Commercial real estate news – The Sundance Company

November 18, 2014October 7, 2014 sundancecompany business information, commercial real estate, Commercial real estate news, The Sundance Company

Architects Shaping The Offices Of The Future

In what was to be his last public appearance before his death, Steve Jobs detailed to Cupertino city council, California, in 2011 the plans behind Apple’s new headquarters – a 71 hectare (176 acre) campus with an enormous O-shaped building for 13,000 employees at its heart.

Jobs claimed that they had the opportunity to construct “the best office building in the world”, the donut-like plan by Norman Foster hinged not just on aesthetics but also ensuring the possibility for collaboration between workers who would be able to walk around the new campus, a concept which is central to how architects now look at the modern office.

Much like when he scrapped plans for three buildings for a new Pixar headquarters in 2000 in favour of one vast space with an atrium at the centre so that employees had to run into each other and interact, the building is aimed at encouraging collaboration – a trend which illustrates that the modern workplace is no longer just seen as the desk but also the area around it.

Simon Allford, a director of architects Allford Hall Monaghan Morris (AHMM), said that when he started his career, design centred around getting from the lift to the desk as quickly as possible. This has changed in the last decade.

“The journey is actually seen as beneficial because as people are working in different ways, you are not expecting them to be only working in one place, therefore work is a kind of continuous activity and you are always thinking,” he said.

The BBC’s new Broadcasting House headquarters in central London has large units similar to American diner booths in common areas where staff can have chance meetings, while the redeveloped headquarters of the Royal Institute of British Architects (Riba) at Portland Place will have a “forum” where different parts of the organisation can congregate.

In California, the design of technology firm NVIDIA’s new headquarters takes its influence from computer chip design, where the connections for the flow of information are made before other parts of the chip are added on. With this in mind, stairs were replaced with platforms so that other activities could be carried out there and landings are oversized and used for meetings.

“There are great stories of researchers having incidental space and just bumping into one another and having ideas,” said Stephen Hodder, president of the Riba and chairman of Hodder and Partners Architects.

This move away from the office desk as the main place of productivity is one of the developments in workplace design which has seen the real estate departments of large corporations realise that packing employees tightly into spaces will not necessarily result in greater productivity, according to Philip Tidd from the design and architecture firm Gensler.

“The idea that the desk is a unit of productivity is changing very, very rapidly. Your productivity is not measured by the amount of time you sit behind a thing called a desk. It is what you do. It is about your output,” he said. “It is about getting the balance of specs right so it is not just get everybody in the open, have open plan but have the right balance of spaces where you can get in a zone of concentration.”

This requirement for varied features in office buildings is cemented by the longer hours of many workers, notably in the technology sector, and as a result new offices are now seen to need different areas for working and letting off steam, a tactic most notably championed by Google.

The new White Collar Factory, which is to open beside east London’s “Silicon Roundabout” and designed by AHMM, will have a running track for the companies that take up space there.

“When people work longer hours, you need to escape from work at work and also do different kinds of work in different places,” said Allford. The new Google building in King’s Cross is being designed along the lines of a theatre with the furniture as props which can be moved depending on the needs of the staff, he said.

The all-inclusive use of office space and breakdown of traditional barriers has also been seen in the new BBC building, the interior of which was designed by architects HOK. As all carpets and fabrics have been tested for the screen, filming can now take place across the whole building, according to Andy Baker, who oversees the corporation’s London locations. Radio studios were also rehoused in glassed areas which cut the space they needed and added to the atmosphere, he said.

This breakdown of traditional barriers is also beginning to creep into status and hierarchy, according to Tidd. Those higher up the food chain got bigger offices – culminating in the cherished corner site. But those who usually get the prime spaces are typically executives who are out a lot and do not need them.

“Your seniority in the organisation, your status in the organisation, does not need to be reinforced by how much space you get,” he said, citing a Brimingham law firm which is all open plan where none of the partners have offices.

The Riba says the demand for high-quality workplaces is on the rise constantly and contributes to the recruitment and retention of staff.

“As the country has shifted from being a largely manufacturing base to a service base, I think there is a staggering statistic which is that almost three quarters of the UK’s GDP is generated largely by office service industries. It is incredible to think of that and so the design of those and the optimisation of design of workplace is hugely important to underpin,” said Hodder.

The story was originally published in The Guardian.

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November 11, 2014October 7, 2014 sundancecompany business information, commercial real estate, Commercial real estate news, Economy news, The Sundance Company

10 Ways To Decrease Distractions In The Office

The Internet is full of gloomy articles about workers who hate their open cubicles and yearn for private offices, where they believe their lives would be full of productivity and peace.

Today’s open environments are designed to foster collaboration by eliminating barriers and making informal interactions easier and more frequent. However, an increase in informal interactions creates distractions, making it more difficult to get the work done.

Susan Cain, author of the book ” Quiet: The Power of Introverts in a World That Can’t Stop Talking,” says this can be difficult for introverts, since they “are more easily overwhelmed, reacting to what’s going on around them.”

