Solutions Newsletter
June 2016
Featured Properties
150 Virginia Ave., Crystal Lake
10,665 SF multi-tenant industrial building with excellent Virginia Ave. exposure. 14-16' ceilings. Short-term tenants could free up building for single user.
Sale: $735,900  ($69 psf)
6217 Factory Rd., Crystal Lake
5,000 SF industrial "flex" building with 2,870 SF office/showroom and 2,130 SF warehouse. 16' ceiling. Drive-in door. Highly motivated owner.
Sale:  $305,000  ($61 psf)
271 S. State St., Elgin
Investment property. 100% leased 9,000 SF 6-unit building one block from  the Riverboat. 10.7% cap rate. Price reduced.
Sale: $280,000 ($31.11 psf)
8609 Hwy. 12, Richmond
Former Platek's restaurant with living quarters. 70-80 seats, bar, outdoor deck. 3 BR, 1 bath apartment. Bank owned.
Sale: $285,000 
11614 Algonquin Rd., Huntley
3,100 SF mixed use building. Live-work opportunity with 1,800 SF first floor office adn 1,300 SF 2 BR, 1 bath second floor apartment. Monument signage. Bank owned. 
Sale: $214,900  ($69.32 psf) 
Recently Sold and Pending
5015 Bull Valley Rd., McHenry
44,000 SF industrial building with 3,500 SF office. 
Sold for $1,700,000 by Heather Schweitzer, representing the buyer.
748 Tek Dr., Crystal Lake
11,685 SF industrial flex building.
213 E. Chicago St., Elgin
2,200 SF mixed use building, storefront with loft apartment.
189 S. Main St., Crystal Lake
5,000 SF auto showroom with lift.
164 Dundee Ave., East Dundee
7 bay, 5,000 SF auto repair building.
743-45 McHenry Ave., Woodstock
4,600 SF industrial building.

Unintended Consequences - The Quest for Sales Tax Revenue
by Bruce Kaplan, Premier Commercial Realty

We continually see our local municipalities coveting sales tax revenue as a source of bolstering their budgets. Sales tax is a significant line item in the budget in towns like Algonquin, Crystal Lake and Lake in the Hills, to name a few. They count on this money to pay for services and special projects.

Some towns are using zoning to try to force only sales tax-generating retailers into the vacant storefronts to the exclusion of office or service-type businesses. Lake in the Hills recently passed an ordinance that requires office and service uses to apply for a special use permit in order to occupy space zoned B-2 or B-3 (retail district). This ruling has negative consequences in the real estate market, as well as to the residents.

The retail industry has changed with the advent of Google and Amazon and the Overstock.coms of the world. Many brick and mortar stores are going "lights out" and landlords are struggling to keep up occupancy rates. Many have lost their buildings to the bank as vacancy factors go so high that there is no longer enough income to pay the debt service and expenses. So for a town to say to a landlord that he must find a sales tax generating tenant when these are few and far between is a severe hardship on that landlord. And to throw up an extra roadblock with delays and expense incurred to try to get a special permit adds insult to injury.

Commercial Real Estate Outlook 2016
by National Association of Realtors,

NAR's latest Commercial Real Estate Outlook offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets.

  • The pace of commercial transactions dropped in the first quarter of 2016, following an upbeat 2015.
  • The volume of commercial sales in LCRE markets totaled $111 billion, a 20 percent year-over-year decrease.
  • Continuing the trends from 2015, apartment transactions comprised the largest share of first quarter volume, with $38.6 billion in sales, followed by office properties, which accounted for $31.2 billion.
  • Retail and industrial sales totaled $17.9 billion and $12.6 billion, respectively.
  • In comparison, sales in SCRE markets rose 8.5 percent year-over-year during the first quarter, based on REALTORS® market data.
SBA Re-Fi Program Announced

We recently were informed that the Small Business Administration is unveiling a nifty re-fi program ideally suited for property owners who occupy at least 51% of their buildings, and who have a conventional loan. The SBA will begin taking 504 re-fi applications in June. This is a game changing program. Contact us at Premier Commercial Realty to discuss this program and how it can benefit you!

Here are some of the specifics:
  1. The rules are at Federal Register now. Applications can begin being processed on June 24.
  2. Guaranty fee for refi deals will be 95.8 basis points.
  3. Program mandates: 504 program must be at zero subsidy to remain active.
  4. Job creation or job retention or economic development goals MUST still exist like the regular 504 program.
  5. Debt must have existed for 2 years and can be more than one eligible loan.
  6. All payments for the last year must be current (not past due over 30 days).
  7. On a stand-alone refinance, 90% Loan to Value is the maximum. Borrower may pledge additional assets to meet the 90% requirement.
  8. No SBA or USDA loans are eligible.
  9. Cash out allowed for business expenses BUT cash out portion cannot exceed 25% of the appraised value of the fixed asset, and, in no instance, can cash out deals go above a 75% loan to value (when combined with an eligible mortgage refinance).
  10. The application must include a transcript of the previous 12 month payment history to confirm payment currency.
  11. SBA loan specialists (bank or small business refi company) will verify that the liens have existed for 2 years from the date of application and document the loan file accordingly.
  12. Revised SBA forms are available.
  13. Appraisals will not be included at application but must be dated within 6 months of application.
  14. All occupancy requirements still exist (51% or more).
Details credit to SomerCor 504 Inc.
What is a Cap Rate?
by Ian Formigle, CrowdStreet

The capitalization, or "cap" rate is a term that is used frequently when discussing real estate asset sales and purchases. The cap rate is a ratio of two variables - net operating income and the current value or sale price of a property - which helps to determine the potential return on an investment. Put another way, the cap rate is the rate at which the net operating income recapitalizes the asset value on an annual basis. The cap rate is a useful tool that is often used to assess real estate investment opportunities and draw conclusions across asset classes.

Motorola Property Update
from the Harvard Economic Development Corp.

The 1.5 million SF former Motorola facility, which is located on a 300-acre campus on Route 14 in Harvard, has been sold for $9.3 million. The sale closed on May 23. Although the new owner has not announced any plans for the facility's future use, City of Harvard and Harvard Economic Development Corporation officials are optimistic that the sale will result in the productive refurbishing and re-use of the site. "It is our understanding that the new owner is a user and not just an investor," noted a source.  
Premier Commercial Realty
 industrial  | retail  | office | land 
business  | investment

 9225 S. IL Rt. 31 | Lake in the Hills, IL 

Bruce Bossow, x 12 847-732-3462
Bruce Kaplan, x 20  847-507-1759
Heather Schweitzer, x 15  815-236-9816
Joe Billitteri, x 21  847-833-5004
Joe Heffernan, x 18  847-302-5550
Kevin Kaplan, x 13  309-261-0920
Tina Kropke, CCIM, x 14  815-970-0546
Michael Williamson, CCIM, x 25  847-732-0504

Premier Commercial Realty | 9225 S. IL Route 31 | Lake in the Hills | IL | 60156