Commercial Real Estate: Back in the Saddle?

Cheaper Rates, Vigorous CMBS Activity Send Positive Signal about the Commercial Real Estate Market in 2012, According to John B. Levy & Company

Richmond, VA (PRWEB) February 28, 2012

After a Tale of Two Cities year in commercial real estate that gave lenders and borrowers alike the best of times and the worst of times, the outlook for 2012 is both positive and encouraging. According to “Commercial Real Estate: Back in the Saddle?” – the latest podcast produced by John B. Levy & Company (available online at http://www.jblevyco.com) – early indicators suggest that CMBS is back with a force.

“After the European debt crisis and US government bonds gave us a rocky ride in 2011,” says John Levy, founder of John B. Levy & Company, “commercial real estate is back in the saddle for 2012. The conduit business gives us a perfect indication of what we can expect. First of all, rates are cheaper. Ten-year fixed-rate money is 5 percent or less, which is 100 basis points better than what it was this past fall. In addition, second- and third-tier cities are now in the mix. Deal-making has moved from cities like Washington, New York, and Chicago to a broader array of markets . . . Albuquerque and Amarillo, Nashville and Richmond.”

"While CMBS is expected to make a strong statement in 2012, preferred equity and mezzanine debt will continue to bring additional leverage to transactions," according to Levy. In fall 2011, as well as earlier in the year, mezzanine debt and preferred equity fell in the 13 to 15 percent range, if not higher. Those prices are currently in the single digits, the result of low interest rates on US Treasurys. In no uncertain terms, current Federal Reserve policy is playing a significant role in the pricing of preferred equity and mezzanine debt.

“Perhaps nowhere is it more clear that the Bernanke fiscal policy is working than in the preferred equity, mezzanine debt arena,” says Levy. “Look at the 5-year Treasury note. It’s 1 percent. So if you secure mezz debt at 9 percent over five years – which sounds cheap by historical standards – you’ll still get a return that’s 800 basis points over Treasurys. By keeping interest rates extremely low for at least three years, Fed policy penalizes investors for parking their money, and it forces them to invest in the market. The result? Higher leverage is cheaper.”

While the multifamily housing market has performed well over the past several years, Levy believes that trend may be nearing its end. Several factors account for the success of that sector and, as such, hint at its easing. First, the market for single family homes has been abysmal, so people rented rather than bought. Second, multifamily housing has been the beneficiary of extremely cheap government-sponsored mortgages.

“Multifamily housing has been the darling of commercial real estate, and it owes a huge debt of gratitude to a single-family market that has been in the tank for years,” says Levy. “But what has really driven the success of multifamily is cheap money from Fannie Mae, Freddie Mac, and FHA. That’s my money, your money, government money. It’s puzzling as to why the government provides mortgages for less than what the private market charges.”

Firm Background
John B. Levy & Company, Inc. is a real estate investment-banking firm headquartered in Richmond, Virginia. Since John Levy founded the company in 1995, the firm has structured over $3.5 billion in financing for developers and owners of commercial and multi-family projects nationwide, often investing its own proprietary funds into transactions with its clients.

Mr. Levy is an expert on commercial real estate financing and the effects of interest rates on commercial real estate markets. He is the originator and author of the Barron’s/John B. Levy & Company National Mortgage Survey, which Barron’s published for 23 years, and co-creator of The Giliberto-Levy Commercial Mortgage Performance Index (sm), the first and pre-eminent index to measure and analyze the performance of investments in the commercial mortgage industry. Additionally, he is a former member of the Board of Directors of Anthracite Capital Inc., a New York Stock Exchange REIT managed by BlackRock, Inc. and a former director of Value Property Trust.

A seasoned speaker, Mr. Levy has presented nationwide to major real estate associations and key industry groups, including the Mortgage Bankers Association and the Urban Land Institute. He has also appeared on Bloomberg and CNBC. Mr. Levy also appears regularly as a guest commentator on FoxBusiness.

For more information about John B. Levy & Company, please visit our website at http://www.jblevyco.com or call Julia Grant at 804-644-2000, extension 258. You can also follow us on Twitter at http://www.twitter.com/jblevyco and become a fan on Facebook.

