Entries Tagged as 'Office Space'
Here are a few of the Q and A about the World Trade Center 1 construction. I picked and chose what I thought was interesting.
Q. About what floor will 1 WTC reach by the 9/11/11 anniversary, and what floor will it reach by the end of 2011? – Michael, East Brunswick, N.J.
A. We expect to have steel up to a floor in the mid-80s by the 10th anniversary later this year and near the 104th floor by the end of the year.
Q. When do you expect 1 WTC to become the tallest structure downtown, as well as in New York City? Also, why does the first floor of glass skip to every other piece, and finally when will the plaza finishes begin? – Anthony, Commack, N.Y.
A. We anticipate 1 World Trade Center will be the tallest structure downtown by mid-summer when it surpasses the Beekman Tower, and the tallest in the City when it surpasses the Empire State Building by the end of this year. The missing panels of glass on the 20th floor were left out intentionally to accommodate supports for the protection required for the curtain wall glass installation.
Q. When will the spire go on 1 WTC and how long will it take for the spire to be installed? – Logan, New York, N.Y.
A. Installation of the tower's spire will begin in mid 2012, and will take approximately six months to complete.
Q. How many workers are working at 1 World Trade Center at any given time? – Joe, Brooklyn, N.Y.
A. Currently, the total manpower of all of the trades is approximately 1,100 people.
Q. When I visited last week, I noticed something strange with the glass. The reflections of things close to the building are very clear, but buildings and objects that are far away seem to be wavy and odd. Is this because the glass has just started to go in? Is there a film on the glass? – George, Philadelphia, PA
A. George, there is no film on the glass. Once the building is fully enclosed and pressurized, the wavy reflection will be reduced.
According to a recent article in the Finance and Commerce CCIM Report "Nationally, office vacancy rates stood at 19.5 percent in the third quarter of 2010, about the same as in the second quarter and just 50 basis points above the rate in the third quarter a year ago. Vacancy and rental rates across all property types were in a stabilization pattern in the third quarter of 2010. Rents are now 6 percent to 18 percent below their prerecession peak... Office rents are down 12 percent."
More news to show that we have hit bottom in the office space market and will begin the slow climb out.
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Lease Negotiations , Office Space , Office Space Negotiations , Office Vacancy Rate
Over the past nine months we have made numerous posts on the effect that shadow office space will have on the office space market recovery. In a recent article from CNBC some numbers show the effect that shadow office space will have on the market. According to Co-star shadow space is adding as much as 7 percent to the Los Angeles office vacancy rates and over 6 percent in Chicago. This is likely to be the case in most markets. The problem with shadow office space is that before the market can see a full recovery, shadow office space will need to be absorbed. Typically, shadow office space is space that a company still has under lease, but is not in use. Before these companies who have shadow space will go out into the market to lease additional office space, they will need to fill their shadow space.
Additionally, Grub and Ellis is predicting that as the market recovers shadow space will account for about 1/3 of the increased demand in 2011 and 1/4 of the office space demand in 2012, thereby dampening the office space market recovery. The good news is that we are starting to see positive absorption. As the jobs come back, the office market will improve.
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The article below is one that I wrote in February 1993. I found it interesting that it still holds true not only for the Seattle are, but most office markets, too.
Almost 20 percent of the vacant office space in Bellevue and Seattle is available for sublease. Massive corporate restructuring, downsizing and mergers mean that many Puget Sound firms need less space than anticipated. Yet they find themselves locked into expensive long-term leases. It makes a lot of sense to find a way to recoup on space that would otherwise stand empty.
Office Leasing Tips , Office Rental , Office Space , Office Space Negotiations , Sublease Office Space
Even at 20 percent, sublease space in the market is underestimated. When any space is vacant or is soon to be available due to a pending move, it is included in our vacancy rate analysis. But often sublease opportunities are poorly marketed and publicized. Space with less than one year remaining in the lease is often not marketed at all. So tenants willing and able to relocate and go through the complications of a sublease transaction will find plenty of attractive possibilities around town.
"Attractive" is not a word you would hear from building owners, who often view subleases as bad news. Rates are typically at least 15 percent lower than direct leases. An owner therefore finds himself competing with existing tenants for new tenants. It's an uphill battle, because the landlord is usually at an economical disadvantage.
Rental rates for sublease space in some of the newest buildings in downtown Seattle, for example, can run as little as $12 per square foot, complete with full service. This is a whopping one-third savings over the average downtown rate of $18 for similar office facilities.
Garth Olsen of Cushman & Wakefield, leasing agent for the remaining 100,000 square feet of AT&T sublease space in the AT&T Gateway Tower downtown, says that his firm is asking between $14 and $15 per square foot. This includes a generous tenant improvement allowance with a lease that runs through the year 2000.
On the other hand, the landlord has a starting price of $18 per square foot. The building is only 54 percent full after two and a half years. Having to compete against your major tenants to lease space adds insult to injury.
Getting a Good Deal
Despite the obvious economic benefits, there are some challenges in negotiating a wise sublease. If costs were equal, it would be more desirable to deal directly with a landlord than to sublease, since there are fewer risks and complications involved. Direct lease space negotiations are two-way between landlord and tenant. In a sublease arrangement, however, transactions become three-way, with all the inherent pitfalls of any triangulated relationship. "In most leases, the original tenant is still ultimately liable for rental payments, even after the space has been subleased," said Craig Michalak, a prominent Eastside broker. "If the subtenant pays less than the face rate of the original lease, the original tenant must make up the difference." He points out that the subtenant, in turn, needs to be concerned with the financial stability of the original tenant. The subtenant may find themselves stuck making overage rental payments, or could end up with default problems that cannot easily be cures. In a worst-case scenario, they could be forced to move.
