Stirling Properties Helps Send Local Athlete To 2018 Special Olympics USA Games
Craig Oser, Paul Mastio, Donna Taylor, Charlie Courville, Andy Gay, Kellie Brame, Grady Brame, Ashlynn Hemingway
Stirling Properties has made a donation to help send local athlete, Andy Gay, to the 2018 Special Olympics USA Games! Andy is from the Hammond area and will be competing in Bowling. He has been competing with Special Olympics Louisiana for 20 years, and this is his first time attending the USA Games. (Also, this will be his first time on an airplane!)
Andy stopped by our corporate office today in Covington to visit with Team Stirling and fill us in on his plans for the upcoming games.
“Going to USA Games is a once in a lifetime dream that I may never have the opportunity to do again. I feel very honored to have been chosen,” said Andy. “Thank you so much for your support. I hope to make you proud—and I hope to come back with a gold medal.”
Charlie Courville, Ashlynn Hemingway, Andy Gay, Kellie Brame
The 2018 Special Olympics USA Games will be held July 1-6 in Seattle, Washington. There are nearly 3,500 athletes, 1,000 coaches, and 10,000 volunteers and delegates from all over the world expected to attend and compete in the games this year. About 50,000 family, friends, and spectators are anticipated to attend.
Locally, 70 athletes, 28 unified partners, and 31 coaches and official delegates will join Andy in representing Louisiana. They are leaving this Saturday for Seattle. It costs participants approximately $1,000 each to attend. Stirling Properties is proud to provide $1,083.50 to cover Gay’s registration and travel expenses.
Team Stirling wishes Andy Gay the best of luck during the upcoming 2018 Special Olympics USA Games! We are rooting for you! Follow us on social media to keep up with Andy during the games.
#StirlingProud
Special Olympics Louisiana is a state-wide organization that changes lives by promoting understanding, acceptance and inclusion between people with and without intellectual disabilities. Special Olympics Louisiana offers year-round programs for 14,880 children and adults with intellectual disabilities in all 64 parishes with the help of 15,000 volunteers. We have health, education, and leadership, family, training and sports programs for people beginning at age 2 and there is no upper age limit. There is no cost to participate in Special Olympics. Visit Special Olympics Louisiana at www.laso.org. Engage with us on: Twitter @SOLouisiana; fb.com/specialolympicslouisiana; youtube.com/SOLouisianaTV, and specialolympicslouisiana.wordpress.com.
Stirling Properties Scores Big During Annual Olympic Games
Stirling Properties Raises $54,000 For Local Nonprofits!
Stirling Properties has its own version of the Olympic Games! Employees recently celebrated the 6th Annual Stirling Olympics, an event hosted by the Stirling Stewardship Committee to raise money for charitable causes throughout the Gulf South region. The games were a HUGE SUCCESS, raising $54,000 for local nonprofit organizations!
Funds raised from the event benefited Compassion That Compels, a nonprofit organization that provides spiritual, emotional, and tangible resources for individuals battling cancer through the distribution of Compassion Bags both nationally and internationally, as well as St. Nicholas Center for Children, a nonprofit center that works to transform the lives of children diagnosed with autism, developmental delays, and neurological disorders by seeking to meet their educational and therapeutic needs. Representatives from each organization were on hand to accept a check for $27,000 each.
Throughout the day, Stirling Properties’ team members battled one another in quirky competitions and relay races such as Musical Chairs, Skornhole, Stirling Ball, Word Search Relay, Backyard Sling, and Stirling’s Dirty Laundry. Scores were tallied, and individual medals were awarded for each event.
[ngg_images source=”galleries” container_ids=”20″ display_type=”photocrati-nextgen_basic_slideshow” gallery_width=”990″ gallery_height=”425″ cycle_effect=”fade” cycle_interval=”3″ show_thumbnail_link=”0″ thumbnail_link_text=”[Show thumbnails]” order_by=”sortorder” order_direction=”ASC” returns=”included” maximum_entity_count=”500″]The games were judged by Christi Zito, Steve Zito, and Tommy Chisholm (Zito∙Russell Architects), Tyler Marquette (Fishman Haygood), Tommy Buckel (Duplantis Design Group), Misty Labat (IBERIABANK) and Kasey Dorr (RCI). Dick Cyr served as the event emcee. Fidelity Bank, Smoothie King, Captain’s Tasty Treats, and Standard Coffee provided participants with food and beverages throughout the day.