Resurgence in Commercial Real Estate Benefits Regional Banking Sector

Resurgence in Commercial Real Estate Benefits Regional Banking Sector

Social Media in CRE No Longer Just for Socializing - CoStar Group

With An Audience of a Billion, CRE Industry Adopting Social Networks for Business Outreach

By Mark Heschmeyer

February 22, 2012

Commercial real estate brokers and companies are slowly shrugging off their aversions to social media platforms and are engaging more frequently in online marketing, information gathering and client building.

While late to the social networking scene and still in a fledgling state of using websites such as LinkedIn, Facebook and Twitter, many in the CRE industry have started trying to harness their reach in hopes that one day it will lead to deals and dollars. At the same time, many others still refuse to join the fold and flat out state they will resist until they're the last ones online.

"Clearly social media is still a divisive issue in commercial real estate - the difference in sentiment between enthusiastic adopters and major detractors parallels the sentiments in other industries driven by client relations, such as nonprofits and law firms," said Angela Brown, external communications manager for CoStar Group. "What is interesting in the similarities is the fact that many of the perceived challenges involved with social media are not insurmountable - platform selection, time management and measuring ROI are actually relatively simple with a bit of education and practice."

"I also think there is a misperception out there that social media is a magic wand that is meant to replace traditional relationships. It doesn't work that way," Brown said. "It should be seen as an inroad to establishing new online relationships and as a bridge to building offline relationships."

Brown and Coy Davidson, senior vice president of Colliers International - Houston will be hosting a live webinar on costar.com entitled Social Media for Brokers next Wed. Feb. 29 at 12 noon EST. The two will tackle many of the issues raised in our survey and techniques for success in social media. Register here to participate.

In preparing for that webinar, CoStar updated an informal poll it did a year ago to find out what successes, challenges and strategies the industry has adopted in the past year.

"The commercial real estate industry still seems to be trying to get its arms around the basics of social media," Brown said. "It is not surprising then that the default use of social media is marketing and public relations - social media lends itself to broadcast messaging and people aren't quite sure how to use social media for business development purposes and that's the sweet spot. Promoting news and listings are one thing, but people want dollars and sense. That's why education and information are so important. Most marketers and salespeople know how to evaluate ROI for traditional channels like email campaigns and phone calls, but measuring social media return is a special skill."

CRE marketing and communications executives have become huge advocates for social media.

Amy Schenk, marketing manager for Cassidy Turley in Cincinnati has the firm all over the Internet on sites such as Facebook, LinkedIn, Twitter, YouTube, Google+ and is researching the use of Pinterest.

"Over the past year, I have seen a huge increase in CRE professionals accepting social media and becoming more open to utilizing it for business," Schenk said. "The CRE industry as a whole is very conservative and set in its ways of operating and therefore usually follows behind other industries when it comes to adapting to new business tools. However, it seems there is finally consensus that social media is here to stay which created a sudden rush to become involved."

"Referrals are a huge source of business in CRE and social media is all about referrals," Schenk said. "By sharing, tweeting, posting, liking and pinning, people have built a universe of over a billion people that could be referring your services. At Cassidy Turley we have found social media to be a vital part of our CRE business development, customer service and marketing platform. The statistics prove that it's critical to have a place in the social media arena since it is now where the majority of people spend their time to socialize with friends and business acquaintances, find the latest news, research companies and professionals, and share information.

Gail Donovan, Director of Communications at Ariel Property Advisors in New York, said commercial real estate professionals will be more effective if they can reach a wider audience of buyers and sellers.

"We believe in reaching members of our target audience of current and potential clients and investors by using the communication tools they are most comfortable with. For this reason, we use a full menu of delivery options -- email, mail, fax, Twitter, Facebook, LinkedIn, RSS news feeds, and LoopNet," Donovan said. "At Ariel Property Advisors, we see social media as another distribution tool with which to sell properties for our clients, share our research, and market and brand our firm."

Alicia Miller, director of marketing at Rock Commercial Real Estate in York, PA, said social media allows instant conversations to take place.

"We have had direct property inquiries and referral leads come from social media," Miller said. And "social media is a wonderful way to pitch news to media and promote clients successes."

"Brokerage advisors use their own LinkedIn accounts for social networking and as a referral source. Marketing uses LinkedIn and Twitter to communicate settled listings, ratified leases, available properties, changes to available properties, client success stories, CRE research trends, team updates and successes and carry on conversations regarding CRE interests, both local and national," Donovan said. "We currently integrate several easy to use tools that allow marketing to monitor, publish and analyze our social media channels allowing more time for content creation."

