Vending Of The Future

Many real estate professionals have been approached by one vending company or another during their careers. While most of us have shrugged off these "vendors" as pestering annoyances. However, the future is looking very bright for the vending industry and is bringing more popular and exciting consumer products closer to everyone one. Kiosks such as this iPod vending machine are poping up all over the country.   Here is a demonstration video link from the manufacturer.

http://www.zoomsystems.com/videos/demo/zoom_demo.html

These machines are making the most popular consumer products even easier to purchase. The best part is these machines don't need very much space. In some cases, these machines can be placed inside walls so as to appear like a small store front inside any building or common area. If you can pull phone lines and power to the area, you are equipped to install one of these state-of-the-art retail stations.

Proactiv Solutions has had a successful run operating from common area carts or retail merchandising units (RMUs). National advertising campaigns aligned with Hollywood celebrities has helped with sustainability. However, this product typically is the top seller among mall kiosks and have provided with landlords with some stable income over the years. However, in order to combat the owner / operator issue that many consumer products face, they have developed a vending kiosk that brings the product even closer to the consumer.

Sony has also explored the non-traditional retailing strategies and brought its products closer to the consumer. Again, just as Apple and Proactiv, they decided to enter the vending world to bring their products closer to the consumer while reducing costs to enter the market. While you can't purchase computers or other large electronic equipment from the machines, they do carry mp3 machines, headphones, ear buds and other smaller electronics.

Many other major retailers and consumer products are entering the vending business to shrink the supply chain. This means that more venues will be attractive to vending type facilities whether it be in a major high-rise office building, shopping center, street corner, etc... The sky is the limit to this type of service and provides landlords with another non-traditional revenue stream.  Also, these types of opportunities require very little or no cost to the landlord.  

Who's Pursuing Ancillary Revenue?

Real estate owners or managers are constantly looking at ways to increase the value of their property. Whether the property is your own home, an apartment complex, industrial warehouse, office high rise or multi-level retail destination, everyone wants to make sure that their property is worth more today than it was yesterday. Pursuing ancillary revenue is one way to do that.

Real estate ancillary revenue can be ambiguous. The simple reason being is that there is no clear definition on the subject. I define it as any revenue that is generated from your property that is ancillary to your core business. If your core business is leasing apartment complexes, then any dollar that is generated that is not leasing to a new residential tenant, would be considered ancillary revenue. I've also heard it described as: specialty leasing, new business development, local leasing, etc... Also, the fact remains that there are so many ways to make money from your real estate that don't include your core business, no one specific definition can suffice. Its difficult to some up a job description for something that can easily have thirty different responsibilities.

Therefore, I'm curious to know who in the real estate world is pursuing ancillary revenue. If you are pursuing the opportunity, what areas are you pursuing and why? Perhaps the why is understood but many developers and property managers I've talked to in the past believe ancillary revenue is more of a "thorn in my side" or "more cost than a reward". I would answer any nay-sayers this way. If you spend $1 pursuing ancillary revenue but received $2 for your efforts, is there any reason why you shouldn't consider the opportunity? No. There will always be a cost to pursue new business. However, if you generating more revenue through non-traditional channels while maintaining costs than the answer is clear. Ancillary revenue should always be considered....ALWAYS!!!

I challenge developers, property managers across the globe to see how much money their real estate is really worth. Coming out of a comfort zone to learn new skills can reap huge rewards at little or no cost. As with any new venture, a learning is to be expected. Time and research will pay off in the end. Dialogue also seems to spawn creativity. The creative person will able to see what lies underneath each stone that is turned. I enjoy pursuing ancillary revenue because it seems to me that every day is different. With countless revenue options to pursue, ancillary revenue can spice up even the most boring of days.

"WindCube" Targeted For Urban Commercial Real Estate

Renewable energy is becoming more popular and affordable. The benefits to transferring your energy requirements to a renewable energy source have been well documented. When sourcing energy from the wind, the huge windmill type structures are what come to mind. Yesterday, at the WindPower 2009 industry trade show a new product and design geared toward the commercial real estate industry was unveiled.  

