As 2013 is off to a running start, working with our clients to build a real estate strategy geared towards reducing occupancy costs. Part of that strategy process is building leverage using the current real estate market. Though we are absolutely still in a tenant driven market, we are beginning to see a shift in the mentality of landlords, in particular in class A office buildings in certain submarkets. This shift, and the flurry of current leasing activity in the market is driving us to reach out to clients and perspective clients to talk about approaching their landlords in many cases and talking about early lease renewals. Here are a few recent trends we have directly encountered with landlords in our market.
The World Trade Center development will be New York's most attractive new destination. It will provide an abundance of open public green space combined with unparalleled transportation access, outstanding retail and cultural amenities.
A few short weeks ago the Rich Commercial team trekked from Raleigh, North Carolina to the Big Apple, Yew York City, New York. We made the trip because Rich Commercial Realty is a member of the esteemed Alliance of Tenant Representatives. This organization, ATR, is a highly established group of independent exclusive tenant representation firms throughout the country. Each of these firms have dedicated themselves to a standard of ethics that sets them apart from any other firm. Further, these professionals have tremendous experience and strive to work with quality organization on a local, regional, national, and international level.
The Triangles housing market has continued a 2012 trend of strong sales into the fall months, and based on many conversations with residential brokers, I do not expect this trend to slow anytime soon. Below are some interesting points taken from the News and Observer article by David Bracken:
All of this sounds great, but what does it mean? As supply dwindles, there is going to be an opportunity for shelved development projects and new home builders to get projects off the ground. One example is the L building site, a public private partnership between Empire Properties and Wake County. The L building has gone from a retail and condo project, to an apartment project, to an office product, and now back to a condo project. I was not surprised to see they are going back to a condo project because the building (shaped like an L, would have narrow floor plates for office users and even more detrimental, has a huge amount of competition with The Edison project, Charter Square, Powerhouse Plaza, North Hills Tower II, and the Grubb tower project on Glenwood. The bottom line is that there are too few large tenant currently in the market to get all of these projects off the ground, and with the influx of Citrix and Redhat employees downtown, some quality condos are a great addition.
I look forward to watching the continued home sale growth, which may be what we need to continue to feed the Triangle economy, which seems to be itching to kick-start (depending who you ask of course!)
To be successful, you just have to make it a great day!
I am human just like everyone else, so not everyday is the best day of my life. With that said, I think one of the things that has and will continue to make me successful in life and in the commercial real estate industry is my overwhelmingly positive outlook on everything. If you were to ask my mom to comment here, she would probably laugh because sometimes I even get a little to ambitious with my "no problem, let's get it done" attitude towards things.
This weekend I found several great Inc.com reads that illicit positivity. So give them a read, make it a great day, and get out there on Monday and spread some positivity!
Customers Drive Business
Customers are what drives business, period. Without them, there would be no business. How do you find them, keep them, service them, and bring them back for more? Whether you are a commercial real estate broker, boutique clothing owner, CPA, tech entrepreneurs, or anything else, it is important to understand your customers so you can retain them and...this is very important...have then refer other customers to you!
We are now all well on our way to the second half of the year and if you have not met your goals for the year, then these Inc.com posts are a great place to start. Enjoy!
Honestly, to this date, I am not sure how I was existing without the iPad in my arsenal. Well I was existing, just not particularly efficiently. As a commercial real estate broker, it has been imperative to bring some order to my daily tasks, and there are a few apps that allow me to do that. I have included below a Top Ten Must Have Apps for Commercial Real Estate, and beyond. There are certainly other great apps out there, but these are the ones I find I use most often.
1. LinkedIn, Twitter, Facebook
These social apps are vital to "building my brand". I spend time daily posting, responding, and engaging my followers and connections. These native apps provide an easy platform to do this. In the past I have tried other apps like Hootsuite to manage all of my profiles, but just have found the native app better. I do however use Buffer to help keep my posts going out.
Wunderlist is vital when it comes to organizing tasks, lists, etc. They have even released a better app called WunderKit, but I just have not had time to delve into this one yet. I have also toyed with using the native Reminders app now that Apple has updated their OS.
I cannot say enough good things about Evernote. It allows you to create lists, do voice notes, picture notes, and creates a solid platform to organize them. This app is imperative for both business and personal life and syncs well across my iPhone, iPad, and Macbook (Yes, I am an Apple junkie)
Loopnet has a very solid app that is huge for commercial real estate brokers. It allows users to search for properties geolocationally, which can be huge when you are out on a tour. This app has saved me more times than I care to admit while out touring with clients.
