The Four Things That Matter

I have a bunch of work-related travel coming up next month.

Perhaps like your industry, Fall is the time for Annual Conferences when groups get together to talk about the year. My most active affiliations are Counselors of Real Estate (CRE), Certified Commercial Investment Managers (CCIM) and the Society of Industrial and Office Realtors (SIOR). It’s an exciting time as industrial is the hottest it has been in 20 years.

As I’m preparing for these visits, I’ve been thinking about some of the best advice I’ve been given. Some of it comes from Michael Brennan, who in addition to being managing principal of Brennan Investment Group, runs one of the most well-established real estate master’s degree programs as Executive Director of the University of Wisconsin’s James A. Graaskamp Center for Real Estate, a program that is consistently ranked among the best real estate programs in the world.

Michael loves teaching, something that has become apparent during our time working together. When I’ve asked his advice on an issue, he doesn’t just show numbers, he’ll talk through them with me and help me make smart decisions. Michael is also very disciplined and has rules he follows. He’s often saying, “John, let me tell you about the four things that matter when considering the acquisition of an asset.” It’s a valuable conversation every time we have it. Now, I’m going to share some of Michael’s wisdom with you.

The four things that matter, as explained to me by Michael Brennan

  1. Location. This one isn’t unexpected. Location of the building is important.
  2. Configuration. How practical is the building being considered? With an industrial building, are we talking about 12-foot ceiling heights or 32-foot? With retail, we need to consider how much parking is there and the ease of parking. Office users need to consider the floorplate, such as is it an 18,000 square-foot floor plate or a much larger one. Etc.
  3. Income. What is the caprate, what is the quality of the income and what is the length of the term.
  4. Price per pound. How does the price per square foot stack-up to the competitors, comparables in the marketplace and where does the price fall in the range of values for similar buildings across the region?

Choose your seller wisely. Michael’s not a fan of commodity deals, for example. They don’t allow for much transactional complexity or messiness, which may keep them easier, but they don’t offer the same value and opportunity you can get elsewhere.

It’s a fun time to be involved in industrial real estate. And remembering these four things that matter will help me maintain my focus as I sift through assets and potential acquisitions.

Real estate transactions can be fraught with frustration and pitfalls.

Sometimes the hardest part turns out to be working with your broker, the person who is supposed to help you through the complexities. Veteran commercial real estate broker and client advisor John Culbertson discovered that brokers’ interests aren’t always aligned with those of their clients. He realized there was a better way to advocate for clients and get the deal done.


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