What are the economic implications of Topgolf and Dave & Buster’s coming to Village at Riverwatch? According to projections from Augusta Economic Development Authority reported by Damon Cline, these two projects are expected to add $15 million to the local tax base, and add 200 jobs and generate $1M in sales tax revenue. Hats off to the Economic Development Authority, who was able to help attract these developments without tax incentives, and the only expense is a $250K commitment to construct the public road that will give these sites access.
What do you think will be the impact of these new developments? Comment below:
Hi! Today we’re going to be discussing the Industrial Market Update. There’s been a few notable sales, the Keeblerbuilding sold on 7/28 for 7.4M, $16 per foot, and 1431 Marvin Griffin sold on 6/27 for 2.7M (Jay Willingham handled that one). On the leasing side a few large leases have been done, the largest is at 4301 Evans To Locks, leased over 400K SF to start in Feb, Acoustic Insulation Techniques leased 75,000 SF in Augusta Forward Drive in June of 2019,and 48KSF leased in April at 1595 Columbia Hwy N in Aiken. Overall demand for flex is strong, and with the Hock family putting some of their portfolio on the market there is availability of good multi-tenant industrial buildings. See below for more resources, including details on notable sales and leases, and a link to an overall industrial market report.
Recent Notable Industrial Transactions:
2.7M, $32.58/SF, 75,200 SF, sold on 6/27/19 — Electrical Equipment Bldg–1431 Marvin Griffing Rd Marvin Griffin Comp
There’s a lot of activity in Augusta’s Multifamily Market! We’ve already reported that there are over 1500 apartmentsin development around Augusta, and Damon Cline published an article with even more projects and details two weeks ago. Click here to download the Costar Multifamily Report, which has some great information about vacancy rates, rental rates, and the overall economy. Below we’ve included listings from the MLS, Costar and Crexi if you’re looking to buy or want to keep up with the market. Many of these properties trade off-market, so give us a call if you’re looking for off-market opportunities.
Have you ever wondered how to evaluate a coin-operated car wash? Today we’re going tounderwrite a car wash. Someone called me and asked me to give them an opinion of value on their car wash.
I always start by evaluating the financial statements. In this case I requested their last two year’s tax returns, in this case Schedule C’s. My goal is to arrive at the NOI. Remember, generally tax returns are drafted to minimize tax liability, so often they are inflated, or include things such as travel and deductible meals that you likely wouldn’t include on an operating statement. Here you see my revision of the Schedule C’s–depreciation and mortgage interest are both non-operating expenses that we’re going to remove from the operating Statements.
Then I’m going to create a pro-forma, which is my guess as to the actual operation of the car wash. You can see here that I’ve added some expenses–lawn care and utilities, and taken the average of the actuals on some of the other items, and then I look across the three different lines to get a guess of what a potential buyer might expect.
Then I’m going to call a few lenders and get their guess on what financing assumptions will look like. I want to know what the term, interest rate, and LTV might be for a loan on this asset. In this case, two lenders I called, both guessed that at 75% LTV is likely, 5.65% interest, and 15 year term, and target DSCR of 1.5.
I enter these loan assumptions and then I review the value indicators. How does the property cash flow?
Now I review industry specific resources–you can use the Business Reference Guide or similar resource. It tells tells me a general rule of thumb is that car washes trade at 4 times gross sales–that would put this car wash at between $160,000 and $215,000. Another guideline is “cost of real estate, equipment, improvements, plus 2 to 3 times EBIT“. I’m also told that a market average is that operating expenses should be between 25 and 40 percent of Gross Sales (our numbers put it between 18% and 37%).
Another consideration on this property would be the value as a development site. What are land comps selling for? Is it suitable for commercial development? If so, there is a chance the land is worth more than the car wash–keep that in mind.
So now I have a pretty good ballpark guess on this car wash. If I set the price down under $200K, the cash on cash-on-cash is between 26%-60% (obviously too high), and the Cap Rate is between 22% and 14%. At $300K, the cash-on-cash is too low–7.55%, and DSCR is tight at 1.25. My guess on this is that 250K is about right. Remember, this is higher than the rule of thumb from the Business Reference Guide–but still leaves a decent margin for a potential buyer.
What are your thoughts? Have you ever owned or sold a coin-operated car wash? Do you have any questions? Feel free to comment below!
Parsons Corporation–A Defense, Security, Infrastructure and Intelligence Company with 16,000 employees and $3.6 Billion in Revenue–is the latest company to lease space in the Georgia Cyber Center. It is estimated that they will create twenty-six jobs with the potential for more in the future.
According to Wikipedia, Parsons Corporation provided jet propulsion facilities during the cold war, and worked with nuclear, chemical weapons, as well as working in systems design for aircraft, missiles, and rockets. Today Parsons focuses on defense, infrastructure, and security, and handles many federal and municipal agencies along with private customers.
According to their website, Parsons has worked with the US Government for over 30 years providing technical and cyber intelligence solutions. The Cyber Center will be a great match for them and they will be a welcome addition to Augusta!
What are your thoughts about Parsons coming to Augusta? It seems the nation’s intelligence and cyber contractors are coming to Augusta! Do you think they will bring their whole operations here or just small teams?
It looks like the market in Downtown Augusta is continuing to improve! There have been some notable sales downtown, with murmurings of decent deals being considered and hunted for. It appears that the investors are bullish on Downtown, and that prices have not peaked. It also appears that although there is talk of a recession, most people don’t believe Augusta will be significantly impacted. It appears that some notable buildings are potentially transacting–Bonnie Ruben has put her portfolio on the market, and the Lamar building and the Marion building are both said to be under contract. Ironwood Apartments sold the first week of August, and 1500 apartmentsare either just delivered or in development.
Passco Companies announced its purchase of the 300-unit Crane Creek Apartments in Augusta, GA for $58,000,000. According to Costar, this property traded off-market at a 5.73% Cap Rate with a 5% vacancy at time of sale. The sale price equates to about $193,333 per unit.
Passco plans to make a a number of improvements to the already luxurious property including LED lighting, Nest thermostats, and energy-efficient toilets and shower heads.
Columbia County neighborhood is attempting to convince Columbia County commission to vote no to rezoning land on Columbia Road for a self-storage project. Advising with zoning and entitlements is a major part of a commercial broker’s role, especially with raw land. We often have to deal with neighbors, and getting them on board with a project can make or break a development.
The neighbors say the project will be “out of place” and that “it will damage the water system”. Of course, the county has an engineer who’s job it is to confirm the stormwater plans are adequate.
What’s your experience with zoning opposition? Have you ever opposed a project that was going to be in “your back yard”? Have you ever put together a project that fell apart due to zoning opposition?
Affordable housing is growing as a major issue across the US, partially due to a lack of workforce housing, and partially due to zoning restrictions which restrict smaller lots or higher density. Mobile Home Communities, once a fixture of affordability in most communities, are near-impossible to develop and I’ve heard from multiple sources that a new mobile home community hasn’t been developed in the southeast in the last 15 years.
“The gap is growing, in part because renters across the U.S. face a shortage of properties they can afford to buy as starter-home prices soar, year after year. In the second quarter, the homeownership rate for all Americans fell to the lowest since 2017, and the number of new homeowner households grew by only 585,000, a third of the year-earlier level and the fewest since 2006.”
Question: What’s your experience with affordable housing? Or have you had zoning challenges to an affordable or dense project you wanted to develop?