The WindCube, is a 22-foot-tall footprint intended to be installed on rooftops that can supply energy to a single commercial or industrial site.  The initial objective of the "Cube" is to create wind power in an urban setting. The standard towering turbines we've seen on TV or at "wind farms", can't be utilized in an urban setting. Typically, there isn't enough room for the turbines to rotate to generate adequate energy.  Northeast Ohio based, Green Energy Technologies will manufacture the state-of-the-art turbines.

The cost for these units can range up to $300,000 for one cube. However, through tax tax credits and incentives, about 70% of the set-up costs would be returned. Therefore, it is estimated that the balance of the purchase would be paid back in approximately, 2-3 years. Since the initial target market is urban buildings, the commercial real estate industry will need to take notice.

Here is an animation link on how the "Cube" works:  

http://greenenergytv.com/Watch.aspx?v=e2db816bdb430fe6

Entering the energy business is already an income source for some landlords.  As the costs for infrastructure continue to decline, renewable energy for commercial buildings and their tenants will become more mainstream.  While the environmental benefits are acknowledged, the revenue streams from this opportunity are significant.  Depending on the application and location, ancillary revenue generated can equal into the millions of found revenue.  

I am not affiliated with Green Energy Technologies in any way.  I am a proponent of new technology that can help commercial real estate owners drive revenue to their bottom-lines.  I believe this footprint could be the wave of the future as costs decrease and infrastructure shrinks.  One thing is clear.  This technology will make Wind Energy more affordable to a larger audience and can be a huge ancillary revenue source for commercial property owners across the world.  

Grocery shopping in 25 square feet or less!

Convenience store shopping not a new concept.  Its actually been around for over 80 years.  The basic art of vending has been around for nearly thousands of years.  However, the 24-hour, vending grocery store is an innovative concept that has been experienced in Europe for several years.  In the US for much less.  

A company based in Belgium, called Shop 24 is rolling out these grocery store vending machines across the US.  The photo to the right is one of a proposed 150 that will be installed at Kroger Grocery stores across the US.  

Basically, these vending machines have approximately 150 products available from milk, lunch meat, soda and pain relievers.  Each location can accept credit cards, coins or bills as payment methods for the items you choose.  The items can be selected in the same manner as you would any other traditional vending machine.  Push different buttons for the corresponding item codes and your items are selected by a robotic arm inside the machine and placed in the "selection bin" for retrieval.

This concept can be used in a number of locations from office buildings, stand along sidewalk stores, malls and in remote outparcels of shop power shopping centers.  Obviously Kroger has bought into the concept as they are going to roll them out across their North American grocery stores.  Consumer convenience will always be important not matter your industry.  What I like about this is that the presentation is clean, professional and can be used in so many applications.  

This machine was placed on a college campus in upstate New York.  I don't believe the machines are capable of holding alcohol, nor do I believe this is legal.  However, students and residents are impressed with the convenience of the concept and the variety of the product offerings.  No word on what income potential is available from these machines as its an new concept to market.  However, in a era where retailing is extremely stale, this variation on the traditional staple is impressive and won't have too many barriers to entry in appropriate settings.

The vending world is changing with consumers habits and needs.  Are your properties receptive to these units?  What would you want to see at your properties if you could have or want one?

What are your exterior walls worth?

Real Estate Ancillary Revenue can take the forms of mulitple different streams.  One lucrative revenue stream is advertising.  Yes, I've discussed this topic before.  However, does anyone know what their walls are actually worth?  Property managers are challenged with tenant signs, vendor signs, etc... on a daily basis.  

What if a media company approaches you about placing a wallscape (billboard on a building wall) on the side of your building.  Wallscapes can be interactive, static or digital projections. If a wall can be seen by thousands of people per day, odds are that it has appeared on the radar screen of a billboard or out-of-home media company.  

  

      

Take a look at this interactive wallscape that was done in Columbus, Ohio for Nationwide Insurance.  Not only were the building walls used, but the parking lot was incorporated into the message as well.  This is one of the best wallscapes I've seen as it conveys a strong message and is undoubtedly memorable.  