Since it’s unlikely that everyone can claim a private office, here are 10 ways to decrease distractions for the introverts in us all, based on Cain’s design principles for the workplace:

Give employees permission to be alone:

Create drop-in workstations where no phones or interruptions are allowed.
Turn a small conference room into private drop-in space, and add homey touches like a small sofa, a pull-up table, and a lamp.
Give staff permission to select the correct setting for a particular task. Make sure management adapts the attitude that it’s OK to work away from your desk and lead by example — management should use these spaces too!

Allow staff to have control over their environment:

Introduce music speakers in quiet rooms, and allow users to control the playlist.
Give workers a desk lamp for personal control over lighting. Haworth’s LIM desk lamp is slim and energy efficient.
Create boundaries around technological distractions, and set policies and expectations around how frequent you expect staff to respond to email/phone messages. Email, phone calls, text messages, twitter can be just as disruptive as that annoying co-worker, and you can experience this loss of productivity even if you have a private office.

Create sensory balance:

Add touches from home by using different textures and patterns to the workplace like pillows, plants, rugs, vases, books and sculptures. Society6 has an awesome collection of fun pillows at reasonable prices. I especially love the faux books of Bookworm or the geometric shapes in tryypyzoyd. Introduce calming colors with wall paint or add interesting accent lighting – go retro with the Aston by Rejuvenation. Or, add a touch of wood with West Elm’s Bentwood pendant.
Try some acoustical solutions to block out unwanted noise.

Provide psychologically safe areas:

Apply “frosted-look” film to glass windows on private spaces to give workers more privacy. However, keep the bottom 12-18 inches clear to increase a sense of security, and to allow occupants to see if someone is approaching.
Think about the orientation of desks and furniture: Orient desks and seating towards doors and openings so occupants can see visitors approaching.

Don’t forget about the extroverts, either: Make sure you have places in the workplace that have increased activity levels like coffee bars, gathering areas, and social spaces. Make sure you buffer these spaces from the quiet ones.

The story was originally published in Dallas Business Journal.

September 16, 2014August 20, 2014 sundancecompany commercial real estate, Commercial real estate news, The Sundance Company

4 Things You Thought Were True About Time Management

I don’t know anyone who doesn’t struggle with how to make the most of their time at work. How do you stay on top of an overflowing inbox? How do you get work done when your day is taken up by meetings? How can you get through a continually expanding to-do list? How do you even find time to make a list in the first place?

To make matters worse, there are lots of misconceptions about what time management really comes down to and how to achieve it. Let’s look at some of the most common suggestions and assess whether they’re actually true.

It’s about managing your time. False.

Time management is a misnomer, says Jordan Cohen, a productivity expert and author of “Make Time for the Work That Matters.” He says that it’s really about productivity: “We have to get away from labeling it ‘time management’. It’s not about time per se but about how productive you can be.” He likens it to the difference between dieting and being healthy. “You can diet all you want,” he says, “but you won’t necessarily be healthier.” In the same way, you can pay close attention to how you spend your time, manage your email, etc., but you won’t necessarily be more productive.

Teresa Amabile, the Edsel Bryant Ford Professor of Business Administration at Harvard Business School and coauthor of The Progress Principle, whose expertise in this area comes from reading thousands of work diaries of workers who documented their struggles to get work done, says it’s more about managing your overall workload. Many managers simply take on too much. “If you don’t keep an eye on the commitments you’ve made or are making, there is no time management technique that’s going to solve that,” she says. Sure, this might be an organization-level problem — many managers overload their team members — but she says that most professionals have more control over their workload than they might admit. “It is possible to say no. It is possible to negotiate,” she says. Cohen agrees: “While your schedule may not be yours per se, you can be judicious about what you go to and how you manage it.”

You just need to find the right system or approach. False.

“Having a system can be useful, but it takes more than that,” says Amabile. “And what works for each person, like spending an hour and a half on focused work at the beginning of the day, will not necessarily work for another person.” The key is to continually experiment with techniques. “Some things may or may not work in a particular context or situation,” says Cohen. Try lots of different approaches — really try them. Don’t change the way you check email for a week and declare it a failure. Set metrics for measuring success, give the approach time, and consider involving someone else — your boss or a coworker — to help you evaluate whether it really worked.

You need to devote time to change. Somewhat true.

One person I spoke to said her biggest challenge was finding time to put time management systems into place. She didn’t have the day or two she felt she needed to set aside. Amabile says this may not be necessary: “Small tweaks can make a big difference. The best approach is to start out with a few small things. Progress in this context might mean that you find yourself with some additional time each day when you can reflect and think. Even if it’s just an additional 20 or 30 minutes each day, that’s progress.” But it depends on how bad your situation is and how desperate you feel. Amabile mentioned one person who decided to use her vacation week for a major overhaul to achieve less stress. She looked at how she was using her time, her level of commitments, and experimented with a few techniques that people had suggested. “She felt things had gotten so out of control that she wanted to give herself this gift. But that was an extreme measure that was necessitated by the extreme situation,” says Amabile.

It’s up to you — and only you — to get it right. Somewhat true.

This may be partly true. “There is no one who’s responsible for how productive you are,” says Cohen. In that sense, this rests on your shoulders. He is clear: “You’re expected to be productive, so you better take this puppy on yourself.” But Cohen and Amabile both say you can’t do it alone. “If you’re in an organization where there are pressures for immediate responses or turnarounds on all requests or there is no room for any kind of slack, it’s very tough to do time management on your own,” says Amabile. She points to Leslie Perlow’s research about small tweaks you can make in any work environment. Still, it may be tough. “Organizations unknowingly put a lot of barriers in front of you to get your work done — unclear strategy and clumsy processes, to name just a few,” Cohen says.

