 |
|
|
 |
 |
|
|
December 2008 |
Miller, Rubenstein
Hoffman & Hawkinson
|
|
Early lease renewals offer opportunity in stumbling market
 Even while many commercial real estate professionals hate to
admit it, there is just no hiding the fact that the majority of the country is in a full-blown tenant's market. And this means tenants are in a prime position to capitalize on the opportunity through an early lease renewal.
Property owners are scrambling to maintain the value of their buildings in the midst of plummeting rents and rising vacancies. Therefore, a recently renewed and extended lease with an existing tenant means a more secure future for an
anxious landlord. Working with your tenant representative, begin the process by engaging the market. Find out what else the market has to offer that would fit your firm. This action alone, especially when underway substantially ahead of
your original expiration, will provide leverage when your new lease talks come down to actual numbers.
Early renewal in these market conditions can also provide you with the chance to address any unfavorable terms that were components of the original lease. Or more specifically, you can execute a "blend and extend" strategy. This method of
renegotiation of the lease offers the landlord a longer lease term in exchange for lower per square foot costs for the remainder of the term. This strategy blends the current costs of your lease with current market rates and most
importantly, allows you to begin paying the new lower rates immediately.
Remember though, with an extension, you're committing to your current space for the long term. That is not to be taken lightly; so be sure the extension of term is worth the savings.
Blend and extends can be used in situations that call for a reconfiguration of space as a result of growth or even a contraction in the amount of space needed. The key factor in successfully carrying out a blend and extend is the state of
the local market. Is the landlord in a position to gain from longer terms? Are rates declining and vacancies rising in the building? Clearly, today's market is ideal for a blend and extend strategy.
According to news publications in Atlanta, falling rents have prompted landlords to agree to unheard of concessions to secure existing tenants, offering up to two years of rent abatement and substantial improvement allowances. In
Manhattan, specific market rental rates are difficult to pinpoint, given the myriad of concessions, discounted renewals and subleases flying around the market. As a result, landlords are willing to be very open with any credible tenant
seeking an early renewal.
In a December 9 New York Observer article, Richard Warshauer, senior managing director of Williams Real Estate, said that in today's market, "A tenant broker will call up a landlord's broker or agent and ask what the asking rent is, and
they say, ‘You tell me.'"
The concessions and willingness to negotiate being communicated by landlords today cannot be overstated. Rampant development over the last several years has only augmented the current conditions, leaving many markets with countless
speculative properties sitting vacant. And as more companies suffocate under the blanket of recession, more sublease space finds the market. All of these factors (and many more) are churning a perfect market storm that should be easily
navigable for opportunistic tenants and their tenant representatives.
|
|
The cost of going green
 The biggest roadblock to the widespread adoption of green
building technologies is cost, especially as landlords aim to pass on the costs of going green to their tenants in the form of higher rental rates. As a result, many companies are hesitating going green.
A national survey of 400 real estate executives recently reported that only 42 percent were willing to pay a premium for green space. Last year, that number was 77 percent. Clearly, there is a connection between current economic conditions
and the progress of the commercial real estate industry's green campaign.
The survey also returned that 69 percent of those polled consider sustainability a critical business issue, up from 47 percent in 2007. And, forty percent of those polled consider energy issues and sustainability a major factor in future
relocation decisions. These two figures suggest that possibly, a stand is being taken against the phantom markup of green building products and that the market believes costs should be more aligned with traditional building materials and
methods. Stated another way, tenants would like to go green but are reluctant to pay significant rent premiums to get there.
There is no question that the effort to go green has resulted in substantial energy savings, innovations in construction and a renewed commitment to bettering our planet. Solar arrays on rooftops, water recapture, geothermal heat systems,
intelligent buildings and recycled building materials are all byproducts of the commercial real estate industry's efforts to reach carbon neutrality. But at what cost?
As corporate real estate becomes a much more strategic component of a company's growth plan and not just a tactical, balance-sheet expenditure to be dealt with in the near-term, esoteric issues like sustainability will only continue to
increase in their criticality. Thus, the cost of going green will be weighed alongside other high-level business issues. With this added scrutiny, the green building market will only become subject to additional challenges by the real
estate market, the result of which will hopefully be a fair price correction.
