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.

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

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.

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

 

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.

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

 

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.

 

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

Making Your Business Buzzworthy

An article from the Business News Daily discusses how email marketing used to follow a one-size-fits-all model, but now new technology is giving businesses the chance to take their campaigns to the next level.

Vivek Sharma, co-founder and CEO of email marketing technology provider Movable Ink, said there are numerous new ways businesses can help ensure their emails are not only read, but revisited multiple times.

Originally, email marketing was similar to direct mail in that everyone got the same message, Sharma said. Eventually, email messages could be targeted to different customer segments — for instance, one email could be sent to men, and the other to women.

Sharma said “agile marketing” takes things several steps further. “Agile marketing is actuality-based marketing — meaning, rather than creating a prefabbed message, the message is adapting to you based on when you are [reading it], where you are, what device you are opening it on and even the weather outside,” Sharma said.

To help businesses better understand the capabilities of email marketing, Sharma has compiled a list of 10 ways retailers can use email marketing to generate excitement and boost sales:

  • Multimedia: Rather than a simple picture, use video and a countdown clock to unveil a new product and create a sense of urgency.
  • Social media: Use social media to make emails interactive by incorporating real-time tweets and Instagram photos.
  • Personalize: While some think slapping someone’s name at the top of an email makes it personal, take it even further by personalizing an image with the recipient’s name on it — for example, a piece of jewelry with the person’s name engraved on it.
  • New deals: To get consumers to revisit the email after they have opened it, use new technology that allows for the email to be updated with new deals every hour.
  • Shipping: Include real-time shipping-status information in purchase confirmation emails.
  • Updated locations: Use geo-targeting to show nearby store locations and the hours when each of those stores is open.
  • New products: Change offers that are promoted based on each shopper’s location. For example, a ticket broker could change the concerts or sporting events it promotes in an email based on each consumer’s location.
  • Bar codes: Use bar codes in mobile emails to drive sales by letting consumers have their email scanned straight from their mobile device for an in-store discount.
  • Best sellers: For businesses with fast-moving products on their home page, use new tools that allow the emails to always show the most up-to-date best-selling products. It ensures the emails never go stale.
  • Mobile friendly: Optimize emails for mobile devices — for instance, include a “click to call” button for customers who want to make a purchase or speak to a customer representative.

Sharma said email marketing makes the most sense for retailers because it has the largest return on their investment. He points to past research that shows that the return on investment for email marketing is $29 for every $1 spent.

“Dollar for dollar, out of all of the digital channels available to retailers, email simply performs the best,” Sharma said. “It is incredibly effective.”

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

For the U.S. Office Market, 2013 Was A Very Good Year

Investors are cheering the gains in asset values seen during 2013 from a strengthening recovery in the U.S. office market, and looking forward to an even brighter 2014 as virtually all the important metrics that drive rent growth and property income are expected to continue to improve over the next 12 months.

The robust office market performance was the highlight of the year-in-review analysis and forecast webinar presented by CoStar market experts Walter Page, director of office research; Hans Nordby, managing director and corporate officer, and Aaron Jodka, manager, U.S. market research.

According to CoStar’s analysis, net absorption in the U.S. office market rose a solid 22% in 2013 over the previous year to 59 million square feet, with the increased demand helping push the vacancy rate down 50 basis points from 12.4% to 11.9%.

The growing demand for office space, combined with an extended period which has seen little to no new office construction, resulted in the average U.S. office rent to grow 3.1% last year – the first time rents have cracked the 3% annual growth mark since 2007, the peak of the market cycle.

New office construction remains muted with just 40 million square feet of new office space added in 2013, and another 78 million square feet under construction at the end of December. Any gains in construction were largely offset by the loss of existing office space as older buildings were demolished or converted, in many cases to be replaced with apartment or condominium properties.

Despite a flattening yield curve and expectations that 10-Year Treasurys will rise to nearly 5% over the next few years, investors increased office purchases by 20% last year, for total office property sales of $106.2 billion, driven in part by demand created by the 2.4% gain in office-using employment in 2013, well above the overall U.S. employment growth rate of 1.6%.

Looking ahead, the CoStar analysts expect the country should finally reach its pre-recession employment peak by summer 2014, building on the 750,000 new office-using jobs gained in 2013.