For companies like the Hogan Company, a Bellevue communications firm, subleasing 7,800 square feet of office space for the past three years has been a good decision. "I looked at everything available that was the right size for us," said Walter Hogan, president. "My final decision was based on cost. We were able to move into our space as is, and saved more than 20 percent over doing a direct deal. I'm very pleased with how everything worked out, and highly recommend a similar arrangement to others."
Hogan was lucky. It's unlikely that the layout and site of an office will exactly match a new tenant's needs, especially in offices greater than 5,000 square feet. When the space can't be used as is, an appropriate allowance for tenant improvements needs to be included in the sublease. Otherwise, the 'financial benefits of a reduced rental can quickly vanish. A typical downtown tenant improvement allowance is around $25 per square foot. Using a 10 percent annual interest rate over a five-year lease amortizes to $6.37 per square foot per year in rent. In other words, more than $6 of each rental payment goes to help the landlord payoff tenant improvements. When the remaining term is less than three years, these expenditures can cause the effective rental cost to increase significantly if the tenant has to foot the bill. What seemed at first glance to be a good deal becomes a very expensive proposition.
Remaining terms of less than two years are the norm for sublease space. But spaces offered by major users often have remaining terms and expansion options that reach well into the next century. In these cases, it's worthwhile to calculate very carefully the pros and cons of various tenant improvement options. Long-term subleases can make sense even when the subtenant ends up paying for improvements. When improvements are amortized over many years, the results of a sublease can become much more beneficial than anything that could have been obtained directly through the landlord.
Two of the larger companies in town with large amounts of sublease space available are AT&T, with 100,000 square feet, and Seattle First National Bank's Security Pacific Bank space, with 200,000 square feet. AT&T's space became available due to a reorganization of the company's work force. SeaFirst's space is the result of their well-publicized merger with Security Pacific Bank. Both leases have a long time to run...;, about seven and a half years for AT&T, and about 25 years for the bank. In SeaFirst's case, there is little probability of finding firms willing to commit for a quarter of a century. So they can be expected to be flexible on the length of term for subleases.
SeaFirst is in the process of finalizing their leasing strategy and selecting a leasing representative. They have already done well, subleasing 150,000 square feet of their original 350,000 square feet to West One Bank and other smaller subtenants. SeaFirst views their property more as owned than as leased. They have therefore decided not to disrupt the market by undercutting prices for competitive space. In other words, they are taking a long-term ownership approach, rather than opting for a quick fix that could result in both hard feelings and financial drawbacks in the long run.
Outstanding opportunities await any business owner willing to consider subleasing space. But risks are certainly present too. Anyone interested in investigating subleased property would be wise to consult a real estate professional as well as an attorney; to make sure that the deal is really as good as it looks.
We recently looked at points to check to ensure you have a healthy office space. But there are more ways to ensure you and your colleagues are healthy and have a sense of well-being as well as increased productivity in your work areas. After all, who can possibly be their most productive in a drab, boring space? What is in your office environment on a daily basis has a big impact on your energy level, motivation and success.
It is a little known fact that work space design is among the top three factors in ensuring employee job satisfaction. Documented studies have shown that an increase in productivity of 20% or more is not uncommon when changing from a boring office space to one that provides the vibrancy and energy needed to help people produce.
Many of the below suggestions can make your office space more attractive -- not only to you and your staff but to clients as well. Many are also very inexpensive to implement. A few may require a little investment, but the rise in your bottom line and employee satisfacton will make it well worth your time and money.
Use of Color: Many office spaces are made up of mobile partitions in some drab color such as gray or drab blue. Grey metal file cabinets may be much of the furnishings besides desks and chairs. The overall look can be quite institutional; that’s the last thing you want in your office environment. Of course, you could have your walls repainted or buy new partitions, but amazing changes can be made with the addition of bright splashes of energizing colors. Bright colors such as red, orange, yellow, bright blues and greens in the form of paintings, posters, and incidental furnishings can be added for very little money and yet improve the space greatly. However, avoid making the workspace so full of color that it becomes “nervous”. Add highlights of super-bright color in some spaces while leaving some areas of the office in calm, cool colors for a sense of peacefulness. For example, a break room or coffee area should be decorated with relaxing colors to maximize the effectiveness of a work break.
Add Green Potted Plants: Not only will the addition of living greenery in the office space add vibrancy, but it also cleans the air. If you and your co-workers have no green thumbs, you can enlist a plant service to care for your plants or even to provide the plants and change them out on a regular basis. But if you have minimal time and ability to care for plants, you can avoid this expense. It is quite likely that one of your colleagues has a passion for plants if you don’t, so enlist their help. Brightly colored planters can add the splashes of color you seek while the green plant will add a touch of the outdoors. If your office space has few or no windows, this is a critical improvement for helping productivity and increasing that important sense of well-being.
Personal Items: Allow people who work in the office space to include their personal items in their workspace so that they feel at home. A “bragging wall” of family photos, awards, pictures of pets, colorful calendars, or whatever appeals to the person should be permitted as long as it is attractive and in good taste. Some people like to have a small water fountain on their bookshelf or some other personal items which make them feel their best.
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