Follow Up to Last Week-The Sheriff Sale

Alec Pacella, CCIM
Managing Partner – NAI Daus in Cleveland, Ohio


Splitting the Difference. Evaluating the Feasibility of a Real Estate Development


Alec Pacella, CCIM
Managing Partner
NAI Daus in Cleveland, Ohio

@dausyouknow Twitter

Last month, it was announced that Amazon is converting the old Randall Park Mall site as a location for one of its massive fulfillment centers. The numbers associated with this facility are staggering. At an anticipated 855,000 square feet, it will be the largest warehouse/distribution development ever in northeast Ohio. The projected employment of 2,000 is more than the entire population of North Randall. And the projected cost of the facility is $177 million. Numbers like this can make a person dizzy – so how does a developer make sense out of it all?

This month, we are going to take a look at two of the most common approaches that are used by developers when evaluating the feasibility of a real estate development.

Before either of these approaches can be used, the developer first needs to determine a figure known as the Total Project Cost. This include hard costs, such as concrete, steel, plumbing and associated labor, as well as soft costs, such as fees, professional services and contingencies. It does not include profit but don’t worry, we will get to that in a few minutes. Once an accurate Total Project Cost is determined, the developer can use either the Cost Mark Up method or the Rent Constant method.

The Cost Mark Up method calculates the profit as a percentage of the “all-in cost” and is a series of gross ups. The first step is to multiply the Total Project Cost by the target Mark Up percentage, which indicates the Profit. This Profit is then added to the Total Project Cost, which results in the Net Market Value. And finally, an estimate of Sales Cost, as if the project would be immediately sold when completed, is added to the Net Market Value, which provides the Total Market Value. Click here to read entire article

Aging Gracefully

Alec Pacella, CCIM
Managing Partner
NAI Daus in Cleveland, Ohio

Twitter @dausyouknow

Sometimes life has a unique way of maintaining balance. A few weeks ago, on a particularly delightful summer evening, my youngest son and I happened upon a sleek red exotic sports car parked next to us. As regular readers of this column will know, cars are an Achilles heel for me so I immediately recognized it as an early model Acura NSX.

My 13-year-old son Ethan had no idea what he was looking at but as we made our way around the low-slung and sleek lines of this self-proclaimed “Everyday Supercar,” I began to think of various ways to suggest a potential acquisition to the family’s CFO, otherwise known as Mrs. Daus You Know. But my daydream was quickly shattered by my son’s exasperated voice: “Dad, this car has classic plates – it must be ancient, like from the 1980s!”

Actually, it was built in 1992 but a lot can happen in 25 years. Sometimes we notice the change but other times, things just sort of slip by. Microsoft introduced Windows 3.0 in 1990 and their Office Suite hit the shelves the following year. Both were groundbreaking technology and while certainly enhanced and updated over the years, the basic underpinnings are unchanged – the former still offers the ability to have multiple programs running concurrently in individual ‘windows’ while the latter still offers the ability to type letters and crunch numbers. But we know that technology is not only ever-changing but the pace of that change is ever-increased.

This month, we are going to take a look at three items that could have a pronounced impact, not only affecting how we play but also how we work.

Box Drive
I’m willing to bet that very few readers have ever heard of Box. This cloud-based file sharing service dates to 2005 but has been overshadowed by competitors such as Dropbox, OneDrive and Google Docs. That could change in the near future. Last month, the company launched an enhancement known as Box Drive. And it may fundamentally change the way you think about file storage.

The Dropbox/OneDrive/Google Docs crowd all work basically the same way, providing an easy-to-use interface to access and download your files and/ or sync these online files with a mirrored folder that is stored locally. While users would like to think that these services are the same as a local network server, in reality there are a couple of primary differences. First, when using Dropbox and OneDrive, I can look at the files online but if I want to change them, I have to first download the file, make the changes and then upload the file. The sync functions make this less bulky but that download/upload process still needs to occur. And while Google Docs allows me to make changes to the actual file that is being stored in the cloud, I can only do so if using Google’s proprietary software – Docs, Sheet, Slides, etc.

Compare that with Box Drive; similar to Google Docs, it allows users to access, modify and change files online but you can use any software, not just Google’s proprietary programs. And unlike Dropbox and OneDrive, these is no downloading/uploading/syncing going on. Rather, when using Box Drive, a folder called ‘Box’ appears in Microsoft Explorer/OSX Finder. This folder is not synced but rather serves as the actual cloud-based folder, providing users with direct access to add, read, edit or delete. Box folders act like any other folder – you can create folders, rename files, drag files in and out, and share between local folders. And second, although Dropbox/OneDrive/ Google Docs allow the user to share various folders and/or files, none give this power to a central administrator.

Put another way, these services have given the keys of the asylum to the inmates. But Box Drive allows a central administrator to have over-arching control by assigning permissions and sharing rights. In other words, the asylum is under the watchful eye of the warden. Box Drive could spell the end of traditional file servers as we know them and dramatically improve access to secured files regardless of location.

Google Photos
Box Drive may have clipped Google when it comes to file sharing but don’t think the internet gorilla is asleep. In 2015, the company introduced Google Photos as a part of its ‘Google Suite’. Although you may think that it’s just a place to store photos online, it is so much more. Click here to download the entire article…