Caitlin Luebbe, lease and marketing administrator for Ironwood Investments in Shoreline, WA, said social media can be an advantageous method of expanding your network, increasing brand awareness, and deepening your customers' sense of brand loyalty, especially if your company's drivers are aimed at directing business to your company website.

"A focused online marketing strategy that's aimed at effectively engaging commercial property owners and real estate investors within the target market can help a company to access hard-to-reach market consumers and generate favorable word-of-mouth advertising," Luebbe said. "Every post and blog update is ultimately an opportunity to reinforce your company's official brand and corporate identity and differentiate yourself from the competition. Such online activity also helps to positively impact your placement in organic search-engine rankings and make sure that you get noticed on sites like Google."

Real estate executives and brokers too provided feedback on their individual experiences using social media. We present those here.

Sourcing Capital

In short, I feel strongly that social media impacts my business in four major ways: it boosts visibility, fosters relationships, leverages media dollars, and builds brand equity. Recently we connected with a new capital source looking to invest in distressed properties as a direct result of a "re-tweet" from one of our followers on Twitter. The principals of our firm, Kinetic Companies, take a very hands on approach to using social media. Our biggest challenge has been training brokers, stakeholders, and employees to "think before they click" and recognize the impact blast style via social media messaging has on our company brand.
Joel Moyes, Principal, Kinetic Companies, Phoenix, AZ

An Everyday Tool

Our team currently uses multiple social media mediums as both an informational gathering tool as well as a way to build awareness of our brand / market activities that demonstrate good implementation of our service lines. We regularly rely on social media like Twitter, LinkedIn and Facebook for everyday activities in order to improve our business development and maintain existing client awareness. I do not believe you can quantify the gains on a specific basis as our experience has been more abstract as a research tool in-order to connect dots or some type of PR regarding information about an industry sector.
Albert Ellis, Senior Associate, Colliers International, Southfield, MI

Finding Us in New Ways

Social media is changing how America does business. It has a greater effect on the millennials, and Gen Y that are the early adopters when it comes to how they are handle consumption. At Velocity Retail Group we use social media to reach the smaller growing percentage of the population that tweets and follows. But we still have to rely heavily on traditional methods because so many in the industry, mostly baby boomers are obtuse to the newer tools. One of the main successes is the power of the Internet and search engines allows people to have access to the information that we put out there on blogs, tweets and our Facebook page, and LinkedIn and enables them to find us in ways that were not as likely before.
Dave Cheatham, Managing Principal, Velocity Retail Group, Phoenix, AZ

Connecting with Information

I am a newbie to social media. I use it but try not to let it run my life. I use social media (Twitter) to feed information which I find interesting and important to what I do. It has allowed me to connect with some pretty interesting information sources when I need information.
Greg Rutten, Principal, GRu Ventures Inc., Del Mar, CA

Success Is Measured by Amount of New Information

Social media has enabled me to casually "meet" new CRE members and have enabled me to exchange meaningful ideas and find information about trends, fact, articles and information about software products that I may have never been aware of or known about the capabilities of the same. My successes have been measured by the advice, information and experiences that I have shared and received by others in CRE, that I may not have had access to before.
Howard Applebaum, President, Corporate America Realty & Advisors, Rutherford, NJ

Keeping Track of Contacts

Social media provides an easy way to see what people are up to and a great way to get introductions to people you may want to meet and discuss things with. I have used it to make people aware of new listings and real opportunities I have. But mostly I use it in just getting my name out and letting people know what I do. I have over 600 LinkedIn contacts and release information to them on a very selective basis. Undoubtedly the biggest challenge for social media in a business application is the lack of time most people have to learn something new.
Ray Rosado, Broker Associate, Cassidy Turley Fuller Real Estate, Denver, CO

The Interaction Shows You're Interested in Your Clients

Social media isn't important just to CRE but to any business looking to expand their client base and reach more customers. As far as social media directly relates to CRE, you aren't going to find a head of real estate for very large companies that will be following you on Twitter or something, but you can use social media as a way to keep clients more updated on the news and trends in the market place as well as deals big and small that have closed in the marketplace. Lastly, I think the more you have your own social media interacting with your own client's (because they almost 100% will have their own as well), it shows that you are interested in their expansion and their business doing well too.
Joshua D. Arcus, Broker & Managing Director, The Siderow Organization, New York, NY