The office recovery continues to evolve and broaden in new and different directions. While CBD markets in top-tier gateway markets saw the lion’s share of improvement earlier in the recovery, suburban office is now recovering at a dramatic rate, driven by gains in technology, health care, education and even energy industry jobs.

“Markets such as Charlotte are being driven by diversifying economies and lower business costs. Many of the jobs coming into the office sector such as call centers don’t use CBD towers, but they do absorb space,” Nordby said. “This is one of the few calls we’ve been on where it’s hard to find much bad news at all.”

Vacancies Down, Rents Up

In fact, the CoStar analysts said, 2013 was a great year for the office market. Even better, the office recovery is only at about the halfway point — the vacancy rate is expected to plummet another 100 bps to 10.9% by the end of 2015, noted Page, adding that the 59 million square feet of net absorption included a strong year-ending 20 million square feet in the fourth quarter.

“For office investors in particular, the second half of this recovery is what they like,” Page said. “With the occupancy gains, we should see rent, NOI and value gains.

“We are reaching what I’d call a sweet spot — and we’re also reaching a tipping point, the 11.6% vacancy line which is the historical average between 2004 and 2012,” Page added. “At that point, we will really see accelerating rents.”

Roughly half of major markets have already reached or are near that point, including Pittsburgh (8.2%) New York City (8.8%), San Francisco (9.3%) and even St. Louis (11.6%). Baltimore (11.6%) and Philadelphia (11.7%).

Not reflected in the hard numbers is the decline in free rent and concessions offered by landlords, which have been cut in half in such markets like Seattle, Boston and Miami. Rent discounts tenant improvement packages are also shrinking in many markets, Page said.

While the majority of U.S. office markets experienced notable gains, others still have a ways to go. Detroit and Phoenix still have vacancy rates of 17.9% and 18.2%, respectively, but they’ve also come down from stratospheric levels.

The Amazing Suburban Office Rebound

While suburban office markets were still largely lackluster as recently as a year or two ago, CoStar analysts now describe the recovery in the suburban office sector using superlatives such as amazing, remarkable and “on fire.”

Lingering higher vacancies have prevented additional construction in many suburbs, which are also benefitting from the fast-growing tech, health-care and other employment sectors. Suburban markets, which make up a much higher share of total office inventory than CBD markets, account for 90% of total office absorption.

“Some of the recovering suburban markets would have been in tough shape a year, 18 months ago,” Nordby said. “The economy has become much more broad-based, and normal, low-cost back-office places like Tampa and Phoenix have been posting very good job growth.”

Cranes Rising In More Markets

While office construction starts remain low as a percentage of existing inventories, building has been relatively brisk in a few markets like San Jose, Austin, Houston and Boston — and more recently, San Francisco, Dallas, Northern New Jersey and even Chicago.

Most projects are built with tenants or owners in tow, although developers are beginning to move forward on a handful of speculative projects. It’s hardly a surprise to see cranes piercing the skyline in San Francisco, where 2.5 million square feet is under construction, including Jay Paul Co.’s 181 Fremont, a $500 million mixed-use tower in the South Financial District with 415,000 square feet of speculative office space.

San Francisco CBD rents have risen 63% from their recession lows, compared with average 5.7% rent growth for the 54 largest markets.

“Much of this activity is smart money getting under way before the cycle becomes long in the tooth, and we’ll see more of this across the country,” Nordby said.

The story was originally published on CoStar.

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

Does A BYOD Policy Make Sense For Your Business?

Smartphones and tablets are what make many small businesses tick. Modern mobile devices are portable enough for a daily commute and powerful enough to keep your employees productive from anywhere. For many small businesses and startups, these devices are practically indispensable.  So should small business owners be the ones to buy iPhones, Android phones, Windows phones or BlackBerrys for their employees? Or should your employees bring their own?

For decades, companies have usually provided a desktop computer for each employee if the job called for it. But as personal computing devices become more and more mobile — not to mention numerous — small business owners are faced with tough new questions. Shelling out for company-owned devices may be the most secure option, but it can be expensive — and, counterintuitively, could even dampen morale. Here are three reasons to adopt a bring-your-own-device (BYOD) model for your business — and three reasons to stay far away from BYOD.

