In war, real estate is the essential weapon. The high ground almost always wins. At least historically this was true in battles on the ground. From ancient times to the American civil war there are historic accounts of battles where those holding the strategic high ground won the day.
Looking at World War II, there are multiple examples of "buffer zones" between battlefields; area's that separated combat. Quiet zones that went un-touched even though war waged all around. One example being the French agreeing to surrender Paris in exchange for Germany not destroying the city via aerial and ground attack. Thus, Germany controlled France. The high ground was the capitol city.
When accessing real estate assets in present day terms, in many instances, you get a feel for a place by just being there. Like coffee houses, some are pleasant, warm and welcoming. Others can be just stand-offish and sterile. Others just make you feel un-easy. Without getting all touchy-feely, my point is that we all have intuition. When reviewing real estate assets for purchase or lease this is no time to ignore your gut.
I know, "gut checking" advice is difficult to add to the market analysis and catalog under due diligence. This is why when reviewing assets we review the entire market area. Quiet and peaceful for one block in every direction excludes too many factors affecting a location.
Take Princeton, for Example. Princeton University has a master plan. Princeton is surrounded by many sub-par and privately owned dwellings. Here is quote from the Princeton Campus Plan 2016:
Princeton had to balance the needs and desires of two interdependent communities: the University; and the neighboring Princeton Borough and Princeton Township.
In this case, the big dog on campus is... the campus. How can a single small property owner interact with a historic, iconic University? Not very well, really. Other than to pray for fairness.
My point is as an owner or entity in acquisition mode it's important to know the surroundings of owned assets beyond what's on the next block or two. In densely populated cities two blocks may represent the entire market area including competitive assets. In tertiary markets competitive properties may be seven miles away (yet still in the employment corridor).
This is not to say that all competitors are enemies. Collaboration does come into play on occasion. But do not discount that in a micro-market real estate revenue can be a zero sum game. One where competitors will pay to have your signs torn down and the occasional window broken if only to make your asset look bad for a spell (we exclude here "real" crime such as arson and intimidation).
Competitors may click on your Internet pay-per-click advertising to drive your advertising cost up and send fake shopper tenants to take up staff time. Such tactics seem counter-intuitive to me, but these things happen all the time.
Be mindful of your assets in terms of their "place" in the market and their "place" in the community. In other words, do all you can to assure your real estate is not in use as a weapon, be it a buffer or shelter to those committing crimes. Cities and towns evolve all the time. Complacency is seldom affordable in the long term.
Gaining a sense of place requires a review of buildings, streets, "flow" and people.
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Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. We discuss best practices in multifamily management and methods related to how to buy apartment complexes. Our focus is sharing strategies and tactics that can be implemented and measured. For more information, visit: www.MultifamilyInsight.com
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