If this sounds like your company, Amabile suggests you make attempts to change the culture. “I would urge people to push back in ways that they believe will be effective,” she says. Raise questions like, “How can we be more productive around here?” This can often be more effective than focusing on getting out of your own bind. “You have a responsibility to push back on the organization,” she says. Cohen also thinks it’s worth talking with senior management, because it’s often bigger than any single manager. “It requires a redesign of how work gets done, where decisions get made, how they get made. There’s only so much that a system can take,” he says.

For the lone professional, getting control over your workload and schedule is daunting. But knowing the difference between what people say will work and what actually does may be the first step in the right direction.

The story was originally published in the Harvard Business Review.

September 9, 2014August 20, 2014 sundancecompany commercial real estate, Commercial real estate news, The Sundance Company

Workplace Design Trends To Increase Your Productivity

Creating paths for chance meetings, including nooks, and designing agile, unique workspaces are solutions that designers say promote collaboration, creativity, and productivity in the modern office.

“In the last four to five years, we’ve all been focusing on sustainability and the impact technology has in an office,” says Kay Sargent, director of workplace strategies at infrastructure solutions provider Lend Lease. “During this time, we’ve forgotten that we’re designing for people. Now there’s a real focus on trying to maximize human potential, performance, and productivity.”

But what is productivity? It’s no longer about sitting at your desk with your head down working all day.

“I think of [productivity] as effectively creating ideas and solving problems and a lot of that has to do with being collaborative,” says Miguel McKelvey, cofounder and chief creative officer of coworking office space WeWork.

To help employees come up with their next great idea, McKelvey and Sargent provide the most current trends in workspace designs:

CREATE PATHS FOR CHANCE MEETINGS

In the past, people used to have to sit at their desks if they needed to answer emails, but today, anyone can do that–or any other work–from anywhere. This means that, from a creative perspective, it’s no longer necessary to make sure people are at their desks at all time.

“It’s more crucial to make sure people are connecting and brainstorming with each other,” says McKelvey, who leads design and architecture at WeWork.

“We’re very specific when we’re drawing work plans. We think about the chances of when a person gets off the elevator where they will go,” he says. “We think about how people get to a coffee machine, when they go and get their lunch, when they go to the bathroom.”

The chance encounters are necessary to increase familiarity and to hopefully create conversations that lead to solutions.

Sargent, former vice president of architecture and design at furniture manufacturer Teknion, says there is a popularity now for designs that help people move.

“There’s a huge movement now to design for human potential … for intellectual and emotional intelligence,” she says. “We see staircases are now designed to be in the center of offices and not in the back as exits.” This is because designers have realized that there are several chance encounters that could happen as people pass one another on stairs, simply going to and from their desks.

INCLUDE NOOKS NEAR COMMON AREAS

The best-case scenario when people run into each other is that brilliant conversations spark, resulting in innovative solutions. This is exactly why you should include nooks–areas where people can go and maintain some privacy–around these common areas and paths.

“When you start a conversation when you’re at the coffee machine, you can quickly sit down after and have a 20-minute meeting,” says McKelvey. “If you have to reserve a conference room to finish that conversation, then you lose time. It’s not efficient.”

McKelvey advises to put these nooks adjacent to social places, such as areas for eating, coffee, or printing.

BUILD CONFERENCE ROOMS DIRECTLY IN COMMON AREAS

Instead of the boring walls that usually put people to sleep, glass walls in the middle of a busy area can help keep the mind awake.

“Your mind is being spiked by the activity that’s swirling around,” says McKelvey. The downside is that this could be a problem for people who have issues concentrating.

INCLUDE BOOTHS FOR PRIVATE CONVERSATIONS

With the popularity of open floor plans, “it’s certainly important for people to have a sense of privacy,” says McKelvey. “People need a space that they can go to make a conference or Skype call.”

“It’s important to create those spaces and create a company culture that supports those spaces.” In other words, you don’t want to have a culture where the boss is always asking why someone isn’t at their desk.

People need to feel like they can go to a private area for a phone call or simply to work uninterrupted if they need to.

CREATE AN AGILE WORKSPACE

“We’re designing spaces today where every employee doesn’t have to sit in a specific spot,” says Sargent. “Rather than going to sit in one desk all day, it could be that I’ll start working at a bench, then I’ll go to a more quiet space for head-down concentration, then I’ll go to the social hub because I want to connect with my co-workers. We’ve moved beyond traditional offices to agile design.”

Sargent says agile designs make more sense because it feels more comfortable for employees. If you have a house, you go to the space designed for the task at hand instead of having to sit in one spot all day. This increases your movement, and creates an agile environment where people have choices, more control, and power.

“We still need to conquer how to control distractions. You can’t control all distractions, but you can get up and move.”

HAVE ADJUSTABLE DESKS AND CONFERENCE TABLES

Research shows that sitting too much is harmful to our health and employers should be concerned about the health of their biggest asset: their employees.