Generating Buzz

In my area of specialty (multifamily), I figured out early on that social media is a great tool for generating buzz about a particular property. Using my Facebook page, I have been able to secure additional listings or at least generate conversations with owners and lenders regarding either the property I am highlighting or one of their properties near mine. I don't think it will ever replace direct communication but it will reduce the need for paid advertisements.
Kevin Rocio, Broker, @properties, Chicago, IL

A Foot in the Door

I am an avid user of LinkedIn and use it to actually drive business not just see how many contacts I can get. Whenever I am trying to break into an account I will try to research LinkedIn accounts to see who works at that company. I'll scan through each employees profile and look for common ground. Once I can find common ground, reaching out is usually easier. I also reach out on the phone, not through LinkedIn as it's so much warmer. I simply use LinkedIn to do the research, not to try to conduct business. This can be an excellent way for tenant/landlord rep brokers to get their foot in the door with companies they are trying to secure business with but don't know many employees.
Marty Busekrus, Senior Associate, CBRE | Capital Markets, Boca Raton, FL

As Close to Free Advertising as You Can Get

I am an active blogger as well as contributing columnist to the Savannah regional business journal. The ROI in social media specifically, being recognized as a local industry expert, is by far a better investment than the traditional route. That is the great thing about social media, if you have the time to commit, it is as close to free advertising and as you can get.
J. Rex Benton, III, Principal/Business Manager, NAI Savannah, Savannah, GA

Social Media in CRE No Longer Just for Socializing - CoStar Group

February 2012 Commercial Repeat Sales Analysis Now Available - CoStar Group

Latest Findings from CoStar's New Economic Indices Offer Insight and Analysis of Commercial Real Estate Sales Activity

By CoStar Staff
February 20, 2012

CoStar Group released the latest findings of theCoStar Commercial Repeat-Sale Indices (CCRSI) last week, providing the market's first look atcommercial real estate pricing trends based on property sales that closed through December 2011, and offering the broadest measure of commercial real estate repeat sales activity.

The National Composite Index of commercial real estate prices ended the fourth quarter of 2011 relatively flat with December 2011 commercial real estate pricing essentially unchanged from October 2011 levels. This trend was in-line with fourth quarter pricing performance in each of the past two years, as heavy pre-year-end trading activities kept prices stable. The National Composite index ended 2011 up just 0.2% from year-ago levels, however the index was up 5.5% from its low point in March 2011, thanks to a mid-year surge.

The Multifamily index continued to demonstrate the strongest pricing growth, advancing by 6.8% in the fourth quarter of 2011 and increasing a total of 15.3% in 2011. The Retail index lost ground in the fourth quarter of 2011 and returned to its lowest value since 2003.

Among CCRSI's regional indices, the West regional index recorded the largest regional gains, aided by outsized growth in office and multifamily pricing levels, while the Northeast regional index continued to track the largest cumulative pricing gains since the trough of the recent cycle. While distressed trading volume remained elevated in the fourth quarter, its impact on pricing levels was mitigated by a surge in non-distressed property trading.

View the press release for a full analysis.

CoStar developed the CoStar Commercial Repeat-Sale Indices to provide a comprehensive set of benchmarks that investors and other market participants can use to better understand and predict price movements within the commercial real estate sales market.

We believe an accurate measure of real estate price changes is a critical component to understanding investment or market performance. By covering all levels and all types of CRE transactions, and by using well-tested available methodologies, we believe that CoStar’s CCRSI indices will provide one of the most comprehensive benchmarks for tracking and analyzing price movements within commercial real estate.

CoStar plans to release updates for the CCRSI every month to serve as timely indicators of the overall health of the commercial real estate industry.

To access the CoStar Commercial Repeat-Sale Indices, please go tohttp://www.costar.com/ccrsi/index.aspx.

February 2012 Commercial Repeat Sales Analysis Now Available - CoStar Group


To get local market information on the Rio Grande Valley visit www.nairgv.com

Real Money: More Capital Expected To Flow to CRE - CoStar Group

National Retail Properties, COPT, Equity One, Rouse Among Several Raising Capital

By Mark Heschmeyer

February 22, 2012

A number of lenders see more capital coming back into commercial real estate in 2012 in much greater volumes and across multiple lending sources.

