We believe the adoption of an additional revenue source will be appealing for the commercial real estate industry. However, we also believe that increased margins can be achieved by Optimized Mobile Business Solution to realize other partnerships if the commercial real estate industry charges exorbitant fees for services rendered to obtain lessee. A couple of interesting thoughts to consider are, (1) how a mobile commercial asset is defined for leasing with a commercial agent and, (2) How the opportunity will present to partner with multiple commercial agents in one municipality to list the mobile commercial units for lease. We believe each mobile unit asset will be a unique agreement between agent and lessor, creating greater opportunity for a lessor owner to find lessee for multiple units. 

We believe the asset will have to be classified by the average rate assigned to the service radius where the asset will primarily perform operations. Current commercial appraisals and cap rates are obtained by comparable geographic locations, more commonly referred to as comps. 

 We believe initial valuation will be based on asset replacement cost. However, local property tax law will potentially provide a different approach to valuation as market adoption substantiates law revisions. Most commercial space is valued by three factors: replacement cost, rent roll, or from a revenue approach and geographic comparable lease or sale value.  We believe some municipalities may reassess value based on revenue potential.

Current lending valuations on commercial buildings are amortized over 20 years with a 5-year fixed interest rate based on rent received. We believe financing will need to be reimagined for these assets in a similar capacity to create a cost-effective approach for business owners to consider this opportunity.  The mobile commercial units run on diesel engines with engine life cycles of 6 years or greater, as we consider use of the asset beyond that point or looking at alternative engine design other than combustible options, like electric, to increase asset life cycles. We would like to see an increase in amortization for the asset because we believe the asset’s life cycle should be greater than 6-7 years. We would like to see it stretched to 8-10 years.

The current market for sprinter and transit vans is robust and demand exceeds supply. The general layout for the commercial space will provide various options for utilization amongst multiple verticals. Making an investment in these generalized mobile commercial units is highly favorable because of the size of the commercial real estate market, and large customer demand for assets of this nature. The lower risk of business failure due to reduced, fixed operating costs and the minimal depreciation of the van, versus revenue generating aspects of the asset will also make investment from trust a viable option. We will coin the phrase (MREIT), “mobile real estate investment trust” and will find or launch the first trust of this nature. 

It will stabilize per square foot prices in markets when competition impacts the traditional business model profitability.