The solution to this problem is the adjustable desk, which is said to be a healthier alternative and can help people feel more alert throughout the day.

“Desks need to be in sync with our natural movements,” says Sargent. “If I want to stand, I should be able to stand and if I want to sit, I should be able to sit.”

Sargent says desks today should be able to adjust to any height and conference tables should do the same since research also shows that standing meetings keep groups more engaged and less territorial than sitting meetings.

The story was originally published on the website Fast Company.

August 25, 2014August 20, 2014 sundancecompany business information, commercial real estate, Commercial real estate news, The Sundance Company

The Right Way To Unplug When You’re On Vacation

Vacations are for unplugging: we all need to escape the daily grind from time to time, after all. But that doesn’t have to mean unplugging from the entire internet. In fact, you may have a more enjoyable and meaningful vacation by staying connected–as long as you’re staying connected to fun, friends, and family, rather than to work.

That takes a combination of planning, tech tricks, and self-discipline. In an ideal world, you’d work-proof your devices and online activities so that you could use the phone, computer or internet without coming into contact with any work-related stuff.

But many of us simply aren’t in a position to take completely off-the-grid downtime, so you’ll need to figure out just how disconnected from work you can be so you can appropriately minimize the frequency and duration of your work-related check-ins and trigger each of those check-ins manually (so you won’t be tempted to respond to the ping of each incoming message). It will also be essential to draw a clear line between work and personal technology use.

Plan before you go.

Whether you’re planning to disconnect from work completely or simply to keep your work time minimized, you need a clear plan for how you’re going to use your devices while in vacation mode. Ask yourself these questions:

What’s the least amount of work connectivity I can get away with? Understand your office culture and separate your colleagues’ expectations from your own anxiety. If the idea of ignoring all your work email fills you with fear, is that because you like to be in touch, or because you really could lose your job if you disconnect? What is the minimum connectivity that will be accepted at your job?

What do I still want to use technology for while I’m away? Make a list of the specific ways you want to use your phone, tablet or computer while you’re on vacation and limit your tech use to what’s on that list. (This will focus and constrain your tech use more effectively than making a list of online activities to avoid.) For example, I am using the fantastic app RoadTrippers to organize my family’s itinerary and activities, an Evernote notebook as my personal travel guidebook, Yelp as a travel journal, and Facebook to stay in touch with friends.

Which accounts will I disconnect from? It’s easier to disconnect from entire networks or accounts than to ignore work-related correspondence once it hits your radar. So once you know what you want to keep doing—and how much you can stop doing—identify which accounts you’ll stay away from and plan accordingly, setting up vacation messages or alerts as necessary. If you use email, social media, or text messaging for a combination of personal and professional conversations, get clear up front about how you’re going to draw the line between what counts as work and what counts as play.

What do I and my fellow travelers expect from one another? Your work colleagues aren’t the only ones you need to consider. If you’re traveling with friends or family, get clear up front about your technology game plan. Agree on when it is and isn’t ok to use your devices – for example, you may agree that it’s fine to read the morning news on your tablet over breakfast, but not ok to check sports scores over dinner. Setting shared expectations about tech use is especially important if you or your fellow travelers have kids you’re trying to keep offline or off-screen.

Prepare to leave. The work of disconnecting begins well before your vacation. Here’s how to set expectations – and set up technology – to increase the odds that you’ll be able to unwind without unplugging completely.

Plan some out-of-cell-range travel. Whether it’s a few days at an off-the-grid cabin or a few hours in a wifi-free plane, it’s great to be truly incommunicado for at least some portion of your vacation. This allows you to sincerely set the expectation that you will not be reliably reachable, making it easier to assert control over how much or how often you’ll check in.

Set up a vacation email address. It’s hard to avoid your work email while you’re on vacation if opening your inbox is the only way you can access certain information or check if there’s a crisis with a key client. You may find it easier to avoid peeking if you set up a separate account to use during vacations. Share the address only with the people you really want to stay in touch with while you’re away (like your spouse, house-sitter, or traveling companions). Use mail rules and filters on your work account to automatically forward any travel-related emails to this address (flight confirmations, for example), as well as any key messages (like any email message from a key client or from the company CEO). Just make sure you don’t reply to messages from your secret address, or share that address with more than a couple of people, or it defeats the whole purpose.

Set up a smart out-of-office reply. When you set up the vacation auto-responder message on your primary work account, write a message that helps you avoid the dreaded backlog that typically awaits your return: let your correspondents know that you may not review all the messages you receive in your absence, and that they should email you again after X date if they need a reply. As a courtesy, provide an alternate way of addressing their issue more quickly, such as contacting your assistant or colleague. If this isn’t a possibility given your clients or prospects, set up a more conventional message for external correspondents and then set up rules and filters so that their messages are automatically filed in a separate folder where you can review them promptly without being sucked into the rest of your inbox.

Move travel info out of your email. TripIt is an itinerary manager that you can connect directly to your email account; it monitors incoming emails for anything that looks like a travel confirmation, and puts it into an itinerary you can access from the web or the TripIt app on your phone or tablet. Not only does this keep you out of your inbox, but it gives you a more convenient way of tracking travel details or sharing them with your fellow-travelers.

