Why 3D Virtual and Video Tours are Critical in Marketing Commercial Real Estate Right Now

In the post-pandemic world, ensuring that your commercial property can be toured and understood remotely is essential for it to compete in the marketplace.  Due to the Pandemic, tenants are increasingly wary of letting strangers walk through their buildings–this is especially true for multifamily and office. 3d and virtual tours are the best way to accomplish that, and we’ll discuss reasons why and the different kinds of tours in this article.

Reasons for the increasing popularity of 3d Virtual tours:

  • Social Distancing Requirements
    • Showings are more complicated now than ever—many buyers are hesitant to view space, and many tenants do not want strangers in their buildings.
    • During this time, commercial properties with 3d virtual tours will stand out against their competitors.
  • 3d Tours create More traffic
  • 3d tours Help tell the story of the property
    • 3d tours create virtual spaces that a buyer or tenant can use to understand the layout and feel of a property.  They help convey the visual information that can be difficult to explain in text or in still photos.
    • Some 3d tours also create floorplans or “Dollhouses” that help make it easy for a prospect to visualize the space.
  • 3d Tours help with Out of Town Buyers/Tenants
    • Prospects are often looking at many options from far away, and you have just a few moments to capture their attention. A 3d Tour makes it easy for them to understand.
    • “Decision makers aren’t always able to tour every property, 3d tours give them a feel for the space and ensures that your building is in consideration.” Peter McGuone, CBRE, SVP

What different types of tours are there?

  •  3d Virtual Tours–these are rendered and allow you to virtually walk through a property.  Matterport is a good example of this sort.
    • With 3d Virtual Tours, lots of scans are processed to create a rendering of the space.  These are the most immersive, giving a user the ability to tour the space.  These are also some of the most challenging to create.  For an example see this video.  
    • Also, for an overview of all the major providers of Virtual Tour Software, see Ben Claremont’s video on the subject.
  • Virtual Tour–think Zillow’s tour feature.  These tours are not rendered, so they are more like a collection of 3d pictures, that are labelled.
    • You can still click on “Living Room” or “Foyer” and look around the different 360 pics, but you cannot virtually walk through the building.  On some platforms, you can click on an adjacent picture, and it will take you there, but it is not as smooth as a 3d Virtual Tour.
  • Video Tour–This is…well, a video tour.  They can be guided or unguided.
    • Guided – These are useful and often can be a great supplement to a 3d virtual tour.  The guide can walk through the space, describing the features and benefits of the space,
    • Unguided – Think of a video camera being taken through a property–Zillow has a video tour feature and most of the videos placed there are unguided video walkthroughs.

We would love to hear your experience with 3d Virtual Tours.  As a Broker–do you currently use them, and have they been helpful?  As an Owner–how important is it to you to have 3d tours on your listings?

This post originally appeared in Jonathan Aceves’s blog and is republished with permission. 

Economists project positive 2020 economic outlook, but with a few concerns

Overall there was good news for a room full of business leaders gathered at the Marriott Hotel in Downtown Augusta.  The 2020 forecast was hosted by the Terry College of Business at UGA, and presented by Dr. Ben Ayers and Cal Wray.  

Dr. Ayers outlined a number of economic development announcements from across the state, including the Union Agener and Acoustics & Insulation Techniques announcements which themselves will bring 245 jobs to the CSRA.  

Cal Wray, president of the Augusta Economic Development Authority, noted that Augusta has experienced 8.5% population growth since 2010, and unemployment sits at historic lows near 2.9%.  With Fort Gordon continuing to expand, Augusta’s future looks bright, even as nationally and internationally there are warnings signs of an economic slowdown.  
 
For an in-depth review, real the Amanda King’s article in the Augusta Chronicle.  

What are your thoughts?  What are you seeing in the local economy?  

New Apartments Coming to Downtown Augusta and implications to Rental Rates

Damon Cline reported on Monday that Downtown Augusta will see one of the first downtown multifamily projects in decades at the corner of 10th and Ellis next year.  Known as “Connell’s Corner”, and long home to the local favorite “Sandwich City”, the property will soon be the home to a new high-end four-story apartment building. 

‘It will boast a covered and gated 57-space parking lot, ground floor retail/restaurant space, a rooftop patio and high-tech features such as keyless entry – the types of amenities that appeal to urban-minded young professionals migrating to the downtown area.’