The Gold Medal overall went to the Raspberry Berets. Congratulations to Beezie Landry, Charles Barclay, Cyndie Quave, Gena Randall, Lynn Blanchard, Marty Mayer, Rebecca Pritchard, Sonia Shoemaker, Kelly Wellmeyer, and Saban Sellers! The Pistachios took home the Silver Medal—Ellen McCain, Jaime Burchfield, Jeanne Taravella, Jeff Marshall, Lesia Richardson, Morgan Lera, Susan Maher, Mark Salvetti, and Griffin Lennox. Splash Money secured the Bronze Medal—Carly Plotkin, Craig Oser, Johnny Tolson, Justin Toomey, Valda Butler, Cheri Magee, Patrick Malik, Jan Kinard, Peggy Foots, and Jill Meeks.
A special thanks to all of our sponsors, supporters, and Team Stirling for your generosity. Major sponsors include BXS Insurance, Brasfield & Gorrie, Fishman Haygood LLP, Richard Price Contracting Co., Duplantis Design Group PC, Zito∙Russell Architects PC, Capital One, Hancock Whitney Bank, IBERIABANK, Walker & Dunlop, RCI, Acadia Land Surveyor, Louisiana Landscape, Berkadia Commercial Mortgage, BH Management, Vinson Guard Service Inc., Associated Building Services LLC, Kent Design, Regal Construction, Red River Bank, VergesRome Architects, Stratum Engineering LLC, Baker Donelson, and Fidelity Bank.
And a big shout-out to the Stirling Stewardship Committee and the Olympics Committee for all their hard work organizing the event and making it happen! You all deserve a gold medal.
#StirlingProud
Thank you to Precision Metal Inc., Jones Walker, CSRS Inc., Eustis Mortgage, First Bank & Trust, Gallo Mechanical, Jimmy Maurin, PGIM Real Estate Finance, Bellingrath Wealth Management LLC, Armstrong Property Services, Ogden Painting, Robert Refrigeration, James Hudson, Jones Swanson Huddell & Garrison LLC, Roger Ogden, Acadiana Lighting & Signs, Construction South Inc., SCS Electric Inc., Sun Interiors, E. Cornell Malone Corp., Postlethwaite & Netterville, Yardi Systems Inc., Precision Waste Solutions LLC, CBL, Cleco, The Lemoine Company, Tudor Inc., Newmark Knight Frank, Netchex, Real Estate Tax Group LLC, Metairie Bank, River Parish Disposal, Certified Air Conditioning, Dixie Office Products, Big Easy Parking Lot Maintenance, Gulf South Electric, Covington Electric Services Inc., Metro Mechanical Inc., Geiger Heating & Air, CSSI, Roth Law Firm LLC, Ryan Gootee General Contractors LLC, Jones Fussell LLP, Larry Loyd Construction Co. Inc., Trimark, ITS Fire Alarm Security, Premium Parking, Champion Security, Southeastern Waterproofing, PMAT Real Estate Investments LLC, Palmisano Group, Robert Levis Development LLC, Mullin Landscape Associates, Premier Service Team LLC, Calcasieu Mechanical Contractors Inc., Codaray Construction LLC, Precision Concrete Cutting of Louisiana, Professional Maintenance Services, Cook Moore & Associates, Jeffrey Lipp Parking Lot Services, Angelo’s Landscaping, Unit Design Inc., Chrestia & Staub Inc., B&G Lawn Maintenance LLC, Dale’s Paving Inc., Gene Nims Builders, McNeer Electrical Contracting Inc., CertaPro Painters, Huseman, Thermal Products Inc., Just Chillin, Crystal Clean Sweeping, Landry’s Lawn, ACA Mechanical Industrial Inc., T.L. Construction LLC, Grass Unlimited, C J Ladner – State Farm Insurance Agent, and Sign Lite.
President’s Message: Gross Exaggeration
I recently read another doom-and-gloom article in the local newspaper that embellished the dire health of shopping centers and the retail industry in general.