Set up a check-in schedule. If you are planning to check your business email or voicemail during you holiday, set up a schedule in advance. Maybe you’re going to look at your email for 15 minutes every morning, or twice a week after the kids have gone to bed. Talk with your traveling companions about this schedule so they know when you’re going to be in work mode. And share your game plan with your colleagues, so that they know if and when you will be checking work-related email.

Pack only personal devices. The easiest way to separate work from play is to leave your work phone and work computer at the office. This doesn’t mean having to go out and buy new hardware; for your phone, for example, you can buy a pay-as-you-go SIM card, so that you can use the device without using your work number. Similarly, you can set up a separate user profile and account on your computer. Another trick is to get a set of walkie-talkies: that way you can stay in touch with the rest of your travel party, even if you turn off your phone or go out of cell range.

Adjust while you’re away. The moment your vacation begins, implement your disconnection game plan by making the following tweaks to your devices.

Turn off notifications. Disable any work-related notifications on your phone and computer for the length of your vacation. On a Mac or iOS device you can disable notifications on an app-by-app basis or by using do not disturb; Android users can turn off notifications for individual apps or download an app that lets them turn off notifications globally. Windows users can get away from notifications by using an alternate user account on their computer, or by turning off reminders associated with an individual application like Outlook. And don’t just do this for email and calendar reminders: I share Evernote notebooks with some of my colleagues, so even though I disconnected from email over my last vacation, my work brain got reactivated when Evernote notified me of a new note titled “Things to discuss with Alex when she gets back.”

Limit access to work-related accounts. You can go a step beyond turning off your notifications and disconnect from certain accounts altogether. For example, since all my work-related social media accounts are connected to HootSuite, I sign out of HootSuite for the duration of my trip, and use an alternate app to check my personal Twitter account – and only my personal account.

Get yourself on board. The biggest obstacle to disconnecting isn’t technology: it’s your own level of commitment or compulsion when it comes to work. If you work 80 hours a week, 50 weeks a year, you may find it pretty hard to get your head out of the office – and even harder to break the Pavlovian association between hearing the ping of an incoming email and immediately shifting into work brain.

That association is exactly why it’s so useful to develop strategies that put your devices in vacation mode. You probably don’t leave Oreos in the cupboard when you’re dieting; for the same reason, it’s best to put work out of arm’s reach when you’re on vacation. Instead of relying on sheer willpower to keep you from checking in on work, you can use your vacation tech setup – and a little up-front planning – to support your efforts to minimize work time.

With that setup in place, you’ll be able to enjoy the benefits of online connectivity and digital tools, as well as the benefit of disconnecting from work. And instead of apologizing for bringing a phone on vacation, you’ll be able to relax even with your devices in tow.

The story was originally published in the Harvard Busines Review.

August 21, 2014August 20, 2014 sundancecompany commercial real estate, Commercial real estate news, The Sundance Company

U.S. Commercial Real Estate Market Continues To Improve

The outlook for all of the major commercial real estate sectors is slightly improving across the country despite disappointing economic growth during the first quarter of 2014.

According to the National Association of Realtors quarterly commercial real estate forecast and its chief economist Lawrence Yun, the sluggish growth experienced in the first quarter is not indicative of the actual health of the economy.

“Gross Domestic Product should expand closer to 3% for the remainder of the year,” Yun said. “The improved lending for commercial loans and continuing job gains we’ve seen this spring bode well for modest progress in commercial real estate leases and purchases of properties.”

However, Yun cautioned that with rising long-term interest rates on the horizon, consistent economic growth is imperative to solid commercial real estate investment in the years ahead.

National vacancy rates in the office market are forecast to decline 0.2 percentage points over the coming year, while international trade gains continue to boost use for industrial space, which forecasts a decline of 0.3 points.

The outlook for personal income and consumer spending is favorable for the retail market, likely leading to a vacancy decline of 0.2%.

“The multifamily sector continues to be the top-performer in commercial real estate with the lowest vacancy rates. However, tight availability, despite new construction, is causing rents to currently rise by nearly 4% annually in many markets,” said Yun. “Many renters who are getting squeezed may begin to view home ownership as a more favorable, long-term option.”

NAR reported earlier this month in its annual “Commercial Member Profile” that despite sub-par economic expansion, Realtors who practice commercial real estate saw an increase in sales transaction volume and medium gross annual income in 2013.

NAR’s latest “Commercial Real Estate Outlook” offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.

Office Markets
Office vacancy rates should decline from an expected 15.8% in the second quarter of this year to 15.6% in the second quarter of 2015. Currently, the markets with the lowest office vacancy rates in the second quarter are New York City and Washington, D.C., at 9.4%; Little Rock, Ark., 11.5%; San Francisco, 12.6%; and New Orleans, at 12.8%.

Office rents are projected to increase 2.5% in 2014 and 3.2% next year. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 39.7 million square feet this year and 49.8 million in 2015.

Industrial Markets
Industrial vacancy rates are anticipated to fall from 9.0% in the second quarter to 8.7% in the second quarter of 2015.

The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 3.5%; Los Angeles, 3.9%; Miami and Seattle, 6.0%, and Palm Beach, Fla., at 6.5%.

