The economy is indeed bleak, but that doesn’t mean it’s bleak for everyone. Business is booming for auto mechanics, cobblers and other people in repair businesses but for millions of people, it means closing up shop and applying for unemployment or perhaps down-sizing. Either way, there is movement in office leasingand openings in both retail space and office space and that means great deals for people who are looking for space. Great deals on office leasing rates too: According to Grubb & Ellis, the average retail rental rate was up 1.7% in 2007, but is showing a big decline in rental rates- some instances as low as 10%, with a forecast for even lower rates. This is good news for new businesses looking for great deals on retail space or office space.

Landlords are Adjusting to the Times

Landlords are concerned with the decline in tenant sales- everyone is affected and owners are doing their best to keep their retailers and businesses there. New tenants will no doubt have the upper hand in negotiations with landlords and with commercial real estate agents, which can result in rent reductions and other perks for new businesses. With more attractive options becoming available all the time, forecasters believe that overtime, the market will reverse itself and with so many people taking advantage of attractive lease terms, potential tenants will correct the supply and demand discrepancy.

New Tenants Take Advantage of Other Move-In Deals

Commercial realtors can sweeten the deals on many office spaces by enticing tenants with move-in specials like:

• Fresh coats of pain

• New carpet

• Deals on cubicles

• First month free rent

• Deals on cleaning services

It’s a tough time for so many people who are losing their business or jobs but the silver lining for a lot of other people is the golden opportunity to start a business and take advantage of great rates, or downsize into a less expensive office space as well as take advantage of first rate deals on move-in specials. As with everything in life, what goes up must come down, so too will the economy and commercial real estate options.



Sell House Quick

Can you afford commercial real estate on the Chicago Magnificent Mile? If you can, your business will be in good company, and you can make a lot of money!

A festival of restaurant dining, theater and jazz experiences, shopping, hotels and entertainment, Chicago’s Magnificent Mile is abuzz with activity from Spring through Fall, and those merchants and commercial vendors who are lucky and wealthy enough to rent space in Chicago’s most productive real estate market, are the fortunate recipients of some pretty hefty income.

The Magnificent Mile stretches from Randolph Street to North Avenue and from Lake Michigan to the North Branch Canal, and it is Chicago’s most expensive commercial real estate.

The landscape is flush with fancy hotels including the Inter-Continental, the Ritz-Carlton, Hilton, Omni, Le Meridian, Hyatt, Wyndham, the Westin, the famous Whitehall and many other world-renowned hotels share this prestigious real estate, and the Greater North Michigan Avenue Association manages the business district.

Within this precious Chicago real estate, street festivals, garden shows, food festivals and other events are planned, all to bring local residents and tourists to spend their entertainment dollars.

Along this stretch of expensive real estate you can also find posh, formal restaurants like Les Nomades, and NoMi intriguing international restaurants where you can find Brazilian, East Indian, French, Italian and cuisines from many countries around the world.

The Chicago Shakespeare Company is also in residence in the Magnificent Mile of Chicago Real Estate, as are a number of jazz clubs and galleries like Kenneth Probst, Peter Bartlow and R.S. Johnson, selling fine art, antiquities and much more.

Water Tower Place, the Shops at North Bridge, Chicago Place and the North Michigan Shops also offer commercial real estate opportunities in well-advertised storefronts, malls and real estate centers.

If you are looking for commercial real estate in this area of Chicago, be sure you employ a reputable broker. Rents are high and real estate is precious. Options to extend commercial leases and expansion options to take on more space will come at a premium in this real estate market.

Upscale brokers like Gordon McAdam, Property Management companies like Zeller, and Executive Suite brokers like AMATA deal in finding and leasing commercial real estate and space to businesses in this area.

If you are looking for Chicago real estate on the Magnificent Mile, be sure you find a company that will work with you to assess your square footage requirements, and do an office or building search that will take into consideration the ideal location for your type of business.

These companies can also help you analyze the commercial lease you will be asked to sign and negotiate more favorable terms. Some have partners that offer architectural and build-out services for your real estate needs, and even move-in and utility hook-up services.

If you DO rent commercial real estate along the prestigious Magnificent Mile in Chicago, make the most of your network by joining the Greater North Michigan Avenue Association. Membership in this business and real estate district association provides you the opportunity to participate in business-to-business marketing activities and to have your logo and business identify advertised and promoted in the Magnificent Mile events and activities.

The Board of Director’s for this Chicago real estate business district and association always includes prestigious hotel managers and business managers for large commercial vendors like Neiman-Marcus, as well as business district and service vendors who provide the local transportation. These are good people to know if you want to promote your business.

