written by
Natalie Baylon

Don’t let the advancement of today’s technologies and information make you lose sight of why we hire professional services in the first place. At your fingertips, you can file your taxes, design your living room, trade stocks, order groceries or book a vacation all from your smartphone.

Due to the digital convenience of these technological advancements, there has been an influx of DIY-ers within the residential markets – consumers are hunting for their next home virtually. That doesn’t mean you should take all Real Estate matters into your own hands, especially when it comes to securing a location for your new or growing business. Sure, you can find commercial space on Craigslist and a plethora of other sites, in which landlords and their representatives post available space. However, getting through to the correct broker, scheduling a tour and negotiating a lease is where you might run into problems. Additionally, a tenant representative may know of space that hasn’t been made public, otherwise known as “off-market”. They will be familiar with the market conditions, market rental rates, the right questions to ask, and most importantly they will be in your corner.

Not only can using a tenant rep broker save you money, it will also save that one precious commodity that we never have quite enough of, and we can never get back —time.

As an entrepreneur looking to set up shop or a current business owner looking to expand, you have probably made a few savvy money-saving-moves that have helped you get to where you are. Don’t let the notion of saving a few bucks cloud your judgement on something as important as your business’s location. A common misconception is that hiring a tenant/buyer representative is going to cost you money that could have otherwise been saved. In most cases, tenant representation services come at NO COST to the tenant. Per industry standards, tenant rep brokers are compensated by property owners for securing a lease at their property.

In addition to the fee not coming out of your business’s start-up or expansion fund, your tenant representative will work in your favor to negotiate terms, tenant improvement allowances, free rent and other concessions, without any conflict of interest. Not only can using a tenant rep broker save you money, it will also save that one precious commodity that we never have quite enough of, and we can never get back — time. Time that can be used to focus on your core business which, after all, is what got you here in the first place.

Natalie Korn is an Associate of Intersection, specializing in leasing of commercial space, representing both landlords and tenants, with an emphasis on retail. Contact Natalie at 619-785-3503 or [email protected] to learn more.

written by
Natalie Baylon

USO Expands Presence in Liberty Station: Supporting Service Members in San Diego

San Diego’s military presence has significantly shaped the city’s history and landscape. As a result, the transformation of the 80-acre Liberty Station, once the Naval Training Center San Diego, stands as a prime example. Today, the former barracks house retail spaces, offices, event venues, and a dynamic community of nonprofit organizations, arts and culture groups. The latest addition to this thriving space is the United Service Organizations (USO).

Dan McCarthy, Kyle Clark, and Grant Thiem of Intersection Real Estate Services represented the lessor, Davles, LLC, while Jill Morton of Capital Growth Properties represented the USO Council San Diego in this lease transaction. “We are thrilled to deliver a space that not only complements this unique project but also supports a purpose to serve those who serve our country,” said Dan McCarthy.

About the USO and its Role in San Diego

Founded in 1941, the United Services Organizations Inc. (USO) became the first service agency dedicated to supporting troops and their families. Today, the USO operates over 160 centers worldwide, continuing its mission to enhance the lives of service members and their families.

While the USO has historically been known for hosting entertainers overseas. The organization has recently expanded its services to include more support for veterans transitioning from military to civilian life. The new USO headquarters at Liberty Station features offices, conference rooms, a kitchen, and lounge areas, which will enhance the three existing USO centers in San Diego. Thus, this new location will serve as a central hub for local service members and their families.

Google’s $2.5 Million Grant to USO

In a significant effort to support veterans, Google CEO Sundar Pichai visited San Diego last month to announce a $2.5 million grant to the USO. This funding will help veterans transition to civilian careers by incorporating the Google IT Support Professional Certificate into USO programs.

With over 8% of the U.S. active-duty military stationed in San Diego, the USO’s new headquarters at Liberty Station feels like a homecoming. It is truly a fitting location for the organization’s continued support of our nation’s heroes.

written by
Natalie Baylon

The JOBS Act: Unlocking Capital for Real Estate Investments

In 2012, the Jumpstart Our Business Startups (JOBS) Act was passed by Congress, opening the door for general solicitation in private securities offerings for commercial real estate. Many industry professionals, including those of us raising capital for our own investments, were optimistic that this would revolutionize capital inflows. The ability to market private securities was expected to unlock a flood of capital into privately held real estate assets.