Wallscapes or spectaculars (as known in the media world) can take many forms as you can see.  Solid walls aren't the only canvasses available.  Messages can be incorporated into windows, furniture, staircases, etc...  If you have a creative mind you can propose placing messages on any surface.  Also, because this advertising type can generate significant media attention, the revenue potential is also significant.  In some cases, annual rents can equate to several long-term tenant leases.  While this gets some attention to your building, there is little or no impact to the building itself.  Any windows that would be covered, are still usable by tenants.  Most of the time, tenant employees won't be able to tell that a sign is "pasted" on their window.  

Therefore, I ask the question.  What are your exterior walls worth?

Tenant Storage: What are your options?

In my experience, tenant storage has been a major issue for property managers,  leasing personnel and risk managers.  When tenants seek out additional storage on a permanent or temporary basis, odds are they are considering their own interests in their decision.  In reality, tenants taking additional storage in a facility where they operate, can be a major headache for those running the property.

Unless specifically acknowledged in a lease, taking additional storage space is trespassing.  While the majority of us would never accuse a tenant of “trespassing” for taking storage, there are significant risks to the property manager / owners if  not handled correctly.

Storage spaces can take the form of a number of uses.  

•        Storage Trailers placed behind stores or in parking garages
  
•        Use of unrented space in or around a building
  
•        Dedicated storage area used for property management
  

The use of these spaces can put property managers / owners in very difficult positions.  The most importantis that lessees are using the real estate for purposes other than what their lease dictates.  What if an employee or worse a customer was hurt working inside the unapproved storage space?  I can tell you (from experience) the injured person will not seek damages from the employer or business.  They will come after the landlord or property management company responsible maintaining the common area facilities.  Lawsuits, court dates, damage control, public relations remedies would be necessary to correct the situation. 

The situation could have been avoided had the tenant simply leased / licensed space from the landlord.  The agreement doesn’t need to take the form of an existing lease nor are you going to charge “commercial market rent” when quoting.  You also need to obtain a separate certificate of insurance protecting ALL parties involved.   This reduces the risk to the managing party.  You may also ask, what do I charge the prospect interested in storage space.  I simply contacted a few area off site storage providers for rates and then made a determination.   Be prepared that tenants are not going take kindly to your solution of the situation.   Some tenants will say they can seek storage off site.  If so, that’s fine too as they won’t use your space illegally anymore.  You can present your solution as a cost-effective way to avoid a very expensive problem in the future.  Speaking in terms your tenants’ attorneys are going to understand should end the conversation.

Landlords are not looking to squeeze every dime from their tenants.  In reality, they are trying to provide the safest environment possible to conduct business.  Leasing storage space is no different than leasing commercial space.  You need have to document to protect all parties involved in the transaction.  

Wind Power

On my recent trip to Houston , I picked up a copy of the Houston Press.  What caught my attention was the cover of magazine with an artists rendering of T.Boone Pickens in front of several wind turbines.  More and more companies are jumping on to the alternative energy bandwagon as it relates to promoting their "green initiatives".  However, to break into the pursuit of wind energy will require time, persistence and capital.  The time and determination needed can come from our industry.  The capital can be federally subsidized if approached correctly.  Our properties can benefit and generate some additional revenue from these resources.

T.Boone Pickens, an oil tycoon that lives in the panhandle of Texas is single-handedly financing a national energy policy.  He is working building a wind farm across 200,000 acres in Texas that will provide landowners a two-pronged revenue source.  Who would have thought that an oil tycoon would get into the wind business.  He is a businessman after all and he realizes there is significant money to be made by pursuing these alternatives.  Land owners can lease their land for the right to place a wind turbine.  As the wind farm begins producing power, the landowner will receive royalty payments as power is generated and distributed to the market. This is very similar to the transaction that is made between and landowner and an oil and gas company that want the resources below the ground.  The benefits of these new alternative energy sources are well documented.  

