SVN | J. Beard Real Estate – Greater Houston has recently completed the sale of a free-standing Class-A office building in Spring, Texas, at 21025 Spring Brook Plaza Dr. 

The 5,000-square-foot building is situated near the intersection of major thoroughfares FM 2920 & Kuykendahl Road.

Advisor Linda Crumley of SVN | J. Beard Real Estate – Greater Houston represented the seller, Charles Dixon of Dixon Family Real Estate Ltd. The buyer, a private investor group, was represented by Tom Condon of Colliers International Houston, Inc.

There are a tremendous number of complexities to erecting the buildings that make up our skylines. Whether a property is a new build or a redevelopment, the team moving development forward—owners, project managers, general contractors and subcontractors—must all collaborate to ensure smooth delivery and activation of the space without delay.

While day-one tasks and challenges such as site selection, construction and delivery are crucial to the success of a project, the question of how a completed space will function in practice is often overlooked during the design and construction phase – to disastrous results.

These “day-two” issues, or problems that arise after construction has completed and building operations have commenced, are not exclusive to any one sector. Whether a building is a healthcare facility, a hotel or a multifamily property, securing stable occupancy and creating a functional space for the end user is essential to driving profitability and achieving investment goals.

Unfortunately, errors during design and construction that are not contemplative of operational functions can impede these stabilization efforts, requiring costly and time-consuming changes that, until sorted, can significantly impact revenue, daily operations and customer experience.

As day-two pitfalls can affect any asset class, developers and project managers must address potential operational challenges early in the planning and construction phases to mitigate potential issues. Here are five steps for establishing an early foundation for a successful day-two.

Construction and operations planning should be integrated from the beginning of construction. Combining day-one and day-two plans into one master roadmap will ensure that the project’s goals are aligned, and that any decisions made will support the building’s functional operations. Integrating these two strategies requires bringing consultants, including architects, engineers, construction managers, property managers and multi-disciplinary end user groups, together as early as possible.

To begin with, leaders for overall day-one and day-two work should be identified, and those people must align day-one and day-two schedules to increase accountability and transparency and create a cohesive budget that allows for the flexibility needed to address operational needs during the construction phase.

One way to create a unified schedule is pull planning. Rather than starting with the first task and working up toward the end goal, a pull planning strategy works in reverse. The project team will identify the opening date and the final task that needs to be done before the doors can open, then work backward to create a task list. Pull planning reveals overlaps in the schedule, helping to ensure each milestone is completed by the opening date.

The day-two goals should also be visible and transparent up front. For example, a healthcare facility may have the goal of 72% occupancy six months after opening, or three exam room visits per hour after four months. Knowing this information upfront and building a process with milestones and check-ins allows the team to more easily adjust elements to keep on schedule and ensure these goals are met. Methodology for how the information is going to be acquired and analyzed should be agreed to and implemented.

Establish an Owner Change Committee

An owner change committee is a group of key project stakeholders that can communicate and discuss necessary changes throughout the duration of a project. No matter the project, it’s inevitable that changes are going to happen, so it is imperative that there is an established process to deal with them as they arise.

An owner change committee can vet prospective modifications based on the necessity of the alteration and how it will impact the project, then provide a framework to effectively implement changes with minimal impact to the overall timeline and budget. In a healthcare property, an owner change committee is a multidisciplinary team, one that is involved beginning in the schematic design process to help provide direction from day one. The same team should remain involved from construction to activation.

The change committee can include everyone from development and construction stakeholders to the doctors that will work in the physical space, who can speak to operational efficiency. Additionally, everyone on the change committee should have visibility into both the upfront and long-term operational costs, which will help to avoid situations in which decisions are made based on “first” cost estimates, without building longer-term operational expenses into the timeline and project structure.

Create Milestone Check-Ins

While establishing a proper plan and a change committee is important, the process must continue to evolve alongside the project. Creating a schedule that includes regular check-ins with project stakeholders and end-users alike helps ensure that both construction and operational goals remain aligned as the project progresses, and that any potential challenges are dealt with as soon as possible.

The design and construction project team rarely has deep insight into how the end users are going to run the building. If set up properly, these meetings can validate design, confirm operational models and jumpstart the creation of building activation and stable occupancy models. As it can be especially costly and time consuming to address updates and changes after the end-user has moved in, scheduling milestone meetings from the jump will allow stakeholders and owners to assess issues and reach targeted income-generation earlier.