Fast forward to 2018, and the impact of the JOBS Act has been underwhelming. While we have successfully raised approximately $20 million in equity through traditional networks such as friends, family, trusts, and family offices, the inefficiencies in the process remain. We had anticipated that the JOBS Act would enhance capital-raising efforts, but regulatory uncertainty, high expenses, and inconsistent commitments from crowdfunding sources have dampened enthusiasm.

The Reality of Crowdfunding in Real Estate

One of the major disappointments has been the lack of reliable equity delivery from crowdfunding platforms. While numerous startups emerged to facilitate capital generation through online sourcing and crowdfunding, many have struggled or failed due to challenges such as high fees, lack of transparency, and inadequate due diligence resources.

A key obstacle has been the absence of an advisory component for investors. Traditionally, brokers and financial advisors play a crucial role in evaluating real estate investments. Crowdfunding bypasses these advisors, leaving investors to navigate track records, fee structures, investment strategies, and risk profiles on their own. This has led to slower adoption of crowdfunding platforms, making real estate investment less suited to an online-first approach—at least for now.

The Future of Crowdfunding in Commercial Real Estate

Despite these challenges, momentum is growing. Since all provisions of the JOBS Act were finalized in 2016, regulatory clarity has improved. According to KickstarterForum.org, global commercial real estate crowdfunding was projected to reach $8.2 billion in 2018, a significant increase from $400 million in 2013 and $3.5 billion in 2016. While this remains a small fraction of the $217 trillion global real estate equity market ($8.2 trillion in the U.S.), the potential for growth remains substantial.

However, liquidity remains a major challenge for crowdfunding real estate investments. Investors often commit capital for three to ten years, making early exits difficult. Meanwhile, sponsors hesitate to invest in creating truly liquid platforms, such as publicly traded Real Estate Investment Trusts (REITs), due to the high costs.

The Potential of Cryptocurrency and Tokenization in Real Estate

One emerging solution is cryptocurrency and tokenization. Blockchain technology has the potential to increase efficiency, reduce costs, and enhance liquidity in real estate investments. Tokenization allows assets to be fractionalized and traded in a highly efficient manner.

Imagine owning a token representing a $100,000 share in the Empire State Building. If you decide to sell, and a buyer is interested, a simple smart contract transaction ensures compliance with securities laws while enabling a seamless exchange. This model introduces unprecedented liquidity into private real estate investments.

While cryptocurrency and tokenization are still in their early stages, some technology companies are working on global solutions for secure, compliant transactions. If successful, these innovations could significantly lower barriers to entry for investors and sponsors alike, making capital-raising more efficient and accessible.

The Next Generation of Real Estate Investors

For those skeptical about cryptocurrency’s role in real estate, consider the next generation of investors. A communications professor at Pepperdine University recently surveyed students on the role of technology in their daily lives. The overwhelming consensus? They prefer minimal personal interaction, opting instead for digital solutions for everything from food orders to banking.

This trend suggests that millennials and Gen Z investors will demand more technological integration in real estate investing, including:

  • Greater transparency from sponsors
  • Easier access to due diligence materials
  • More liquid investment options
  • Seamless digital transactions

Looking Ahead: Will Technology Finally Unlock Capital Flow?

In over 31 years of commercial real estate investing, we have yet to see a solution that fully addresses the inefficiencies of capital raising. However, if technology can revolutionize every other industry, why not commercial real estate?

Whether crowdfunding or cryptocurrency becomes the dominant model, the next generation of investors will expect smarter, faster, and more efficient ways to invest in real estate. With these advancements, we may finally see the capital inflows that the JOBS Act originally promised back in 2012.

Final Thoughts

The commercial real estate investment landscape is evolving. Crowdfunding has made progress, but liquidity remains a challenge. Cryptocurrency and blockchain technology present a compelling alternative, offering efficiency, security, and liquidity.

As technology continues to shape the future of investing, those who adapt and innovate will be best positioned to capitalize on the next wave of opportunities in commercial real estate.

 

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