The problem we all face is convincing our political leaders that focusing on energy sources closer to home must be a priority.  Regardless of your political affiliation, putting more money in the pockets of real estate owners is a good thing.  While open wind farms are the wave of the future, those in commercial real estate must also take action on pursuing these alternatives. Many companies would be excited to enter buildings powered by energy alternatives.  The public relations benefits would be extreme.  Most commercial properties are in areas where wind is prevalent and the potential to transfer that wind into energy is a possibility.   The revenue potential is available and can make a major direct impact to your bottom line.

Wireless Technology

The explosion of cell phones, smart phones, digital networks is well known and now a part of our everyday lives.  How many people stop and think how all of this information is transferred from point "A" to point "B"?  The "network" that every cell carrier describes and explains is so superior to their competition, is used to transfer messages, phone calls, data.  The network is comprised of thousands of receivers across the world.  Each being hit thousands of times per second by your calls, emails, internet searches, data transfers, etc...  

Where are these receivers?  

These receivers can be placed in many different areas on vacant land towers, rooftops, inside buildings, flagpools, trees, etc...  Technology has helped mask the dreaded towers that are all over the country.  Also, in order to keep up with rising demand for expansive networks, carriers are looking at all different types of real estate to prevent unpopular dead zones.  While Verizon has branded the phrase, how many times have we been on a call when we ask:  Can you hear me now?  

As always, location is key to determining a cell tower viability.  That will determine if a carrier needs stronger signals for increased demand.  Also, the positioning of a building, topography and accessibility also play an important part in positioning a site.  Zoning requirements will also play a role into a cell site development.  Receiver types, aesthetic requirements, ingress/egress opportunities will be questions asking by zoning officials when allowing sites.  All landowners want these sites to be as attractive as possible not only for the cities where they are placed but prevent to prevent eyesores for the public, tenants and visitors.

Casinos, malls and high-rise office buildings in large cities are leasing their interior corridors to carriers as well.  In some cases building walls are too thick to allow signal penetration.  Therefore, the carriers need to transmit signals inside the buildings to allow customers easier communication.  These receivers are more discreet than the traditional towers or rooftop units.  Typically they are placed in the ceilings of common areas and wired between each floor.  A central signal distribution hub is used somewhere inside the building to power the interior network.  This way, all patrons in the basement to the highest floor can have the same amount of "bars" and can communicate just as effectively.

This use must not be confused with any temporary use.  While non-traditional in nature, cellular agreements are traditional leases in everything but name only.  Terms typically run for approximately 10-15 years with option periods included.  Therefore, this brings in significant revenue for a long period.  

When considering a lease, make sure you are working directly with the carrier.  There are many brokers in this business that have their own interests at heart.  Not only, will your negotiation process be much shorter, you will also be sure you have a potential site.  Brokers have been known to tie up multiple sites together to negotiate the best deal.  

Typically you can find more online by googling "Cell tower leasing".  It is a good business to be in considering the wireless community is not going away.

Parking Stripe Advertising

Advertisers are faced with a daily challenge of cutting through the clutter to expose their products to as many people as possible.  Land owners and property managers are being approached by media companies of all types in hopes of using their locations to promote their products.  One such innovative and clean technique I've seen is advertising on parking lot stripes. 

More information can be found at: http://www.parkingstripe.com/

I have used this concept at several properties in the Caribbean as well as the Midwest.  

Basically, the product is a decal that can be placed or stuck onto the parking stripe on the ground.  Any advertising message can be printed on the decal.  The durability of the stripes is what surprised me the most.   They withstood Caribbean summer days and Ohio winters and everything else in between.  

There are several benefits to landlords.  

1. Ancillary Revenue - Landlords can earn upto $2/stripe that is placed.  

2. Cost savings - A strong advertising program can save a on striping of the existing stripes.

3. Tenant Relations - Provide your tenants with a cost-effective and timely promotional campaign immediately in front of stores, buildings, etc...