Your business should go BYOD because:

1. It’s cheaper: Smartphones and tablets are not cheap. Regardless of how many employees you have, these devices might not fit into your business’s budget. And the hardware costs are just the beginning: don’t forget to factor in the cost of a data plan for each device. Prices vary widely between devices and carriers, but providing a Web-connected cellphone or tablet could cost you $1,000 or more for each employee.  Besides, most of your employees probably already own at least a smartphone — and if they don’t, they’re likely to be in the market for one soon.

2. Employees want BYOD: When it comes to mobile technology, most workers have strong brand preferences, be it iOS, Android or otherwise. Those employees are most content when they can work using their favorite devices, applications and Web tools, instead of ones hand-picked by their employer. And working from your own smartphone or tablet is often simply easier, since there’s no need to juggle multiple devices or partition mobile activities. That translates into happier, more productive employees. And because workers will almost always have their personal devices on hand, they can be ready to work at a moment’s notice.

3. You’re busy: Let’s face it: You’re busy, and your small business isn’t likely to have an IT department on hand to manage a fleet of cellphones and tablets. And there’s a lot to manage beyond picking the right devices and juggling payment plans. You could spend a lot of time micromanaging which apps your employees use for functions like reading and responding to company email. And if a company-owned device breaks down, you’ll be the one tasked with fixing it. By going BYOD, you leave those decisions in their hands, letting you stay focused on daily business operations.

Your business should stick to company-owned devices because:

1. It’s (much) more secure: Letting your employees work on an unsecured personal device is risky business — especially when it’s a device that’s so easy to lose. Even when using devices and apps that hold sensitive company data, employees are likely to use weak passwords — or no passwords at all. And if an employee accidentally sends private client data to a personal contact, your business is on the hook. By managing company-owned devices, you can control which applications your employees use — and how. You can also retain the option to wipe company devices — even remotely — or revoke access to company accounts at any time. All else aside, legal liability is the No. 1 reason to steer clear of BYOD policies.

2. You own the numbers: Letting employees use their own phones has its perks, but what do you do when an employee leaves? Shelling out for company-owned devices means you own more than just the phones — you also own the corresponding phone numbers. That can save you from a lot of headaches — and keep you from missing out on business if a client tries to contact your company through a former employee. Owning all phone numbers associated with your company will also help your next employee get right to work without any hiccups and avoid lost productivity.

3. Your employees really need them: The majority of Americans have smartphones, but the pocket-size computers are far from ubiquitous. If you depend on your employees to respond to that email from wherever they are, buying them a phone might be the best option. Employees can’t be expected to shell out for an expensive phone or tablet — not to mention foot the bill for a data plan. Biting the bullet on company-owned phones isn’t just secure and practical for small businesses; it might also be the only way to ensure that every employee can stay connected and productive when they’re away from the office.

Ultimately, this choice comes down to the needs of your individual business. Not every employee needs to stay connected to work through a smartphone or tablet. But when they do, there are very good reasons for small business owners to buy and maintain their own devices. On the other hand, if your business is very small, or if employees rarely handle sensitive company data, the flexibility and cost-savings of a BYOD policy might be too good to ignore.

The story was originally published on Business News Daily.

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

The Top Workplace Trends for 2014

Happy New Year!! An article from Forbes.com discusses the workplace trends for the new year. 2014 will be a slow period, where a lot of major workplace issues will surface and executives will be scrambling. As more boomers retire and more people work from home, the idea of “work” will start to change. Hiring processes are going to start to shift as more recruiters rely on the Internet and the word “reputation” will become even more important to professionals and companies alike. Here are the trends I’m following that will affect you one way or another next year:

1. Healthcare’s impact on the workplace. CNNMoney.com found that 9 out of 14 economists say that businesses are putting off hiring because of health care reform next year. The reform will force employers with 50 or more workers to provide affordable health insurance starting in 2015. Starting next year, small businesses will be able to get a credit for up to 50% of their health care premium costs if they buy insurance. It’s debatable exactly how Obamacare will impact the workplace but many are saying (at least Republicans and some economists) that companies will be laying off more full-time workers and hiring more contingent workers in order to dodge the penalty.