Get to know the individuals who share this small square of real estate with you and leverage their connections to help you make more money and pay that steep rent bill every month.

Per square mile, this patch of Chicago real estate will produce more income for your business, but it will cost you a pretty penny to house your business here.

If you want to consider Chicago real estate with a slightly less onerous price tag, you can consider real estate in the Riverfront area, which is very near the Magnificent Mile and attracts lots of tourists. There are lots of events there and the overflow of shoppers and tourists from the Magnificent Mile is a definite advantage to renting commercial real estate in the area.

Ask your Chicago real estate broker to make some recommendations and see what you can afford. Good luck and enjoy the ride!



Quick Property Sale

If there is a single concept which has revolutionized the car industry in recent years, it is the idea of leasing a vehicle rather than owning it. Nowhere has this been seen more dramatically than in the business sector where leasing is now the standard for car ownership.

Leasing for boats has been available in Europe for several years, but it is a purchasing option that is little understood by the boating community in general, and particularly in the UK, despite the fact that it can offer significant VAT advantages whether the vessel is used for private or commercial use. The two most popular schemes are those used in Italy and France.

At the time of their introduction, both countries were suffering a decline in yacht manufacturing. In an effort to halt this decline, both governments introduced incentives for yacht owners to buy their vessels under leasing schemes, which provided significant VAT reductions. In addition, the schemes were based on the concept that the larger the vessel then the greater the saving, thus encouraging owners to buy larger boats.

The growth of yacht manufacturing in the Italian market in recent years has been spectacular, with a proportionate increase in leasing which was up 32% in Q1 of 2005, and now represents nearly 6% of all yacht financing.

Before explaining the details of these schemes, it is important to understand some of the concepts behind them, which should help to clarify some of the relevant issues.

Firstly, in simple terms, a lease involves a bank or finance house, buying the asset and then effectively renting it back to the client for an agreed period at an agreed price. This is defined as a transfer of services. At the end of the lease, the client has the option to buy the asset which then becomes a transfer of goods. For VAT purposes a yacht lease is a supply of services and is deemed to take place where the person who makes the supply is established: i.e. French bank in France, Italian bank in Italy etc.

Secondly, they are simple to set up and administer and can be in individual, joint, or company names. Finally, it is important to understand that there can be two VAT elements, namely the VAT on the purchase price and the VAT on the leasing repayments.

If we take the Italian scheme as an example, the Italian law states that VAT has to be applied to leasing repayments, only in relation to the time spent within EU waters. Given that it is impossible to determine this accurately, the Italian Revenue Agency (along with the French & Maltese) has agreed that an assumed period can be applied to a leasing contract, based on certain criteria. Under the Italian scheme this is a combination of vessel type and size, so for a motor vessel over 24 metres in length, a rate of 6% VAT applies (30% of the standard Italian VAT rate of 20%)

In other words it has been assumed that a vessel of this size (24 metres plus) would spend 30% of its time in EU waters (ie the European summer for example) and outside EU waters for the remainder of the year (the Caribbean for example) The table below shows the various rates which have been agreed under the Italian leasing scheme:

Motor or sailing over 24 metres in length VAT: 6%

Sailing between 20.01 – 24m VAT: 8%

Motor between 16.01 – 24m VAT: 8%

Sailing between 10.01 – 20m VAT: 10%

Motor between 12.01 – 16m VAT: 10%

Sailing up to 10m VAT: 12%

Motor between 7.51 -12m VAT: 12%

Motor up to 7.5m VAT: 18%

Category D (protected waters only) VAT: 20%

The French leasing scheme is very similar and is based on the same principles of assumed time in EU waters. Their categories are based on the Class of vessel as shown in the Certificate of Registry. The French VAT base rate is 19.6%, and the minimum payable under the French system is 9.8% for a Class 1 vessel (50% of 19.6%)

The most recent country to introduce a leasing incentive is Malta, and with a lower VAT base rate of 18%, their rates vary from a minimum of 5.4% to a maximum of 18%.

Having covered the basic principles of what a leasing scheme is, and how it works, we can now consider the mechanics of acquiring a vessel using a European lease as follows:

Example – Individual Purchase Of A New Boat From UK Broker/ Manufacturer

1.The client chooses the boat and agrees a price with the dealer/broker or manufacturer. 2.The client agrees a deposit and lease period with the bank. 3.The bank pays for the boat. 4.The boat is leased to the client who pays installments at the reduced rate depending on the scheme, vessel type and size. 5.At the end of the contract the bank sell the yacht to the client at the agreed 1% residual value. Full rate VAT applies to this payment as this is a transfer of goods. 6.The boat is now VAT paid.