The story was broken by Damon Cline, who also shared some statistics and details about the overall rental market in Augusta.  Overall, apartment rents are rising quickly, and what was once considered a “Class-A”  apartment renting at $1.15-$1.25/SF/Month, has been eclipsed by new super-luxury apartments renting at $1.30-$1.40/SF/Month.  This new class of apartments come equipped with similar finishes found in luxury homes, including granite and high-end appliances.

We recently discussed charting rent curves and what they tell us about rent rates and forecasting rent rates.  I think this is a great case study.  Here’s what the rent curves for downtown apartments looks like:

You can download the spreadsheet here.   These are asking rates at the major downtown apartment complexes vs. downtown lofts and upstairs apartments.  You can see a big difference between the two.  I think what we’re seeing is that the curves are moving out–driven by a higher demand for downtown apartments like Canalside and Ironwood.  My guess is that the Atticus could probably plot a new curve–maybe ask $2.15 for their smallest units, and maybe $1.50-$1.65 for their larger ones.  If they’re successful with this project, I think we’ll start to see redevelopment of buildings that have up to now been impossible to redevelop with existing rental rates.  

What are your thoughts?  What are your observations about Augusta’s rental market?  Do you think Downtown will continue to grow and develop? 

Using Rent Curves to Study Multifamily Rental Rates

This is Jonathan Aceves with Meybohm Commercial Real Estate, advising business leaders and helping them make wise real estate decisions.  Today we’re going to be discussing Multifamily Rent Curves.  

 

How does one set out to study multifamily rental rates?  We do this by building a rent curve.  Let’s say you want to study the rental rates for housing in Martinez, GA.  We would do a survey of rental rates at apartment complexes in the area, and plot them on a graph.  The graph would start out looking like this:

Then we would separate them by class.  Class is a ranking system given to multifamily properties by investors, generally A, B, C, and D.  A properties are generally newer, amenitized, and really nice.  B properties are usually good, but maybe a little older, maybe not the same level of amenities.  C properties are in not-so-great areas, in fair condition, usually schools aren’t so good.  D properties are in bad condition and really rough areas, these are the kind that you wouldn’t go to at night.  Once you’ve broken them apart by class, you draw a curve over them.  You would end up with something like this:

 

It is interesting to note the steepness of the curve, and the distance between the different curves.  Another thing to note is that market changes shift the curves.  This is what we see in rapidly gentrifying areas—the entire curve moves out.

 

So how do you use the rent curve?  Well this helps investors identify opportunities for repositioning.  It also helps you identify management problems.  If I see a complex with below-market rents, I try to figure out why.  Is it a problem that an investor can fix?  

 

Thanks for reading!  Please like and share with those you think might benefit from this.  We’d love to hear from you! What are your thoughts about rental rates? 

 

 

Lessons from Sharedspace in Augusta

Today we’re going to talk about SharedSpace and Coworking with John Cates, COO and General Counsel at Meybohm Real Estate

 

Jonathan Aceves (JA): Tell us a little about your prior experience with the coworking business model.

John Cates (JC): When i was in Atlanta, coworking was just starting to take off.  Not just from a office space model but also as a model of entrepreneurship.  Coworking space like WeWork and others that were purely office tenant landlords but also incubator space.  We were involved with helping the Atlanta Technology Village to get started.  We got to see in Atlanta over a six or seven year period,  the coworking model take shape in all its different forms.  

JA: What was your connection to SharedSpace?

JC: I was approached by the SharedSpace group before they got started as they were looking for different space in Downtown Augusta.  We had some mutual connections from my time in Atlanta.  And they really reached out to me to try to get some advice as to pricing and location and what I thought would work and what wouldn’t work here. I guess a little bit like a sounding board.  They actually approached us about potentially getting involved both from a personal and company standpoint. 

JA: What was your advice at the time in setting up that business?

I think the first thing is that coworking takes different forms depending on the area that you’re in.  So coworking in place like Augusta or you call a secondary market is very different from coworking in Atlanta.  Your pricing needs to be different. Your sizing needs to be different.  The companies yo are going to attract are very different.  And pricing is probably the most important because when you’re dealing with a space like SharedSpace over on Greene Street when you can go over to Broad Street and get a comparable office space.   So i think Coworking is an asset class in and of itself outside of office space and is very unique.  And one of the things I really tried to explain to them was that Augusta is not like Atlanta. That’s not a good or bad thing–it’s just a fact.  Some of the other things were that you need to be really, really careful about how you program the space, because coworking space really only works when it’s programmed properly.  Nobody wants to be in a coworking space by themselves.  You have to create a pretty inviting and exciting entrepreneurial community where you’ve got several people doing different things.  There has to be a good energy there.  And so i think that you really have to do a good job of programming certain events to give people a reason to want to be there, because a lot of people who are there are likely either working at home or they’re working somewhere else.  So you want to build that community, I think that was it.  And one of the parts where I initially tried to offer some advice in addition to that was getting the size correct.  