4.  Call to action - The medium is perfect for providing a call to action for consumers.

A minimum print run is 500 stripes which is significant and can cover a large parking area.  While the concept is still in its infancy, major advertisers such as MasterCard, Pepsi, Home Depot, etc... are pursuing the medium.  The only issue I've experienced is a lack of attention given towards the concept from the creator.  While an advertising company created it, they aren't selling it to major agencies on Madison Ave.  Therefore, in order to get something placed, you will need an advertiser that will commit to using them at your property before you see anything at your facilities.

Interesting concept that has significant potential if the mainstream catches on.

Creativity yields productivity

I apologize for the lag time in posts.  You see, I spent the last few days in Houston, Texas visiting family and pursuing opportunities.  Time will tell, how successful my trip actually was.  

As this posts gets more and more exposure, questions are starting to arise.  Such as, what is the overall cost to generate non-traditional revenue.  Man hours?  Administrative costs?  Liability insurance costs?  As with starting any business, there are going to costs associated with beginning a department or redirecting time efforts from a core business any individual was hired to do.  I will tell you, the first deal I negotiated cost my company approximately $1,500 in logistics, administration and maintenance.  Eventually, we were able to turn our red ink into black, but it did take some time first.

Therefore, I wanted to address any skepticism there may be about pursuing ancillary revenue.  Any new deal that you would consider, needs to address your costs.  In order for any revenue to fall to the bottom-line, it needs to address the time, effort, logistics, etc...needed to bring anything to fruition.  To handle this potential situation, I suggest assessing an administrative fee to your deals.  You funnel this money directly to your costs or consider another profit center.  Public companies, show these fees as another revenue stream as smaller ones will address the costs.  The method of handling the situation is irrelevant as long as you aren't losing money in the end.  

Pursuing ancillary revenue can be time consuming.  It is best to know how to handle the situation before addressing it.  Therefore, make sure the "tenant" bears as many of the costs as possible to increase your programs profitability.

Temporary Tenants

Temporary Tenants in real estate have been around since the beginning of time.  Just watch an episode of "Bizarre Foods" when Andrew Zimmern visits any east Asian or European country.  The concept is nothing new and has been practiced and successful for thousands of years.  Therefore, when I recently read an article about the impact of temporary tenants on real estate appraisals, I was shocked to learn how narrow-focused real estate professionals actually are on the overall subject.  Read the link below....

http://valustar.net/wordpress/2008/10/19/the-regional-mall-temporary-tenant/

Overall, a landlord that contracts with a temporary prospect believes in marketing and entrepreneurship.  Remember, at one time, EVERY store started as a temporary concept.  One objective of the temporary tenant industry is to diversify and upgrade the retail landscape.  While the article above seems to believe that the size of a tenant makes them credit-worthy.  I can ask 1,000 temporary tenants and retail entrepreneurs if they think the size of their store matters.  In most cases, the larger the space equals higher expenses.  Temp tenants just want to move product and grow sales.  They can operate from a cart at shopping centers or shallow store fronts.  In most cases, lease terms are more favorable for start-ups because of the inherent risk they are taking.  A new, unknown product / retailer must compete against the national clutter that exists in every shopping center.  

I will agree that most landlords that do lease to temp tenants, don't consider their tenants merchandising, marketing and / or promotional plans to drive traffic to the store.  If a temporary tenant is serious about their business, this will be a major consideration before going into business. 

Temporary tenants are necessary in retailing today.   They keep well established retailers focused on their customers and bring fresh and innovative products to market.  In most cases, a successful temporary tenant program can add millions to an appraisal.  Mr. Simpson, I applaud you for addressing the issue that temp tenants need to be focused on merchandising and marketing.  However, without them, the regional shopping center would be 100 times worse than it is today.

Real Estate Internet Marketing 2.0

The social network spectrum is rapidly changing the way everyone markets products, services, properties, events, etc...  Twitter, Facebook, MySpace, FaceFriend, etc... are exploding their membership bases exponentially.  How many real estate properties are marketing themselves on the internet effectively are few and far between.  

