Stirling Properties Names Darryl Bonner To Executive Team
Stirling Properties is pleased to announce that long-time real estate executive, Darryl Bonner, has joined its team as Vice President of Strategic Initiatives. He will work from the company’s Pensacola (FL) Office located in the SCI Building at 220 West Garden Street.
As VP of Strategic Initiatives, Bonner will assist Stirling Properties with short- and long-term strategic planning of the company’s expanding portfolio. He will also support new business growth across a variety of service areas including development, management, leasing, and acquisitions.
“We are thrilled to have Darryl join Team Stirling. He has been a leader in the commercial real estate industry for quite some time and brings a wealth of experience to our company,” said Marty Mayer, President & CEO of Stirling Properties. “In this rapidly evolving business environment, his extensive market knowledge and deep-set relationships throughout the Gulf South region will add significant value to our strategic growth plans.”
“I have always admired Stirling Properties and the skill set that this team brings to the Gulf South region—so it is with great pride and much excitement that I accept this unique role. I look forward to being a part of the company’s future success,” said Bonner.
Previously, Bonner was Senior Vice President of Retail for Cousins Properties in Atlanta, GA, where he was responsible for all retail leasing activity for the company—from specialty centers to mixed-use projects and office properties, including the procurement of key leases and tenants during pre-development activities in new projects. He has extensive experience working with national and regional retailers and leasing platforms.
Prior to that, Bonner held a range of retail leasing executive positions at General Growth Properties in Atlanta, GA; Jim Wilson & Associates in Montgomery, AL; and Robert B. Aikens & Associates in Troy, MI.
A Florida native, Bonner earned his bachelor’s degree from Southeastern Louisiana University in Hammond, LA, and his MBA from Auburn University in Montgomery, AL. He is a member of the International Council of Shopping Centers (ICSC) and holds the professional designations of Certified Shopping Center Manager (CSM), Certified Leasing Specialist (CLS), and Certified Retail Property Executive (CRX). He is a frequent guest speaker at Auburn University, ICSC conferences and industry roundtable discussions, and real estate educational programs.
Suburban Office Space In Short Supply for Baldwin County
I recently attended a commercial real estate conference held in Birmingham, Alabama, where over 500 commercial brokers, developers, lenders, politicians, and business leaders gathered to learn of current trends in commercial real estate, as well as to gain a better understanding of how certain factors have and will continue to shape the future of Alabama. Prevalent themes centered on the rapid growth of the Gulf South region and the evolution of our industry—with progressive growth and opportunities on the horizon for the South Alabama market, notably, changes in the office market space.
Baldwin County continues to be the fastest growing county in Alabama with 49% population growth since 2000. The University of Alabama’s Center for Business and Economic Research (CBER), projects that the Daphne-Fairhope-Foley metro population will increase 43.6% over the next 20 years, and is anticipated to become the 4th largest MSA in the state by 2040. The recent arrival of the Walmart distribution center and Amazon fulfillment center, combined with the expected growth of companies such as Airbus and Austal, the continued success of the Port of Mobile, and the addition of the new bridge over Mobile Bay all point towards a bright future for the South Alabama region.
But as the population continues to increase throughout Baldwin County and new businesses are attracted to the region, the nonexistence of Class A office space outside of Mobile’s CBD is evident. The product simply doesn’t exist. The lack of available inventory can indeed be frustrating—not only to national commercial brokers seeking office space options for clients but to local economic developers tasked with recruiting industry and commerce to the area.
According to Lee Lawson, President and CEO of Baldwin County Economic Development Alliance, “The lack of available professional office product in Baldwin County is a critical difference maker in converting economic development opportunities to successes. We continue to work with our partners both private and public to create the environment where economic development opportunity conversions can happen successfully. In the white-collar office arena, existing space in the marketplace creates a higher conversion opportunity ratio for new high-paying jobs in our community.”
Even more challenging would be to locate a Class A office building that meets the preferences of today’s changing workforce. There are certainly niche markets, such as Downtown Fairhope, that are starting to support a higher-end office product but on a smaller scale. Other options for office space along the Eastern Shore of Mobile Bay, including Spanish Fort, Daphne, Fairhope, and Point Clear are primarily made up of smaller, older buildings, some of which are becoming antiquated. Office space needs for those users not willing to commute to broader markets such as Mobile or Pensacola are often met by converting retail space to office use or working from a home office.