JA: Do you think we’re seeing a paradigm shift in the coworking space?  Are consumers changing the way they office?  We’ve seen the fall of WeWork, and now this.  What are your thoughts in general about the coworking model?  

JC: I don’t think so. I don’t think it’s the model. I don’t think wework’s struggles through their IPO are really a true reflection of the health of the coworking space and the coworking industry.  Again i think it works, but it has got to be done smaller, then growing larger. That was one of the biggest things that I didn’t necessarily agree with about SharedSpace was that I thought they went too big too fast.  Nobody wants to go into one of these spaces to be alone and what my advice was initially was pick a smaller space, maybe 3000, 4000, 5000 square feet–to be bursting at the seams.  Program it, get people in there, and have a waiting list.  Then once you’ve got that demand there and that community built, then you can transport it to a bigger space.  But by not having the right programming up front, by taking a space that was too big, I think this deincentivized people from wanting to be in there, because nobody wanted to be in there and hear their own voices echo.  So you’ve got to balance the cultural aspect of coworking space with the size of it itself.  Then the other thing is that if someone can go to Broad street, which is two blocks from there and a potentially more desirable location than Greene Street,  and get a location for about the same price for a company of three or four people, then that’s what they’re going to do.  So there’s still a decent amount of good office like that one on Broad Street.  So I don’t know how appealing it would be to me as a small business or as a freelancer to locate my business in there.  And I think what happened was that they ended up getting a few smaller versions of call centers.  And that goes against the whole entrepreneurial atmosphere that you’re trying to create.  

JA: What implications does this business case have for downtown business and retail?  

JC: Well I think the first thing is to understand why it happened.  Just because the concept didn’t work, doesn’t mean that coworking can’t work in Augusta.  There’s a significant demand for it.  And I think one of the things that we saw when I was involved in the Augusta Innovation Zone was that we also got to the point where we were almost going to be in a place that was too big.  And that’s why it didn’t work in the Woolworth building when we were were looking at that a few years ago, and we felt that there was a huge need for it.  And we had a waiting list.  But you had to start smaller to prove out the concept.  So I don’t want people to take away that this model doesn’t work in a market like Augusta.  It does.  You just cannot start to big and your pricing needs to be reflective of the market–it’s got to be lower than what you can otherwise get on Broad street or somewhere else.  The other thing is that the model really should work when you’re trying to also use the space to create new businesses.  So i think it’s one thing that the Clubhou.se has done really well.  And you know–they’re bursting at the seams, and as you know they’re located in the Cyber Center and doing great.  But that’s because the pricing is right.  The location is right, and I think they’ve proven that if you can partner with the right people and get entrepreneurs in that space and activated, that it works.  So that would be my only big takeaway is don’t look at this and say that the concept doesn’t work because it is working.  It just has to be done right.  The Clubhou.se has done a really good job proving that the concept does work. 

JA: Those are great lessons.  

 

A big lesson is the value of good advice–and how important it is as advisors to tell the hard truth to our clients.  What other lessons can you learn from this business case?  What are your thoughts about Coworkign in Augusta?  What is working?  What are lessons you’ve learned in launching a new enterprise? 

GA Power gives $50K to DDA for Downtown Storefront Improvements

Georgia Power is starting off 2020 with a pledge of $50,000 toward storefront improvements in downtown Augusta.  This is more than triple what they have donated in the past. For the previous two years they have donated $15,000 each year which was used to create a  facade matching-grant program. It has helped with projects but it has gone quickly.

 

The company’s regional external affairs manager, Stephen King, presented the Augusta Downtown Development Authority with the symbolic check.  He said, “It doesn’t come with any stipulations other than for the growth and development of downtown.” The program developed is a matching-grant program that offers up to $5,000 to downtown business owners who invest an equal amount in exterior improvements to their spaces.