Working Around Day-Two Updates

In an ideal world, once the end-users move into a building, the job of a project team would be done. Unfortunately, we live in the real world, and while regular check-ins with end users and the owner change committee can help to mitigate day-two problems, there are often situations in which a building needs to be operational before it’s finished. In these instances, it’s essential that the property can still generate income while these final kinks are worked out.

On a multifamily property, for example, this could mean opening the doors before common areas are complete, which will let ownership begin leasing efforts while completing construction of ancillary spaces. It is essential to anticipate potential day-two disruptions and build those into the schedule, budget and project roadmap from the beginning to ensure building safety and the customer experience are not compromised.

Keep End User Experience Top of Mind

The biggest threat of a day-two challenge is that it hampers the overall experience of the property, which could derail leasing efforts in a multifamily property, hinder productivity and patient health in a medical setting, and delay stabilization across all property types.

While the building may still have a punch list on opening day, the feel and experience of the property should be true to the tenant’s brand. To ensure a cohesive experience on opening day, prioritize the essential elements of the property that will create a familiar branded environment for guests, patients, users or doctors and staff, whether that is a welcoming lobby and amenities in a hotel, completed and operational units in a multifamily property, or a clean and well-equipped medical facility.

Day-two challenges can dramatically impact a development project. By taking a few proactive steps, engaging the right team members and understanding what aspects of the project to prioritize, project owners can reduce or eliminate day-two problems and achieve stabilization earlier.

Eric Hoffman is Vice President & Healthcare Sector Lead at Chicago’s Project Management Advisors.

On March 13, Sansone Group and Raith Capital Partners broke ground on Rancho Del Rey Logistics Park in El Paso, Texas.

Spanning approximately 3.7 million square feet across three phases, this development promises to redefine the industrial landscape of the region, ushering in a new era of economic vitality and growth.

Strategically situated at the convergence of Interstate 10 and Loop 375, and just three miles from the Ysleta-Zaragoza Port of Entry, a vital US-Mexico border crossing, Rancho Del Rey Logistics Park emerges as a pivotal hub facilitating the seamless distribution of goods throughout North America and beyond. With an increasing trend of manufacturing operations relocating from Asia to North America to better serve the U.S. market, the park’s strategic location offers unparalleled access to major transportation routes, ensuring seamless integration into the US distribution network.

The inaugural phase of development comprises three industrial buildings totaling 1.38 million square feet, slated for completion in Q4 2024. This phase represents just the beginning of a comprehensive vision to establish Rancho Del Rey Logistics Park as a premier destination for businesses seeking state-of-the-art facilities and strategic access to key markets. Bosch, a Global Fortune 100 company, has committed to occupying a portion of phase 1 through a lease agreement, underscoring the project’s immediate appeal and potential for long-term success. 

Sansone Group is proud to be partnering with incredible organizations for the development of Rancho Del Rel Logistics Park, starting with Raith Capital Partners. The team at Raith has decades of commercial real estate investment expertise, spanning various cycles in both the equity and debt markets. They have been investing in El Paso since 2019. Leading leasing operations is Colliers, a globally recognized real estate services firm renowned for its expertise in commercial property leasing and management. The Colliers New Mexico-El Paso team is led by Bob Feinberg and Tom Jones. Ensuring impeccable construction quality and efficiency is Catamount Constructors, Inc., a trusted leader in the construction industry with a proven track record of delivering high-profile projects on time and within budget. 

The development of Rancho Del Rey Logistics Park holds significant emotional weight for Ben Ivey, whose family has owned the land for nearly 90 years. The Ivey family has sought the right redevelopment projects for years, ultimately finding a suitable fit with Sansone Group. The collaboration between the Ivey family and Sansone Group reflects a shared commitment to honoring familial legacies while driving business innovation. The park’s name pays homage to Ben Ivey’s grandfather, King Benjamin Ivey. This familial bond is paramount, as articulated by Nick Sansone, who shared, “I understood the pride that Ben Ivey had in his family and this land. It mirrors the same pride my brothers and I feel in leading Sansone Group, established by our father 67 years ago.”

The development of Rancho Del Rey Logistics Park marks the dawn of a new era for industrial excellence in El Paso, promising to elevate the region’s economic landscape and leave an indelible legacy for generations to come.