On pace with national trends, office building features are evolving, with an emphasis on more open space for collaboration and shared-office facilities in high-tech buildings. Suburban locations with urban-type amenities are highly favored among the substantial millennial demographic shift and will create even more demand in the next few years as the age group continues to mature. Another popular suburban office trend is the mixed-use, live-work-play development model with walkability to nearby restaurants, retailers, and residential services.
To expound upon the shifting trends of suburban office space and the lack of Class A inventory in the area, Stirling Properties has recognized a significant need to provide for quality office space. We are currently underway on pre-leasing efforts for The Offices at Spanish Fort Town Center, a proposed 2-story, 44,000-square-foot, Class A office building strategically positioned along the I-10 corridor in Spanish Fort. This future development is in the bullseye of major growth in the county and provides convenient access to both Mobile and Pensacola. Not only will this new office building help to attract corporate and professional users to the area, but the new construction and design also allow the incorporation of the emerging styles that will change the way office space is utilized.
The Offices at Spanish Fort Town Center will include state-of-the-art construction such as efficient floor configurations, allowing tenants the ability to design space to incorporate innovative ways to potentially reduce square footage required, therefore, reducing rental expenses. Other features include flex space to encourage and promote collaboration among employees; flexibility in hours of operation, as the trend for 24/7 “shift” use evolves; and ample, free surface parking, resulting in significant cost savings when compared to paid parking typically associated with CBDs. It will also benefit from high interstate visibility and signage opportunities.
The office building is within walking distance of numerous on-site amenities associated with Spanish Fort Town Center, a mixed-use development consisting of retail, restaurants, and residential facilities. An on-site Container Park is also planned for 2018, with exciting new restaurant vendors.
Our region is quickly emerging as a top destination for business and corporate growth and relocation. Baldwin County has been named #1 in the state of Alabama for incoming business investment for the 2nd year in a row, and #1 in the state for Workforce Talent Attraction. If we are going to compete with other top markets—and win—we must be able to provide quality office space in our suburban markets.
Stirling Properties is excited to embrace and support the growth of Baldwin County and our region. With offices spanning the Gulf South, our team is well-equipped to recognize and execute strategic commercial real estate opportunities—from Louisiana to the Florida Panhandle.
For additional information, please contact me at 251.375-2496 or jbarnes@stirlingprop.com.
Tax Reform & Real Estate… It’s a good time for our industry
The Tax Cuts and Jobs Act passed in December and several of these provisions will take effect in 2018. Many individuals have already benefited from the new tax law by seeing their recent paychecks increase. We believe this tax reform will have a similar positive impact on the real estate industry. Tax reform can be a very complicated—and tedious—topic so we’ve highlighted some of the implications for real estate owners, small business owners, and individuals. We’ll preface by saying this is our interpretation of the law, prior to the regulations being written and what we think Congress intended by the text of the law.
Initially, many of us in the real estate industry were very concerned about tax reform and the negative aspects that were being considered. The International Council of Shopping Centers (ICSC), responded by forming a committee consisting of executives and tax professionals across our industry to garner input to deploy lobbying efforts. Stirling Properties played a significant part in providing consistent feedback that guided ICSC’s lobbying efforts. Several executives in our company, including Marty Mayer, Townsend Underhill, Jimmy Maurin, Will Barrois, and me, were active in lobbying congress, and as noted below, these efforts were successful. Together, we were able to quickly respond to aspects of the tax proposal that were detrimental to the real estate industry and offer solutions that would benefit our real estate holdings and the business as a whole. We’ve compiled a brief overview of some of the changes.
Real Estate Business Owners and Investors
- Expanded Bonus Depreciation: Items that were previously required to be capitalized over 15 years (subject to 50% bonus depreciation) are now eligible for a 100% deduction in the year of completion.
- Examples of these items include parking lots, landscaping work, pylon lighting, etc.
- This provision begins to phase out after 5 years.
