Browse Tag: Office

5 of the Fortune 15 Are Building New Headquarters

Five of the 15 Fortune 500 companies will build new headquarters in 2017.

Amazon Joins Other Fortune 15 Companies in Building New Headquarters

Amazon recently announced the start of their selection process to find the location for a second headquarters that could employ as many as fifty thousand (50,000) new full-time employees with an average compensation exceeding one hundred thousand dollars ($100,000) over the next ten to fifteen years.  This opportunity has communities scrambling to identify the incentive package and real estate site that can land this amazing deal.  The initial requirement is for 500,000 square feet that will be open by 2019 that could grow up to 8 million square feet by 2027.  The establishment of a second headquarters by Amazon will be the fifth company within the top 15 of the Fortune 500 to begin or complete a new headquarters project in 2017.

Apple's New Headquarters
Apple’s new headquarters comes with a price tag of $5 billion and will be powered by one of the world’s largest on-site solar farms. Source

Apple recently opened their highly anticipated 2.8 million square feet structure that can accommodate 12,000 employees in Cupertino, California.  At a cost of approximately $5 billion, this structure received the same attention to design as any of Apple’s other products.

Closer in scale to the proposed Amazon headquarters two is the recently opened ExxonMobil campus located 25 miles north of downtown Houston.  At 4 million square feet, it is designed to accommodate 10,000 employees.

ExxonMobile's new campus in Houston, TX.
ExxonMobile’s new campus features a 10,000-ton cube that appears to float. Source

The Apple and ExxonMobil campuses share many similarities.  Both are low-rise buildings (less than 4 stories) with lots of glass providing natural light.  Sustainable design practices have been incorporated into most aspects of each project.  And both headquarters boast 100,000 square feet wellness centers.

General Electric's new headquarters in Boston.
GE’s new building will feature a museum. Source

The other two Fortune 500 headquarters, General Electric and Walmart, are moving into new facilities on a much smaller scale.  General Electric is moving their headquarters from Connecticut to Boston, Massachusetts.  Executives have moved into temporary space while renovation of two brick buildings, totaling 95,000 square feet, begins with an estimated completion by mid-2019.  A proposed 12-story, 295,000-square-foot tower is scheduled to be completed in mid-2021.

Finally, the number one company on the Fortune 500 list, Walmart, announced plans to consolidate operations spread across more than 20 different facilities around northwest Arkansas into a new headquarters located on 350 acres near downtown Bentonville.

While the designs and sizes differ, all of the projects promote the same common benefits: providing a collaborative environment, amenities and environment to attract top talent and sustainable, energy efficient designs. These projects will also have a major impact on the economic development of their respective areas in terms of creation of high-paying job opportunities as well as the indirect benefits resulting from the ancillary services and suppliers needed to support them.

Downtown Cleveland’s Key Center Sells For $268M: What’s The Market Like?

Key Tower in downtown Cleveland, Ohio
Key Tower in downtown Cleveland, Ohio (Photo credit: Wikipedia)

The cornerstone of Cleveland’s skyline has sold this week for $268M to a local owner.  What does it mean for the local office market?

The Key Center, a 1.3M SF office tower sporting 57 stories and Class A status has been sold by national office REIT Columbia Property Trust to a Cleveland-based multifamily property and development firm. Built in 1991, the Key Center anchors a deal that includes a nearly 1,000-space parking garage as well as a ten-story bank building.

The anchor tenant in the tower is a regional banking power. KeyCorp, a holding company that owns the 18th largest bank in the US, lends a significant chunk to the tower’s 95% occupancy at sale time. The new owner, Ohio’s Millennia Companies – a group of real estate operations and development firms – intends to move operations into the tower, further bolstering the Cleveland CBD strong net absorption numbers, reported in Xceligent’s 4Q2016  Cleveland Market Report as the city’s leading absorption submarket with over 75KSF absorbed.