Speakers at the event included Nick Sansone, Principal at Sansone Group, Jon Barela, CEO at The Borderplex Alliance , Henry River, City of El Paso Representative District 7, Illiana Holguin, City of El Paso Representative District 6 and a blessing by Father David James Ivey, the Chaplain of St. Michael the Archangel Chapel at Fort Bliss. More than 100 guests attended the groundbreaking from partner companies and neighboring businesses as well as representatives from The Borderplex Alliance, Horizon EDC, the City of El Paso.

Are multifamily owners gearing up for a wave of refinances? Or will they sell their properties in droves? Either could happen as more than 55,000 U.S. apartment properties have loans that are set to expire by the end of 2028, according to the latest research from Yardi Matrix.

According to a new report from Yardi Matrix, 58,533 U.S. multifamily properties are financed with loans set to mature during the next five years.

How big of a financial impact could this have? Yardi Matrix says these loans represent $525 billion of the total $1.1 trillion of loans currently backed by apartments.

Atlanta, with $34.9 billion in loans set to mature by the end of 2028, has the largest volume of upcoming maturities. Next comes Dallas, with $26.6 billion of multifamily loans scheduled to mature by the end of 2028; Denver, with $22.9 billion; Houston, with $20.8 billion; New York, $19.9 billion; and Chicago, $18.8 billion.

Markets with the highest percentage of loans coming due through the end of 2029 are Atlanta, with 65.9%; Denver, with 56.9%; Nashville, 56.2%; Las Vegas, 55.9%; Houston, 53.6%; and Chicago, 53.2%.

More than half of the multifamily loans found in Yardi Matrix’s database, $641.8 billion, equal to 56.3%, was originated by Fannie Mae and Freddie Mac. Next in line, at $187.3 billion, or 16.4%, came from commercial banks, followed by the federal government/HUD ($115.7 billion, 10.1%), debt funds (69.9 billion, 6.2%), life companies ($67.6 billion, 5.9%) and CMBS ($25.2 billion, 2.2%).

These numbers aren’t completely surprising. As Yardi Matrix reports, multifamily originations peaked during in 2021, when $194.7 billion of loans were originated, and 2022, when lenders closed $209.8 billion of multifamily loans. Low interest rates and high demand for rental living spurred this surge of new multifamily loans.

The interest-rate environment is different today, though, which could make it difficult for multifamily property owners to refinance. Others might struggle to sell their properties without taking a loss, depending on how the U.S. economy performs during the next five years.

The wave of maturing loans might result in an increase in multifamily sales during the next five years.

Of the loans in Yardi Matrix’s database, $61.8 billion are set to mature in 2024, with another $84.3 billion in 2025, $89.3 billion in 2026, $77.9 billion in 2027 and $107.3 billion in 2028. By percentage, 5.4% of the loans will mature by the end of this year, 12.8% by the end of 2025, 27.5% by the end of 2027 and 46.1% by the end of 2029.

Your favorite bench at the neighborhood park. The table in the corner of your local public library. The neighborhood bar at the end of your block. The yoga class at your gym. These are all examples of third places. And they are the key to building successful mixed-use developments and communities.

What are third places? They are the places we go to when we are not at home – known as the first place – or work – the second place. When you attend your local community theater, you are visiting a third place. When you sit on a park bench reading a book, you’re in a third place. When you chat with your neighbors at the local dog park, you are, again, in a third place.

And today, those third places are even more important. A growing number of people are working remotely, even if only on a part-time basis. They are spending less time in their second place, then, and socializing with fewer people. This makes the time spent in third places more important for people’s mental wellbeing.

Third places have also become more important in commercial developments. Mixed-use developments are thriving today, largely because of the pocket parks, brewpubs, dog runs, bowling alleys and gyms that they offer.

And this need for third places is only going to grow as developers see just how successful mixed-use developments that offer spaces for socialization are becoming.

We spoke with Alex Baum, vice president of strategy with ERA-co, a New York City-based global consultancy firm that works with clients planning and developing mixed-use projects, about what makes for successful third places and why developers need to think beyond coffee shops and bare patches of grass when developing these key spaces.

ERA-co is working with clients on projects in eight countries. The firm employes everyone from master planners and urban designers to professionals specializing in spatial analysis, place strategies and graphic design.

Here is some of what he had to say:

The general definition of third places is clear. But how do you personally define third places?
Alex Baum: Howard Schultz and Starbucks helped popularize the term with the idea that people should walk into a Starbucks and stay there for hours with a coffee. The bars in New York and the pubs in England are examples of third places. Third places have always existed. It’s where people have long exchanged ideas and where movements have been born.