- Business Income Deduction: 20% of the taxable income generated from a business could be eligible to be deducted from taxable income pending multiple limitations.
- For example, if your share of taxable income from a business you own is $100,000, the first $20,000 may be eligible for a deduction, thus lowering taxable income to $80,000.
- Business income from pass-through entities like partnerships and LLCs will still be taxed at the new lower individual rates.
- Historic Preservation and Rehabilitation Tax Credit: The 20% credit for renovating certified historic structures remains in place but must be taken over a 5-year period as opposed to being fully deductible in the year of completion under the existing law.
- C-Corporations Tax Rate: The corporate tax rate under the new law is 21% as compared to 35% under the existing law.
- Property Tax Deduction: Still in place for real property trade or businesses including rental properties.
- Interest Expense from Loans: Businesses will still be eligible to deduct the interest expense from the debt incurred if its gross receipts are less than $25 million.
- The vast majority of commercial real estate in the Gulf South region would continue to be eligible to deduct interest.
- 1031 Exchanges: Real estate will still qualify to receive 1031 treatment.
- Capital Gains Rates: Remained unchanged at 0%, 15%, and 20% depending on income levels.
- Carried Interest: The new law requires a 3-year holding period to qualify for capital gains treatment as opposed to a 1-year holding period under the current law. This was a “win” for real estate as the original proposal was for carried interest to be taxed at ordinary rates.
Individuals
- Tax Rates: Almost every bracket has been widened and lowered with the top bracket being lowered from 39.6% to 37% thru 2025.
- Standard Deduction: Single filer’s standard deduction increased from $6,350 to $12,000. Married filer’s standard deduction increased from $12,700 to $24,000.
- Personal Exemptions: Taxpayers will no longer be eligible to deduct the $4,100 per dependent.
- Child Tax Credit: The child tax credit increased from $1,000 to $2,000.
- State and Local Taxes: Deduction under the new law is capped at $10,000.
- Estate Tax Exemption: Doubled to $11.2 million for single filers and $22.4 million for married couples.
At the end of the day, the real estate industry appears to have fared well in the Tax Cuts and Jobs Act. Some of these items are pending a technical corrections bill and additional clarification, but the expanded bonus depreciation and business income exclusion make being a real estate investor an enticing proposition. For investors looking to deploy capital in a tax advantageous investment, real estate is an appealing option that will rival alternative investments. We believe tax reform will provide a stimulus for real estate investment over the next five years.
We will follow up with more in-depth coverage of some of these items in the future, as well as how Stirling Properties is adapting to take advantage of this new opportunistic landscape.
The information contained herein is intended for information purposes only. Individuals should seek advice directly from a qualified professional before making any decisions or taking any action that might affect your personal finances or your business. Stirling Properties is not responsible for any investment or monetary decisions made based on the information provided above and is not a tax advisor. The information provided above was done so with the perceived intent of the legislation and not based on the actual regulations. The actual regulations could yield significantly different results.
Consumers Still ♥ Brick-and-Mortar
Valentine’s Day has come and gone—and it was retailers who were feeling the love this year. According to the National Retail Federation (NRF), early sales projections leading into the holiday were estimated to reach a near record of $19.6 billion, an increase from $18.2 billion last year. U.S. consumers individually were expected to spend an average of $144 on Valentine’s Day, also up from last year’s $136.57. The NRF reports these retail numbers are the second-highest in its survey’s 15-year history. Additionally, the majority of Valentine’s Day retail sales were expected to be made in a physical store, including department stores, discount stores, specialty stores, florists, or local small businesses.
This healthy holiday spending is reflective of the upwards trend across the U.S. over the past year. The 2017 official Holiday Season (November & December) rounded out with total retail sales estimated to be more than $690 billion, a whopping 5.5% aggregate increase over 2016, indicating the strongest holiday season growth rates since 2010. Shoppers spent an average of $842 on gifts and holiday-related items versus $714 in 2016. Furthermore, 85% of total sales were by retailers with a physical presence.