A Peek Around The Neighborhood

The deal takes place against Cleveland’s backdrop of declining office vacancy and modest levels of new construction. From Xceligent’s most recent Market Report:

  • During the 4Q 2016 the Cleveland office market has absorbed 104,105 square feet (sf) of space.
  • At 12.0% the regional vacancy rate has continued to decline, showing improvements from the 4Q 2015 at 13.1%.
  • The Cleveland CBD submarket observed the greatest positive net absorption totaling 75,222 sf during the 4Q 2016.
  • The Cleveland Office development pipeline had 67,000 sf under construction during the fourth quarter

Cleveland, In Fact, Rocks

If nothing else, the Key Center deal is a strong show of local commercial confidence in the face of a city’s commercial history that has suffered from capital flight, at times resulting in “rust belt” perception. It’s the duty of CRE professionals to look past such cliches, however. Industry players who might shadow the principals in this deal — such as financial support services or real estate service companies who have or seek profiles in the Midwest — can indulge their interest in low-barrier office markets such as Cleveland’s with a quick and easy look at Cleveland CBD’s comparable and nearby office properties.  To view a live query at CommercialSearch of office properties listed for lease or sale in the shadow of the Key Center,  click here.

Get Xceligent’s 4Q Cleveland Office Market Report

To get your own copy of Xceligent’s latest (4Q2016) Market Report on the Cleveland Office Market, click here to drop us a note today.

Where Is Commercial Real Estate Oversupply?

English: Welsh Assembly Office Construction De...

The national market for commercial real estate is a massive thing, a meta-market encompassing tens of thousands of localities, each with their own economies and histories, subject to their own internal logic — and illogic. When trying to take all of these in as a whole, it’s important to remember that the local stories always loom larger than might be apparent, and that effects are overwhelmingly driven by local needs, wants and preferences.

That said, some indicators are more easily acquired nationally than others. Construction delivery is one. More inventory arriving may influence performance for existing, surrounding inventory, but delivered construction always opens the door (when taken as an aggregate) to the possibility of overbuilding.

With that indicator’s strength in mind, Susan Persin’s piece in REITCafe (registration required) looks at national construction deliveries in the major sectors of CRE and finds where the numbers suggest demand and supply are growing out of balance, tipping toward supply.

In apartments, the high end of the market in NYC and SF get a jaundiced eye from Persin:

[…]REITs with significant investments in markets like Manhattan and San Francisco, such as Avalon Bay (AVB) and Equity Residential (EQR) have cut their revenue forecasts several times this year, citing weakness in these markets.[…]

Persin also noticed some developments in office markets in Dallas, Houston and New York that have the “o” word — overbuilding — rearing its ugly head. Quoting Sam Zell’s recent Bloomberg interview — a chipper affair otherwise — shows Zell concurring about a situation in NYC office that sees new construction as outpacing demand there.

Get the full article — with commentary on all the major CRE sectors of retail, hospitality, industrial  — at Trepp REITCafe for a free registration.

Photo credit: Wikipedia

Oil Prices Continue To Fall, Effects Felt In CRE Sectors

Harristown_Township_Illinois_Oil_Wells

As reporting about the world’s oil markets increasingly features terms like “glut” and “supply overhang,” property prices directly related to US oil extraction are widely taking a beating. At the same time, other indirectly related property sectors such as retail are benefitting from low gas prices.  In the wake of the latest drop in oil prices, here’s a quick roundup of the recently reported ripple effects in commercial property:

CNBC: The World’s Most Expensive Office Markets

Photo of Shangai Pudong district
Shanghai Pudong district. Photo credit: Lucas Shifres / Getty.

If you’re in the office space industry and you’ve ever wondered where it would lead if you followed the money to the top office markets in the world, take a peek at CNBC’s collection of eye-popping dollar figures per square foot in commercial centers across the planet.  Learn the moves from last year’s list — gainers and losers might be surprising.  From Shanghai Pudong districts’s relatively modest $132 per square foot all the way to…well, check out the list to learn the top.  (No, it’s not New York.)

CNBC The World’s Most Expensive Office Markets

 

The Genius Among Smart Buildings: The Edge

Consider an office building that comfortably supports 2,500 workers…with fewer than half as many desks.  A building where all the lighting panels are connected by ethernet cable, making every panel controllable and customizable using an smartphone app.  A building sporting enough photovoltaic solar paneling to power the entire footprint, including electric car charging stations at the parking lot.  A parking lot that recognizes your car and directs you to an empty spot in the morning.

