Six Ways to Spot a Shoddy Commercial Real Estate Appraisal

Lisa DukeAppraisal, Around Town, News

If you are a non-appraiser and tasked with reading and trying to determine the validity of a CRE appraisal report, it can be an intimidating experience. Moreover, while there is no sure way to tell if the values are valid, there are a few telltale signs that should immediately raise a red flag, and you should consider seeking trusted professional advice.

  1. Poor Maps/Exhibits – Generally speaking if the maps and exhibits in a CRE appraisal report are faded, crooked or they look like they have been taped in with double sided tape, you may be reading a shoddy CRE appraisal. If the appraiser does not care enough to handle the easy part then why should the metrics be any more reliable?
  2. Outdated Economic Information – If the economic data presented is from 2013, the comparable data is from 2010, and it is now 2018, you just might be reading a shoddy CRE appraisal.
  3. Lack of Relevant Continuing Education – If the bulk of the continuing education and relevant coursework by the appraiser signing the report is from the 90’s, and it is 2018, the appraiser is resting on his/her laurels, and there is a good chance you may be reading a shoddy CRE appraisal.
  4. Lack of Website or Social Media Presence – It is 2018, and even the most basic companies care enough to have a reasonable web and social presence. Therefore, if the appraiser signing the report has no web or social media presence, I would not be surprised if you were reading a shoddy CRE appraisal.
  5. Data is Thin and Comparable Selection Makes No Sense – Like the old adage, junk in, junk out, a report is only as good as the data the valuation is based on. Therefore, if all of the comparable data is clustered around a two-block area 30 miles from the property being appraised, and there is no reasonable explanation, the appraiser is probably just being lazy or is incompetent, and you just may be reading a shoddy CRE appraisal.
  6. Poor Photo Quality – They say a picture is worth a 1,000 words. If the CRE appraisal you are reading has photos with the appraiser’s finger or the frame of his/her car door in the image he/she does not care enough to get this basic piece right, and you just might be reading a shoddy CRE appraisal.

Walter Duke + Partners has been providing trusted advice to the commercial real estate industry for over 43 years in the Florida market. Our reports are widely relied on by a variety of clients from startups to Fortune 500 companies. Give us a call today at 954-587-2701 to see how Walter Duke + Partners can help you or your clients.

Five CRE Trends That Hit Home

Walter Duke + PartnersAround Town, News

Florida Apartment Appraisals

#1 Not Your Parents’ Movie Theatre

The internet has forced nearly every mall-based retailer to re-tool. The latest industry is movie theatres. Theater attendance last year fell to its lowest level since 1995, a crisis propelled by the rise of streaming. Exhibitors are tearing out seats and replacing them with luxury recliners, fitting fewer overall seats, but creating steadier revenue at higher prices. They are adding specialty drinks, dining options, and sophisticated sound and screens that most home theatres couldn’t replicate.

#2 Rising Seas Impact Miami Home Market

Recent studies show that single-family homes in Miami-Dade County are rising in value more slowly near sea level than at higher elevations. Low elevation properties are becoming Miami’s laggards.

#3 Home “Not So” Sweet Home

Two of the largest home rental giants are planning to merge providing one of the most evident signs that Wall Street is betting on home ownership rates, currently at 50-year lows, will remain low and that a growing number of U.S families will rent.

#4 Property Tax Cuts Strain Local Governments.

Retail sales and occupancy rates are falling in many parts of the country due partly to the oversupply of stores and competition with on-line retailers. Mall vacancies are at a six-year low despite the strong broader economy. That has meant lower property values, lower tax collections and in some cases less to pay teachers and firefighters. Property taxes are the single biggest expense and keeping them low helps keep retail property owners in business because they can negotiate lower rents and remain in business. Some landlords appealing assessments point to the declining amount of sales taxes being generated by their stores. Others cite market conditions in the region and sale prices of vacated stores and malls.

#5 You Can’t Always Get What You Want

There is a tremendous mismatch between the places where people want to live and the places where it’s easiest to build. Suburbanization may have run its course. What used to be a 30 minute commute in the 70’s is now several times that.

JDRF Charity Golf

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We had a great day of golf on Friday with 124 golfers. Here are a few pictures of the event including 12 year old Zach who talked about being diagnosed with Type One Diabetes a year ago. I also include a frame worthy picture of me with your hole sign.

We won’t have the final numbers till next week but I think we raised about $65,000 for JDRF which is 20% more than last year.

Thank you so much for your support. Next year you have to come for the golf and luncheon. So many amazing raffles and silent auction items!!!
All the best!!!