It reminded me of an old quote regarding Mark Twain, “The report of my death has been grossly exaggerated.” As the story is told, Twain was traveling abroad on a speaking tour. A rumor began that he was gravely ill, subsequently followed by reports that he actually died. A major news publication picked up on this rumor and ran with it—soon enough, the news went viral. Twain read about his own death in the media! Ironically, once the very-much-alive Twain was contacted by a reporter for a statement, he gave (a variation of) the famous line above.
His story is very reminiscent of the rumors and headlines regarding the death of retail and brick-and-mortar stores today—grossly exaggerated. This statement may sound contradictory in the wake of numerous high-profile store closures and bankruptcies over the last couple of years, but, according to a recent study by Deloitte, “The great retail bifurcation: Why the retail “apocalypse” is really a renaissance, here are some hardcore facts to add to the hysteria:
- In 2017, retail sales increased 3.5%, compared to a gross domestic product growth rate of 2.3% the same year.
- In the 1st quarter of 2018, retail spending was up 1.6% YOY; total spending across brick and mortar grew 3.2%.
- Last year, 44% of consumers reported spending more on retail than 2016. Only 14% said they spent less.
- Brick and mortar is predicted to grow by $36 billion by 2022, and e-commerce is predicted to grow by $50 billion in the same period.
Retail is not dying; it’s evolving. Deloitte’s report found that high-end, luxury retailers have seen revenues soar 81% over the last five years, while price-conscious retailers have seen their revenues steadily increase 37% over the same period. This contrasts with mid-level, balanced retailers (deliver value via a balance of price and/or promotion), whose revenue has increased only 2%. From 2015 to 2017, price-based retailers gained 2.5 stores for every store balanced retailers closed.
Net store openings and closings
(Source: Deloitte, The Great Retail Bifurcation survey, 2017)
Here’s why: The study shows that consumer economics are actually changing the retail environment, and household income has the strongest observed correlation with shopping behavior. Unfortunately, for the majority of U.S. consumers, the last 10 years have represented a dramatic worsening of their financial situations. Rising healthcare costs combined with new expenses associated with mobile phones and data plans are eating away at discretionary spending that would otherwise have benefitted retailers.
Additionally, income levels affect where consumers make purchases. Low-income consumers are 44% more likely than their wealthier counterparts to shop at discount retailers, and also more likely to shop in-store at supermarkets, convenience stores, and department stores. High-income consumers, on the other hand, are 52% more likely to shop online. While millennials are often lumped together and portrayed as the source of disruption, reporting found that millennial behavior (by income group) is virtually indistinguishable from other generations.
Likelihood of Online vs. In-store spend
(Source: Deloitte, The Great Retail Bifurcation survey, 2017)
The “e-pocalypse” can officially be filed away under fake news. While there is no question that technology has disrupted the retail business via e-commerce, mobile devices, virtual shopping, etc., physical stores continue to dominate retail sales. Research shows that 78% of consumers prefer to shop in-store and spend significantly more in physical stores than online.
In fact, the real story is that the vast majority of retail sales still take place in brick-and-mortar stores—e-commerce sales account for less than 10% of total retail sales. It is also estimated that over half of those online sales actually go to brick-and-mortar retailers. The online vs. brick-and-mortar struggle is not quite what it seems.
However, that doesn’t mean that all retail stores are going to survive. As I’ve said before, there will be winners and losers in the retail race. The winners will be those retailers that can evolve with the changing landscape and capitalize on the consumers increasing demands—and we will continue to see more store closures, especially among the mid-level, balanced retailers.
Home furnishings, beauty/cosmetics, and home improvement stores are performing exceptionally well. Stores such as Best Buy, Dollar General, Ross Dress For Less, TJX Cos. (T.J.Maxx, Marshalls, HomeGoods), ULTA Beauty, and countless others are all thriving and rapidly expanding their physical presence. We see new-to-market retailers pop up every day. Even Amazon has taken note of the power of physical stores and rolled out brick-and-mortar expansion plans. Many other pure online players have followed the same path, like Warby Parker, Fabletics, and Bonobos.
The folks at Deloitte concluded their insightful report with this: “A sea change is clearly taking place in the retail market—but it is not the retail apocalypse. In our view, it is instead a renaissance—driven by huge shifts in economics, competition, and consumer access to options, all fueled by exponential advancement in technology. And in this renaissance, the winners appear to be those retailers that can capitalize on consumers’ experiences of their economic well-being—or lack thereof—to offer a value proposition that aligns with consumer needs.”
