Browse Tag: Office Space

Commerical Real Estate News Roundup For May 13, 2015

Crowdfunding continues to catch on, mall re-designs may be a new national trend, CRE investor dollars are targeting the Midwest, industrial development booms.  It’s all here in the Commercial Real Estate roundup for May 11, 2015.

It’s all here in the latest Commercial Real Estate News Roundup for January 14, 2015. – See more at: http://www.investmentpropertyofcharleston.com/2015/01/14/commercial-real-estate-news-roundup-for-january-14-2015-3/#sthash.6CoSTKPI.dpuf

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A Whole New Meaning For “Office Drone”

Once upon a time, the term “office drone” made us conjure up images of the guy from three cubicles over who keeps handing in his TPS reports late.

But because we’re now living in the era of unmanned aerial vehicles — and because we’ve got office square footage to lease — the entire concept of “office drone” has gotten a serious makeover.

Today’s clip is the in-flight video capture of a radio-controlled vehicle’s tour of a large office space in Orlando.  The “drone” vehicle: the AR Quadricopter.  The video tour: an excellent overview of a raw space, its lighting and views. Usable as part of a sales package in its unedited video form (or even more effectively with time-compression video editing), this kind of fly-through video is packed with descriptive power.

 

 

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Healthcare And Banking: The Business And Office Space Parallels

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At April’s Healthcare Real Estate Conference in Chicago, the panel on “Strategies In Medical Office Space” included notable comments from Michael Noto, SVP Management Services Group at Healthcare REIT.  Since the REIT space is where a property business sector overlaps with finance, it’s a great place to find important perspectives on history and the trends either supported or broken by that history.

In the case of healthcare office space,  Mr. Noto’s  own career history, which includes 13 years as an executive in banking, helped to contribute a compelling forecast concerning the culture of healthcare as an industry and its parallels to banking.  Consolidation, cultural shifts, and the rising role of competition in healthcare come together here:

In a question posed to the panel concerning Chicago’s position in the reconversion market – a key to the retailization of healthcare lies in the reutilization of existing office inventory for outpatient services – Mr. Noto took the angle of consolidation to describe the market:

“I agree that [consolidation trends mean there is] going to have 50 healthcare systems in this country.  I have the perspective of being in banking for 13 years.  When I started in banking there were 13,000 banks.  Today there are 4,000.  The concentration of assets in the top ten is overwhelming.  Back in those days, banking was a gentleman’s game.  Very little competition – believe it or not, in New York if you wanted to open a branch across the street or next to a competitor, you’d actually call them up and ask “is it okay to open up a branch over here?” To move it to health care:  hospitals have been run by gentlemen.  Suddenly, a lot of community hospitals, facing what is happening around us in terms of the economy, health care reform.

“Another analogy is that banking is a highly regulated industry.  Suddenly hospitals have to respond to what’s going on around them, so they decide to plant the flag close to a competitor.  That has now ramped up big-time. To the point where you see all over the country billboards sitting out in front of competitor’s hospitals touting the emergency room waiting time.  competition has driven the tremendous growth of outpatient healthcare facilities .  Given what’s happened in the retail real estate business over the past 5-6 years, there are lots of opportunities for highly visible locations that tout that brand.

Healthcare And Finance Property: Not The Best Neighbors

“There are challenges. Retail space is not usually built to the same quality as is needed when you would build a medical building, and when you get past all the physical challenges that exist, in terms of converting either general office or retail, on the general office side, the biggest challenge we’ve had is tenant relation management.  Because if you have a general office building full of accountants, in the case of Florida, a lot of wealth management companies, retirees are visiting their financial advisor every day – the last thing they want to see when an elevator door opens is someone in a wheelchair with an oxygen hose in their nose.”

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Office Space Classes: How Do You Know What Class Your Property Is?

Class A?  Class B?  When it comes to office space, what’s the difference?

Turns out it’s pretty informal, inconsistent, and has more to do with market reporting than characterizing individual properties.  It’s an old problem in real estate information handling: when you’re describing a single property, you aren’t describing a wider area, trend or factor.  It also holds in the reverse: information about markets by its nature depends on summaries, means and averages when being put together; these summaries don’t often work well as ways to differentiate properties.

That said, office buildings are generally classified by brokers and landlords as being either a Class A, Class B, or a Class C buildings. But differences between each of these classifications varies widely by market.  Class B and C buildings are generally classified relative to Class A buildings, meaning that comparing across markets using these categorizations can lead to dangerous misinformation.

While the industry lacks a definitive formula for classifying a building, we get by (or don’t get by) on three sets of  general property characteristics:

  • Class A. The highest quality buildings in their market. Generally they look the best, use the best construction, their infrastructure is high quality and are professionally managed.   Location and access is premium.  Class A office buildings attract the top quality tenants and the highest rents that go with them.
  • Class B. Typically a Class B property is older than a Class A, yet still has quality management and tenants.  One aspect the distinguishes a Class B from a Class C is its “upward mobility”.  Does the building’s location and circumstance allow the possibility of restoration to Class A status through common area improvement, renovation or facade?  If yes, then it’s a solidly Class B office property.
  • Class C. Usually older than 20 years, a Class C office property needs extensive renovation and/or is located in a less desirable location.  Marked by out-dated technologies and infrastructure, and low architectural appeal,  Class C buildings have the lowest rental rates, take the longest time to lease, and are often targeted as re-development opportunities.

