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Entries Tagged as 'Office Rental'

Medical Office Space will be Expanding...by 2014

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By the end of the decade, droves of previously uninsured Americans will be heading to the doctor’s office as result of health care reform.

But where will they be treated?

Doctors with private practices will soon need larger spaces. And amid a dismal year for commercial real estate, brokers and landlords that specialize in medical space are banking on that growth.

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Blogger's Note: A bit of good news among all the negatives.  Unfortunately, the medical office space won't be needed until after the current recession ends and the new Health Care Legislation take effect in 2014. The author of the article was a bit optimistic about the "end of the decade."

Medical Office Space , Office Rental , Office Space , Office Vacancy Rate

Office Market Nearing Stabilization as Economy Improves

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PR NewswireST. LOUIS, April 14 /PRNewswire/ -- The latest data for the first quarter of 2010 shows that demand for U.S. office space continues to improve, according to Cassidy Turley, one of the largest commercial real estate service providers in the U.S. 

Net absorption registered at negative 3.2 million square feet in the first quarter of 2010, marking the 5th straight quarter of decelerating declines.

"The first leg of the recovery begins when the office market returns to positive demand.  The trajectory of recent job growth figures indicates that the U.S. economy will be consuming office space again by the second or third quarter of 2010," said Kevin Thorpe, Chief Economist at Cassidy Turley. "In other words, the office sector has not yet turned the corner, but it is at the cusp."

Despite decelerating declines in demand, the report reveals that the national office vacancy rate increased from 16.4% in the fourth quarter of 2009 to 16.6% in the first quarter of 2010, which is the highest vacancy rate since 2003.

"National vacancy remains elevated; it is now 260 basis points above its historical average," said Mr. Thorpe.  "With a myriad of high-quality options for tenants to choose from, effective rents will remain low until the excess space is absorbed.  It is a classic inventory overhang problem that can only be resolved with steady economic growth and time." 

Net effective rents remained flat in the first quarter of 2010 at $23.88 – marking the first time in five straight quarters that rents did not decline. 

"Based on the vacant stock figures, the U.S. is no less than 2 years away from seeing healthy rent growth again, but certain pockets within top tier markets will firm before then," added Mr. Thorpe.  

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Blogger's note: I wish the economy were improving. What we are told and what we see are two differnt things. I think we still have more declines in rental rates as the commercial market continues it's downward trend for at least the remainder of the year. There are still a lot of building owners with refinanincing needs coming up this year that are not going to be able to be met. I do not believe we have hit bottom, yet.

Office Rental , Office Space , Office Space Negotiations , Office Vacancy Rate

JLL Sees Recovery Signs for Office Market

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CHICAGO-Signs of a national office market recovery, including the peaking of sublease space and rents bottoming out, began appearing this year, according to Jones Lang LaSalle in its First Quarter 2010 North American Office Outlook. However, company research experts believe that though confidence is returning, job growth will be slow to recover until at least the beginning of 2011.

The national office vacancy rate rose by 20 basis points to 18.3% in Q1 2010, but this increase was relatively stable compared to the vast losses of space, more than 200 basis points, from quarter to quarter in 2009, said JLL officials. Also, the amount of available sublease space nationwide has dropped for the past two quarters, says John Sikaitis, JLL’s director of national office research.

However, the amount of shadow space, offices leased by tenants but not used, has grown at large firms, Sikaitis tells GlobeSt.com. “Many large corporate tenants have excess space, in excess of 9%, that will absorb any new growth this year,” he says. “For example, when company X goes out and hires 10 people in the next three-to-six months, they won’t need more room. Because of this, we believe the first wave of growth is not going to result in much occupancy gains.”

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Office Rental , Office Space , Office Vacancy Rate

Smart Small Business: Turning Fixed Costs into Variable Costs

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What do entrepreneurs, small businesses, start-ups and freelancers all have in common? In addition to overwhelming stress levels, they share a need to remain financially nimble, which enables them to adapt to today's ever-changing marketplace. When evaluating operational costs against projected revenues, companies can avoid financial traps by scrutinizing fixed costs. Personnel, facilities and goods and services are the three key fixed expense areas that should be addressed.

