All Forum Posts by: Bennet Sebastian

@Bharath Siddarth rental rate will be a driving force for a large segment of the market. Your building is not too old but you have shell spaces that will require buildout. You are looking at somewhere in the range of $50/sf for the buildouts which would put your cost/sf at $215/sf. This is still probably less than the new construction project on a hospital campus so you can afford to be priced lower and still get a decent return on your investment. It's hard to say which tenants you should be targeting without knowing a lot more about the area. You would be well advised to begin talking to leasing brokers about marketing your property for lease and you can ask them these questions.  

@Bharath Siddarth what’s the market rental rate for those type of spaces? Are you concerned about competition for tenants from the other projects? Just curious why you are concerned about moving forward. 

@Bharath Siddarth what’s your cost per square foot on the building you are buying and how old is it? If it is not too old and you are able to buy it for less than the cost of new construction then you can charge a lower rental rate and be somewhat protected from the new competition. If all the units are medical then it only makes sense to target other medical practices, specifically ones that are complementary to yours. 

@Julie Marquez thanks for your note. Residential is on fire in my market but I'm strictly on the commercial side which has seen a 45% drop in permit activity locally in 2020. I mostly do office buildouts but with so many people working from home there hasn't been a lot of activity. There are just too many contractors chasing too few projects and the margins are getting super thin if you are lucky enough to get one.

Thanks @Joe Norman. 

@Wayne Brooks thanks for the response. 

@Joe Norman Can you tell me more about your arrangement (fee, timing, etc.) with your contractor (s)? Do either you or your contractor (or both) disclose this to the client? 

@Alberto Nikodimov the fee varies from project to project depending on the size and complexity as well as how busy I am. It's not like real estate where the percentage is generally fixed. I absolutely would factor in the referral fee when building my cost estimate just like any other job cost. If it's a reasonable fee then it should be negligible but if you are saying you are seeing 5% and 10% (I sometimes don't even make that as the GC) then obviously it's not and the client would end up overpaying or I would just lose it to another GC who didn't have to pay a referral fee. 

Hi all,

I'm a commercial GC here in the Orlando market which like many other markets has seen a slow down in commercial construction activity. So I'm thinking of ways to get the phone to ring and I'm considering whether or not to offer, and how I would structure, a referral fee for brokers who bring me a client. I know a lot of brokers in town and so that's been my primary source of leads. Most brokers have never asked for a fee but a few have which makes me wonder if I should reconsider my "don't pay to play" stance on the matter. I usually buy them a gift certificate to a nice restaurant and most importantly make their clients happy. But brokers generally pay each other referral fees for referring clients that are either not in their wheelhouse or not in their market so there is some inherent expectation of being compensated for referrals. I'm not sure if they ask this from other allied service providers like lenders, closing attorneys, inspectors, etc. 

Would a referral fee be an incentive to refer one GC over another all other things being equal? If so what would you feel would be a fair fee? Also, what disclosures would be required to be made to the client? Should the fee be paid directly to the agent or should it go through their brokerage house? Should I clear this with their managing brokers first? 

Am I opening up a can of worms that I won't be able to close?

I'd like to hear from some of the brokers here on this topic. 

Thanks

@George Yaz do you already have the tenant in place? 

@Henry Clark this is helpful, thanks for sharing. Are the roofs metal as well?

@John Acheson in my market (Orlando) office vacancies have increased this year but asking prices still remain high. It's only a matter of time before prices come down and I'm confident that they will.