 |
|
|
 |
 |
|
|
July 2010 |
Miller, Rubenstein,
Hoffman & Hawkinson
|
|
Nationwide, Office Vacancy Continues to Climb
 Like an anchor that seems to become more entrenched with
every attempt to release it, the country's unemployment crisis is still weighing heavily on the commercial real estate industry.
Nationwide, the office vacancy rate nudged upward to an uncomfortable 17.4 percent during the last quarter, a figure that now represents the largest amount of empty square feet since 1993.
Real estate data firm Reis report that since 2008, the total amount of occupied office space has been reduced by 133 million square feet. This can be easily translated to indicate that no significant hiring is expected in the next number
of months.
While government entities are expanding rapidly (Washington D.C. has the lowest vacancy rate), it is private industry that fuels Wall Street confidence and the most valuable employment numbers. Without it, owners of commercial real estate
will have to do all they can to maintain occupancies.
Tenants will continue to benefit from substantial landlord concessions and a vast array of leasing alternatives throughout their respective markets and submarkets. Effective rent, the final rate per square foot after all discounts are
considered, was cut on a national level for the seventh consecutive quarter.
The fallout of the financial industry is starting to yield a few benefits, as a number of smaller, more niche services firms have opened for business and helped provide some semblance of stabilization to real estate markets that rely
heavily on banking and finance. Nevertheless, it will take a much larger crop of new and/or growing business across all industry types to help heal the country's commercial real estate market and prime our economic soil for another growth
season.
For companies looking to relocate or take advantage of a very unique leasing market, tenant representatives continue to be the single best professional source when it comes to space considerations. Given the options and types of
concessions available today, the value of understanding every alternative available simply cannot be overstated.
|
|
Instability Continues in Larger Full Service Real Estate Firms
 The Great Recession has put the commercial real estate
industry into a state of flux not experienced in decades. News filters into the market everyday about the pending mortgage refinancing dilemma, drastically falling property values and increasing vacancy rates.
Conditions have also sent shockwaves through many of the country's large full-service commercial real estate firms as profits have dissipated and in some cases, turn-around agents have been hired. A frenzied game of musical chairs is being
played out from LA to Miami as aggressive tactics are being taken to hire brokers away from competitors and consolidate offices across the country.
Brokers switching firms is not new to the industry. Today, it seems to be accelerating. In some cases, firms are deliberately coming after brokers who hold relationships with any company that demonstrates the potential to relocate or
strike a new lease in the next couple of years. They are also seeking to snatch brokers who have experience in future growth sectors, like healthcare and energy. A byproduct of these moves is a further reduction in support staff for the
firm being fleeced, who end up either laid off or following a favorite broker to a new firm. In short, things are all over the place.
Maintaining a sense a stability in the real estate services marketplace are small private firms focused on the needs of tenants. With a more specified approach to helping companies make crucial real estate decisions, these firms have been
able to better sustain the pain of such a challenging economy. Like business consultants, boutique tenant representatives provide benefit between transactions and demonstrate long track records under the same, locally-grown brand name.
Furthermore, boutique tenant representation firms draw 100 percent of their revenue from servicing tenants, whereas industry estimates agree that the majority of full service companies receive close to 70 percent of revenue from landlords,
proving how challenging it can be for such firms to maintain an operation without conflicts of interest relative to space recommendations for tenant clients.
The state of the market does not appear to be changing right away. In conjunction, expect more broker swaps and operational question marks to continue within the full-service partition of the industry. However, those firms that remain
small and specialized are primed to offer a high level of market insight and professionalism to companies tired of the nationwide run-around.
|
|
Bank of America's Green Tower
 The banking industry has been under a lot of fire lately.
Unfortunately, lost in the recession heavy headlines is that one of its major players co-developed and is located in what many consider to be the most environmentally conscious office buildings in the nation.
Bank of America's glistening tower in Manhattan is a stunning new presence in New York's iconic skyline and is as rich in energy efficient technology as it is tall. The city's now second largest building is also its most sustainable,
showcasing an array of features designed to re-define how big business tackles energy preservation.
Bank of America teamed with The Durst Organization and hired chief architect Richard Cook, head of the firm Cook+Fox, to see One Bryant Park (it's official name) come to life. Perhaps the building's most beneficial characteristic is its
ability to produce 65 percent of its annual energy need from an on-site natural gas powered cogeneration plant. The plant's presence means that power does not have travel across the grid to reach the building, substantially reducing the
amount of wasted energy, a common issue with most large commercial buildings.
The first commercial skyscraper to earn the U.S. Green Building Council's Platinum LEED certification, the 55 story complex is sheathed in highly efficient floor-to-ceiling windows with insulating glass that blankets the interior with
natural light and drastically cuts the heat load created by most glass exterior buildings. It has air handlers on every floor to enable individual floor control to create self-contained heated and cooled environments, carbon dioxide
monitors that automatically adjust the amount of fresh air needed throughout the structure and a water recycling system that captures all rain and gray-water for re-use, saving millions of gallons of city water every year.
In addition to common green fixtures like LED lighting and recycled building materials like drywall and much of its steel, the property has in its basement a cooling system that produces ice in the evenings (when the city's electricity
demand is lowest) from 44,000 gallons of recaptured water to use for up to 25 percent of the next day's energy demands.
There is no doubt that this is a remarkable building that demonstrates what's possible in terms of green commercial real estate. Broad in scope and a physical inspiration to those wanting big business to do more for the environment, One
Bryant Park is now the standard bearer for responsible property development.
|
|
|
|
|