"Cutting back on overhead expenses is a great way for companies to save money and remain financially prudent," explains Steve Strauss, USA Today small business columnist. "Small businesses often get locked into large, fixed expenses unnecessarily. It's essential to stay fluid as work demands ebb and flow. Business owners often see these expenses as unavoidable or costs that can only be reduced in the long term. There are immediate ways to adjust these expenses to keep businesses afloat and profitable in times of crisis, and as a long term strategy."

Personnel: Hiring full-time employees comes with the added expense of healthcare, 401(k) plans, and other benefits on top of their salaries. When project loads are low, these employees may not be working at capacity, but their related expenses don't adjust accordingly. This equals wasted money. A smarter way to maximize your personnel investment is to hire freelancers.

Independent workers make up 30% of the nation's workforce. And, that number is expected to grow. According to a survey conducted by Regus (LSE:RGU.l), global leader in flexible workplace solutions, in September and August of 2009, 59.6% of U.S. companies expect their use of freelance workers to rise in the next two years. Using freelancers turns your fixed human capital costs into a variable expense that corrects against project requirements as they ebb and flow. Additionally, freelancers are often experts at their craft who offer a higher caliber of work. The Freelancers Union is an invaluable organization that helps businesses tap into the top talent in any given field.

Facilities: Office leasing is often a company's biggest fixed expense. Getting locked into a long-term, traditional lease can be corporate suicide for a small business. In fact, nearly half of all office space sits empty or is unutilized. There's also the added burden of furnishing and maintaining that space. So, what if your office space could scale with your needs much like the freelance workforce suggested above?

Several turnkey options exist that allow companies to pay only for what they use while presenting a professional image and providing a functioning workspace for staff. Regus offers a full range of cost-effective business-ready workspace products including fully furnished, fully equipped offices, meeting rooms with on-site business and administrative support services.

When a physical office is unnecessary, virtual offices allow businesses to instantly gain a market presence with a prestigious, high-profile business address. Support services can also include local telephone answering and mail handling services. 

"Paying for unused, unnecessary office space is like throwing bags of money into a bonfire," said Guillermo Rotman, chief executive officer of Regus Americas. "Small businesses fall into the long-term lease trap all too often. Staying nimble by scaling expenses with projected or actual revenues is essential for any size business, but is absolutely crucial for smaller companies operating on much tighter budgets."

Goods & Services: Businesses no longer have to enter into exclusive, long-term contracts with most goods and services vendors. Negotiating flexible agreements upfront allows professionals the ability to revisit the contracts quarterly and shop for competitive pricing elsewhere.

And, gone are the days when overstock is vital. Just-in-time production and creative storage practices help businesses cut down on inventory overhead. Businesses should pay only for what is needed, when it's needed. What's more, many sub-contractors will ship directly to a customer's clients as necessary -- cutting out the middle man and eliminating unnecessary expenditures.

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Executive Suites , Flexible Workspace , Office Leasing Tips , Office Relocation , Office Rental , Office Space

Commercial Real Estate Tenants Ask Landlords to Verify Finances

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After years of property owners conducting due diligence on the financial wherewithal of their tenants, commercial real estate agents say corporate clients are turning the tables when it comes to financial scrutiny.

With commercial real estate values down by as much as 40 percent nationwide and the number of foreclosures still growing, tenants in the market for new space now often conduct the kind of financial background checks of their new landlords they once might have been more likely to face themselves.

Dick Cassetti, a local commercial broker who does mostly tenant representation work, understands firsthand why.

Cassetti said one of his clients has given its landlord an April 6 deadline to make good on a promise related to tenant improvement money the client says it never received.

“Any large tenant of 20,000 square feet or more would be foolish if they could not get representations and guarantees that (their landlord) has money in the bank,” Cassetti said. “If the landlord is not willing to escrow the funds promised to the tenant for the build-out, then I as a tenant would look for a different landlord.”

It’s a very different reality from five years ago during a real estate boom, when such measures by tenants were relatively rare.

The motivations for tenants stem from the negative trends in real estate finance...

Read more: Pittsburgh Business Times

Note:
This office leasing issue is not exclusive to Pittsburgh. Office space tenants around the world need to check on the ability of their prospective landlords to perform.  How do you go about it? The best way is to have an office space tenant rep by your side to guide you. They deal with these issues day in and day out. They protect you and make sure you avoid costly mistakes. Their services are free to you. It is a no lose proposition.

A previous post that is pertinent to this issues is Protecting Your Businsess

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Lease Negotiations , Office Rental , Office Space , Office Space Negotiations , Tenant Representation