All of the 20 institutional lenders with whom Jones Lang LaSalle met with during last week’s Mortgage Bankers Association conference in Atlanta indicated a stronger appetite or allocation for placing commercial real estate mortgages in 2012.

Jones Lang LaSalle also partnered with Penton Media Research on a proprietary survey that compiled feedback from 186 borrowers and 136 lenders that together comprise a total median $73.3 million in commercial real estate asset value.

In the survey, lenders reported positive expectations for 2012 funding aims including a 12% uptick in expected capital placement this year.

"We expected to hear bold predictions from all of the lending sources along the capital stack and they didn't disappoint with strong inclinations to place commercial real estate debt," said Tom Fish, co-head and executive managing director of Jones Lang LaSalle's real estate investment banking business. "We were pleasantly surprised with lenders' acceptance of risk as more indicated they had cash flow for the secondary markets and property types, indicative of lenders moving up the risk curve."

"While absolute borrowing rates are at historic lows, lenders view commercial real estate mortgages as attractive investment opportunities versus alternative bonds or other fixed-rate alternatives. That should result in larger allocations to commercial real estate this year from life companies, commercial banks and CMBS originators," added Mike Melody, the other co-head and executive managing director.

The lenders Jones Lang LaSalle surveyed agreed, indicating an increasing trend that has been on the move the past two years. Lender financing in 2011 increased an average 11% over 2010. Lender respondents expect 2012 financing to increase even more with a 12% improvement over 2011.

2012 lender expectations highlights were as follows:

• Financing in 2011 increased an average 11% from 2010. Respondents expect 2012 financing availability to increase 12% over 2011.


• Apartments represent the best investment opportunities as 76% chose the product type. Another 48% of lenders worry the most about hotel loans.


• Lenders indicated that 62% of loans closed are for long-term and 38% are for short-term loans. Those percentages aren't expected to move much with 2012 long-term expectations at 64% and short-term at 36%.


• Following a volatile 2011, CMBS originators are back in the market in a big way in 2012, as volumes are expected to rise as high as $50 billion this year.


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Real Money: More Capital Expected To Flow to CRE - CoStar Group

Choosing a Location for Your Business

There's more to consider than just cost

From Scott Allen, former About.com Guide

One of the basic concepts taught in almost every introductory marketing course is The Four P's: Price, Product, Promotion and Place. "Place" refers generally to distribution, i.e., where your customer evaluates and ultimately receives your product or service. While this may not matter much for people who work virtually, or who run a business that drop-ships from a third party, it's critical for restaurants, retailers, and even many service businesses. Ironically, while "place" is often the most permanent of the four P's, it's also often the most overlooked.

Location is about more than just choosing a building. Perhaps for you, opening your business in your own town, or even your part of town, is a given. But consider the big picture:

• State - Income taxes and sales taxes vary greatly from state to state, as do regulatory requirements. Is the state you live in friendly to entrepreneurship? To the specific type of business you want to run? Now might be the time to consider a move if it isn't, or possibly to open your business in a nearby state if you live near a state line. The Small Business Survival Index ranks the various U.S. states on how friendly they are to small business.
• City - Rent and other costs, availability of labor, taxes, regulations and government economic incentives can also vary greatly from city to city, even within the same state. Or maybe a small town is the perfect spot for your business. Entrepreneur Magazine publishes an annual list of the Best U.S. Cities for Small Business. Under 30 CEO also has a list of the best cities for young entrepreneurs.
• Part of town - What kind of commute is involved? Is the part of town consistent with the image for your business? Rent varies greatly according to location.
• Location relative to streets, parking, and other businesses - Do you need to be visible and/or easily accessible to pedestrian and automobile traffic? Will being close to businesses that draw a similar clientele help your business? For example, a sporting goods store or health food store might do very well next to a gym.
• Type of location Do you need office space, retail or warehouse? Retail is generally the most expensive of the three.

There are many factors to consider in choosing the location for your business. While cost is obviously a major consideration, you must also think about your various constituencies. Is your location important to...

