2020 – Page 19

5G: Revenue Through the Roof

by Harding Easley
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Telecom carriers have deployed 5G networks—could that mean an additional revenue stream for building and land owners? And owners bode well to determine if leasing their land and rooftops will bring them additional income. Every so often a technology comes along that revolutionizes society and the economy. The 5G wireless technology is one of those. And, after a year of what many refer to as the launching and relaunching of 5G wireless technology, we can finally believe the hype. Verizon, T-Mobile and AT&T are just a few of the carriers working to ensure their 5G network preparation maximizes the revolutionary opportunity that exists. What it Means for CRE The owners of commercial real estate buildings and land are consistently looking for additional revenue streams. That’s even more true during the current COVID-19 pandemic. Knowing that average leases range from $1,200-$3,300 monthly, or that an average 10-year advance payment ranges from $144,000 to almost $400,000 of additional revenue for qualified CRE buildings, there is certainly evidence that cell tower ground and rooftop leases will help owners send revenue through the roof. What Exactly Is 5G? 5G is the fifth generation of wireless technology. Most of us are driven and fixated on the need for speed. Whether ordering at a drive-thru, navigating highway traffic or heating food in a microwave, the sooner we can reach our objective, the better. The same is true when it comes to data. Once upon a time, many of us would log on to our computers and select options that would produce the familiar dial tone of a dial-up connection. Our patience would earn us the satisfaction of the dial tone coming to an epic ending as imagery and text crawled slowly down our screens. Telecom providers like AT&T and Verizon have shown speeds past 1 gigabyte per second. That’s up to 100 times speedier than a typical cellular connection and faster than an actual fiber-optic cable going into a home. Global Workplace Analytics recently provided their best estimate that 25%-30% of the workforce will be working from home multiple days a week by the end of 2021. The download capabilities of 5G at an employee’s home will easily outperform the speeds in the office if the employer chooses not to meet or exceed the offerings of 5G in the workplace. Downloading large files fast is certainly a common ground for both work and work-from-home needs. Resilience during the coronavirus pandemic and the ever-accelerating build-out of 5G network, make cell tower real-estate investment trusts an attractive investment too. 5G also differs from previous generations of cellular technology with network latency. Latency is the time it takes a set of data to move between two points. 5G shortens the amount of time it takes to travel. Gamers renting in properties that have 5G will be delighted to avoid high latency, which causes lag and inevitably reveals the delay between the action of the gamers and the real responses within the game. The Benefits of 5G The performance benefits of faster speeds and low latency are as obvious as the choice between a property with 5G connectivity versus one without, but at a comparable rental rate. The not-so-obvious benefits may be surprising. Remote surgery is arguably the most exciting and surprising benefit. Imagine surgeons being able to use surgical robots to perform a procedure in a facility far away. The advanced imaging guides the surgeon. The lag time currently found in 4G would be too great. The ability to help specialists save lives and attend to more patients in critical conditions is what 5G brings to the operating table. Consider the future of self-driving automobiles being developed alongside 5G, using sensors to ping the network and communicate with other vehicles. Ultimately, it helps with collision avoidance because it knows where every car is. Manufacturers can develop more productive and efficient factories. Farmers can sustain ideal conditions for growing and raising food. Smart Cities will use 5G to power the network infrastructure, from the grid to the water supply. Combining technology with services and infrastructure will simplify the lives of residents who are open to becoming early adopters of the “smart city” as a practice, and not just a theory. The Ground Game on Cell Tower Leases Although owners of commercial property generally think of leasing their rooftop with 5G apparatus, the broad reference also relates to ground leases. Cell tower lease rates vary greatly. The rent is derived from myriad factors, including construction limitations, location, network needs, population density, etc. The cell tower lease agreement between the carriers and the landowners allows the tower companies to use the land in exchange for rent in a long-term agreement. Negotiations will take place before the installation, at a renewal date or during a lease buyout discussion. CRE property owners play a part in the solution of some of the challenges 5G is still facing. Pricing and designing systems to use 5G are both major concerns. The challenge of widespread coverage is critical. As networks develop, carriers’ need to lease the property owners’ site is an opportunity for owners to add income. The era of “smart cities” is also the era of “smart leases.” A smart cell tower lease should maximize monthly revenue, and it should also minimize terms that will have a negative impact on future development, financing or disposition of your property in the long term. The time value of money is always a highly weighted consideration. A lease can last 5, 10 or upwards of 30 years. A solid lease is provisioned for flexibility to adapt to changing conditions during the life of the lease. For example, there may be a need to relocate the cell tower or relocate access or utility easements on the property. Or, the lease could address potential changes in the insurance, liability, environmental and other sections of the lease, particularly over 20 or 30 years. The language regarding the ability to assign, sell or transfer the lease is also important. Is the lease