This survey points directly to the importance of moving sustainable construction into the mainstream. It can no longer be considered fodder for corporate press releases and green ribbon cuttings--earth-friendly commercial real estate needs
to be affordable and ubiquitous. That's a great thing to work toward in 2009.
|
|
Holiday Technology Gifts
 There is never a recession for gadget nuts. And for all
those out there who love the latest and greatest, the 2008 holiday season should be one to remember. We have highlighted for you some of the most popular items on this year's must-have list:
Slingbox
The size of a VCR with none of the nostalgia, this wondrous toy hooks up to your TV and allows you to access it from a laptop, cell phone or other wireless device from anywhere. Need to have The Office on the road? It's there. Missing the
big bowl game? Not any more. Using common audio/video inputs, such as S Video, Composite or USB, the Slingbox is as easy to set up as its VHS-powered ancestors. Best of all, you'll never have to figure out how to set the clock.
Apple iPhone 3G
Today's 3G network offers more speed, reliability and best of all, more bandwidth. And more bandwidth means more video, Internet and music on your iPhone. If you haven't yet gawked at a co-worker's iPhone or had the chance to use your
fingers to scroll through contacts like a hi-res Rolodex or check Fantasy Football scores, you don't know what you're missing. If Apple's marketing campaign hasn't convinced you that they've created the single best cellular phone ever,
then we recommend you take today's lunch hour at your nearest the Apple retail outlet. You probably won't leave empty handed.
Nintendo Wii
You don't need to be a "gamer" to use--or love--Nintendo's revolutionary gaming system and you'll know in only a few minutes of use what all the hype is about. The beauty of the Wii is that the simplest games like bowling, tennis and
boxing become as addicting as the most complex, long-winded adventure games on the market. Perhaps the most misunderstood component of the Wii is that it's just for the kids when actually, it's fun for the whole family. With the new Wii
Fit games coming this Christmas that literally offer exercise programs like yoga and snowboarding, family game night has just taken on a whole new meaning.
Blu-Ray
Now that the Blu-Ray format has won the high-definition DVD war, your only choice now is what movie to view. Blu-Ray players bring the visual theatre experience to your living room with the best quality picture and visual add-ons available
today. Finally, your movies will look like they're supposed to on your 1080i HD TV. Blu-Ray technology allows special features, such as commentaries and zoom control, for example, to be accessed while viewing the movie. Although, if you're
an old fashioned cinephile and just want to view your favorite Quentin Tarantino flick without distraction, there is no better format than Blu-Ray. Most important, prices on Blu-Ray players are falling fast, with many models available for
under $200. Act now. Oscar season is just around the corner.
Most likely, the gadget-geek on your list already has one or more (or maybe all) of these items so don't feel bad about picking one of them up for yourself. After all, if 2009 is anything like this year, who won't need a little extra
entertainment?
|
|
The Miller Richmond Company Represents Fabric.com in 50,000 Square Foot Renewal/Expansion
 The Miller Richmond Company is pleased to announce that it
has represented Fabric.com in the renewal and expansion of its Marietta, Georgia facility. Fabric.com, a leading online fabric store that offers custom measured and cut fabrics, as well as patterns, sewing tools and accessories, is
expanding to 51,708 square feet at 2151 Northwest Parkway in Northwest Business Center.
David Rubenstein, Principal of The Miller Richmond Company, handled lease negotiations for Fabric.com. According to Mr. Rubenstein, "Fabric.com's business has been growing steadily over the past several years with the help of a very loyal
customer base. The company is now at a point where it needs to double the size of its facility to better service growing demand. At a time when so many companies in town are contracting or closing facilities, it is exciting to work with
a client that is in an expansion mode."
Stephen Friedman, President and CEO of Fabric.com added that "while we evaluated a number of relocation options in the area, from both a functional and economic standpoint, it made most sense for Fabric.com to renew and expand at Northwest
Business Center. Not only was The Miller Richmond Company able to negotiate very attractive lease terms, we were able to craft a lease that will provide us the flexibility to properly expand our facilities as the business continues to
grow in the future."
The building's landlord, Cobalt Industrial REIT II, was represented by Mark Sheffield of NAI Brannen Goddard.
|
|
|
|
|
