Paul Ruff, President

Supply Chain

All US rail traffic is up as happens anytime the economy grows, but interesting to note is that according to Rail-Time Indicators (“RTI”), a publication of the American Association of Railroads, Intermodal freight traffic was up 5.2% in 2014 YOY and set a new annual record.

Overall, RTI reports that in 2014 total carloads reached 15.2 million, the highest since 2008 but still 12.3% below the peak of 17.3 million reached in 2006. So despite the sporadic reports we hear of heavy energy traffic stretching rail capacity to its limits, it is clearly not the case.

Not unexpectedly based on our research on the shifting of supply chain dynamics in the US, the percentage of container shipments has continued to increase as a percentage of all intermodal traffic since 1990, while the percentage of trailers has continued to decrease.

Paul Ruff, President

Interested in investing in industrial real estate? Why?

If you answer is something along the lines of “good fundamentals,” then you’re probably chasing deals in the same 20 markets as everyone and their cat. This herd mentality is fine and there are certainly risk-related analyses to justify the approach, but the ability to deploy capital in those markets is becoming increasingly about how low you are willing to accept yields. The approach may also not be doing justice to the question as to why fundamentals are good in the first place. It’s not because of a bourgeoning US economy.

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Paul Ruff, President

The future of industrial real estate is now thanks to retail

As appeared in…Colorado Real Estate Journal

A few months ago, the manager of a major brokerage firm asked me whether we were interested in buying any retail projects right now. It was a reasonable question, because he knows we’ve been opportunistic investors and developers in all of the major commercial property types over our 15-year history. But, for once, my answer was uncharacteristically short: “No,” I said, “the truth is that the more we study retail, the more we want to buy industrial.”

The fact is that both retail and industrial real estate are undergoing a historic, fundamental shift in their utility. And as a firm that puts rigorous economic, demographic and political analysis at the forefront of its business decisions, that fact has us rather interested.

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Top 10 lease negotiation and facility selection mistakes

As appeared in…New England Real Estate Journal

Mistakes?   Everyone makes them. Here is my personal list of the ten biggest mistakes tenants make when it comes to lease negotiations and facility selection … and how to avoid them.

  1. Starting the Process Too Late  ‐  Most companies fail to realize how long it takes to perform a well‐executed commercial real estate transaction. The search for commercial space is not like searching for an apartment. By starting the process early, tenants gain control of the process, increase their number of options, and enhance their leverage. Identifying a firm’s real estate needs, looking at properties, and conducting a comparison analysis can take as little as a week for motivated companies already familiar with the local market. Unfortunately, this is just the beginning of a process that can take several months. Negotiations with several landlords to obtain the best transaction can take weeks, even months. Once the parties have agreed to lease terms, lease preparation, negotiations, and execution can easily take weeks or months. Once the lease is signed, some degree of tenant finish work is usually required. Unless it just cosmetic changes (carpet, paint, etc.), expect several weeks to prepare construction documents, a week or so to competitively bid the work, a few weeks or a few months to obtain a building permit depending on the municipality, and one to two months for actual construction. Therefore, savvy tenants generally start their search for space at least six months prior to the time they expect to move and more if a large/complex transaction or build‐to‐suit is a possibility. Read more
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There’s a new sheriff in town, and you can call him ‘Tenant’

As appeared in…Colorado Real Estate Journal

What a glorious time to be searching for office space!

How things have changed in the last three years. The constant rental rate increases and declining vacancies are now long gone. The tide has shifted and what used to be a landlord market has now gone full circle and tenants can once again call the shots, or at least have a say in how the transaction is structured

From a corporate services/tenant representation perspective, this all seems so strange. We had become so accustomed to indifferent landlords, spaces we were targeting being yanked out from underneath us by ever expanding neighboring tenants, landlords unwilling to offer concessions or make any substantive changes to their lease documents, and onerous security issues just to obtain office space.

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