2. Freelancing becomes a normal way of life. One third of Americans are freelancers (17 million people), contractors and consultants right now and there will be more of them than full-time employees in six years. Employers are saving more money hiring freelancers because they don’t have to pay benefits (they will want to avoid the Obamacare penalties for instance) and they are looking to hire experts who can complete specialized projects. This also means that more professionals will be working from home instead of a traditional office setting, which saves companies money. Despite how the public views the working from home phenomenon, Gallup reports that you are more engaged when working from home.

3. Gender pay gap starts to close. Earlier this year, Gallup found that only 24% of women are happy with what they earn at work compared to 32% of men. This was a more general view of the workforce but what we found recently was that if you break it down by generation, there isn’t much discrepancy between millennials. After controlling for all other factors, there is only a 2-3% difference between male and female pay across all 3 generations, and that difference is the smallest for Gen Y. The gap is going to shrink overall because 36% of the American workforce will be millennials by next year and that number will continue to rise. As more women are becoming educated and more men leave the workforce, the gap will shrink even more. Millennials are all about equality in every aspect of life and want women and men to be treated the same. For instance, 74% of millennials support same sex marriage, which is a big reason why it passed in many states.

4. The economy delays career growth. The economy hit the workforce really hard and there are no clear signs that it’s going to bounce back any time soon. The Congressional Budget Office expects unemployment to remain near 8% in 2014 and Generation Opportunity reports that there is a 15.9% unemployment rate for millennials. A new studybetween my company and PayScale.com shows that millennials are most likely to have had to move back home with their parents due to financial hardship after starting their careers (28 percent) compared to Gen X (11 percent) or Baby Boomers (5 percent). Millennial workers are now 30 years old before hitting a median wage of $42,000–up from 26 back in 1980. Millions of millennials are moving back in with their parents when they graduate and Pew Reports that 36% of millennials are choosing to put off moving out on their own. Many recent graduates are finally getting internships, which delay their ability to actually get a full time job. Degrees and internships don’t guarantee jobs anymore and the economy has slowed down career development for many.

5. Boomers retiring – changing demographics in the workplace. We’re going to see a lot of boomers retire starting next year and it’s going to cause major shifts in workplace demographics. In fact, 18% of boomers will retire within five years and 68% of HR professionals say that boomers retiring will have a major impact on the workforce. Next year, millennials will account for 36% of the American workforce too. One of the biggest problems companies will have is succession planning. They are going to have to train Gen X’ers and Gen Y’ers before their boomers retire or they will be in major trouble. On the flip side, new opportunities will be created for younger generations who are more loyal to their companies.

6. Employers create new ways of filtering candidates. Every year it becomes more competitive to apply for jobs because there are more applicants for fewer positions. In the past, I’ve called this the black hole of resumes and the Wall Street Journal calls it “resume oblivion“. Companies, especially larger ones, are finding new ways to filter candidates. One of them is to have HR programs that filter out those who didn’t graduate from college. The second way is to use social networks to screen candidates. Jobvite.com reports that 94% of employers are using social networks for recruiting and that number will be about 100% next year I predict. More smaller companies and even midsize companies are looking at your online footprint first before giving you an interview to see if you would fit into the corporate culture and if there’s anything negative that comes up for your name. More companies will be using tests next year to try and close the skills gap. One test is called the “Collegiate Learning Assessment“, which provides an objective, benchmarked report card for critical thinking skills.

7. More companies provide wellness programs. Health and wellness at work will become one of the biggest conversations next year, especially with the Affordable Care Act coming into effect. Employers will be able to use financial rewards and penalties to encourage healthier behaviors. Currently, employees who smoke cost companies an average of $5,800 per year and depressed employees cost companies $23 billion each year in loss of productivity. 10.8% of the workforce suffers from depression and they miss an average of 8.7 days per year due to poor health. Companies know they can save a lot of money and be more productive and effective with a healthier workforce. Professionals who are healthier are happier in their jobs too.

8. The continuous job search. Research shows that people are always searching for new jobs and opportunities. People are just not satisfied anymore with the work they do so they are continuously searching even after getting a new job. 73% of workers don’t have a problem looking for new employment before leaving their current employer and 48% of millennials say they conduct job search activities at work. The Bureau of Labor Statistics reports that people have about eleven jobs between the ages of 18 and 34. People are going to get even more restless in the future as the internet creates an even larger marketplace for jobs.

