CCIMs’ local market knowledge adds value in well-traveled markets.
a powerful economic engine, travel and tourism generate an estimated $1.9
trillion in the U.S. each year, according to the U.S. Travel Association. And,
where there are travelers and tourists, there are prime opportunities for
commercial real estate investment.
spots such as New Orleans — which sees an estimated 8.5 million tourists
annually — support thriving hotel and restaurant sectors, which, in turn, help
such established markets renew their claims as must-see travel destinations.
smaller markets can also thrive on the economic boon tourists and business
travelers bring to a community. For example, the allure of Mount Bachelor,
recently named one of National Geographic’s
top 25 worldwide ski destinations, draws 2 million visitors to Bend, Ore.,
annually. But the central Oregon town of nearly 80,000 is also gaining ground
for its entrepreneurial climate, luring young professionals and small
businesses from larger markets.
do CCIMs leverage the opportunities provided by a tourist-oriented market? For two CCIMs who work in these two diverse
destinations, it centers on having a vision, tapping into their network of
contacts, and providing in-depth market knowledge.
Big Opportunities in the Big Easy
much of New Orleans was damaged by Hurricane Katrina, the already-vacant
Audubon Building at 931 Canal Street was no worse for wear after the storm hit.
Originally built in 1909, the property served as office space with ground-floor
retail until 2004 when the interior was demolished. After Katrina in 2005, the
building remained untouched until 2009, when Robert Hand, CCIM, SIOR, now
president of Louisiana Commercial Realty in New Orleans, took on the listing,
which had languished unsold for the previous 12 months.
gutted eight-story building with no parking was located on the outskirts of the
French Quarter, making it a prime location for a hospitality investment. But
marketing the property and convincing a prospective buyer of its future use was
challenging. “Prospective buyers could not inspect above the first two floors
of the property since the stairs were demolished, there was no electricity, and
the elevator was removed,” Hand says.
the structural challenges didn’t hamper his marketing strategy. “I developed a
short list of existing hotel owners in the area and contacted each
individually. I also marketed the property regionally and nationally, reaching
out to hotel franchisees and national brands,” he says. “The tourism market is
a tight-knit group and people in the industry know each other, so you can work
through referrals and centers of influence. I had almost 100 people on my short
list and, of those, six made offers.”
the deal-clincher resulted from a true act of dedication that surpasses
traditional marketing tactics. “The last thing I did was climb out on a ledge
40 feet above Canal Street to post a large for-sale sign on the building,” Hand
says. “It turns out the sign attracted at least one buyer.”
relied on his CCIM tools and professional network to help streamline the
transaction. “I walked potential buyers through that process of determining if
they could make money off the property. I had already done the analysis and
because of this, potential buyers were able to determine if this was the right
project for them. I prepared a 30-page marketing presentation that covered
everything a buyer would need to know, including contacts in the city planning
department, architects, historic tax credit attorneys, and even research on
tourism, including the trend of tourists flying in and out of the airport and
how much money they spent on hotel stays. Site To Do Business was instrumental
in providing the demographics.”
securing a buyer, Hand conducted negotiations with the New Orleans planning
department, negotiated contracts, and helped the buyer receive $2 million in
income from selling historic tax credits. With a total cost of $45 million
dollars to purchase and renovate the property, the new owner, Canal Street
Lodging LLC, rolled out The Saint Hotel in 2012. The boutique hotel includes
166 luxury rooms on eight floors adjacent to the city’s Canal Street streetcar
line and a short walk from the French Quarter.
says having a vision for the property and working his professional network were
the keys to the deal. “The best strategy was to use several marketing channels
to reach local as well as regional and national hotel owners who are already in
the industry and know what the risks were. I had a vision, had already run the
numbers, and put together a team of experts to answer all the questions a
potential buyer would need to know before making an offer.”
Tourist Town Turned Tech Hub
close proximity to Mount Bachelor makes it a perfect place to spend long
weekends hitting the slopes. But this fast-growing town is also a mecca for
entrepreneurial small businesses. Recently pegged the “next big city for
entrepreneurship” by Entrepreneur
magazine, Bend offers prime leasing and development opportunities with some of
the country’s biggest high-tech firms, including Facebook and Apple.
It’s precisely this burgeoning growth and
start-up energy that requires commercial real estate investment opportunities
that appeal to a unique mix of tourists and business-minded locals, says Darren
Powderly, CCIM, partner and president of Compass Commercial in Bend.