The above example is for an individual (or group of individuals) purchasing a boat using a European leasing scheme. In two cases it is possible to have a VAT free lease as follows:

• A charter business buying a vessel which is used 100% for chartering in EU waters.

• An individual buying a vessel for use 100% outside EU waters

Detailed below are some of the main features of the leasing schemes:

• Leasing facility available from 300,000 euros ( no maximum )

• Initial deposit between 20% and 50%

• Lease maturity from 3 to 8 years

• Residual value 1%

• Available for both private and company ownership

• Available for both new and used boats

• Registration in virtually any country and any flag

• UK flag is available under the scheme

• Chartering is permitted within the lease agreement

As a specialist marine financial services broker, we are receiving an increasing number of enquiries from both the UK and Europe to arrange leasing schemes with our European banking partners. The schemes are straightforward to arrange and administer, and can offer significant savings in VAT. As a company we also offer a wide variety of more conventional marine mortgages as we believe that whilst leasing offers many advantages, this may not be appropriate for all our clients.



Sell and Rent Back

While many people do not consider the possible use of a ground lease or land lease, ground leases offer a great way to retain a long-term ownership interest in real property that can significantly benefit heirs, while providing a current income stream. Vacant land that an owner may not be able to develop on his own can also reach its full development potential sooner using a ground lease. Most ground leases are negotiated with a provision that calls for the short-term development of the land, and once developed land owners / landlords have a relatively small risk of loss.

In Las Vegas, ground leases are used periodically but they have not been a mainstay in the real estate market. Given the cash crunch caused by the “Recession of 2008,” however, more land owners are considering them. Waiting for an end user to purchase a property, when most cannot get bank financing, can be costly. A ground lease provides and alternative to waiting that appears to be promising in the current economic climate.

Establishing a base return rate for a ground lease is not as difficult as one might imagine. Discovering the current market value of a property to be leased is the first step, and it is usually accomplished via an appraisal. With regard to the rate of return, if you were to sell a property for cash and invest the proceeds with as little risk as possible, you have established a base or minimal return figure. The near risk free rate paid on government treasury bonds is usually the base rate. Since more risk is associated with a ground lease than with holding government bonds a risk premium is usually added to the base rate.

One of the biggest issues associated with a ground lease in Las Vegas, as elsewhere, is position or subordination. If a developer is going to borrow money to improve a site, the lender generally wants to be in first position. Since the underlying land owner sees this request for subordination as a way to separate him from the land asset, and the bank feels its investment is larger and should be superior to the underlying land owner, some ground leases fail to materialized due to this security issue. Ground leases are most attractive to land owners when no financing is required for the development of improvements.

Another difficulty establishing a ground lease is the provision regarding rental adjustments. The Consumer Price Index (CPI) adjustments is often built into building leases, and at times CPI adjustments are adopted in ground leases. CPI adjustments provide the tenant with some assurance that they will not be caught up in a revaluation due to an explosive land market. The downside of using a CPI adjustment for the land owner is that the land may dramatically increase in value over time and the land owner will be stuck with the contract terms negotiated based on a much lower value.

Once established, the sum of the net present value of the income stream from a ground lease plus the discounted value of the remainder are the basis for value. So poorly structured ground leases can destroy the value of a parcel of real property.

Thus, ground leases can be detrimental to an owner or tenant if not well crafted. I have personally evaluated a real property encumbered by a 99 year lease with a 60 year term remaining that provided the leased fee owners with a return so low that their heirs could not afford to pay the tax bill. I can’t think of anything worse than being conveyed an asset worth several million dollars that just costs you money every month and that will likely not provide you with a benefit during your lifetime.

The opposite side of the coin is a lease that favors the owner so much that the tenant cannot afford to pay the monthly rent. Driving your leasehold tenant into bankruptcy is also not the best scenario for a long-term lease relationship.

Under certain circumstances a ground lease can be beneficial to both a landlord / owner and a tenant. Recent market changes in Las Vegas have opened land owners to the possibility that a ground lease may be a valuable tool to get a deal transacted. Great care must be taken to develop terms and legal provisions (with the aid of your attorney) that will remain reasonable over the life of the lease. Thus, the use of a ground lease in Las Vegas is being considered by owners and developers as a serious alternative to traditional land sales.



Repossession