9. ROI of college is looked at closer. Next year the pressure is going to be on colleges much more than in years past. College’s continue to increase their tuition rates for 2014 and there are still one trillion outstanding student loans out there. Due to all the unpaid internships, it’s becoming harder for students to pay back their loans and save up to live on their own when they graduate (26 million of them live at home). In response, colleges are being forced to prove their worth and one way they are doing it is to offset unpaid internships with money. The other threat that college’s have to worry about is MOOC’s that offer free online courses that people can take from their homes. More colleges are going to be offering online courses next year in order to lower costs and allow for more diversity in the student body.

10. Reputation become more important for both professionals and companies. The word “reputation” will be talked about in length next year by employers and professionals alike because people will be hired and promoted based on it and will only work at a company that has a positive one. For professionals, companies are focusing their recruiting on outcomes, waiting for the perfect hire and are more risk averse. They want to hire a candidate that already has a reputation built on a strong track record. From the professionals standpoint, they are starting to judge companies based on reputation when deciding where to work. A recent study by CareerBuilder shows that about 75% of job seekers will accept a lower salary for a good brand.

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

10 Ways to Motivate Anyone

Geil Browning, founder of Emergenetics International, an organizational development firm in the U.S., Singapore, and the Netherlands, discusses how to understand the unique brain and personality types of your employees so you can keep them invested in work and get amazing results.

I am often asked about how I keep employees inspired and productive. It’s an essential question since companies today must accomplish more, with fewer people. The most successful start-ups must be lean, nimble, and fierce.

In a nutshell, you should hire bright, energetic, innovative employees. Then offer them the right incentives–the ones that will impact their personal brain and personality types–to keep them mentally and emotionally invested in doing their best.

It’s impossible to talk about motivation without mentioning Drive, a book by best-selling author Daniel Pink. (His TED lecture was turned into a fabulous video.) Pink notes that people perform best when they are given autonomy, opportunity for mastery, and the belief that their task is meaningful. He says money is not the best motivator, and that employees want to be “players, not pawns.”

Pink believes Google’s “20% time,” in which employees may spend one day a week on whatever they want is a shining example of how allowing intrinsically-based motivations (a sense of accomplishment or purpose) can flourish. Personal endeavors from “20% time” resulted in Gmail, Google News, Orkut, and AdSense. Long before Google–back in 1948–3M instituted the “15% solution” or “dream time,” which yielded both Scotch Tape and Post-It Notes.

There’s no question that intrinsic motivation is essential. However, I do not agree with Pink that all extrinsic motivation (raises, bonuses, commissions, awards, titles, flex time, and other perks) is harmful. A skillful entrepreneur keeps employees motivated with a combination of both.

That said, there is no cookie-cutter approach to motivating your people. What inspires one person may leave the next cold. When you understand an employee’s thinking and behavioral preferences, you’ll be able to maximize his or her enthusiasm. This will help you get your workforce aligned and moving in the same direction, and you’ll see incredible returns.

1.   Analytical types want to know that a project is valuable, and that their work makes a difference to its success. They need a leader who excels in a particular area, and whose expertise they believe benefits the group. They prefer compensation that is commensurate with their contribution. If they have done a tremendous amount of work on their own, don’t expect them to be happy if you reward the whole team.

2.   People who are “structural” by nature want to know their work aids the company’s progress. They prefer a leader who is organized, competent, and good with details. They like to be rewarded in writing, in a timely manner, in a way specific to the task. An encouraging email is appropriate to communicate with them.

3.   Social people want to feel personally valued, and that what they are doing has an impact on a project. They go the extra mile for a leader who expresses faith in their abilities. They prefer to be rewarded in person with a gesture that is from the heart. If your own preference is for written communication, send a handwritten note to a particularly social employee.

4.   Innovative employees must buy into a cause. To them, the big picture matters more than the individual who is leading the charge. They prefer to be rewarded with something unconventional and imaginative, and would find a whimsical token of your esteem very meaningful.

5.   Quiet staffers don’t need a lot of fanfare, but they appreciate private, one-on-one encouragement.

6.   Expressive people feel more motivated when assignments are openly discussed and an open door is available. They like public recognition, with pomp, and ceremony.

