National Engineering Firm Space Survey

Space efficiency is a fundamental determinant of real estate costs. A new survey of engineering firms shows how large sums can be saved with small reductions in office space. Engineering firms, like many service businesses, find that real estate is their second or third highest cost of doing business. Two offices of the Alliance of Tenant Representatives, CoRE Partners of Denver and Gola Corporate Real Estate in Philadelphia, conducted a national survey to find out why some engineering firms used space more efficiently than others.

The survey determined that the average space per employee at larger engineering firms is 226 to 250 rentable square feet. However, there was quite a bit of variation. For instance, firms that delegate the responsibility for leasing space to the heads of their local offices tend to use around 50 square feet more per employee, 20 percent more than average. Firms with space guidelines use 50 to 75 square feet less than those without. And firms that charge their local offices for real estate use around 50 square feet less space per employee.

All of these factors are important because they affect space efficiency by 50 square feet or more per employee. For a company with 1,000 employees that pays on average $20 per square foot for its office space, this amounts to savings of $1 million each year.

For a more detailed look at the survey results and advice on how your company's space utilization can be more efficient, call Robert Sample at 713 739 7777 x 4.

Should You Sublease?

Subleasing someone else's extra space can seem tempting. It could mean access to prime space at a discount price. Sometimes office furniture, telephone systems and even networking and computer support are included. But there are traps for the unwary.

When approaching sublease space, there are three options: sublease, assignment of lease, or drafting a new lease with the landlord.

The big caveat to subleasing is that you are depending on the present leaseholder to keep current. "If the sublessor is weak or the client is looking for a longer term, a direct lease can often be negotiated at below-market rents," says ATR member John Reynolds, CoRE Partners, Denver.

In fact, a sublease is often the least desirable option, according to Brian Schwellinger, Wisconsin Tenant Representatives, Madison, Wis.

"Subleases are a snake pit of trouble down the road ranging from master tenant default possibilities to having to communicate through the master tenant instead of being able to work with the landlord directly," says Schwellinger.

What about assignment of the lease? "Unless the current lease is exceptionally well drafted in the current tenant's favor, it is best to negotiate for a new lease if at all possible," he says. "Negotiate concessions and realize them regardless of the master tenant's performance over the term of your lease, and you will have peace of mind and measurable success."

So before you become a subtenant, get an experienced tenant representative on your side to help avoid the pitfalls. For help, contact Marian Livingston at 713 739 7777 x 5.

CBD Sublease and Direct Vacancies

CBD Office Statistics
Source: CoStar Property

occupancy
Existing Buildings: 138 of 147
# Spaces: 894
Existing RBA: 43,881,903 sf
Vacant: <8,529,419 sf> ; 19%
Occupied: 35,352,484 sf; 81%
Leased: 38,060,266 sf; 87%

availability
Direct: 6,905,749 sf; 16%
Sublet: 1,275,840 sf; 3%
Total: 8,181,589 sf; 19%
Vacant Availability: 7,049,913 sf; 16%

leasing activity
Average Time: 21.4 months
Leasing YTD: 496,703 sf; 1%
Net Absorption YTD: 1,197,816 sf; 3%

direct gross rent
Office Range: $10.00-$33.38/yr
Office Average: $20.11/yr

Westchase Sublease and Direct Vacancies

Westchase Office Statistics
Source: CoStar Property

occupancy
Existing Buildings: 131 of 133
# Spaces: 555
Existing RBA: 14,453,376 sf
Vacant: <2,635,278 sf> ; 18%
Occupied: 11,818,098 sf; 82%
Leased: 12,354,165 sf; 85%

availability
Direct: 2,380,324 sf; 16%
Sublet: 565,927 sf; 4%
Total: 2,946,251 sf; 20%
Vacant Availability: 2,533,376 sf; 18%

leasing activity
Average Time: 18.2 months
Leasing YTD: 236,412 sf; 2%
Net Absorption YTD: 20,168 sf; 0%

direct gross rent
Office Range: $11.77-$28.50/yr
Office Average: $17.02/yr

Greenspoint Sublease and Direct Vacancies

Greenspoint Office Statistics
Source: CoStar Property

occupancy
Existing Buildings: 94 of 95
# Spaces: 353
Existing RBA: 10,288,051 sf
Vacant: <1,953,414 sf> ; 19%
Occupied: 8,334,637 sf; 81%
Leased: 8,646,601 sf; 84%

availability
Direct: 1,729,512 sf; 17%
Sublet: 88,262 sf; 1%
Total: 1,817,774 sf; 18%
Vacant Availability: 1,728,954 sf; 17%

leasing activity
Average Time: 21.6 months
Leasing YTD: 297,917 sf; 3%
Net Absorption YTD: (91,935 sf); (1%)

direct gross rent
Office Range: $10.50-$27.75/yr
Office Average: $16.14/yr

The Leasing Institute - UT School of Law

Send Email to Candace Baggett

Need continuing legal education credit? Attend a premier two-day leasing conference sponsored by The University of Texas School of Law and hear The Calibre Group, Inc.'s Candace S. Baggett speak on subleasing or call 713 739 7777 x 2.

For info, go to www.utcle.org.

April 1-2, 2004
Hilton Americas Houston
Houston, Texas

April 29-30, 2004
Cityplace Conference Center
Dallas, Texas

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This newsletter was designed to comply with the rules and regulations of the Texas Real Estate Commission. The Calibre Group, Inc., Candace S. Baggett, Marian E. Livingston and Robert G. Sample are licensed as real estate brokers by The Texas Real Estate Commission.

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Copyright 2004 The Calibre Group, Inc.