What to Expect in Changing Times

by Tami Bonnell
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When times change, people change too. Bob Dylan famously sang, “The times they are a’changin.’” We can certainly say they’re a’changin’ as a result of COVID-19’s business as unusual. Here are just a few. Impact of Working From Home People are becoming accustomed to working from home. This means we’re going to see a lot of open commercial spaces. Change always inspires creative entrepreneurs. We’re going to see a tremendous number of zoning changes primarily in commercial with mixed use. We’ll see shopping malls turned into condo projects, perhaps to accommodate people aged 55 and older, or perhaps a group of millennial entrepreneurs who envision a hub where everybody can share the space. We’ll see strip malls become mixed use, some even including residential space in order to get those properties filled. Some families will continue to home school their children, which may impact the future location of schools. The Great Reckoning Because many more people are comfortable using their homes as satellite offices now, a trend that once saw people flowing to the city core will now see them moving back to the suburbs. People have realized they don’t mind an hour and a half drive because they’re not doing it five days a week. They want a better quality of life and work/life balance. They’re saying, “My world’s not the same anymore.” Years ago, my oldest brother was a nurse who ran a national home health care organization and was a former president of the American Nurses Association. In a quest for a better work/life balance, he left everything behind and moved to Costa Rica. He got a part-time job working six weeks on and six weeks off in California. His interesting and diverse assignments included working on an Indian reservation and in a hospital. He ended up making more money working this rotation and enjoying an excellent quality of life than he did running a national organization. He decided not to wait for the next thing to happen to actually live his life. I’m witnessing this same mindset today as people around the world reassess what’s really important during this unusual time. Like my brother, many people are saying, “I’m not going to wait to start living my life.” And now that they’ve been forced to reduce their working hours to 32 or 24 per week, they’re realizing they can actually make do on that income. Many will forego returning to the pre-pandemic hustle and choose instead to live simpler lives. Waking up to Community People move because of their circumstances. Traditionally, those circumstances included earning more or less money, relocating for a job, adding to their family or becoming empty nesters. But now people are analyzing their place in a world that became more humanized overnight. People became neighbors again. They became part of a community. They were “all in this together.” There are countless stories of people genuinely helping and connecting with one another. Since they’ve been home, they’ve had time to think about: What do I really want for the rest of my life? What do I really want for my family? What do I really want my lifestyle to be? The right answer for some people is to move to a smaller home because they’ve realized they don’t need all their space. For others, suburban McMansions will provide the solution. Instead of a cramped three-bedroom home, they will opt for a spacious home with four or five bedrooms so they can have a home office. People will deliberately plan multigenerational households—and not just because their millennial kids moved back home. Some Gen Xers will choose to live with their parents. After being separated from them during the pandemic, they will want to be close and not want to waste the time they have left. Generations will pull together. Opportunities for Real Estate Professionals Real estate brokerages and agents will shift to meet these needs. We’re certainly seeing more brokerage owners considering mergers and acquisitions because they don’t want to jump back into the fray. A lot of them with smaller brokerages simply don’t want to keep up with the lightning speed of technology. They’re tired. Now that they’ve experienced a lull in business, they’re looking for alternatives that allow them to transition successfully and ensure their agents are cared for. Agents, too, are moving because of their circumstances. Pre-pandemic, even if they were unhappy with the daily grind of making the next sale, they were reluctant to make a change. But the Universe forced us all to change. Suddenly we had to stay at home. Character isn’t made in a crisis—it’s revealed. Many agents aren’t happy with the character they’re seeing in their leaders during this time. Because they don’t feel appreciated or heard, they’re assessing their options. Agents who didn’t produce or pay attention to market knowledge will disappear. Those who remain will need to leverage technology, stay current with knowledge of the market and learn to read trends. Those who are able to do so will be able to identify and seize windows of opportunity for their clients. Agents who are paying attention to the trends are keeping a close eye on planning boards and municipalities. As we see zoning changes, we’ll see business changes. Paying attention to zoning changes on shopping malls and being proactive might mean you can represent the condos. Changes to businesses will impact employees, which may lead to an opportunity for a proactive agent to educate them about their home ownership and refinancing options. The next few months will shine a light on who has those skill sets. Agents will need to bring their A-game to be the solution for their prospects and clients. Accurate, thorough market knowledge combined with a focus on the needs of the person they’re serving will be key differentiators. For example, one of our agents was helping a client find the right location for retirement. The ideal spot happened to be out of town, so the agent referred the client