Neil Efron
Noble Properties

5 Key Takeaways from the 10th Annual Commercial Real Estate Symposium

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Walter Duke and Realtors of the Palm Beach Beaches and Greater Fort Lauderdale

I was fortunate to be asked back to moderate this fantastic annual event hosted by the Realtors of the Palm Beach Beaches and Greater Fort Lauderdale. The discussion varied and the overall mood was one of optimism. This year’s panel consisted of Paul Marko – President of Stiles Realty, David Coddington – VP of Business Development for the Greater Fort Lauderdale Alliance, Steven Michael – Founder and Principal of Hudson Holdings and Chad Moss – EVP of Moss Construction. Five key takeaways are presented below.

  1. Plenty of Steam Left in the Engine – the panelists overwhelmingly felt that there was still a good three to five years left in this current expansion cycle and the current local economy is very good. Given that it started in 2011 this would make the current expansion one of the longest on record. All felt that the South Florida economy is one of the most robust in the country.
  2. Live/Work/Play – the panelists all felt that more and more people want to live, work and play in an urban setting. The panelists also felt that trends in mass transit will continue to spur transit-oriented residential development. There was also optimism about the positive impacts of mass transit.
  3. Honey I Shrunk My Unit Size – the panelists all felt that more people will continue to be renters by choice and developers will increasingly deliver micro-units in order to keep costs down. There is also a focus on better project amenities and public spaces. They all felt that rental rates increases that have occurred in the recent past are not sustainable.
  4. Bricks and Sticks – construction costs will continue to rise gradually but the worst of the increases in material costs is over. One concern however is a potential increase in labor costs due to post hurricane clean-up efforts in Southwest Florida and Houston.
  5. Thick Red Tape – the panelists all expressed frustration with the permitting and approval process taking much too long in most local jurisdictions. The economic costs of these delays to communities are massive according to one panelist.

Walter Duke + Partners is a comprehensive commercial valuation advisory and consulting company that provides critical analysis and market metrics to corporate, government, and private clients nationwide throughout Florida. Since 1975, the company has completed over 15,000 assignments more than $30 billion. Walter Duke + Partners is located in Fort Lauderdale with satellite offices in Tampa and Palm Beach.

Member Profile: Walter B. Duke III, Walter Duke + Partners

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A self-described Army brat, Walter B. Duke III was born on New Year’s Day at Walter Reed Army Hospital in Washington, D.C. For the first six years of his life, Walter’s Army-pilot father was stationed at various bases around the globe and so the family traveled with him wherever he was sent. When his father went to serve in the Vietnam war, Walter’s mother moved the family to Fort Lauderdale to be close to her parents who had lived in the area since 1956.

Walter grew up the South Florida way, on the water, fishing and boating with two uncles and an aunt who loved salt water fishing in the Atlantic and fresh water fishing in the Everglades and Chokoloskee. When his father returned from the war he became a commercial airline pilot and moved the family to nearby Hollywood, where they planted roots and became fixtures in the community. Mr. Duke was a major figure in little league and the youth sports scene in Hollywood, where he has a baseball field named after him at Rotary Park. Walter credits his father with teaching him the value of volunteering, teamwork, and leadership skills through his involvement in sports, and thanks his aunt and uncles for helping him to become a true steward of the marine industry.

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Five Ways Irma Will Impact Florida Commercial Real Estate Values

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In the aftermath of Hurricane Irma, the clean-up and rebuilding aren’t the only fallout that Florida must deal with. Walter Duke + Partners has survived four catastrophic hurricanes since 1975. Based on our recent and historical experience, below are five ways we see Irma impacting Florida real estate values.

Construction Budget Interrupted

The cost of labor and materials will rise dramatically post-storm putting pressure on already skinny development budgets. In the aftermath of Andrew in 1992, it was common to see construction costs rise as much 30% to 40%. The situation is compounded by the massive rebuilding efforts in Houston in the aftermath of Hurricane Harvey. Contractors may directly elect to walk away from the job rather than face huge losses leaving developers in a pinch. Residential condo developers may decide to table projects due to lack of feasibility in the face of rising costs, growing inventories and declining sales.

Sea Level Rise Gets Its Due

South Florida cities have been implementing adaptive measures to combat sea level rise. So far, the business community has been late to the game but in the wake of Irma and Harvey that will likely change. Look for both the trade and public sectors to further address sea level rise and work with the insurance industry to demand more resilient developments and communities. These storms also lent credence to tougher building codes, because guess what? They worked and saved life and property.

Opportunity Knocks

One of the early beneficiaries of Hurricane Harvey in Houston is the self-storage sector. The Wall Street Journal reports a surge in demand for self-storage space in the Houston market since the storm. Before Harvey, self-storage companies had been in aggressive price competition, with incentives such as free rent commonplace. We expect to see this in South Florida where there has been a widespread development of self-storage facilities as well, but landlords will be mindful of not being perceived as price gougers. The need for temporary office space will also tighten up an already tight South Florida office market. Values for these property types should continue to trend upward.