These statistics confirm and reiterate that the retail real estate industry is thriving, and the rise of ecommerce hasn’t changed that. Yes, we’ve read the bloated headlines about “the retail apocalypse,” “the death of shopping centers,” and “the Amazon effect on retail” but the real story is that ecommerce sales account for less than 12% of total retail sales. It is also estimated that over half of those online sales actually go to brick-and-mortar retailers. Even though ecommerce sales are growing considerably, online giants such as Amazon still only account for a small percentage of the overall market.
As we saw this past Valentine’s Day and during the 2017 Holiday Season, consumers prefer to shop in-store. In fact, 90% of holiday shoppers made purchases from retailers with a physical presence. In the retail game, successful stores are actually using ecommerce to their benefit, giving consumers more options and convenience to make their purchases. Omnichannel buying options, like click-and-collect and click-and-ship, are enhancing the brick-and-mortar shopping experience and boosting sales at physical stores.
To add even more sentiment to your post-Valentine’s Day heart: In the past year, we saw more retail store openings than closures and store openings are expected to outpace closures over the next 5 years (according to Zebra Technologies-IHL Group study). In 2017, the retail market had 4,080 net store openings.
And… To put the icing on the heart-shaped cupcake, retail sales are expected to continue to increase for the next several years. Many experts forecast that overall retail sales will rise between 3.8% and 4.4% in 2018 over last year. That certainly warms my heart.
On track with the rest of county, the retail landscape here in the Gulf South region is solid. Occupancy rates in our centers remain high. Retailers are reporting strong foot traffic and higher-than-anticipated sales numbers—especially those who are learning to adapt to consumer demands and offering unique shopping experiences. We are also attracting and welcoming many new-to-market stores and restaurants.
So, on Valentine’s Day, today, and every day, let’s remember to advocate for and show a little love to our brick-and-mortar retail friends.
Marty Mayer
President & CEO
Mobile area primed for future growth
Mobile Aeroplex at Brookley establishes surrounding area as prime position for sustained growth in the commercial real estate industry.
Mobile, Alabama, and its surrounding region are experiencing unprecedented growth due to a low cost of doing business, diverse commerce base, intermodal transportation options, and quality lifestyle. Businesses and corporations are flocking to the area, bringing with them an increased workforce and a plethora of new economic opportunities.
One specific area of note is the positive trend in the market surrounding Brookley field. Economic activity is thriving in this area, and an influx of significant commercial real estate development is expected within the next few years. With the advent of numerous new businesses and the resulting inflow of employees and their families, this is a natural site for the emergence of convenience stores, gas stations, hotels, restaurants, and much more in the near future.
Most of the area growth is spearheaded by the recent expansion of Mobile Aeroplex at Brookley. Spread over 1,650 acres in southwest Mobile, the Aeroplex is now the largest industrial and transportation complex in the region, combining rail, road, and water along with a state-of-the-art airport. Currently, more than 75 companies employing some 3,600 people are housed in the complex, including Airbus U.S. Manufacturing Facility, Airbus Engineering, FedEx, Signature Air Support, Safran USA, Continental Motors, VT MAE, MAAS Aviation, among many others—and it’s growing daily.
Late last year, Airbus announced its largest single deal to build aircraft for Indigo Partners, whose airline portfolio includes Frontier, JetSMART, Volaris, and Wizz Air. The contract includes 430 aircraft and is valued at $49.5 billion. Airbus was also selected by Delta Air Lines to manufacture as many as 200 jetliners, with delivery of the first 100 beginning in 2020.
Airbus and Bombardier also announced an agreement to form a partnership to build Bombardier’s C Series passenger jets. This deal could result in the addition of a second aircraft assembly line at Mobile Aeroplex, creating a proposed 400 to 500 more direct jobs in the area, and would represent an investment of hundreds of millions of dollars. Reports also estimate that establishing “the necessary C Series facilities” would create 1,900 direct jobs, 1,000 indirect jobs, and 3,000 induced jobs during construction.
In December, the Mobile County Commission approved its share of incentive packages for Safran USA and Continental Motors. This process will move forward plans for Safran—a new tenant at Brookley—to open a new manufacturing operation. The company plans to invest $1 million in starting the operation and will hire approximately 20 employees. Continental Motors is planning a $60 million investment to build an entirely new facility to house its existing operations at the Aeroplex.