5. Notes Plus
I have spent a lot of time trying to find the best note taking app out there. For me, Notes Plus seems to encompass the best of everything. Sharing with my Dropbox is one of the most important tools. I have also used Penultimate, but Notes Plus seems to be more packed with features, though it does carry a $6.99 price tag.
6. Newsstand (The Week, Inc Magazine)
I use my iPad to stay up on news and reading as well. No need to keep getting magazines to the door!
I have found that I have become so "mobile" that receiving bills in the mail is a pain, so I have gone totally paperless on the bill front. To take that leap, it is imperative that you have some way or reminding and organizing your bills, due dates, etc. Pageonce is the best tool out there to do this and makes is very easy to pay those bills with the click of a button. Password secure.
8. DocScan HD
I needed an app to scan documents with my iPad on the go. I found DocScan and have had pretty good luck with it. I would love to know what other apps are being used out there, but this one seems to do the trick. It also makes it very easy to share the documents via email, Dropbox, Evernote, etc.
If there were a single app that I could not do without, it would be Dropbox. This app has allowed our office consisting of 3 tenant rep brokers to essentially go paperless. We no longer are printing huge tour packets that get thrown away, keeping huge paper files on hand for clients, etc. This is a must have. There are free versions, but we subscribe to the $9.99/month version, which gives us about 100GB of cloud storage.
Every commercial real estate broker out there needs to have an app dedicated to receipts and expenses. I failed to do so last year and cannot imagine doing taxes again without this app. A total no brainer.
These applications are meant to serve as my suggested list for the 10 "Must Have" apps for every commercial real estate broker. They all however translate to anyone who is on the go. If you have any other great apps you are using, let me know and I will give them a try!
Are shelved projects working their way off the shelves?
The Raleigh, Durham, RTP, NC real estate market seems to have both declarations and whispers of some big projects finally coming off the shelves due to some larger tenants in the market. Tenants including government entities, technology, and law firms have been among the most recent. The square footage of these requirements seem to range from 50,000 SF to 1,000,000.
As one can imagine, with the chance to land a possible tenant of that capacity, developers have been scrambling to get their project in front the the tenant reps of these companies. The recent announcement of a formal Request for Proposal for the Department of Health and Human Services, DHHS, (Grubb and Ellis | Thomas Linderman Graham) has sent developers in a tail spin to get a project under way. Of course who can blame anyone for that when the campus would ultimately produce 1,000,000 square feet of space, a 20 year lease, and 600,000 SF to be delivered by June 2014? The News and Observer makes a good point in that developers are especially weary about an "out clause" for loss of government funding on this requirement. Though there is likely no escaping that clause, developers will cerntainly be conciencious about the marketability of the space should DHHS vacate.
Among other exciting development news is the speculative development of Diamond View III at American Tobacco Campus in Durham, NC, which has landed FHI 360 in 95,000 SF of space. Addtionally rumors for several projects in downtown Raleigh and surrounding areas include the Edison project, the L building, Charter Square, and Powerhouse Plaza, and a Grubb venture on Glenwood Avenue. If nothing else, it is good to hear whispers of projects hoping for more traction.
Of course the strongest market in the Triangle area of NC right now is multi-family apartments. Keep in mind that this is around 2500 units coming online within an essentially 2 mile radius of each other. The demand is strong, with a Triangle Wide vacancy rate of 6.5%. Additionally, with companies such as RedHat, Citrix, and Bandwidth.com all moving downtown or closely surrounding, the demand for this product will be high.
Don't let your lease expiration stress you out!
At some point, every commercial tenant is going to be faced with the expiration of their lease and how to move forward. In many cases, the landlord will approach the tenant in advance and offer some generic terms for renewal. As a tenant, you need to know that the landlord is often in a position of strength here. Landlords are keenly aware that a majority of the time, tenants chose to renew their lease. They also know that there can be a large expense that comes with moving. I see a huge number of tenants reduce their ability to negotiate, and here are some reasons why.
The Sheer Numbers
According to Coy Davidson, tenants renew their lease approximately 70% of the time. Your landlord knows that even if the deal they offer is less than market competitive, there is a good chance you will choose to renew. Why is this the case? If the space works for the tenant, tenants generally do not want to have to deal with the hassle or expense of moving. The landlord knows this, and can negotiate from a position of strength.