Having a website is essential for sure.  But its what you do with the site to make it exciting, embracing, unique is the most important issue.  While creating an informative website was good 10 years ago, it merely gets lost in the polluted landscape of the internet today.  To break through the clutter, you must use creative ways to drive traffic to your site.  

Many advertisers are focusing their efforts on using the power of social media in their overall marketing mix.  Commercial properties can use these powerful sources as potential revenue streams.  You can create promotions through the media outlets.  The major sports leagues are pursuing these options as ways to interact with their fan bases in innovative ways.  Malls, office buildings and other properties can use these networks to market themselves as well as their tenants.  While driving traffic through a social media outlet, properties can interact with a larger audience of consumers, shoppers or potential tenants unlike ever before.  

These "properties" within your existing website will be used as portals to access your property. Many innovative marketers are using these sites to communicate to customers unlike before.   I look forward to seeing more and more properties promoting themselves more effectively.  

Look to the sun to grow your bottom line

The use of solar power is not a new concept.  The use of solar power within commercial real estate is not a new concept.  However, the concept you can turn solar power into a revenue source is new.  Murray Shor, of Shopping Center Digest just blogged about the impact of leasing / development of the "Green" movement.

http://shoppingcenterdigestblog.blog.com/4629750/  

Major developers are listed in the article who all are pursuing these resources to green their buildings but the main reason is the fact they profit from it.

The Green movement has / will provide many significant revenue streams for developers and real estate owners as they begin to pursue these initiatives.  The main opportunity will be for owners to enter the energy business within their portfolio and re-sell the energy to their tenants.  

While geography will play a role into who can and will be able to take advantage of this option, the energy that can be stored and used to power buildings, malls and home... is significant.  In some cases, the revenue that will be generated is in the millions.  While a considerable investment will be necessary to purchase the infrastructure, the savings and revenue potential can justify the expense in just a few years.  Aside from the good PR that can come from you pursuits, why wouldn't you invest in the "greening" of your buildings?  Therefore, let the green movement put a little more green to your bottom lines.

Mother Nature can blow some cash your way.

The greening of commercial real estate continues to gain momentum.  Conservation of energy and saving money on energy expenses is top of mind for real estate executives.  A relatively new method of renewable energy wind power.  

The development of wind turbines to provide electricity for municipalities, homes and buildings is becoming more and more popular as utility expenses continue to rise.  Any property can install (at their cost) a wind turbine on their property in the hopes of reducing all or a portion of the power currently used.  I read an article from the Cleveland Plain Dealer a week or so ago about a property close to Lake Erie is considering a wind turbine for the property.

http://blog.cleveland.com/metro/2009/03/sheffield_lake_plan_wind_turbi.html

Consider the billions of dollars that can be saved on energy costs by investing in renewable energy.  The set-up costs will be high but the savings justify the expense.  The savings can be turned into a profit center if structured correctly.  Coastal, mountain and flat locations need to consider the benefits of installing wind turbines at their properties.   The benefits are clear.

Signs, Signs, everywhere signs!!

In today's ever cluttered advertising marketplace, advertisers and marketing agencies are spending millions of dollars a year producing and placing signs wherever someone will let them.  The real estate industry is no different.  Signage definitely has a place in commercial real estate as it still remains the most cost effective and easiest way to market your property, vacant space or service to the masses.  

However, property owners and managers need to consider what potential revenue can be generated from additional signage.  One example, is pylon, directional or monument signage.  Most leases have no or limited signage language included in the documents.  Therefore, if tenants, vendors or third-party agencies want to market themselves on your property, you can assess a fee.  Your fee should be considered based on the following details.  

1. Visibility of the sign

2. Liability risk associated with placing the sign

3. Potential incremental sales associated with placing the sign

4. Loss of business to existing tenants on your property.

5. Design of sign intended to be placed.

Based on these factors, you can assess a fee of your choosing.  Demand will also be a determining factor on your fees.  If sign is easily seen by many people on a busy thoroughfare, your fee can be higher.  Leasing signage space is a major revenue stream to real estate owners.  In some cases, signage fees can be equal or in excess of those generated by traditional tenants.  Consult your tenants to see if they need additional signage on the property.  Consult a local advertising company to see if they would / can consider your property for advertising.  