Annual industrial rents should rise 2.4% this year and 2.6% in 2015. Net absorption of industrial space nationally is seen at 107.8 million square feet in 2014 and 107.1 million next year.

Retail Markets
Vacancy rates in the retail market are expected to decline from 10.0% currently to 9.8% in the second quarter of 2015.

Presently, markets with the lowest retail vacancy rates include San Francisco, at 3.2%; Fairfield County, Conn., 3.8%; and San Jose, Calif., at 4.7%. Northern New Jersey; Long Island, N.Y.; and Orange County, Calif., all have a vacancy rate of 5.3%.

Average retail rents are forecast to rise 2.0% in 2014 and 2.3% next year. Net absorption of retail space is likely to total 11.5 million square feet this year and 19.6 million in 2015.

Multifamily Markets
The apartment rental market (multifamily housing) should see vacancy rates edge up from 4.0% in the second quarter to 4.1% in the second quarter of 2015, with added supply helping to meet growing demand. Vacancy rates below 5% are generally considered a landlord’s market, with demand justifying higher rent.

Areas with the lowest multifamily vacancy rates currently are New Haven, Conn., at 2.3%; Ventura County, Calif., 2.4%; and New York City; San Diego; Hartford, Conn.; Oakland-East Bay, Calif., and San Diego, at 2.5% each.

Average apartment rents are projected to rise 4.0% this year and in 2015. Multifamily net absorption is expected to total 221,400 units in 2014 and 173,100 next year.

The story was originally published on Pleasanton Weekly.

August 11, 2014July 9, 2014 sundancecompany commercial real estate, Commercial real estate news, The Sundance Company

The Stability of Commercial Real Estate

When the U.S. housing market boomed and busted in the past decade, commercial real estate was comparatively placid. Prices were more stable, there was little overbuilding, and bankruptcies never soared. The question is why. A research paper attributes the stability of commercial real estate at least in part to the “civilizing influence” of real estate investment trusts, which are a bigger presence in the market than they are in housing.

“REITs played a central role” in discouraging speculation in commercial real estate of the kind that led to doom in housing, write the authors. “Commercial markets stayed in balance throughout the biggest real estate bubble in the United States since the 1920s.”

The study, which appeared in the Journal of Portfolio Management, is by Frank Packer, head of economics and financial markets for the Bank for International Settlements in Hong Kong; Timothy Riddiough, a real estate professor at the University of Wisconsin Business School; and Jimmy Shek, a BIS statistical analyst. The article appeared in the journal last year but hasn’t received much attention outside REIT circles.

The authors’ hypothesis is that REITs increase the transparency of the real estate market, allowing investors to spot overvaluation or undervaluation quickly. If a big construction project is announced in, say, Los Angeles, and REIT prices fall, that’s a signal to other builders and lenders that L.A. could be getting overbuilt. It helps that REITs are ongoing concerns that have a strong incentive to be perceived as reliable because “management reputation and consistency over time are critical to continued affordable access to capital markets.”

The proof of the hypothesis, the researchers say, is that overshoots and undershoots of construction in the U.S. office building market were more moderate at times when REITs had a bigger market share. They presume that the rest of the market pays more attention to the REITs at times when their market share is bigger. To zero in on the impact of REITs’ market share, they held constant two other factors that might affect office building construction, namely the prices of buildings and the cost of construction. Similar effects were found in other commercial real estate sectors in the U.S., as well as with office buildings in Japan.

That’s not a perfect demonstration because other, unseen factors could have affected the construction of office buildings over time that the researchers didn’t measure. The authors acknowledge that markets have also moderated in European and Asian countries that don’t have well-developed REIT markets. The case would have been stronger if the researchers had shown big differences in metro areas, based on their relative REIT penetration, but Riddiough tells me that “getting that level of detail was problematic for us.” Says Riddiough: “We’re the first ones who have done something like this. That said, there’s better ways to do it.”

The chart at the top of this article shows prices, not construction volumes, for single-family homes and office properties. The scale is set so that each index has a value of 100 at its lowest point after the financial crisis.

Riddiough is a member of the investment advisory council of the National Association of Real Estate Investment Trusts, but he says that his research was conducted independently and none of the researchers received support from the REIT industry. “They knew nothing about this research until I finished the paper.”

No surprise, though, that NAREIT likes the results. “The Riddiough, Packer, Shek study makes it clear that REITs provide real benefits for the broader commercial real estate industry, for investors and for our nation’s economy,” NAREIT Chair Ronald Havner Jr., who is chairman, president and chief executive officer of Public Storage, wrote in REIT Magazine earlier this year.

The story was originally published on BusinessWeek.

June 17, 2014May 10, 2014 sundancecompany commercial real estate, Commercial real estate news, Economy news, The Sundance Company

Commercial Property Transaction Volume on Course to Reach a 10-Year High by 2016

A new U.S. real estate forecast based on a survey of 39 of the industry’s leading economists and analysts predicts that commercial property transaction volume will reach $430 billion by 2016, exceeding the volume of 2006. The latest multi-year outlook (covering 2014 through 2016) from the Urban Land Institute (ULI) and EY projects steady growth for the U.S. economy; sustained strength from real estate capital markets; and continued improvement in both commercial real estate fundamentals and the housing sector.