These and more high-tech features are all part of Amsterdam’s fifteen-story, 430K S.F. office building dubbed The Edge. The tower is home to international consulting firm Deloitte, who helped work on the technology, providing both technical capability and the all-important tenant’s perspective at the same time.

Owned by Germany-based Deka Immobilien and designed by London’s PLP Architecture, The Edge has been lauded for its sustainable features and deep designs that even repurpose rainwater to flush its toilets. The project is a living proof that the challenges of energy and resource efficiency can meet and be mitigated with the demands of tenants.  The building systems do not create perfectly seamless solutions with every feature, but it’s a clear leap forward into a future where office experiences will leave the 20th century behind.

Avison Young CEO: Canadian Commercial RE Boom At An End

As reported in Bloomberg Business, Toronto-based Avison Young’s CEO Mark E. Rose doesn’t see the global boom in commercial real estate continuing in Canada.  The indicators include rising vacancy rates in offices matched with new construction of 20 million sq. ft coming online across the country. Added to this is the recent move by the US Federal Reserve to raise borrowing costs plus the expectation that 2Q 2016 will see another hike by the central bank.

“We’re at a peak. I don’t think we’re getting any higher,” Mark E. Rose, chief executive officer of Toronto-based Avison Young, said in a phone interview. “The next step is down — it has to be,” Rose is quoted.

Bloomberg’s Katia Dmitreieva explains what’s behind the recent report and why the warning bells are sounding.  Watch the video below:

 

 

Commercial Real Estate News Roundup For January 12, 2016

English: Rubber city with the spirit of Akron ...
Akron, OH. (Photo credit: Wikipedia)

Four areas of retail real estate to watch in ’16, heightened apartment demand stemming from soft home demand, spotlight on Indiana, and a big deal closes in Rubber City, aka Akron, OH — it’s all here in today’s National Commercial Real Estate News Roundup.

Office

Multifamily

Industrial

  • United Pipe And Steel Renews 100K SF Lease – REJournals Jan 10, 2016 – Franklin, IN tenant keeps its footprint right where it is.
  • Five Ways To Get Large Commercial Property Tax Refunds – Orlando Business, Jan 9, 2016 – It pays to understand the appraisal process.
  • Triangle Industrial Market Remains Model Of Good Health – News & Observer, Jan , 2016 – A low vacancy rate and considerable storage needs for local businesses are driving the NC Triangle’s industrial market.

Retail

Video Gallery: The Fed Has Raised Rates, But Is More Coming?

The cost of money has come up for the first time in more than nine years: the Federal Reserve Bank announced a raise in its short-term interest rate of a quarter point. For a quick look at various takes on the move, check out the following video gallery:

 

NAR: NAR Chief Economist Lawrence Yun Analyzes Fed Rate Hike

 

Bloomberg video: Fed Raised Rates Without A Hitch And It Only Took $105 Billion.

Bloomberg Video: Fed’s Lockhart Suggests Pace Of Four Raises Over A Year 

 

Bloomberg Video: Don’t Expect Big Profits At Banks In Wake Of Rate Raise

 

NPR: The Fed Raised Interest Rates: So What Happens Next?

 

 

Big, Bigger, Biggest: The Story Of The Skyscraper

https://www.youtube.com/watch?v=P7lWOkXuO8Q

The engineering and commercial histories of tall buildings tell an inspiring story of meeting and overcoming huge challenges in management, in materials science, in finance, in construction technology, and in environmental sciences.  Big, Bigger, Biggest is a beautifully made 45 minute film that covers it all, beginning in 1870 with the Equitable Life building in New York and culminating with Dubai’s Burj Khalifa, at 2,722 feet the world’s tallest artificial structure.

The film builds an amazing story with advance after advance in elevators, materials, architecture, heat management, craning, form construction and much much more. 100% worth watching or showing to anybody tasked with solving problems with space, this film is one of my favorite documentaries and I hope it will become yours as well.