• You? The space has to work for you, or it won't work. Remember, you're the one has to work there every day.
• Your customers? It also has to work for your customers, or it won't work. No customers = no business.
• Your employees? This issue may not be as critical at first, especially if you don't have any employees yet. But the ability to attract and keep good employees will be affected by your location.
• Strategic partners? While this may not seem like a big issue, the reality is that strategic partnerships happen more easily when the partners are local to each other. Why do you think that certain areas become hubs for certain types of business, such as Silicon Valley for the tech industry?
• Potential investors or buyers? You may not even be thinking about that yet, but potential investors looking at the long-term value of the business will see location as an important factor.

Each of these groups has different concerns about the location:

• Cost - Most obviously, can you afford it? Also, though, consider whether your customers and employees can afford it. For example, is there free parking, or is it expensive? Will higher rent cause you to charge higher prices to your customers? That's not necessarily a bad thing, but a factor to consider. What about taxes? Income taxes and sales taxes vary greatly from state to state, and if you buy your own property,
• Convenience - Is it easy to find? Is parking close by? Consider your clients. If you're dealing with pregnant mothers and the elderly, they may have a different concept of "convenient".
• Safety - This is an increasingly important issue for both customers and employees. Is the parking close by? Well lit? Is there security on the premises?
• Prestige - Would a downtown address add credibility? Will wealthy clients favor a business in their own neighborhood? Some places even provide virtual offices with prestigious addresses, such as Beverly Hills, Silicon Valley, or Manhattan.
• Traffic - Retailers and restaurants love it, office workers don't.
• Facility requirements - Do you have any special needs, such as high power consumption or specialized wiring? Do you need meeting space, but only occasionally? You might consider a shared office suite (often called executive suites) in that case.
• Zoning - Many cities have very strict zoning requirements. Make sure your business is even allowed there before you sign the lease!

As you can see, a fully informed decision involves a fairly complex matrix of issues. Determine your priorities, keep an open mind about your options, do your research, and get ready to make one of the most important decisions about your business.

__________________________________________________________________________

495 Commerce Center

Mix-Use Business Park in McAllen, TX 

Ideal Setting
495 Commerce Center is situated between McColl and Jackson on 495 (Pecan Blvd), a prominent thoroughfare that offers high visibility and easy access to major transportation arteries. Thoughtfully designed landscaping element, including a lake and jogging trails, enhance the campus-like quality of this business park. The development offers varying sized lots starting at 1 acre that are ultimately customized to fit the client’s needs.

495 Commerce Center offers direct access or proximity to:

• Regional transportation

• Future interstate I-69

• Hospitals & Medical support services

• Retail centers and support services

• An international airport

• Eleven  international bridges

• Higher education and technical training

• Trade-related training resources

• Federal, State and County courts

Tips for Choosing a Business Location

U.S. Small Business Administration

The ideal location for your business depends on a number of factors. The most important consideration is the kind of business you're running. Before you begin scouting a location, consider a few of the factors that can help you select the right location for your business.

Determine Your Business Activity

Your business activity is an important determining factor of where your business should be located. Answering the following questions can quickly narrow your location choices.

• Do your customers come to you?
• Do you have to go to your customers?
• Do you have employees?
• Do you manufacture products for distribution?

If your type of business depends heavily on pedestrian or drive-by traffic, such as a florist, gift shop, or clothing boutique, you'll want to seek popular retail locations, such as a downtown area or a mall, where there are few restrictions on signs that can help attract passing customers.

If customers typically seek your type of business, such as a child care service, beauty salon, or fitness center, you'll want to find space that is easily accessible from population centers, major roads and public transportation.

If your customers do not typically come to you, other location factors may be more important than physical proximity to your customers. For example, if you conduct much of your business online, establishing a home-based business might be more desirable and economical than leasing commercial office space. If you manufacture products for distribution, an ideal location might be an industrial park near major transportation ports.

Ease of Access

If your business is a customer destination, consider how people get around in the area where your business will be located.

• If you are scouting a location in a suburban area, most people may get around by car. You'll need to make sure you are close to major streets, and have plenty of parking.
• If you are scouting a location in an urban area, consider areas around public transportation hubs or areas of the city where there is a lot of foot traffic.