Bunker Mentality

Companies and developers will be more mindful of the importance of hardened buildings and backup systems as everyone seeks to minimize the down time after a major storm. Add to that the increasing likelihood of a terrorist attack, and we think you will see increased demand and value of disaster-proof structures.

Loan Size Does Matter!

Insurance costs for commercial real estate have been declining steadily since the beginning of the current economic recovery in 2012. They are currently the lowest they have been in years. If history is any indicator, that is about to change. Look for insurance costs on commercial real estate to double over the next five years. This will dramatically negatively impact loan proceeds and size due to much less net operating income. In short, values are likely to decline, especially in properties such as multi-family where the landlord bears most of the expenses.

Walter Duke + Partners is a Fort Lauderdale based full service commercial real estate advisory firm founded in 1975. For a personal consultation contact Walter B. Duke, III, MAI, CCIM.

8 Takeaways from the ’16 Realtors Commercial Alliance Symposium

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Walter Duke 2016 Realtors Commercial Alliance Symposium Moderator

Commercial Real Estate Heavy Hitters

Yesterday I was privileged to moderate a panel of commercial real estate heavy hitters as they discussed their views on the commercial real estate market for Broward and Palm Beach Counties to a packed room of commercial real estate brokers and lenders. The power panel consisted of Bob Shapiro of Master Development, Jeff Greene of the Greene Companies, and Malcolm Butters of Butters Construction and Development. Collectively, these three have developed, owned, or invested in billions of dollars of commercial real estate in the Florida market.

Cheaper Bricks and Sticks!

Construction costs are expected to plateau over the next 18 to 24 months which should bring some relief to skinny deals and increase feasibility. The main reason stated was the slowdown in the Miami vertical residential market where many large planned projects are being shelved.

Walter Duke 2016 Realtors Commercial Alliance SymposiumPlay Ball!

The consensus of the panel was that Broward is in the late middle innings of the current cycle, and that Palm Beach is the early middle innings. The current recovery started in Miami in 2011 and had since worked its way up the coast. Currently, Broward and Palm Beach are very active, and capital is flowing.

Leasing Scared!

Retail tenants are moving very cautiously, often in a pack mentality. Bob Shapiro, who is developing the 3 million square foot Dania Pointe, said that while retail leasing is good, the retailers are very interested and concerned what the other retailers are doing before they make a decision to pull the trigger on a lease commitment, thereby, slowing down the overall process.

Boring is Good!

Malcolm Butters, whose company has developed over 18 million square feet, reports that he is very bullish in industrial moving forward, noting that it is the only property type that requires a larger site because it can’t be developed vertically. It may not be the sexiest product type, but it has the most stable long term prospects and most barriers to entry. E-commerce was cited as a driver as well.

Give It Up for the Burbs!

Even though Jeff Greene predicts massive job losses coming down the road, all the panelists agreed that suburban office might be a good investment because it is not feasible to construct new, so there will be no new competition for years. , due to its proximity to the airport and seaport, and its position along Interstate 95.

Let the Good Times Roll!

All three panelists stated that it would take a lot to damage the currently robust South Florida commercial real estate market, but three potential headwinds include the outcome of the U.S. presidential election, an increase in interest rates, and the weight of the world recessionary conditions. Any of the three could wobble the markets and expose any weaknesses.

Penny for Your Thoughts!

All three panelists favored the passing of ballot initiatives in Broward and Palm Beach Counties concerning traffic and infrastructure but cited concerns over a lack of a plan for how the money will be spent.

If You’re Not First, You’re Last!

Jeff Greene noted that West Palm Beach CBD could probably only handle one new office tower and maybe one more hotel during this cycle, acknowledging a lack of market depth. Butters noted that Florida doesn’t enjoy the massive corporate relocations to the extent of a market like Atlanta.

About Walter Duke + Partners

Walter Duke + Partners provides commercial real estate valuation advisory, economic studies and market metrics to some of the most successful companies in the world ranging from startups to Fortune 500 companies. Entering into its 41st year in business, Florida’s Walter Duke + Partners is an acknowledged market leader in Florida. For more information contact Walter Duke at or navigate to our website at

Duke Moderates the 2016 Realtors Commercial Alliance Symposium!

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Top commercial real estate leaders together in one symposium.

Join leaders in the commercial development world as they take part in a panel discussion that will highlight opportunities and growth in the marketplace. This is a not-to-be-missed event and it’s not just for Commercial Agents — all are welcome!

Thursday, October 13
From  7:30AM – 12:00 PM

Lakeside Terrace Commerce Center
7880 Glades Road
Boca Raton, FL

Get directions