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NEW YORK CITY, NEW YORK (March 20, 2023) – Tom Georges, vice president in Northmarq’s New York City office, was recently interviewed and featured in a Connect CRE article titled, “Go Visit Your Healthcare Provide – At Dollar General?” The story also highlighted a recent report by Northmarq, “Net Lease Favorites Expanding Healthcare Services,” which noted that non-medical retail, specifically Amazon and Walmart, had expanded into healthcare alongside other retail pharmacies like Walgreens and CVS.
While the non-medical retailer’s expansion into healthcare may be common knowledge, the plot may soon take an interesting twist. Dollar General is stepping into the medical care space as well, according to both the Northmarq report and Georges.
The report indicated that Dollar General has partnered with DocGo and is testing mobile health clinics at three of its Tennessee stores. The clinics, which are set up in “sizable vans in shop parking lots,” offer basic, preventative and urgent care services. The mobile clinics are in the “testing and assessment” phase. Based on consumer feedback, Dollar General will determine whether a future roll this out is feasible.
Georges indicated that the move of discount retailers into healthcare isn’t that surprising. “They’re recognizing a need and shift in healthcare destinations for the vast population, and see an opportunity to generate additional revenue.”
NEW YORK, NEW YORK (December 7, 2022) – Wealth Management recently highlighted a topic that has frequented headlines for some time: upcoming office distress. But, while the drum beat of the office sector’s pending demise has been steady in the media, the figures from the firms that track commercial loan delinquencies, such as Trepp, Fitch and Moody’s, tell a different story.
The article notes that in October, the office CMBS delinquency reported by Fitch stood at 1.23 percent, up from 1.19 percent in September, but still behind delinquencies for hotel, retail and mixed-use properties. Trepp reported the office delinquency rate for the month at 1.75 percent, up from 1.58 percent in September. The firm’s researchers tied the increase to lease expirations in the sector. Meanwhile, Moody’s reported the conduit delinquency rate for office properties at 2.69 percent, up 13 basis points from September and 30 basis points from a year ago.
A marker of potential instability in the sector is lessening demand for office space and a marketplace increasingly favorable to tenants. Tenants are waiting until the end of their leases to consider renewal or negotiation, noted Asher D. Wenig, senior vice president at Northmarq. “Landlords are increasing tenant improvements (TIs) allowances, and with a flux in office rents, it’s become a bit difficult to know the backfill options in many markets,” he added.
The office sector will likely undergo a lot of changes in coming years, with different tenant footprints and worker demands, Wenig says. While people are returning to the office, large gateway markets including New York, San Francisco and Chicago are seeing rent corrections and companies downsizing their office space.
Other topics include:
NEW YORK, NEW YORK (November 9, 2022) – SomeraRoad has sold off the real estate of one of the SouthSide Work’s key hospitality anchors as it continues to reposition the next complex with its new “micro neighborhood” approach.
A new owner based in New York called Regal Ventures bought the Cheesecake Factory restaurant property at the heart of the SouthSide Works, paying $7.1 million for the property. The restaurant, known to draw more than one million diners a year, will continue to operate as normal, as it renewed to a new 15-year lease last year.
Ian Ross, founder and principal of SomeraRoad, announced the sale on his LinkedIn account, describing it as part of an ongoing component of executing its business plan.
The sale for a restaurant building that totals more than 12,500 square feet in size translates to a price of $565 a square foot, SomeraRoad announced.
The sale comes after SomeraRoad had bought the SouthSide Works as a distressed asset in the year before the pandemic, acquiring the nonperforming debt of the asset and then taking ownership with some significant redevelopment plans.
Now, the company is touting it was able to find at interested buyer for the property amid a challenging business environment as it works to invest elsewhere at SouthSide Works, with its $85 million apartment development The Park now under construction.
The New York-based investment sales broker who helped to bring the deal together, Asher Wenig, of New York-based Northmarq, noted a “major rejuvenation” of the SouthSide Works in a prepared statement and expects “this strong performing Cheesecake Factory will benefit from major growth in the area given the healthy term, rent and percentage rent outlined in the lease.” Read Northmarq’s release on the property.
SomeraRoad has invested to redevelop the town square in front of the Cheesecake Factory, establishing three new food vendors there, as part of its bid to achieve a renewal with the restaurant, now selling off the restaurant asset as it works to improve the larger complex.
The sale of the Cheesecake Factory property is the second sale of a portion of the SouthSide Works by SomeraRoad, which also sold The Flats at SouthSide Works, anchored by a new Rite-Aid store at the corner of 27th Street and East Carson, in July.
MINNEAPOLIS, MINNESOTA (December 9, 2020) — The Bowery Mission, an organization serving homeless and hungry New Yorkers since the 1870s, received a 2020 Community Involvement Grant from NorthMarq’s New York City Office. The mission of the organization is to combat the epidemic of homelessness affecting nearly 80,000 people and New York City and to meet the needs of neighbors in the metro area. The Bowery Mission is collectively fighting the issue of homelessness and affordable housing with the New York City Rescue Mission and Goodwill Rescue Mission.