by admin
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WeBuyHouses.com has announced today its partnership with realtor.com’s new Seller’s Marketplace service. Visitors to realtor.com ® who wish to sell their homes can learn which selling options may be best for them after they enter some basic information about their home. Seller’s Marketplace then matches the option with options that are available in the home owner’s area. For example, consumers can be connected with WeBuyHouses.com and several other major service providers that offer iBuying or cash purchase programs. Users will see side-by-side estimates for sale price, timeline and other details. There is no upfront cost or commitment. “WeBuyHouses.com has been buying houses nationwide for over 20 years and we are proud to partner with realtor.com on the launch of Seller’s Marketplace,” Jeremy Brandt, CEO of WeBuyHouses.com, said in a release. “We share the vision of providing great consumer experiences and making real estate transactions easier for all.” According to realtor.com, it has the only national home search site to compare different selling options and enable consumers to determine the best fit with just a few clicks.

Commercial Real Estate Auction Market Continues Strong Levels of Activity

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Auction statistics show significant increase in bidding volume and minimal pricing discounts. The commercial real estate auction market is performing at stronger levels than anticipated despite the ongoing coronavirus health and economic crisis. Contrary to the projections of many analysts, deal volume has increased due to healthy investor demand and abundant capital. “We’re currently in a unique and compelling environment to sell commercial real estate. We are dealing with a health-based crisis, very different from previous recessions caused by over-leveraging. That means there is still a tremendous amount of capital ready and waiting to be deployed. Opportunistic investors have been watching for any stumble in the steadily strong market and are now turning to auctions to find assets and place capital quickly,” said Damian Smoter, vice president of RealINSIGHT Marketplace. According to RealINSIGHT Marketplace, there has been robust transaction volume in retail since the onset of COVID-19. In addition, land and office assets are outperforming on the auction platform. Across all asset classes, Marketplace has seen an increase in transaction volume since late March, with an average contract price 157% above the reserve, or the minimum price the seller will accept. The average contract price increased 41%, from 116% pre-pandemic. Moreover, the average number of bidders per property increased from 10 to 18 during the same timeframe.

Restoration Builders Acquires Sky Restoration

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Restoration Builders expands to Tennessee with latest acquisition of Sky Restoration. Restoration Builders, a residential and commercial contractor, has acquired Sky Restoration, headquartered in Smyrna, Tennessee. Restoration Builders was founded in 2017. The company has built a nationwide network of licensed contractors and other industry-related organizations. It is developing a strategic infrastructure of teams, offices, equipment, trucks and other resources. Company revenue is projected to exceed $100 million for 2020. Tony Noel and Scott Willard formed Sky Restoration in 2017 after several years of working together. Since then, they have built a team of technicians with a wealth of roofing and insurance knowledge who provide homeowners and commercial or institutional facility managers with expert roofing and renovation services. “I am thrilled to welcome Sky Restoration to our growing team,” said John Lorenz, chairman and CEO of Restoration Builders. “Tony and Scott have done a tremendous job building a reputation for impeccable workmanship and, more importantly, always putting their customers first. It’s clear that Sky Restoration shares the same core values as us and, as such, I’m confident they will make a wonderful addition to our network.”

ATTOM Data Solutions Report: Housing Markets Most Vulnerable to Coronavirus Impact

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In its second quarter 2020 Special Report released on July 10, ATTOM Data Solutions identified the East Coast and northern Illinois as having the highest concentrations of housing markets vulnerable to the impact of COVID-19. Clusters exist in the areas of New York City, Chicago, Baltimore and Washington, D.C. Although four counties in the Western region of the U.S. were in the top 50 most at-risk counties, that region had the fewest clusters overall. The report indicates that 43 of the 50 counties most vulnerable to the housing-related economic impact of the pandemic stretch from Connecticut to Florida and also within Illinois. According to the report, factors considered for at-risk status included percentage of homes currently facing possible foreclosure, the portion of homes with mortgage balances that exceed the estimated property value and the percentage of local wages required to pay for major home ownership expenses. The conclusions are drawn from an analysis of the most recent home affordability, home equity and foreclosure reports prepared by ATTOM. Rankings are based on a combination of those three categories in 406 counties around the United States with enough data to analyze. Counties were ranked in each category, from lowest to highest. The findings surface amid signs that home-price growth stalled across significant parts of the country in May 2020, with more expensive areas of the West among those getting hit hardest. “Home-sales data from around the country is starting to show that eight years of price gains may be coming to an end amid the economic damage flowing from the virus pandemic. It’s still too early to make any definitive calls, but the latest numbers show storm clouds gathering over the market,” said Todd Teta, chief product officer with ATTOM Data Solutions. “With this second special report on the potential impact of the pandemic, we see pockets around the country that appear more or less poised to withstand downward pressure on prices and other market conditions. Over the next few months, enough data should come in to tell us how things will most likely pan out.” Read the full report for additional highlights and the full methodology used.