Prior to investing any money into the endeavor, you will need to review your existing leases to determine if this opportunity is restricted in any way.  Traditional advertising may be restricted but advertising your tenants or vendors won't.   Depending on the location, tenant advertising can generate between $200 - $500/month.  It all depends on the demand.

Good luck and get to know a good sign company!!!!

Enforce your leases!!

Every property owner wants to maintain a positive relationship with their tenants.  However, many property owners and managers are risking severe consequences by allowing tenants to take advantage of them.  Don't get me wrong.  The property functions much better when tenants and landlords get along.  However, that relationship can break very quickly, when the landlord is exposed to unintentional risk when a tenant conducts business that falls outside of their lease.

Leases are in place to protect tenants and landlords from conducting risky or perhaps dangerous business practices while operating at your property.  Therefore, if a tenant or neighboring property owner is considering pursuing something that falls outside of the lease language or easement agreement, assess a value, draft an agreement. obtain an insurance waiver and collect a fee.

While many landlords are turning these opportunities into profit centers, they started as a means to protect themselves from over ambitious tenants.  For example, consider during the holidays when many retailers receive an increase in merchandise.  Many of them, don't have space within their stores to store the extra product.  Also, very few leases provide for additional storage outside of the tenant's four walls.  In big box shopping centers, retailers have placed ugly, potentially harmful storage containers behind stores as a means to accommodate the increase in product.  These containers can provide harm to store employees, damage to your common areas where they are placed and third party vendors.  These containers are not included the lease and therefore can be a huge liability risk to landlords.  Some tenants place over 20 of these containers on your common area.  When they are removed, who is left to clean up the message and make repairs....THE LANDLORD.

Tenants are also coming out of their stores to conduct events and place additional signage.  I believe landlords should give their tenants every opportunity to succeed.  However, it shouldn't come at the expense of the landlord.  If something were to happen to a store employee, landlord employee, third party vendor, shopper etc... as a result of the tenant's unapproved activities, the landlord would be the one answering questions on the activity, not the tenant.  

My advice to all is monitor your tenants activities a little more closely.  Enforce your leases to the dotted and "i" and crossed "t".  You can make some money on these instances but the money you can save from lawsuits, attorney fees and any other legal strife that could come from unapproved tenant activity is countless. 

What lies beneath?

The insane gas / oil price frenzy that occurred during the summer of 2008 put several things in perspective for me.  First, we as a nation are way too reliant on foreign resources.  Second, we as a nation love a train wreck and bad news.

Throughout the United States, Oil and Gas companies are testing new technologies and drilling methods to extract the trillions of dollars worth of oil, coal and natural gas that resides nearly 1 -2 miles below the earth's surface.  Many of you know of the Barnett Shale located in Texas and the Gulf Coast.  Many property owners are realizing early retirement because they capitalized on resources that are below the surface of the land they own.  Those on the eastern half of the country are beginning to recognize the benefits of the Marcellus Shale.  This "play" (as the drillers will tell you) has enough natural gas to heat the United States for about 15 years.  The exploration of these resources are in their infancy.  If you Google "Marcellus Shale", hundreds of posts, groups and blogs will show up in the search.

While gas companies prefer to drill undeveloped land, drilling for gas on developed land is not uncommon.  There are several active gas wells on commercial property in northeast Ohio alone.  Oil and Gas leasing is a relative unknown in the commercial real estate world, which is why negotiations should be handled by a qualified attorney.  However, the benefits of the resources below the surface can equate to millions in found revenue from royalty shares or gas savings from the free gas offered by the company.  In some cases, the land owner can get into the gas business by reselling their free gas to their tenants at a discount to what their utility company would charge.

My suggestion to landowners of commercial property is to ask around.  My guess is that your neighbor has been approached before about leasing the Oil and Gas resources below the surface.  In the great words of Sarah Palin  "Drill baby Drill".  While I'm not a registered republican, exploring the resources below our surface is something all property owners should consider.