The landlord or leasing agent has been reaching out to you for months now, but you just were not ready to make a decision. Now you have 60 days until your lease expiration, perhaps less, and you have now lost some hair due to procrastination...sound familiar? This happens incredibly often. As a tenant, you are giving the landlord negotiating strength, as they now have you against the wall. As a tenant, you have left yourself with almost ZERO time to go the the market to find other space (forget about tenant improvements). Additionally, it is likely you landlord has built in a holdover penalty into your lease. So if you are still occupying your space after the end of the lease, you now have to pay rent at a rate of 125-200% of your current rental rate. As a tenant, your bak is against the wall, and the landlord likely knows they will come out as the winner. To read more about timing, check out When to Search for Office Space.
Searching the Market
To continue with timing, the number one thing you can do the entice your landlord to get aggressive on a renewal, it demonstrate you have leverage. In order to create leverage, you need to notify the landlord you are going to the market to search for other space. This requires starting the process in advance, allowing for a minimum of 6 months.
Hiring Tenant Representation
Hiring a tenant rep automatically tells the landlord that you are serious. We have often heard landlords say, that we know that if our tenant hires a good tenant rep, we know we have to sharpen our pencil. When brining a tenant advisor into the mix, the landlord can expect that you are looking at the full market and that they need to be highly competitive, or sometimes even more competitive to renew your lease.
Don't allow your company to be in a position of weakness when it comes to renewal negotiations. Staying on top of your lease expiration date, and hiring good tenant representation can help you avoid those pitfalls and create leverage to ensure you end up with a competitive renewal.
Searching for office space on your own
Searching for office space on your own can be a daunting task, and yet many companies chose to do just that everyday. As the internet has evolved, it has become easier and easier for companies to generate their own search using tools like Loopnet. Loopnet even has a great geolocation based app for the iPhone and the iPad, which can be a great resource as you a driving around or walking around a metropolitan area. Loopnet, and other sources like it, can be a great resource, but there are some things you need to know as a tenant and end user.
1. Is Loopnet information truly accurate?
The real estate market is ever changing. I can't tell you how many times I have called a broker only to find out that the space has been leased or the information is no longer accurate. The property listings on Loopnet, and other similar services, are set up encourage you to call the broker to get the real details, this can take a huge amount of time. You are not in the real estate business, so hiring a good broker who only does tenant representation can save you a lot of time and head aches.
2. Are you sure you want to do this on your own?
Once you locate a space, do you plan on negotiating the space on your own? Here is a scenario that has recently happened: A tenant found a space on Loopnet, toured the space, and found that he could not get the deal he wanted. The tenant then reached out to me to assist with negotiations on this office space. I contacted the broker, who was not willing to pay a tenant representative on the deal because of the fact that the tenant rep was not the "procuring cause" of the deal. What that means is it can sometimes be very difficult to get a broker involved late in the game. It is a good idea to contact a tenant representative in the beginning stages to ensure you don't get yourself in trouble down the road.
3. Loopnet can cost money!
In order to get all of the available property information, which I assume one looking for office space would want, you have to pay for Loopnets service. The fee can range depending on levels of service, and most tenant representatives will have access to this information. Tenant representation generally comes without any direct costs to the tenant.
There are many people who have likely had success in searching for space and negotiating office space on their own, without tenant representation. In some cases it is even possible to negotiate a great deal. With that said, with certainty you can be more confident in your decision and the market in general when using a tenant representative broker.
So enjoy the great services Loopnet and other applications provide, but simply be aware of the potential pitfalls you are up against.
Smarter Online Marketing: 4 Tips
Are you doing all you need to do to stay on top of your online marketing? It can be overwhelming...check out these statistics and tips to get back on the right track.
Reputation Management Put to the Test
Reputation management has become hugely important in all areas of your business. A single bad post can huge impact your business. In fact, as a consumer, but a few weeks ago I chose a electrician in an emergency solely based on their online reviews. With Google + Local and new their new review ratings, it is important to get on board!
Social Media Marketing: Why It's Not Paying Off
I know I have at times been very frustrated with the ROI of my online social efforts. Many small business owners go at it with the wrong goals, tools, etc. This is a great read.
QR Codes? Don't Bother. 5 Reasons
Now that I have the app I need, I am a fan of QR codes. I do however agree with the societal points made in this article. Why are we so behind Europe and Asia when it comes to this?
What Marketing Can't Do for You
Stop making excuses for your lackluster sales numbers. There is a reason and it most likely is you or your employees!
Make Corporate Blogging Painless: 3 Ways
Blogging can be fun, painful, easy, and time-consuming...was that confusing? The point is that so many people start blogs and then end up failing. However blogging is more and more important to maintain fresh pertinent content, which is vital to being found by search engines. Look at these tips to make your blogging efforts a tad bit easier.