The Republic’s commercial real estate sector expects lease terms to become more flexible for both tenants in the future as the industry recalibrates to new post-pandemic realities.

A survey of some 250 commercial property professionals, conducted by business law firm Mason Hayes and Curran in late February, also indicates that the sector considers current rent review processes to be fair but ultimately wants better access to market data to level the playing field.

The Republic’s commercial property sector, particularly the office market, has come under pressure in the aftermath of the pandemic due to several interrelated factors. Hybrid working arrangements have eaten into demand for office take-up while many large employers — most notably in the global tech sector, which accounts for a significant proportion of office demand in Dublin — have reduced their headcount in response to shifting market dynamics.

Meanwhile, rising interest rates have made the cost of borrowing and servicing property-related debt more expensive for landlords and commercial property owners.

Headline rents are yet to decline substantially but close to half of survey respondents said they expect commercial leases to become more flexible for tenants and landlords soon.

However, a sizeable 46 per cent of respondents said they expect lease terms to become more tenant-friendly.

“Since Ireland legislated to end ‘upwards-only’ rent reviews in commercial leases in 2009, the rent review process has become more complex,” said Michael Doran, partner and co-head of real estate at Mason Hayes and Curran. “All parties must now agree an ‘open market rent’ that could be higher, lower or remain the same as the original amount. There are a number of factors that can affect rental value, from the strength of the market at the date of review to the assumed lease term.”

While an overwhelming 81 per cent of real estate professionals said the current rent review processes are fair, almost half said they would like better access to market data, reflecting a “move towards a more informed and data-driven negotiation process”, said Mr Doran.

Meanwhile, 61 per cent of professionals said their main goal when entering rent review negotiations was to achieve market-aligned rates while just 20 per cent said they are chiefly concerned with securing long-term occupancy.

Source: The Irish Times

The post Commercial property sector expects more flexible lease terms in future appeared first on Amora Escapes.

Provincial property taxes of nearly $600,000, levied on Irving Oil’s deep-water crude-oil tank farm back in March, was an error that did not signal an end to a four-decade-old tax exemption on the site, according to the New Brunswick government.

Instead, the exemption has been reactivated and the tax bill retracted.

In a series of emails explaining why provincial property-tax amounts charged to the tank farm appeared in March, but have since disappeared, the director of communications for Service New Brunswick said the property briefly lost its tax exemption classification in an inadvertent internal computer incident.

“There was an activity to the property account that reset the classification,” wrote Jennifer Vienneau.

“It has been manually reset to the original classification.”

In March, the province issued property tax bills to all landowners in New Brunswick and for the first time in 42 years, it charged Irving Oil for provincial property taxes on a number of parcels that make up its Canaport crude-oil terminal.

All commercial and industrial properties in New Brunswick, from corner stores to nuclear plants, pay two property taxes, local and provincial, unless specifically exempted by legislation.

The tank farm pays full municipal property taxes to Saint John, but in 1981 it was awarded an exemption from paying provincial property tax by the former government of Richard Hatfield.

The facility sits on Mispec Point, next to Repsol’s LNG terminal at the edge of the Bay of Fundy.

It has a storage capacity of six-million barrels and receives shipments from ocean-going tankers that arrive from around the world multiple times each month. The tank farm feeds the crude to Irving Oil’s Saint John refinery, about eight kilometres away by pipeline.

The property-tax exemption was meant to help Irving Oil weather a significant drop in North American petroleum consumption, caused by the 1979 oil crisis. Those troubles resolved themselves long ago, but the tax exemption has persisted.

In its most recent 2021 accounting of the cost of exempting Irving Oil’s crude-oil tank farm properties from provincial property taxes, the New Brunswick Department of Finance valued it to be worth $674,929 to the company.

However, since 2021, provincial tax rates on business properties in New Brunswick have been reduced, and the value of the exemption in 2023 is closer to $580,000.

According to the finance department, the exemption’s purpose remains to “support the competitiveness of infrastructure that is important for economic development.”

There have been calls for the exemption on the tank farm to be terminated in the past, but action has yet to be taken.