Furthermore, this thriving industrial park has the potential of becoming Mobile’s new international airport—a proposal to move Mobile Regional Airport from west Mobile to Brookley field is gaining steam. This move would completely change the landscape of the area by placing the airport at the center of our region’s economic activity. With the recent support of Congressman Bradley Byrne and many other local community leaders, a feasibility study could be underway soon. “If we undergo a feasibility study and the study shows that Brookley is a viable airport for commercial activity, then there is no reason why we should not entertain that,” said Chris Curry, Executive Director of the Mobile Airport Authority, which oversees the Mobile Downtown Airport, Mobile Regional, and the Aeroplex at Brookley Field.
The Mobile Aeroplex at Brookley is already home to many of the world’s leading aerospace suppliers, and major transportation companies, and it continues to expand every day. It is serving as a major catalyst for surrounding area growth and investment in the region. But people living and working here currently have limited options for eating, shopping, and other needed services. Because of this, we will undoubtedly see an increase in the demand for commercial amenities and new developments such as retail and restaurants.
The time is right for commercial growth in the area surrounding Mobile Aeroplex at Brookley. Anyone with interest in getting in on the front end of a burgeoning market should pay close attention to this space. The growth is starting small, but it will certainly progress quickly over the next few years. I look forward to being a part of the historical evolution of Mobile!
National Association of REALTORS® Selects Beth Cristina as Commercial Committee Chair
Stirling Properties’ Senior Broker Associate, Beth Cristina, ALC, has been selected as the 2018 Commercial Committee Chair for the National Association of REALTORS® (NAR). She assumed the role on January 1, 2018, and will serve for a one-year term.
The Commercial Committee’s purpose is to identify, monitor, review, analyze, and recommend policies addressing commercial real estate industry issues and trends, with a focus on affecting business solutions that help members achieve their business goals more effectively.
“Beth’s role on the committee will help to bring value and benefit to the association’s 1.3 million members, the nation’s 75 million real estate property owners, and the numerous individuals striving to achieve homeownership,” said Elizabeth Mendenhall, 2018 NAR President, who made the appointment. “I know Beth cares deeply about our profession, our industry, and the clients we serve, and she will help to guide us forward; I am proud to have her serve as Commercial Committee Chair.”
As Committee Chair, Cristina will help to advance the organization’s 2018 goals, which include involving committee members in outreach with large brokerage firms to increase brand awareness and membership; developing commercial member testimonials on the value of the REALTORS® Political Action Committee (RPAC); and working with NAR Consumer Communications Committee to increase the amount of advertising relating to commercial brokerage.
“I’m excited and grateful for the opportunity to take on this leadership role. I’m honored to serve on NAR’s Commercial Committee and to contribute to the decision-making process and help shape the direction of the association and its policies,” said Cristina. “Volunteering is crucial for the future of our business. President Ronald Regan said it best ‘The work of volunteer groups throughout our country represents the very heart and soul of America. They have helped make this the most compassionate, generous, and humane society that ever existed on the face of this earth.’”
Cristina has over thirty-eight years of successful experience in commercial real estate sales, leasing, development, and investments. Her qualifications include retail and office market analysis, tenant/landlord and purchaser/seller representation, marketing sales, leasing strategies, and consulting services. She has earned numerous awards and recognition throughout her career, including Outstanding Achievement in Commercial Real Estate, Realtor of the Year, and Woman of the Year.
Most recently, she served as the 2017 NAR Commercial Committee Vice-Chair. She is also affiliated with several business and professional organizations, including Realtor Land Institute (RLI); Louisiana Realtors (LR), where she served as 2015 President; New Orleans Metropolitan Association of Realtors (NOMAR), where she served as 2005 President; and Commercial Investment Division (CID) of NOMAR, where she served as President for 2000 and 2008.
The National Association of REALTORS® is America’s largest trade association, representing over 1.3 million members, including NAR’s institutes, societies, and councils, involved in all aspects of the residential and commercial real estate industries. Membership is composed of residential and commercial realtors who are brokers, salespeople, property managers, appraisers, counselors, and others engaged in the real estate industry.
Beth Cristina can be reached at (504) 620-8127 or bcristina@stirlingprop.com.
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