NorthMarq’s New York City Managing Directors Ernest DesRochers, Craig Bjornsund, Robert Delitsky, and Keith Braddish nominated The Bowery Mission. “For many years, the NorthMarq and the greater real estate industry has supported the charitable ministry of The Bowery Mission,” said DesRochers. “Especially during this pandemic, their work has been paramount in helping hungry and homeless New Yorkers, establishing children’s camp programs, and providing compassionate care and life transformations for thousands of individuals, caught in the cycles of poverty, hopelessness, and dependencies of many kinds.”
The Bowery Mission’s grant will support the organization’s emphasis on connecting to the city’s most vulnerable communities. Just as it did during hard seasons of the past, from the 1918 flu pandemic to the Great Depression to Hurricane Sandy, The Bowery Mission is focused on making it possible to continue providing nutritious meals, hot showers, safe shelter, and much-needed care to New Yorkers in need.
“We appreciate NorthMarq’s commitment to making a difference for people experiencing homelessness through your various areas of work, including your Community fund. Your support makes such a difference, now more than ever,” said Audrey Cooper, The Bowery Mission Development Office – Partnerships.
In the third year of NorthMarq’s Community Involvement Grant program, the company has awarded grants to 18 non-profits in 16 cities. The program solicits nominations from each local office, and had an increase of 20 percent from 2019, with a total of 18 non-profits focused on affordable housing and reducing homelessness receiving these grants in 2020.
Craig Bjornsund in our New York City office celebrates 35 years with the company this week! He’s known for providing valuable strategic insight, answering questions thoughtfully, and being a stabilizing force in the office. A lifelong hockey enthusiast, he’s an avid fan of the New York Rangers as well as the Mets baseball team. Congrats on reaching this milestone, Craig, and thanks for being part of the NorthMarq team!
Ernest DesRochers featured in New England Real Estate Journal
President John F. Kennedy once said that “Change is the law of life. And those who look only to the past or present are certain to miss the future.”
When it comes to the current state of the commercial real estate market change is all around. Whether it is the economy and interest rates, technology advances, and lending strategies, the only constant is change.
The market sentiment for commercial real estate investing is still mostly optimistic but predicting the future is still an art and not a science and always subject to change.
For example, economists have been predicting for several years that we will be facing an economic slowdown in “the next 18-24 months.” Despite international trade turmoil most economists still predict that 2019 will be a healthy year, which is good for all real estate.
Ernie DesRochers in our New York office celebrates 30 years with the company this month. He’s an avid Yankees fan, world traveler and wine aficionado who, like a fine cabernet, has only gotten better with age! Thanks for being part of the team, Ernie!
While the full implications of the new tax reforms have yet to be felt, many in the commercial real estate sector believe these reforms will reflect favorably on this industry. The reduced corporate tax rate has already inspired many companies, including Apple, Boeing, and banks like JPMorgan Chase, U.S. Bancorp, Wells Fargo, Bank of New York Mellon Corp. and Fifth Third Bank to up their investment in employees through bonuses, higher minimum wages, increased 401(k) matching and advanced education programs.
A stronger workforce and healthy bank sector help the economy as a whole, but Ernest DesRochers, senior vice president and managing director in NorthMarq’s New York office, believes there is much more to be excited about.
“More than any sector, the commercial real estate sector has not seen potential benefits like these since the early 1980s,” he says. “Shortened depreciation for all property types, from 39 years for commercial, 27.7 years for multifamily and 25 years for all types, is a boon to itself. Add the retention of 1031 tax deferred sale rules, full deduction of mortgage interest, the preservation of carried interest and the taxing of pass-through entities like LLCs at a lower tax rate, and we could see major new development in many property sectors.”
Of course, there is always the possibility that there could be too much of a good thing. Confidence – not to mention developers – can overbuild. Lenders can loosen their purse strings just a bit too far. Investors can rob Peter to pay Paul. While 2008 might be 10 years ago, responsible lenders would like to believe those within the industry still remember it like it was yesterday.
“Massive tax breaks for the commercial real estate industry often cause a boom to bust in the market as lenders chase product to lend on and developers take on more risk to generate yields,” DesRochers cautions. “Will lenders maintain the discipline they have developed since the bust of 2009? Will cap rates move up or down to reflect the new tax benefits?”
These concerns and further questions surrounding the new tax reforms aren’t unique to DesRochers, as Kristen Croxton, senior vice president of Capital One Multifamily Finance in Capital One’s Newport Beach, California office, can tell you.
“Tax reform was a hot topic at the recent National Multifamily Housing Council conference and I think it will continue to be a hot topic until all the pieces are ironed out,” she says. “I’m most interested in better understanding which clients and types of organizations will benefit the most from the tax changes. In addition, it will be important to better understand how these changes could impact client investing decisions in 2018. Will they buy more? Refinance more? These are questions that I’m hoping CREF will shine a light on.”