In 2016, then opposition leader Blaine Higgs said the exemption should be reviewed and potentially cancelled, since the crisis it was created to help Irving Oil survive resolved itself in the 1980s.

“A lot of policies in government start for a good reason, but they never end,” said Higgs.

“There’s no exit clause, so it just doesn’t hit the radar again.”

In 2018, the New Brunswick Green Party put the cancellation of the property-tax exemption on crude-oil storage tanks into its election platform, but has been unable to effect that change in the legislature.

In March, Green Party Leader David Coon applauded what appeared to be the end of the exemption, when Service New Brunswick began showing full taxes being charged at the site. He said he is disappointed to hear that has been undone.

“It’s surprising,” said Coon in an interview this week.

“It seems unlikely they made a mistake, but maybe it was. It’s time for Irving Oil to pay their fair share on all of their properties.”

Irving Oil did not respond to a request for comment about the tax change and whether a property tax exemption at the tank farm is still required by the company.

Irving Oil does not publicly report its financial results, but in 2022 oil companies across North America posted record financial returns.

Refiners like Valero Energy Corporation, which operates refineries in both the U.S. and Canada, and PBF Energy Inc., which refines and sells petroleum into eastern U.S. markets, each reported pre-tax profits in 2022 close to $3,000 US per barrel of their refining capacities.

Results like that, if duplicated by Irving Oil, would have produced more than $1 billion in pre-tax 2022 earnings.

Source: CBC

The post Province Retracts $580K Property-Tax Levy on Irving Crude-Oil Tank Farm appeared first on Amora Escapes.

While I’ve been appreciative of the legislature and the governor’s recent attempts to stabilize the property insurance industry in Florida, the simple fact remains that most seniors on fixed incomes are finding the rates unsustainable.

Property insurance rates in Florida are widely reported to be two and three times higher than the national average.  However, in one North Florida metropolitan area, the rates are even higher.  Pensacola zip codes have the highest property insurance rates in the state.

Tallahassee is my hometown and has been for decades.  But the Pensacola area is where I was raised from a child to adulthood.  My mother still lives in a small bayside community that sits between Pensacola and Pensacola Beach.

The house my mother lives in is the house we were raised in.  Built in the 1950’s, the house is well constructed of pine tongue and groove paneling on the roof and walls; common for that era but too expensive to do today.  It has withstood decades of storms without sustaining any serious damage, and only once experienced flooding that covered the yard, but never entered the house, and receded quickly.

After my father passed away from cancer two years ago, my mom has stayed alone in that house living on a fixed income.  Because of increased inflationary pricing for everything from groceries to electricity, mom has struggled to keep within a monthly budget.  But she’s done everything right; watching her spending, living within her means, paying the taxes and insurance. Remarkable for someone in her 80’s.

Until now, that is.  Mom’s property insurance has been steadily rising over the decades, and last year, rose to $4,000 annually.  When my father was living, they were able to keep the same property insurer for many years, but after several years of storms, their carrier left the state (as did many others) and they were forced in an unstable market.  Just last week, mom received a bill for this year with a quoted annual premium of $6,200 — a $2,200 increase over last year.

Since mom’s fixed income has not increased, she has now had to start dipping more frequently into the small retirement nest egg she and dad managed to save over their hard-working years together.  And at $6,200, the property insurance bill is now threatening to bankrupt her in a very few short years.  At this rate, her property insurance has become the most expensive monthly bill she now has — more expensive than her medical bills, her utility bills, her food bills, her gas bills and her prescription bills.  And over time, this will simply become unsustainable for her to pay.

Something will have to be done; or for the first time in mom’s decades of living in her own home, it will be uninsured and unprotected in the event of fire, storm damage or another catastrophe.  The price of living in paradise, and in the place she’s called home her entire life, just became too high.

I imagine it’s no different for thousands of other seniors living in Florida right now.

Source : TallahaseeDemocrat

The post Property insurance rates unsustainable for seniors on fixed incomes | Opinion appeared first on Amora Escapes.