Peschel Team

I am a multi-disciplined commercial real estate advisor with experience in tenant/buyer representation, relocation/expansion, land acquisition/disposition, and economic incentive negotiations. I spend most of my time on industrial and land transactions, but given the Colliers network and resources, I’m involved in a variety of deal types including office and investments. I am surrounded by experts who I partner with depending on the deal. I stay involved in transactions to bring trust to my clients.

My clients tell me that they enjoy working with him; that they have a high degree of confidence that I can perform to help them meet their goals; and that they appreciate my resourcefulness and sense of urgency. My background in economic development combined with the Colliers process and platform gives me a unique perspective and experience that I use to meet my clients’ commercial real estate needs.

Top 10 most common mistakes made by tenants when leasing property

We see tenants (occupiers) make the same mistakes over and over whether they are leasing office or industrial space.  Next time you are considering a new lease, lease renewal or relocation learn from other people’s mistakes and don’t do the following:

Top ten mistakes

1. Putting yourself at a disadvantage by beginning renewal or new lease negotiations too late
2. Lacking clearly defined business or real estate objectives
3. Focusing exclusively on financial costs
4. Failing to appoint a project leader as the internal single point of contact
5. Making inaccurate estimations of the company’s space requirements
6. Acting too slowly once a decision is made, and consequently missing out on opportunities
7. Agreeing to terms prior to obtaining a logistics consultant (industrial) or space planning perspective (office)
8. Failing to allow for future expansion or contraction
9. Lacking the knowledge of future opportunities; often, the best deals are secured well in advance of space becoming available
10. Failing to leave enough time at the end of the lease to fulfill “make good” obligations, or failing to understand the exact terms of your tenant improvement allowance

A landlord or listing agent loves it when a tenant represents himself/herself to lease a space or renew a lease.   It’s like shooting fish in a barrel.  Find yourself a qualified real estate advisor and let him/her focus on the real estate while you focus on growing your company.

How will Hurricane Harvey affect commercial real estate?

So how will Hurricane Harvey affect commercial real estate in the Houston region?

I’ve been pondering this question over the last few weeks.  I have read numerous articles and opinions while watching our region start the long road to recovery.  

Two of my colleagues in our New York office called me right after the storm to ask me this very question.  Their client had bought a few development land tracts in Houston and these real estate advisors were trying to determine if it was wise for their client to move forward with the developments.  One advisor had a “doom and gloom” view of what would happen in Houston after the storm and the other advisor thought we would be ok.  “What did I think?” was their question.

My knee-jerk response was this: “Never bet against Houston”. After they stopped laughing a few minutes later, they asked that I take off my cowboy hat, get off my horse and give them an honest answer.  I pondered the question again, this time with more thought and I gave my answer: “Never bet against Houston.”  

The core fundamentals in our Houston commercial real estate market were healthy prior to the storm, and I do not believe Hurricane Harvey has changed that.  We have soft spots like any market and we are still feeling the effects of low oil prices (i.e., record level Class A Office vacancy and sublease space), but the key fundamentals are strong.  

Will we see any effect?  Of course.  Is it doom and gloom?  No.

Residential real estate was hit the hardest.  The rental and apartment markets tightened up overnight.  The residential sales market will see an immediate uptick because everything was on hold for two weeks, but I don’t expect a huge increase in housing sales directly related to Harvey.

Though some commercial properties in the Houston area were impacted, the commercial market for the most part faired quite well.  A lot of the commercial property listings I’ve seen recently state “not flooded”.

I think commercial deal velocity will slow down through the end of the year because a lot people are focused on recovery and repair.  In addition, the holidays are right around the corner and we typically see a slowdown after Thanksgiving.  But once everyone returns from Christmas vacation, I think the market will pick up speed quickly in mid to late January.  

We are already seeing huge increases in construction prices due to shortages in sheetrock and labor, and the hurricane in Florida will only make matters worse.  Who knows how long those effects will be felt.  Marginal real estate deals will no longer make financial sense with the higher construction prices, and some deals will be scaled back or cancelled altogether.

A lot of money will be spent in the Houston region in the next few years, which is a good thing.  But those funds could have been directed to growing new and existing businesses instead of rebuilding and recovery.  

I still stand with the comment I made to my New York colleagues, “Never bet against Houston” ( I was not referring to our sports teams.)  Seeing how our community responded to this natural disaster reminds me of why I am so proud to be a Texan and Houstonian.  It’s that grit and determination that will make us stronger in the end.    

Gross rent, net rent, effective rent and face rent: what's the difference?

Those of us in the commercial real estate industry sometimes use commercial real estate jargon and expect everyone around us to understand what we’re saying. Terms like gross rent, net rent, effective rent or face rent get thrown around in conversations with tenants but not everybody knows the meaning of each term. Let me break it down for you in simple terms and then advise you as to which one is most important to you as a tenant when you are considering lease alternatives.

Face Rent:  The quoted base rental rate before taking into account any rent increases or incentives.  This term is used interchangeably with ASKING RENT or FACE RATE. Face Rent may or may not include building expenses, depending on if the rent is quoted as “gross” or “net”.

Gross rent:  The rent calculated inclusive of all building costs (i.e., property insurance, taxes, common area maintenance expenses, etc.)

Net rent:  The rent calculated excluding building costs. On an office listing, you may see the rent quoted as $20.50 NNN.  In this example, the “base rent” is $20.50 per square foot per year (SF/YR) and then you have to add the annual expenses to that number.  If the annual “NNN” expenses (operating expenses) are $9.50 SF/YR, then your total “gross” rent would be $30.00 SF/YR.  The same applies to an industrial property.

Base rent:  This term can be confusing because sometimes it includes all building costs and sometimes it doesn’t.  If you are reviewing a lease document, the term base rent should be defined in the document.  If you are viewing someone’s listing, you will have to use context clues or ask the listing agent to clarify.

Effective rent:  The rental rate averaged out over the term of the lease, including consideration of rent-free periods and incentives/concessions.  Simply put, effective rent is the average amount of money that will come out of your pocket each year or month when averaged out over a period of time, typically your lease term.  This is the number you want to use when comparing lease alternatives.  Effective rent is not the only thing to consider when comparing leases, but it’s a good way for you to do an apples-to-apples comparison when evaluating offers with varying lease rates, expenses and concessions.

When you are considering an industrial or office lease (new lease or renewal), it is important that your real estate advisor conducts a financial analysis to compare the effective rent for each of your building options.  That is an important first step (but not the only one) in determining which option is best for you. 

Don't use a real estate "agent" to handle your commercial lease renewal

You heard me right.  Don’t hire a real estate agent to handle your lease renewal.  But do hire a commercial real estate advisor who is an expert in lease negotiations for the type of real estate you occupy.

As the saying goes, sometimes “you get what you pay for”.  And it pays to hire a professional.  Give me a call and I just might know someone who could help you.