Despite the deathly tales, retail is very much alive and well—as was Mark Twain!
Retail evolution driving industrial growth across the Gulf South
Here’s one more thing to blame on the millennials: (We) are spurring the evolution of retail into high-tech industrial distribution centers with the click of a finger.
It’s no secret that the retail industry is changing. The prolific growth of e-commerce and technological advancements are shifting consumer shopping behaviors, especially among the sizable millennial population. Anything and everything can be ordered online, and retailers are racing to deliver products to the customer in the fastest, most cost-efficient manner.
The industrial real estate sector is a direct beneficiary of this push to improve supply chains and get closer to customers. In the last eight years, Amazon has built nearly 100 million square feet of distribution centers across the country, with more than 90% of the U.S. now within range for next-day delivery.
Demand for industrial and warehouse space is continually increasing as goods need to be manufactured, stored, sorted, and distributed to meet the insatiable appetite of online consumers. However, today’s complex e-commerce operation requires more sophisticated industrial space than we have seen in the past. Building types and uses have shifted into more modern, technologically advanced facilities to serve as inventory and fulfillment centers. Some more extensive corporations require vast networks of warehouse space, all resulting in the tremendous potential for industrial assets.
This growth is undoubtedly influencing new development in the sector, but recovered assets are also playing a large part in the supply solution. According to a recent study by CBRE, more than 1 billion square feet of modern warehouse space has been constructed within the last decade, which only accounts for 11 percent of the total U.S. inventory of roughly 9.1 billion square feet. Nearly 1 billion square feet is more than 50 years old—consequently, a large portion of the supply is outdated and inadequate.
High-tech logistics and fulfillment facilities can be used for adaptive reuse of properties and help to backfill large blocks of retail space left vacant by big-box stores. Last fall, Stirling Properties facilitated the 1st to market standalone Walmart pickup location in the greater New Orleans area. The grocery concept renewed a shuttered bank building to include a roughly 4,000-square-foot, 2-story distribution facility. The recent closure announcements by Toys R Us, Kmart, and Winn-Dixie stores in our area could present further backfill opportunities for industrial real estate needs.
Another essential factor in the industrial market surge is location, although not necessarily in the prime market areas that you would expect. Centrally located facilities with proximity to various intermodal transportation options are key. Industrial markets here in the Gulf South are performing exceptionally well given the access to burgeoning port cities such as Mobile, New Orleans, and Natchez. Large corporations—like Amazon, Walmart, and FedEx—are starting to take notice of our region and utilizing our ports, air, and rail systems to transport goods. Surrounding infrastructure, warehouses, and properties are experiencing substantial demand.
E-commerce suppliers—including Amazon—and many other expanding companies are starting to focus their attention toward the southeast U.S., an area that has been widely overlooked in the past. This sweet spot, known as the “Golden Triangle,” is said to be currently producing one-half of the U.S. annual gross domestic product and is quickly becoming America’s new supply chain. Further, it’s estimated that 70% of the country’s population now lives east of the Ohio and Mississippi Rivers. Companies would be smart to consider expanding their operations and supply chains this way.
Aside from e-commerce, we also see massive growth in technology, auto, aerospace, manufacturing, and logistics companies in our region. Recent examples include significant development of Airbus and Austal in Mobile, AL; SSAB steel mill relocated its headquarters from Chicago to Mobile, AL; the arrival of a new Toyota manufacturing plant in Huntsville, AL; Continental Tire is constructing a tire manufacturing plant in Clinton, MS; and, of course, the recent expansion of DXC Technologies in New Orleans, LA—just to name a few. Earlier this year, Stirling Properties announced development opportunities for Bilten Park, a 6,031-acre site that has been designated as Louisiana’s #1 megasite for future advanced manufacturing and logistics.
The southeast, and more particular, the Gulf South is well positioned to support growth in the industrial and warehouse sector on all fronts. The value and demand for commercial property are not slowing down; tenants are still seeking space. As the rise of online retailing continues, we remain optimistic that the performance of industrial assets will continue well into the future. And as the millennial population continues to mature, (our) buying power will only increase, driving even more massive growth in e-commerce and industrial demand.