The findings were released today in the semi-annual ULI/E&Y Real Estate Consensus Forecast, prepared by the ULI Center for Capital Markets and Real Estate. The survey, conducted between February 19 and March 14, 2014, is the fifth in a series of polls conducted to gauge sentiment among economists and analysts about the direction of the real estate industry.

The latest forecast is more optimistic than the previous one from October 2013. Although survey respondents moderated their expectations for the housing sector – the latest forecast projects housing starts will remain below the twenty-year annual average through 2016 — the overall industry outlook remains positive. The issuance of commercial mortgage-backed securities (CMBS), a key source of financing for commercial real estate, is expected to continue its rebound with consistent growth through 2016. Hotel occupancy rates are expected to continue improving, while vacancy rates are expected to decrease modestly for office, retail, and industrial properties. In addition, the forecast expects a turn-around in 2014 with retail rental rates, turning positive for the first time since 2007.

“Respondents to the Consensus Forecast survey project consistent growth in the real estate industry, bringing some key factors back to pre-recession levels and others moderating to long-term averages,” said Anita Kramer, vice president, ULI Center for Capital Markets and Real Estate. “Fundamentals beyond multi-family continue to improve with the retail sector now joining in. This overall outlook for real estate is supported by expected on-going improvements in the economy.”

Howard Roth, global real estate leader for EY, commented, “Although we’ve made significant improvement over the past year, the recovery has been uneven globally and many risks still exist, including high global unemployment, high government debt, deflationary pressure in advanced economies, weak domestic demand, capital flow volatility in emerging markets and the potential impact from Fed tapering in the US. Still, all signs point to a continued gradual improvement in both the economy and real estate market fundamentals.”

The Consensus Forecast expects the overall economy to continue expanding a rate equivalent to the 20-year average. Gross domestic product (GDP) is expected to grow by 2.8 percent in 2014 and then 3.0 percent in both 2015 and 2016. Survey respondents predict that employment will grow by over 7.5 million jobs in the next three years. The unemployment rate is expected to fall to 6.3 percent by the end of the year, 6.0 by the end of 2015, and 5.8 percent by the end of 2016.

Inflation is expected to grow by 1.9 percent in 2014, and then increase by 2.2 percent in 2015, followed by 2.5 percent in 2016. At the same time, ten-year treasury rates are projected to continue moving up, reaching 3.4 percent by the end of 2014, 4.0 percent by the end of 2015, and 4.4 percent by the end of 2016. Even though treasury rates will increase borrowing costs for real estate investors, survey respondents do not expect these changes to substantially impact real estate capitalization rates for institutional quality investments (NCREIF capitalization rates), which are expected to remain at 5.7 percent in 2014 and then rise to 5.9 percent in 2015 and 6.2 percent in 2016.

Prices and total returns for commercial real estate investments are projected to increase at moderate rates. Institutional real estate assets are expected to provide total returns of 9.4 percent in 2014, moderating slightly up to 8.5 percent by 2016. NCREIF total returns in 2014 are expected to be fairly consistent across property types with retail and industrial at 10 percent, followed by office and apartments at 9 percent. Total office returns are expected to remain at 9 percent by 2016, while retail, industrial, and apartments are all expected to moderate downward.

The Consensus Forecast survey findings, by commercial property type, are listed below:

Apartments – The Consensus Forecast expects end of year vacancy rates to rise slightly to 5 percent in 2014, 5.2 percent in 2015, and 5.3 percent in 2016. Apartment rental growth rate, which slowed in 2013 after two years of significant growth, is expected to slightly increase in 2014 to 2.7 percent and then moderate to 2.3 percent in 2015 and 2.2 in 2016.
Industrial/warehouse – Decreases in the industrial/warehouse sector are expected to continue but at a slower pace. Vacancy rates are projected to go from 11.3 percent in 2013 to 10.7 percent in 2014, 10.3 percent in 2015, and 10.1 percent by the end of 2016. According to CBRE, the sector’s rental growth rate was strong in 2013 at 3.6 percent. The Consensus Forecast projects continued growth of 3.8 percent in 2014 and 3.7 percent in 2015 before moderating to 3.0 percent in 2016.
Office – Office vacancy rates declined for the third straight year to 14.9 percent in 2013 and are expected to continue at the same pace, decreasing to 14.3 percent in 2014, 13.7 percent in 2015, and 13.1 percent by the end of 2016. Survey respondents foresee a healthy and continued growth in office rental rates through 2016. According to the Consensus Forecast, office rental rates will increase by 3 percent in 2014, 3.9 percent in 2015, and 3.6 percent in 2016.
Retail – Retail availability rates decreased in 2013; however, the Consensus Forecast anticipates modest improvements over the next three years, with availability rates expected to decline to 11.5 percent by 2014, 11.1 percent by 2015, and 10.8 percent by 2016. CBRE reported a decline in retail rental rates for the past six year; however, survey respondents foresee a turn-around in 2014 with rental rates increasing by 1.9 percent, 2.5 percent in 2015, and 3 percent 2016.
Hotel – Hotel occupancy rates are expected to continue their steady improvement, with the 2016 projection surpassing the pre-recession peak in 2006. The Consensus Forecast projects that hotel occupancy rates will continue to strengthen, rising to 63.1 percent in 2014, 63.6 percent in 2015, and 63.8 percent by 2016. The strong growth in hotel revenue per available room (RevPAR) of the last four years is expected to continue, remaining above the long-term average annual growth rate but decelerating, with growth of 5 percent in 2014, 4.7 percent in 2015, and 4 percent in 2016.