7.   Peacekeepers hope everyone will move in the same direction. They’ll never demand a reward or recognition, so it’s up to you to offer it.

8.   Hard-drivers are independent thinkers. If they agree with you, they’ll be highly motivated. They will let you know what they’d like as an extrinsic reward, and they tend to want whatever it is right away.

9.   Those who are focused team members must have confidence in the leader and in the project, or their motivation may falter. They want know up front what kind of reward they can expect. Make sure you follow through on whatever is promised.

10.   Flexible people go along with the team, as long as a project does not contradict their morals or beliefs. They’re also happy with any kind of recognition.

Watch for the weakest link among your employees. If you have a slacker who consistently does less than everyone else but seems to get away with it, this can dampen the motivation of everyone else.

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.

Seven Great Business Reason to Say NO!

An article from Inc.com discusses how everyone wants to hear ‘Yes!’ but sometimes ‘No!’ is the answer that’s best. Business is filled with opportunities, and it’s nice when you can say yes to customers, employees and vendors. But there are absolutely times when saying yes will lead to difficulty or even disaster. Here are seven scenarios where no is the only way to go. Some may seem obvious, but I have often witnessed smart people get themselves in trouble by thinking they will somehow work everything out. Don’t put yourself in a bad position unnecessarily. Recognize these 7 scenarios and just say No!

1.  Say NO! When No One Is Ready

Many people say yes to a boss or customer request when the pieces of the puzzle aren’t in place. Great work requires preparation. Great teams require alignment. If your team isn’t prepared or aligned, agreeing to take on difficult initiatives is a disaster waiting to happen. Young companies often try to speed forward before their organizational structure or business model is ready. They instead end up burning investor money while killing dreams and reputations. Say No! so you can get everything and everyone on board and ready. Then you can say yes with confidence.

2. Say NO! When It’s Not a Fit

Salespeople and entrepreneurs alike tend to see the potential in everything and everybody. But a ton of time is wasted on prospects who are never going to be customers, never going to invest, or never going to be amazing employees. Instead of looking for all the reasons why things will work out, save time by focusing on the reasons they won’t. Even if you say No!, you can always revisit the opportunity if compatibility improves.

3. Say NO! When You’re Overloaded

Some people are afraid to say No! even when they have too much on their plates. They think it’s necessary to respond positively all the time to avoid disappointing others. Then they let things fall through the cracks, get sick or have a breakdown. In this case, an impossible yes causes far more frustration then just saying No! in the first place. Have a realistic sense of your capacity and don’t go past your limit.

4.  Say NO! When It’s Unrealistic

You can’t assume that every request has been thought through in detail. Often people ask for what they want with little or no consideration of what’s involved for delivery. I never subscribe to the “customer is always right” theory. As a consultant, I wonder, if they are always right, why would they want to pay me? Be the expert when someone asks for something. If you don’t know how it works, do your homework and say yes only when you know it can really happen. Otherwise, keep that “maybe” handy.

5. Say NO! When You Have to Go Backwards

It’s hard enough to move steadily toward your goals without having to regain lost ground. When approached with an opportunity that doesn’t obviously propel you forward, ask yourself: “Why am I even interested in this?”  You may be surprised to find there is simply no justification for saying yes. When that happens, loudly declare No! and move on to opportunities that better align with your goals.

6.  Say NO! When It’s Unprofitable

You are in business for many reasons, but nearly everyone–founders and employees alike–is in it to profit. Not all profit is related to money, although young entrepreneurs should take note that consistent monetary profit does help your sustainability and your valuation. Sometimes a transaction can pay off in connections, exposure, learning, satisfaction or, yes, money. But when a transaction does nothing to better the people involved, then the word No! should be used. The key is to make sure everyone in the company can understand, recognize and justify a profitable deal. That requires openness and education, so get to work.

7.  Say NO! When You Can’t Meet Expectations

People are often optimistic about how quickly and how well they can get things done. Combine that hopefulness with the desire to please a customer, and you are left over-promising and under-delivering. Save yourself the mea culpa and say No! to what you know you can not do. Be accountable and manage expectations. Whatever you do, don’t say yes to get the deal signed if you’re assuming that, once the prospects are in the door, they’ll have to adapt to your change in quality, timing or price. After they realize what’s happened, few will come back to say yes and do business with liars.

About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.