 

For more details see Augusta Chronicle Article: https://www.augustachronicle.com/business/20200109/georgia-power-donates-50000-to-downtown-improvements?template=ampart

 

Contact the DDA for more information on how to apply for the grant: 

http://www.myaugustadowntown.com/

AU Hospital Decision Delayed Again

Decision on AU Health’s ability to build a hospital in Columbia County has been delayed again.  It has been nearly a year since the court ruled in favor of AU’s Certificate of Need to build in Columbia County but appeals have stopped them from moving forward.

 

 “Columbia County is really one of the fastest and largest counties in Georgia  that does not have it’s own hospital,” says Madeline Wills, general counsel at AU Health. 

 

Read the WJBF article: 

https://www.wjbf.com/csra-news/georgia-supreme-court-decision-delays-au-hospital-in-columbia-county/

 

What are your thoughts?  Does Columbia County need a hospital?  What impact will it have to the CSRA to have another hospital?

Depot developer Bloc Global threatens to walk from Downtown deal

Today the Augusta Chronicle reported that it looks like the proposed $94 million dollar Augusta Riverfront Depot project is teetering on the edge of collapse.  Bloc Global, the developer, has asked for the return of their $50,000 held in escrow, or they will terminate from the deal.  

 

In 2016, the commission authorized the city DDA to market a 6.3-acre riverfront parcel at the corner of Reynolds and Sixth streets and we later learned of a pretty major conflict over the employee parking lot at the site that was provided for Unisys Corp the year before. 

 

What are your thoughts on this project?  What do you think will be the result?  

 

Read the full story:

https://www.augustachronicle.com/news/20200107/depot-developers-threaten-to-withdraw-from-deal

 

Downtown Rental Market Update

 

Today we’re going to be discussing the Olde Town Rental market update. Click here to download the Rental Study.   

 

Overall, we’ve seen the rental rates in Olde Town (Downtown Augusta’s primary residential neighborhood) climb from an average of $.67/SF to just under a dollar per SF over the past four years.  That’s a 32% increase, about 8% per year. What’s going on?

 

Well, as we’ve already mentioned, Cyber and Medical young professionals are choosing to live downtown.  That’s driving up rents and housing prices.  Also, investors are renovating properties, and so we are seeing more available rental properties that are in in decent condition.  

 

A decent case study is 107/105 Fourth Street.  We recently helped a buyer from Virginia acquire those apartments.  The previous owner had owned them for over 15 years, and they were in pretty rough condition with low rents. The new owner is going to make an investment into renovating the units, and with the help of professional property management, they will lease them at market rates.  The location of the property is great–the condition was terrible.  Now that complex (surrounded by young, professional homeowners) will probably target young professional or medical tenants, and we’ll see it on our rent study next year, my guess is on the higher end of our graphs.  

 

You’ll also see in the graph a strong correlation between the “Score” and the price per foot.  Our scoring system is a somewhat arbitrary numbering of properties by both location and condition from 1 to 5, and then averaging these two numbers together.  Thus, a property with location of 4 and condition of 5 scores a 4.5 in this measure.  The number again is somewhat arbitrary, but the correlation is quite strong.  So I would assign a property in rough condition and poor location an estimated rental rate of .65/ft, while a property with a good location and great condition an estimated rental rate of .95/ft.  Note that this measure doesn’t take into consideration size, which the first graph makes clear is highly correlated with the rental rate.  

 

I think this is great news for our Downtown rental market.  Augusta is changing, and I believe that the rising tide will lift all ships.  

 

What are your thoughts?  What has your experience been in the rental market?  

SharedSpace closes Coworking facilities at 901 Greene Street

SharedSpace announced last week that they were closing their 15,000 SF facility on Greene Street.  The Atlanta-Based co-working company still has two facilities in Atlanta.  The property is located on the corner of Greene Street at ninth, and has been listed for sale at 3.975M, or roughly $260/SF, and advertised for lease at $23.95/SF/Yr.  This is a beautiful facility, fully renovated, with 63 parking spaces.  

 

I think the situation is instructive about the true cost of occupancy downtown.  The number many use to calculate historic renovations is ~$150/SF.  If you purchase shell space at $50/SF, and have to find parking, you could end up with $250/SF invested in a space very quickly.  

 

For more information, see Damon Cline’s Article: https://www.augustachronicle.com/business/20191230/sharedspace-closes-augusta-office

 

What are your thoughts about the Downtown Market?  Or Co-working in general?