Commercial real estate broker Robert Hand says, “In Jefferson Parish there are currently 80 properties of vacant land for sale at an average price of $5.68 per square foot over the last 12 months, which is up from an average price of $5.44 per square foot over the last two years. Because our company designs and executes a strategic marketing plan for each property, we were able to target a specific market for this industrial property and negotiated a price over $10 per square foot.”
In marketing the M-2 zoned property, Hand concentrated on permitted uses and targeted specific industry groups using NAICS codes for businesses. The offer to purchase the property had to be re-negotiated four times to allow the purchaser to sell another property in order to finance the purchase of the industrial lot. Each re-negotiation was a challenge because the seller wanted to allow time for the buyer to fund the purchase, but needed protection in case the buyer was unable to complete the transaction. Hand’s solution was to require the buyer to pay the seller a non-refundable payment in order to keep the property off the market and allow the buyer more time to fund the purchase.
Smart Commercial Property Owners Now Think Highest and Best Use
The sale at a high price for industrial land could be a trend, says Hand, “It’s called ‘Highest and Best Use’, and commercial property owners are getting smart about their real estate and getting expert advice to help them maximize their return on assets, just like big corporations do. In this case the buyer had an industrial property in an area that was transforming into a retail area, causing the property values to increase. So it just made sense that the industrial property owner would sell to someone who would pay a higher value for the industrial property because they could put the property into retail use which provides a higher return. The industrial property owner then utilizes the cash from the sale to purchase a larger industrial property and make their business more efficient.”
Hand thinks the commercial market will see more property owners experience the same situation because New Orleans is almost 300 years old and it is common to see areas transition into different uses, especially since Katrina. If you want to track the price trend on office, retail, or industrial property, Hand keeps a chart of each on his website, www.louisianacommercialrealty.com.