Commercial real estate professionals have a pivotal role to play in the new era of industrial real estate. But taking advantage of new and unique opportunities requires in-depth market knowledge, as well as sophisticated market research, and an understanding of current factors driving corporate site selection. We need to think outside of the box and offer creative solutions in today’s rapidly evolving real estate industry.
Appreciation for Depreciation
The Tax Cuts and Jobs Act contains many major changes to the tax landscape that will affect every type of business entity, both large and small. The new tax reform creates significant opportunities to minimize a business’s overall tax burden.
Perhaps the most impactful—and favorable—legislation to the real estate industry is the changes and modifications to depreciation rules. Here we highlight key components that impact the commercial real estate industry and provide a comparison between the current and new tax laws.
Under prior tax law, most assets held in rental real property were required to be depreciated over periods typically ranging from 5-39 years. Assets with 20-year class lives or less were normally eligible for 50% bonus depreciation, which means we could deduct 50% of the asset in the first year and depreciate the rest over the remaining life of the asset. Under the new law, those same assets are now eligible for a 100% deduction in the year placed in service. Congress has also expanded bonus depreciation to acquisitions, which were not eligible in years past. This is a huge benefit for real estate in many ways, as it allows for significant tax write-offs in the first year for acquisitions, new developments, and redevelopments.
At Stirling Properties, we contract out a cost segregation study on all of our new acquisitions, developments, and redevelopments. These studies allocate the purchase price of the asset into its proper class life. The resulting history allows us to estimate what depreciation will look like on the project during underwriting. On the front end of our due diligence, we have an accurate idea of how much of the purchase price is going to be eligible for the new 100% bonus depreciation. For a $60 million acquisition or development, we estimate that as much as 20% of that investment can be expensed in year one, resulting in over $11 million in depreciation. As you can see in the chart below, depreciation expense has approximately doubled in year one as compared to the old law. The net present value (NPV) of the tax savings resulting from being able to deduct the additional depreciation in year one is over $500,000.
Similarly, ongoing operations of the property will be impacted considerably. To attract and retain high-quality tenants, landlords typically provide tenant improvement allowances which result in enhancements to the occupant’s space that revert to the landlord upon lease expiration. Under the prior law, these tenant improvement allowances were typically eligible for 50% bonus depreciation and the balance depreciated over 15 years. Under the new law, these allowances will be eligible for a 100% deduction in the year placed in service.
Investing in real estate can be a tax advantageous way to deploy capital, especially for individuals or companies that have significant recurring income tax burdens such as financial institutions. We anticipate that the new tax law will lead to higher demand for quality assets helping to keep deal flow robust, thus attracting more buyers and investors into the real estate arena. At Stirling Properties, we will continue to utilize this new tax law for the best interest of our properties and investors.
Disclaimer: 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.
Hop On Over To Hammond Square!
Join us for the annual Easter EGG-stravaganza at Hammond Square on Saturday, March 24th from 11:30am-1:30pm. The festivities will take place on Hammond Square Drive next to Target. This FREE event is open to the public and fun for the whole family!
Come visit with the Easter Bunny. Guests will also enjoy pony rides, a petting zoo, face painting, and a live radio remote with great prizes from Kajun 107.1. Don’t forget your Easter baskets—the egg-citing Easter Egg Hunt will begin at 1:00pm featuring more than 4,500 candy-filled eggs. (The egg hunt is limited to children ages 0-12 years.) Professional Easter photographs are available for a fee at Hammond Square with Becky Blount Photography (appointments are recommended).
Hammond Square is a proud sponsor of The Daily Star’s Easter Coloring Contest for children ages 7-10 years. Complete your coloring sheet and bring in to The Daily Star by Wednesday, March 23rd at 3:00pm to be eligible to win an egg-cellent prize pack from Hammond Square.
Come on out to celebrate with us—and the Easter Bunny—during the annual Easter EGGS-travaganza! We hope to see you there. Be sure to check out all the great stores at Hammond Square for your Easter and spring supplies.
Visit HammondSquare.com or “like” us on facebook.com/hammondsquare for a complete list of retailers and events.
Have a Hippity Hoppity Easter from Hammond Square!