Firehall Building, which was converted from the town’s historic firehouse into
mixed-use office, retail, and restaurant space nearly a decade ago, meets the
town’s unique demands. After its conversion, the space was occupied for five
years by a successful Italian restaurant, yet when that closed in 2009, the
landlord struggled to find a viable operator. Due to market demographics, its
unique architecture, and other factors, the 4,500-square-foot space “does not
fit the typical format for big national restaurant chains,” says Powderly.
Instead, as director of marketing for the listing, he sought regional and local
restaurateurs who could create the right environment for the space. His ideal
tenant turned out to be Brickhouse, an upscale independent steak house and wine
bar. “The restaurant has to have a great reputation among locals to have
staying power, but it also has to impress and market itself to travelers,
hotels, and local tourism agencies,” he notes.
the need to appeal to tourists is ever-present in Bend, a variety of
geographic, economic, and cultural factors has put the town on the map among
entrepreneurial young professionals as well. With direct flights from Portland
and San Francisco/Silicon Valley, Calif., high-tech companies and small
businesses are fueling the local economy and driving commercial real estate
region’s variety of business development and relocation tax and financing
incentives complement the entrepreneurial environment, Powderly notes, citing
Facebook’s $210 million investment in a 300,000-square-foot data center in the
area. Low land costs and ample access to power sources are other factors luring
high-tech companies, he adds.
real estate opportunities continue to grow among the tech and start-up firms
that are eyeing the region. For example, last year Compass worked with The
Staubach Co. to recruit Consumer Cellular to central Oregon. Consumer Cellular,
which is based in Portland, signed a long-term lease for a 77,500-sf call
center facility with plans to employ 500 people within three years.
the year ahead, Powderly plans to continue to use his CCIM network in an
economic outreach initiative he’s spearheading through the non-profit Economic
Development for Central Oregon. His efforts will concentrate on marketing the
region to small tech and start-up companies in the San Francisco Bay Area.
Powderly knows first-hand how to reach this segment of the industry, having
made his way to Bend — and into commercial real estate — via the Silicon Valley
says his CCIM training has been highly valuable in “providing world class
investment real estate advisory service to clients.” With most of his Compass
colleagues hailing from large markets around the country, Powderly notes that
he chose to pursue his career in a small market where he could enjoy a high quality
of personal and business life with access to the many natural attractions that
draw visitors to the area. “CCIM helps me achieve this,” he says.
Jennifer Norbut is
senior editor of Commercial Investment Real Estate.
Robin’s Resort Keeps It All in the Family
When Roger Langpaul, CCIM, of 360 Real Estate Services
in Clive, Iowa, saw the rustic 6.5-acre Robin’s Resort on the Lake of the
Ozarks shoreline near Osage Beach, Mo., his first thought was: “Condominiums.”
But that was in 2001, when developers were buying out small, family-owned
resorts and putting up condos like clockwork.
spending time at the resort and taking in some of the most beautiful sunsets
imaginable, Langpaul chose to buck the trend. He purchased the property as an
investment and retained the family-owned resort structure. Not only has the
investment been rewarding for Langpaul, but “by Robin’s staying as a
[single-owner] resort, we provide much more of an ongoing economic benefit to
the city and the surrounding community,” he says. “Our guests pay a city sales
tax and a lodging tax that stays here in our community. Our guests also
patronize the local restaurants, bars, entertainment venues, grocery stores,
and other retail services.”
made substantial investment into the property, including two condo-style
buildings containing a total of 22 units. “We designed the units such that our
exit strategy is to be able to sell these as condos and continue to rent them
in a rental pool,” he says. In addition, Langpaul added a second swimming pool,
a hot tub, a large covered pavilion for guest use, and three new docks.
continues to offer a family-oriented environment with events such as spring and
fall fishing tournaments and golf packages. Guest service is a critical aspect
of the ongoing operational policy. “Robin’s Resort may not be part of the
Marriott or Hyatt flags, but there is absolutely no reason that our guests
should not get that level of service while they are here,” he says.
gross income “has more than doubled” in the 12 years since Langpaul bought the
property. Overall, the investment in a seasonal tourist area has been a win-win
for Langpaul and the local market. “We have a long-term business plan that
complements and benefits the surrounding community.”