Proximity to Your Competitors

While it may seem counter-intuitive, operating a business close to your competitors is often very beneficial. This is especially true if you have a retail business that relies heavily on foot traffic. Shopping malls are a good example of why proximity to your competitors is an important factor. Most major pedestrian malls are full of clothing shops, and cost of retail space is often very high. The reason for this is that the number of potential customers increases exponentially on a per-store basis around a concentration of similar businesses. For example, while one store might attract 50 customers, two stories might attract 200 customers, and three stories might attract 1,000 customers.

Zoning and Signs

Before setting up shop, check with you local zoning authority to make sure you will not break any city ordinance or zoning policies in your preferred location. Also consider your sign requirements and compare them to sign regulations set by your local government. Many communities set restrictions on the size and appearance of signs.

You can find out how property is zoned by contacting your local planning agency, or use the state and local search engine to find if your city or county has zoning ordinances online.

Home-Based Business

Home-based businesses make up approximately half of all U.S. businesses. Convenience and low start-up costs are just a couple of the reasons that make a home office an attractive business location. However, running a home-based business isn't for everyone. Because most residential areas are not zoned for commercial businesses, your local government may have tight restrictions on the types of businesses permitted to operate out of a home. Check with your local zoning authority for rules that apply to you. If you plan to hire employees and have customers come to you, a home-based business is probably not the best business location for you.

_____________________________________________________________________

One option.... locating in a Mix-Use Business Park. 

495 Commerce Center
is a 110 acre master planned, mixed-use business park in McAllen, Texas. 495 Commerce Center is the only Class "A" business park south of San Antonio and is professionally planned to put businesses on the fast tract to success. This prime development is thoughtfully designed with landscaping elements that enhance the whole park from the jogging trails to the central water feature focal point. 

495 Commerce Center
is a secure investment. The business park offers various sized lots starting at 1 acre that are ultimately customized to fit the client's needs. An Owners Association and Common Area Maintenance program promote property values while the Architectural & Development Standards control building types, uses, mix, as well as the quality of construction, parking, landscaping and the architectural character of the project.

REITs Find 'Perfect Storm' to Ride Real Estate Wave

By: Jeff Cox
CNBC.com Senior Writer

Low interest rates and an improving jobs picture have given real estate investment trusts a boost that makes them an attractive alternative to stocks and bonds.

Commonly called REITs, the trusts have underperformed stocks this year just slightly but face strong prospects going forward as the two critical factors propelling the commercial real estate market continue to take hold.

REITs invest across a broad array of sectors, from office buildings to shopping malls and hotels. There also are health care, timber and infrastructure REITs. They are required to distribute 90 percent of their taxable income to investors through dividends.

"That really is a perfect storm that's very good for REITs," says Rick Romano, co-manager of the Prudential Global Real Estate Fund in Newark, N.J. "It will mean the economy isn't growing fast enough to add new supply and for rates to increase, but we have enough jobs growth so vacancies are starting to push rents."

Ironically, it is the tepid but steady pace of job growth — less than 150,000 per month — that creates a Goldilocks environment where the jobs picture is not too hot so as to drive home-buying but just hot enough to propel rents higher.

"If we can stay around 100,000 to 200,000 (new jobs) a month, we think that's kind of a good backdrop for REITs and real estate," Romano says.

The MSCI REIT Index has gained about 6.5 percent in 2012 after rising 8.7 percent the previous year.

Jeff Cox
Senior Writer
CNBC.com

Industrial REITs have done best, gaining 15.5 percent, while hotels are up 11.4 percent and shopping centers about 11 percent, according to the National Association of Real Estate Investment Trusts.

That compares to stocks, where the Standard & Poor's 500[.SPX  1358.04    14.81  (+1.1%)   ] has gained 7.4 percent, and Treasurys, which have lost about 2 percent.

But the $200 billion U.S. REIT market doesn't face quite the same challenges as stocks and bonds, and offers an attractive dividend at about 3.6 percent industrywide.

The real estate sector, struggling thought it may be, boasts strong support from government policy makers — the Federal Reserve  has pledged to keep rates low — and faces less danger from headwinds such as the sovereign debt crisis in Europe.

S&P on Wednesday reiterated its "stable" outlook on REITs and said they should do better than home builders this year. Making that view even more positive is that sentiment as registered by the National Association of Home Builders has hit its highest level since May 2007, according to data released Wednesday...

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