
| Total this Assemblage | 13,601 | 0 | $549,000 | $612,045 | |||
| 8 | 01-4102-005-9180 HCR MD |
1343 NW 1 St Miami, FL 33125 |
7,500 | 0 | 2017 | unknown | $375,480 |
| 9 | 01-4110-055-0380 HCR MD |
2638 SW 12 ST Miami, FL 33135 |
4,124 | 0 | 2016 | $850,000 | $412,400 |
| 9 | 01-4110-054-0060 HCR MD |
2640 SW 12 St Miami, FL 33135 |
4,250 | 0 | 2016 | ^multi | $340,000 |
| Total this Assemblage | 8,374 | 0 | $850,000 | $752,400 | |||
| 10 | 01-4102-005-7030 HCR MD |
1651 NW 3 ST Miami, FL 33125 |
6,670 | 0 | 2017 | $350,000 | $333,500 |
| 11 | 01-4103-037-0460 HCR MD |
2534 SW 6 ST Miami, FL 33135 |
6,750 | 0 | 2018 | $1,250,000 | $675,000 |
| 12 | 01-0202-020-1030 HCR MD |
220 SW 7 Ave Miami, FL 33130 |
5,000 | 0 | 2018 | $1,050,000 | $250,000 |
| 12 | 01-0202-020-1220 HCR MD |
240 SW 7 AVE Miami, FL 33130 |
10,000 | 0 | 2018 | ^multi | $600,000 |
| 12 | 01-0202-020-1210 HCR MD |
226 SW 7 AVE Miami, FL 33130 |
5,000 | 0 | 2018 | ^multi | $301,020 |
| Total this Assemblage | 20,000 | 0 | $1,050,000 | $1,151,020 | |||
| 13 | 01-4111-013-0470 HCR MD |
903 SW 13 CT Miami, FL 33135 |
7,800 | 0 | 2018 | $365,000 | $351,000 |
| 14 | 01-4110-009-0070 HCR MD |
2500 SW 8 ST Miami, FL 33135 |
5,080 | 0 | 2017 | $850,000 | $508,000 |
| 15 | 01-4103-037-0570 HCR MD |
650 BEACOM BLVD Miami, FL 33135 |
4,509 | 1,334 | 2018 | $800,000 | $156,827 |
| 15 | 01-4103-037-0571 HCR MD |
652 BEACOM BLVD Miami, FL 33135 |
4,509 | 1,334 | 2018 | ^multi | $156,827 |
| Total this Assemblage | 9,018 | 2,668 | $800,000 | $313,654 | |||
| 16 | 01-4138-007-0040 HCR MD |
640 SW 8 AVE Miami, FL 33130 |
2,540 | 687 | 2018 | $210,000 | $156,032 |
| 17 | 01-4121-012-0442 HCR MD |
3200 THOMAS AVE Miami, FL 33133 |
6,200 | 0 | 2019 | $365,000 | $263,200 |
| 18 | 01-4121-007-1830 HCR MD |
3310 ELIZABETH ST Miami, FL 33133 |
4,500 | 910 | 2018 | $350,000 | $271,560 |
| 19 | 01-4110-009-0251 HCR MD |
2537 SW 10 ST Miami, FL 33135 |
5,400 | 929 | 2019 | $240,000 | $204,000 |
| 20 | 01-4103-037-0450 HCR MD |
620 BEACOM BLVD Miami, FL 33135 |
6,750 | 2,586 | 2019 | $900,000 | $344,868 |
| 21 | 01-3208-008-0700 HCR MD |
7880 NE BAYSHORE CT Miami, FL 33138 |
6,839 | 0 | 2019 | $840,000 | $341,950 |
| 21 | 01-3208-008-0690 HCR MD |
7860 NE BAYSHORE CT Miami, FL 33138 |
6,000 | 0 | 2019 | ^multi | $300,000 |
| Total this Assemblage | 12,839 | 0 | $840,000 | $641,950 | |||
| 22 | 01-3208-008-0280 HCR MD |
1010 NE 78 RD Miami, FL 33138 |
6,954 | 0 | 2019 | $775,000 | $347,700 |
| 22 | 01-3208-008-0270 HCR MD |
1014 NE 78 RD Miami, FL 33138 |
6,000 | 0 | 2019 | ^multi | $300,000 |
| Total this Assemblage | 12,954 | 0 | $775,000 | $647,700 | |||
| 23 | 01-3207-016-2710 HCR MD |
1071 NE 80 ST Miami, FL 33138 |
6,240 | 0 | 2019 | $530,000 | $312,000 |
Hawkins Commercial Realty is not managing this auction, but can assist any buyer with it as a buyer’s broker. Buyer’s/Co-broker/selling broker compensation to be paid by the seller is already built into the process. If you are interested in having Hawkins Commercial Realty help you with this as a buyer’s broker, contact James Hawkins (786-581-7990). Initial offers are due immediately. So, if interested, don’t tarry.
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