Ernest DesRochers, senior vice president/managing director of NorthMarq Capital’s New York metro office, recently authored an article for the Connecticut Real Estate Journal. The article, titled “Commercial Real Estate Lending in 2017: Optimism and Uncertainty,” covers a range of topics highlighted at the recent MBA Multifamily conference in San Diego. Optimism is still abundant, but thanks to market uncertainty, many are unsure how long this will last. See the full story here.
According to Franklin Roosevelt, “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
The Mortgage Bankers Association recently held its annual Commercial Real Estate Finance and Multi-Family Conference in San Diego, California. Over 3,000 people attended the four day conference whose focus is networking, relationship building and deal making.
The market sentiment for commercial real estate investing is still optimistic. Conference participants were uncertain, however, if this optimism can continue. There were several takeaways from the conference which support this premise:
Underwriting parameters continue to be conservative. Insurance companies are generally quoting spreads of 160-200 over US Treasuries for sub 65 percent loans. Lower spreads for lower LTV loan are available. The minimum debt coverage ratio is generally 1.50x assuming a 25 year amortization schedule. Available loan terms are generally 7-10 years with longer fully amortizing loans (up to 30 years) available on a select basis.
In contrast, pricing for conduit loans are generally 200-245 over swaps with loan to value ratios of 70 percent or less. Spreads can be tighter for lower sub 60 percent LTV deals. These loans generally require full leasing reserves. Generally these loans are 10 years in length with 30 year amortization. Some interest only may be available if the property, and leverage, warrants.
Multifamily lenders continue to have strong deal flow but they too have gotten more conservative. Pricing is generally 175-225 over US Treasuries depending on leverage and DSC ratios are a minimum of 1.35x. Loan terms are generally 5-10 years.
In common with all of these lenders is the desire to maintain discipline with respect loan underwriting metrics. As capital continues to chase the best deals, lenders are holding to debt yield, LTV and debt service constraints, and are insisting on getting paid for risk.
With the second quarter about to commence, investors with financing needs will have to meet market challenges head-on in order to achieve desired financing levels.
Ernest DesRochers authored a featured commentary in the March 18 edition of The New England Real Estate Journal titled “Commercial real estate lending in 2016: Risk on, Risk off!” Read the full article here.
NEW YORK CITY (December 17, 2015) – Robert Delitsky has joined the New York City office of NorthMarq Capital as senior vice president and managing director. At NorthMarq, Delitsky will be responsible for arranging various types of financing through NorthMarq’s life insurance company correspondents, banks, CMBS lenders, Fannie Mae and Freddie Mac. He will also arrange equity, preferred equity and mezzanine debt for his clients.
“We are excited that Robert is joining our team here in New York,” said Ernest DesRochers, managing director of NorthMarq Capital’s New York City office. “He brings experience as a successful mortgage banker and has a deep knowledge of the New York metro market, having transacted here for many years.”
Prior to joining NorthMarq Capital, Delitsky spent 19-years as managing director at HFF’s Manhattan office. Before that he was associated with a shopping center developer on Long Island. He has been involved in the real estate business since 1979 when he began his career at Bankers Trust Company and later held a position at Bank Leumi Trust Company of New York.
Delitsky is a licensed Real Estate Broker in New York and is active in The Real Estate Board of New York, ICSC, ULI and is a former Membership Chairperson for the New York Chapter of NAIOP.
MINNEAPOLIS (Jan. 21, 2014) – Keith Braddish has joined NorthMarq Capital as senior vice president/managing director of its New York City office.
In his new role, Braddish will focus on originating senior/mezzanine debt, joint venture and preferred equity for commercial real estate transactions. His clients will benefit from his 25-year expertise in the capital markets arena, including lending platforms such as FHA, Fannie Mae, Freddie Mac, CMBS, regional and local banks and life insurance companies. Braddish has worked on permanent and bridge financing for both acquisitions and refinancings.
Prior to joining NorthMarq, Braddish served as an executive vice president in the CBRE Capital Markets/Institutional Group’s New York City office, a senior mortgage banker with Holliday Fenoglio & Fowler and as a real estate appraiser for Koeppel Tener Real Estate Services and Cushman & Wakefield. With 25 years of real estate experience, he has placed in excess of $15 billion in mortgage financings, including mezzanine and equity.
Braddish regularly appears on real estate panels and as a guest lecturer at New York University’s Real Estate Institute. He has written numerous bylines for industry publications. He was most recently the president of the Real Estate Board of New York’s Finance division.
“We are very pleased that Keith has joined the NorthMarq Capital team in New York City,” said Ernest DesRochers, senior vice president/managing director at NorthMarq’s New York City office. “He helps us greatly in expanding our client reach, bringing a long and successful track record to our stable of correspondent lenders. We look forward to working with Keith in the years to come.”