Behold the power of the advertiser

Ever since I was a freshman in high school, I had driving interest in the world of marketing and advertising.  I always thought that our varsity sports teams could be sponsored or have their venues bring in advertising dollars to supplement what was available for each team.  I would have sold our basketball gym to (at the time) Royal Chevrolet if the Ohio High School Athletic Association would have allowed it.  There was a need for non-traditional revenue and a partner willing to spend it with us.

The basic principal of advertising is to expose your product or service to a group of consumers in hopes of generating incremental sales of that product or service.  The example, listed above describes this summarized definition.  Royal Chevrolet wanted to sell more cars in the city of Aurora, Ohio.  Aurora High School was the epicenter of consumer activity for approximately 400 students and 2,000 parents, grand-parents, siblings and extended family members in the city.  It was a perfect match as the demographic of the high school matched that of Royal Chevrolet.

Every commercial property attracts people inside, in view of, around it, etc...  Therefore, every property has some intrinsic marketing value.  Windows, sidewalks, landscaping, parking lots / structure all have value as they are seen by millions of people each year. Creative advertising mediums are gaining momentum as advertisers look to get their message out to the masses in the most effective way possible.  In a retail setting, consumers have made a conscious decision to spend money to buy something.  Advertisers would love to impact a consumer at the point of purchase.  Downtown office buildings are visible by millions of people each year that drive, walk or ride their way to work.  They have marketing value inside and out.  Industrial properties are no different as they also hold a value.  

Commercial Real Estate pros need to determine what value their property holds.  There is a deal out there, you just need to find it.  If a small high school in Aurora, OH can attract marketing interest, nothing is out of reach.

One owners trash is another's treasure

Managing a waste program at any commercial property can be time consuming and frustrating.  Deciding on which trash hauler to use, frequency of hauls, compactor or no compactor, etc... is an issue that plagues every owner, property manager and investor of any commercial property at anytime throughout the year.  

While the issue may be a pain for some, it can be a revenue source for many.  Depending on the type, size and lease requirements that any property has, there is a potential to make significant ancillary revenue from your tenants garbage.  Many large international developers work with local, regional and global waste management companies to take over the trash hauling at the property level.  Not only does this save time and aggravation of the property manager but the waste hauler will share revenue to the property as a pad rental fee.  

Depending on the size and nature of the property this pad rental can range from a few hundred dollars a year to six-figure fees in some cases.  There are many waste haulers that are willing to implement a program such as this.  While this may cause the property owner and manager to incur an investment up front, the return can be significant.  

While your commercial property dumpsters may be a continuous source of frustration, there may be some cash to consider before signing sending out that next invoice to your tenants.  Take a look into your smelly, dingy, 2-ton crystal ball located at the rear of your property.  What do you see?  Trash or treasure?

Why pursue ancillary revenue?

In an economic climate such as America is experiencing now, commercial real estate executives are concerned on their bottom lines.  As they should be, every single day of their working career.  Everyone should.  If you're not, why are you in business in the first place?

I was exposed to the idea of ancillary revenue in commercial real estate at the beginning of my career.   I was looking for ways to not only justify a newly created position but methods to drive additional income at the property level.  While I was "raised" within the retail real estate segment, there are several different ways you can generate additional revenue at an industrial warehouse, office building, residential dwelling and a shopping center.  

There are millions of dollars of untapped, non-traditional revenue that are attainable across the world.  As long as you have an open-mind and a thirst for profitable properties, all members of the commercial real estate community should take advantage of lucrative potential available.  

Revenue sources are available in a number categories.  Among them are:

Telecommunications

Advertising / Media

Marketing / Promotions

Energy

Communications

Financial Services

Consulting

Retailing

While American real estate continues to struggle in a climate that doesn't favor it, we all need to pursue whatever methods are at our disposal to generate as much revenue as possible to make up for our losses and bring our properties back to profitability.

Take a walk away from your desks today and look at your properties.  What do you see?  I bet there's cash out there.  You just have to find it.