June 10, 2014May 10, 2014 sundancecompany Boise Commercial Real Estate, Boise Commercial Real Estate Development, commercial real estate, Commercial real estate news, The Sundance Company

Where is Commercial Real Estate (CRE) Going in The Next 3 Years?

CRE is changing. It’s taken longer than many thought but the winds of change keep blowing and they are finally reaching us. This isn’t going to be an examination of technology specifically but an examination of trends, desires, impacts and what it means to all of us who make a living in CRE. From where I sit there are four main topics:

One service is not enough – the entire CRE world is interconnected.
Organizations internally changing at a rapid pace.
Outsourcing trends continue to accelerate but not in expected ways.
One-off transactions and projects grow in prominence but also in expectations.

These four embody most of the change that is taking place. While the biggest players in CRE continue to grow there is also continued growth of regional, boutique and independent organizations. This is because the focus of all customers has shifted to excellence in delivery as their key driver in selecting a provider. You must either be able to deliver the best, most complete solution (be very big) or deliver the best, most comprehensive solution to a single problem (know more about your market, the asset and data than anyone else). So you must be big or hyper-local.

Good luck if you get stuck in the middle. There’s no room there at the moment. You are too big to be hyper-local and too small to do everything.

This is also putting price pressures on all service providers from both ends. Big organizations can include services (Facility Management, Project Management, Technology, Consulting, Account Management, Brokerage, etc.) at discounts because there is more than one revenue stream. And the smaller, local organizations can discount their projects because they have fewer overheads than the bigger players.

Then take a look at the non-traditional players that are looking to disrupt the industry. Tech firms have started to discover the inefficiencies we have and are creating companies to deal with them. 42Floors, HonestBuildings and a growing list of others are entering and seeing success. They may be occasionally enabling the status quo but if you assume that will remain the case be ready for a rude awakening.

Welcome to the changing world of CRE.

The story was originally published on Box Thoughts.

May 15, 2014March 31, 2014 sundancecompany business information, commercial real estate, Commercial real estate news, office productivity, office space tips, The Sundance Company

The Right Office Building For Any Business

When it comes to office buildings, you generally get what you pay for, but first you need to know what you want. Colliers International Workplace Strategist David McEwen shares his guide to selecting the office building right for your business.

Defining your requirements starts with a solid understanding of your business strategy and a well formed workplace strategy, identifying who is going to occupy the building and how they will use it. Prioritizing your requirements (other than cost and lease terms) can be broken down into these broad categories:

1. Risk Mitigation

What is the risk profile of the business activities to be undertaken?

What is the impact of unexpected loss of power, phones or data circuits?

What is the security profile of the operation? Is it at elevated risk of industrial espionage, theft, hacking / social engineering attempts, or public protest?

Is the building in close proximity to any location specific hazards?

2. Spatial Needs

Will the floor plates, core placement, column grid, ceiling heights and features like internal atria work for your business?

Are there any groups requiring high levels of floor space density such as call centers or clerical processing teams? Or are there areas where typical occupancy may be higher than expected, such as non-territorial environments?

Conversely what’s the expectation for the density of built zones such as personal offices and meeting rooms?

How large are your various teams? How much do their sizes vary and what are their needs for interaction and collaboration?

How long is the facility required and what are the expectations for changes in team sizes, work practices and technology over that period?

3. Building Performance

Will capacity, sustainability (eg. energy and water efficiency) and other characteristics of the various building services including electrical supply, air conditioning plant, telecommunications risers and elevators meet your business needs?

What are the operating hours? Is shift work undertaken? Will the building’s plant be able to service your needs efficiently outside normal business hours?

Is there to be a computer room or data center? Does it host applications or web services used by customers or users in other sites? Does it need to be on site?

Are there any specialist requirements such as labs or clean rooms?

Do you require particular delivery access or garaging? Do you have areas requiring high floor loading?

4. Amenity

Is the building located close to a public transport hub? If not, is adequate car parking available?

Are there end of trip facilities like secure bicycle parking, shower and locker services to support employees’ lifestyle choices?

Does it provide access to cafés, banking facilities, other retail, gyms and child care facilities nearby?

5. Cosmetic appeal

Will appearance and fit out standards for the building exterior, lobbies, lifts, bathrooms, and the floor and ceiling finishes within the proposed tenancy area align with your brand?

What types of employees are you trying to attract? What will they look for in a building?

What is the profile of visitors or clients attending the site? What are their expectations? Are signage rights important?

Armed with this information you can start to prepare your property brief and prioritize your requirements. In practice it’s a complex juggling act with many traps for the unwary. At the outset, it is useful to assemble a team of internal and external specialists headed by an experienced Project Director, typically covering the following disciplines:

While this sounds like a long list, a good Project Director will help ensure timely and efficient inputs from the necessary experts to develop the right strategy and property brief, and provide effective due diligence on short listed sites.

The story was originally published on Colliers International.