No formal international standards exist for office building classification, which is another way of saying that office buildings should be viewed in context and relative to other buildings within the sub-market; a Class A building in one market may not be a Class A building in another.

 

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BOMA’s Henry Chamberlain Spells Out What’s On The Minds Of Owners

Affecting the commercial property market is the comfort level of building owners.  Nervous landlords add to deal volume and help to bridge the gap between bid and ask.  But what’s going through their minds? Answering is BOMA’s Chief Operating Officer Henry Chamberlain, who sees more uncertainty than he’d like.  In an interview following BOMA’s annual legislative conference that found the owners’ trade group pursuing an agenda concerning issues such as carried interest taxed as capital gains, ADA remedies, energy and leasehold depreciation, Chamberlain chalked up the murky waters for owners to finance on the debt side, the regulatory environment, and the leveraging of technology and its expected tendency to suppress demand for traditional office space of the future.

It’s worth mentioning that the trend of internet-based work forcing profound changes in office space needs going forward is one we’ve looked at here before; to hear BOMA leadership acknowledge the upheaval only underscores what’s coming in this critical commercial space market.

(Tip of the hat to reit.com for the video.)

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Finding And Renting Shared Office Space: Monitoring The Trends In A Growing Market

Cover of "Office Space (Special Edition w...
Cover via Amazon

When Patricia Lynne, CCIM addressed a commercial audience at NAR’s annual conference in 2011, she talked of a radically shifting office space marketplace.  She saw the common cubicle-farm concept of office space rapidly falling out of favor with the youngest office workers.  The millennial generation are used to high mobility, high connectivity and knowledge work, and the cube farms across the country just weren’t set up with these things in mind.

Further, a wave of venture capital is crossing the country, funding startups in technology and related fields, trying to springboard the next Groupon or Amazon.  The shared office model being second nature to the generation of workers  that will power these startups means that the office real estate practitioner who ignores this new pattern of economic development is likely missing out on a big chunk of the future.

While the predictions suggest a growth in alternative office occupancy models, a look around the web confirms it.  Indeed, shared office space, incubator-style arrangements idealized for startups and membership-based rental models are on the rise in primary and secondary markets.  Traditional office building listings websites and services are generally a poor fit for this market, so let’s take a look at some of its key sites that define the online marketplace in shared office space.

Craig’s List – Due to its information simplicity, CL remains hospitable to the shared office listing alongside the listings for more traditional listings for buildings, floors, blocks and the like.  Due to Craigslist’s history and cultural positioning with the technology industry, it will probably always be a stop for the prospective technology startup on the hunt for affordable, flexible and appropriate digs.

SuiteMatch – Powered in part by Zillow listings, this site provides listings in over twenty major cities.  Searches for spaces in Chicago came up with bupkus, so I got an impression of thin offerings, although listings did show up in markets highly identified with tech startups such as San Francisco. Just not as many as I expected.

Regus – Using Google AdSense aggressively and an effective landing page strategy to market shared spaces and suites, Regus is a player in this market that displays full understanding of search marketing .

SharedBusinessSpace.com – This “national office sharing directory that solely focuses on unused space for rent that is available within an established business location” boasts”hundreds” of listings and focuses on 10 major markets.  Kudos for being upfront about the amount of listings, but I wished I could find more.

ShareYourOffice.com – Neat design, map support and information-rich listings make this worth a look when considering a marketing plan for shared office space.

Overall, I saw all the hallmarks of a major marketplace in its early stages – plenty of room to grow.  What are some sites catering to shared office space that you’ve seen?

 

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Tomorrow’s Office Workers And Their Spaces: Patricia Lynne At NAR Annual 2011

What’s coming tomorrow?  Wouldn’t we all like to know?  That was the message at the jammed  NAR 2011 Annual session “Views From The Frontier Of Commercial Real Estate.”  What will we be doing in our offices?

Well, never mind traditional offices.

“Hold up your smart phones,” said Patricia Lynn CCIM, speaker and principal of consulting firm Lynnk.  “These are the office of the future.”

In a presentation long on thoughtful asides about the state of office utilization patterns and demographic changes, Lynn spelled out the four principles of the future office worker profile:  Talent, Technology, Transportation and Tolerance.  Creative talent, high technology, high mobility, and social tolerance.

Tomorrow’s office worker, culled from a US population growth that appears on pace to hit 450 million in 2050, will be of the creative class, saud Lynn.  “These are the knowledge workers, who think, and use technology creatively and who want to be near other knowledge workers.”  Today, 30% of the workforce is in the creative class – but Lynn says the number will climb to 50% in just a few years. The more she spoke, the farther away the traditional conception of the office cubicle farm faded into the mists of history.

The millenials (that generation sometimes dubbed “generation Y”) working habits and office needs are radically different from what the industry is used to providing.  They tend toward “fun, multitasking, collaboration, and no boundaries between work/home/family”.  This translates into office space with fewer fulltime employes per square foot, or as  author Jim Heid put it: “The office of the future is no office.”

Not quite.  It turns out that there’s office space in the future, it’s that the millenials are using three distinct places: the traditional corporate HQ about 30% of the time, the home office another 30% of the time, leaving a giant opportunity in what Lynn called “the third place – a kind of Starbucks on steroids.  Slides followed showing new working spaces based not on lease occupancy but on membership – anywhere from $150-$425 a slot – where the millenials stop to connect, collaborate and create.

Get a full copy of Lynn’s presentation at PlaybackNAR.

 

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