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December 2009 |
Miller, Rubenstein,
Hoffman & Hawkinson
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Rise in temp workers may change how tenants use office space
 The recent jobs report that generated buzz on Wall Street
was due in large part to the number of temporary and contract workers that staffing firms are using to fill vacancies in companies throughout the country. It is predicted that contract workers may constitute a quarter of the American
workforce within only a few years. If this trend picks up in 2010, commercial landlords may start to see tenants downsize, increase demand for smaller office floorplans and even start to seek shorter lease terms to accommodate fluctuating
staff needs.
Important for tenants considering taking advantage of this employment trend, which can have a number of business benefits, is how it will impact the concessions a landlord can provide. Current market conditions are benefiting tenants like
few have in many years. But landlords cannot afford to offer the types of concession packages on a short-term commitment that are common to long term leases, especially when the space may soon end up vacant. It simply doesn't make
financial sense for them.
When a landlord offers abated rent, a generous improvement allowance or other types of concessions, they amortize those costs over the life of the lease. An 18-month lease, for example, will not allow a landlord to offer much beyond the
delivery of space in as-is condition or at most, with a modest allowance for paint and carpet cleaning.
Thus, if a short term lease or other flexibility options are your goal, then understand that your effective rent may be a bit more and build-out allowance a bit less than what your neighbor, who recently negotiated a five-year lease for
space in the same or a comparable building, is paying.
Contract workers allow a business to drastically reduce overhead, require less space and hire specialized employees on a per project basis. It is critical though, that when seeking space for your temporary employees or contractors that you
remain realistic and flexible on your space needs. Serious rent reductions, improvement allowances, green fit-ups and other benefits that have become common today will not be as readily granted to a short-term tenant.
That being said, space today remains considerably less than it was a few years ago, so there are still very good opportunities to secure quality space and historically low pricing.
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Turbulent times call for tenant representatives
 Today's commercial real estate market is more turbulent than
it has been in a long time. Landlords are doing all they can to maintain occupancy and continue to generate enough cash flow to service their debt. In an environment like this, tenants have a tremendous opportunity to negotiate
aggressively with landlords; however, there are numerous pitfalls that can trip up even the most stable companies looking for an attractive lease in the right building. That is why it is now more important than ever to rely on a seasoned
commercial real estate broker that works exclusively as a tenant representative to assist you with your space needs.
Given current conditions, exclusive tenant representatives' insight is invaluable. They can help you make sense of the quick ups and downs of rental rates, concession trends, occupancy numbers and key company relocations or bankruptcies
that are impacting the local real estate community. They are also in touch with important space usage trends, such as how to best leverage open floor plans, negotiate an environmentally-friendly fit-up and whether or not subleasing is a
good option for your company.
The commercial real estate industry is very much in flux.Occupancies and rental rates are changing rapidly. The spread between asking rates and ultimate effective rents can be quite significant. Desperate landlords are getting aggressive
and creative when trying to fill empty space. Similar buildings that once competed within pennies of each other are now offering drastically different economic packages depending upon their current leasing status and capital structure.
Without an expert who follows these trends, can interpret the subtleties of landlord pressure points and has the experience to negotiate for appropriate tenant protections, a prospective tenant risks leaving significant money on the table
or suffering the challenges of leasing from a bankrupt landlord.
Most importantly, exclusive tenant representatives serve only tenants and reject all fiduciary relationships with landlords or their lenders. Unlike full service real estate companies, they never subordinate your interests to those of a
landlord or lender who has a financial interest in a prospective building. Exclusive tenant reps can avoid conflicts of interest common in full service firms because they never pursue landlord assignments that could influence their ability
to offer unbiased consultation to their tenant clients. And in a market where the next lease can make or break a given landlord, the pressures on a full service broker may result in a lease that is not in a tenant's best interest.
When the New Year brings decisions impacting your space, make sure you rely on an unbiased exclusive tenant representative to help you navigate the potential pitfalls of today's challenging yet opportunistic market conditions.
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Holiday Movies to Enjoy
 The upcoming holiday season may be a great way to end what
for many was a very trying business year. If yours is like a lot of American families, holiday time often means movies, as traditionally the year's best films are released while people can enjoy them together.
If movies are a tradition for your family come holiday time, here are some that deserve your ticket money:
Up in the Air
George Clooney can do it all. Rest assured, by the end of his career, his den mantle will be decorated with as many lifetime achievement awards as Eastwood's. Depending on what trailer you see, which (smartly) morphed from somewhat
foreboding in August to lighter and more comedic in time for the holidays, "Up in the Air" will come across as a witty romantic comedy or a introspective drama about a disheartened business executive. Truthfully, the film is both. And it
will be talked about. Go see it.
Avatar
This certainly will not be "Titantic," but it would be foolish to think that James Cameron is not shooting for a family-oriented action film along the lines of "Star Wars" or "The Incredibles," something that the sci-fi fanatics
(hopefully) consider a classic and one that will sell toys in the next few weeks. Cameron's track record for knowing what sells notwithstanding, "Avatar" looks a like an other-worldly adventure saga that offers something for everyone down
to at least an accompanied middle-schooler. The creatures certainly look Lucas-inspired. Let's hope the story is too.
Invictus
Please. Clint Eastwood directing Morgan Freeman as Nelson Mandela? If this one isn't on your calendar for December, then you either have major surgery scheduled or are reading this from a prison cell. (And if it's the former, reschedule.)
This political drama about Mandela's invigoration of the South African rugby team to win the 1995 World Cup, and subsequently unite the country, has all the trappings of another Eastwood classic.
The Blind Side
This would be easy to ignore on the count of the inherent melodrama if it wasn't a true story. While the film could have survived with anyone in the lead female role, Sandra Bullock brings a sense of authenticity to Leigh Anne Tuohy, the
matriarch of a wealthy Mississippi family that takes in homeless teen Michael Oher and leads him to a rewarding new life in professional football. It's beloved by just about everybody who has seen it and should be a great way to enjoy the
movies as a family. Or, just see Oher on Sundays with the Baltimore Ravens.
The Princess and the Frog
Disney became a global entertainment conglomerate because of a cartoon mouse. No sense in straying from what works. "The Princess and the Frog" looks like it may bring back the energy the company felt after "Beauty and the Beast" and "The
Little Mermaid" but lost on overdone duds like "Hercules" and "Home on the Range." They should stay away from 3D or motion capture and stick to what they know, traditional 2D animation. Take the kids and enjoy yourself.
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