But it’s important to go beyond the café, beyond the pub. We always joke about coffee shop or latte placemaking. When people are looking for something to add to a mixed-use development, they always say, ‘Let’s put a coffee shop here.’” Third places, though, are places that are familiar to your feet. They are places where you are recognized and you feel that you belong. It could be a dog park, bench, stoop, café or corner bar. It’s more about what the space provides you in terms of a sense of belonging and connection.

It could be your running club or the movie nights that happen on a Saturday night in a park in your town. It’s a place where you walk to and nod your head as you meet people. It’s the ‘where everyone knows your name’ idea.

How important are these third places today?
Baum: You no longer need to interact with humans to live your life. That provides convenience, but it is also a great detriment to society. The advantage of third places is that they connect us to the surrounding community. They expose us to more diversity. At home and at work, you don’t have diversity, or the diversity you have is fixed and not fluid. It is important to see others and see how they function. It’s important to become a part of the broader narrative of society.

What do developers need to consider when developing third places for their mixed-use developments?
Baum: For a development that is more focused on office properties, we know that a mixed-use environment demands higher rents. In a post-COVID world, when you are trying to attract tenants, you can’t just offer a nice space. You must prove to tenants that the spaces you create are relevant to a new cohort of employees who have the choice of whether to come into the office. You have to create an environment where relationships can be created not just in the cubicle or in the office but outside the office, too.

There are two things that are clichés when developers are creating third places: One is a coffee house and the other is a farmer’s market. We understand the idea of those coffee shops. But you need a diversity of offerings that is appealing throughout the day and at different price points. You might need a place where someone can go in and spend $3. They don’t have to sit down for a full meal. They can go in and not have to spend that much to feel welcome in the space.

With a lot of third places, going there becomes a sort of ritual for people, and that’s a positive thing for a development. Look at gyms. People make that one of their rituals, their routines. They keep coming back to these spaces. They might join classes that allow them to socialize with other people. That socialization often keeps them coming back. That should be attractive to the owners of the developments in which these places are.

What about in apartment developments? Are amenities such as on-site fitness centers and dog runs considered third places?
Baum: Some third places are private. They only impact a small number of people. They create a sense of community, but only in a vertical establishment of similar-minded people with similar economic means versus the entirety of the community that we inhabit. Those private spaces don’t have the same power or impact that public third places tend to have.

Public spaces just have more potential. There’s a park near where I live in New York in which people work out in any way you can imagine. There are people on rollerblades. There are people doing ballet moves, weightlifting and sprinting.

There are ways to create a public third space and do it well so that it is used on a consistent basis. You don’t want just a blank slate of grass that is only used by a few people at very specific times. It’s about programming a space so that there are things going on. It’s about providing areas for people to exercise or sit or just congregate. The most successful of these public third places have a diversity of uses throughout the day. Developers, then, shouldn’t just add green space. They should add pocket parks that have seating and spaces to gather.

People would never say this, but it’s a move to a more European-minded urbanity. Rather than vast parks, it’s about pocket parks, a substitute for the European plaza. Developers are considering smaller, intimate spaces. Governments and planners are doing a good job of mandating these public spaces, of saying you can build higher and denser if you provide more public space.

Did the lockdowns and business closures during the height of COVID instill an even greater demand in people for these third places?
Baum: Whenever there is a shock to the system, it allows you to zoom out and look at something from the outside rather than from the inside.

There is an exercise that we sometimes do: How will people feel if you take something away from them? What COVID did was take a lot away from people. And in doing so, it connected them to different faces and places that they weren’t engaging with before. National parks never saw more visits. That has since held steady and resilient. People looked at traveling to spaces within a one- or two-hour drive versus a one- or two-hour-hour flight. People spent more time outdoors, whether on their stoops, the sidewalk or the park.

People learned that third places were not necessarily commercial spaces, but that they can be outdoor spaces.

The Boulder Group completed the sale of a single-tenant ground-leased Sonic Drive-In property at 900 W. John Carpenter Freeway in Irving, Texas, for $1.81 million.

The 2,450-square-foot building benefits from its position along West John Carpenter Freeway which experiences 131,467 vehicles per day and leads directly to downtown Dallas. Sonic is also a neighbor to a wide variety of retailers including, Chase, Walgreens, Chick-Fil-A, Starbucks, Bank of America and 7-Eleven.

Randy Blankstein and Jimmy Goodman of The Boulder Group represented the seller in the transaction. The Seller was a Florida based real estate fund and the buyer was a west coast individual in a 1031 exchange.