A new concept in officeing. Cloud Officing is similar to Cloud Computing in the technology arena, Cloud Officing is all about making an expensive infrastructure available at a reduced cost under a utility model. The idea is to provide a low overhead workplace solution, on a hosted, pay-per-use, and ubiquitous basis. One of our OfficeFinder Members is among the first to offer this new service. They have proven the concept with a grid of 14 locations in the Greater San Francisco Bay Area, which is expanding in partnership with landlords. The company has plans to deploy and manage thousands of on-demand locations around the globe and will start expanding out of its initial Northern California market in the middle of this year.
According to them, the average amount of time a worker is physically present in a dedicated office ranges between 25% and 40%, which is a waste of an expensive asset since facilities and corporate real estate costs represent the 2nd largest expense in most corporate books. This utilization ratio can even be worse for sales people or customer service-related professionals. The need to slash occupancy costs, along with a desire to reduce carbon footprint by bringing the workplace close to where people live, are driving corporate interest for alternate means of officing.
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President Bill Clinton recently announced that the owners of the Empire State Building in Manhattan will be doing a $20 million dollar green face lift of the building. Clinton's foundation is assisting in the environmental upgrades which will include the replacement of 6,500 windows with insulated glass. The $20 million project is expected to save the building's owners $4.4 million annually in energy costs, and will reduce its carbon dioxide emissions by 105,000 metric tons during the next 15 years, equal to the annual emissions of 17,500 cars according to MSNBC. Clinton said the only way to get property owners worldwide to make over their buildings is by setting an attention-getting example. "We have to prove it's good economics, and we have to prove we know how to do it," he said. "Every person on Earth who cares about this knows about the Empire State Building."
Work already has begun, with the upgrades to the building systems expected to be completed by the end of 2010 — longer than it took to build the skyscraper, which opened in 1931 after a year and 45 days of work.
All of the building's green projects are expected to be finished by the end of 2013.
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A recent article in the Wall Street Journal reports that office vacancy has reached 15.2% and is expected to continue rising to 19.3% over the next year. The data comes from REIS, Inc a provider of commercial real estate performance and analysis data for over 25 years. Over 25 million square feet were returned to the market in the first quarter of 2009 driving vacancy rates up and rents down. "Effective rents, which include free rent and other landlord
concessions, fell 2% in the first quarter to a national average of
$24.16, the largest drop since the first quarter of 2002, according to REIS. Sublet space, on average, is going for between 10% and 15% less
than what landlords are charging."
It is a great market for tenant looking for space or renewing during the next 12 months. Smart Landlords cutting deals to keep their buildings full during this downturn providing tenants a great opportunity.
Markets such as Houston and Washington DC, with less exposure to financial services, is weathering the downturn better than others like New York City. The vacancy rate in New York increased two percentage points in one quarter, from 8% to 10.2% and rents dropped over 5% to $52.00 per square foot, still over double the national average.
How can you, as a tenant, take advantage of this opportunity? Make sure you get professional assistance. OfficeFinder tenant representative specialists can provide you the answers to your questions and help you find and negotiate (or re-negotiate) a great deal. There is no obligation to contact them and there is usually no cost to you for their services. Request a contact.
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According to a recent report by CBRE the amount of empty offices in downtown Chicago took an 8% jump in the first quarter of 2009. The year end 2008 empty office rate for office space in downtown Chicago stood at 12.3%. The 8% jump brings the current office vacancy to 13.3%. They also noted that there was a 40% increase in sublease office space to a total of 3.8 million square feet. Much of the sublease space came from "financial companies, including the collapsed Bear Stearns Cos. and Washington Mutual Inc. JPMorgan Chase & Co. and Bank of America Corp. also resorted to subleases."
As we see unemployment increase we will also see a corresponding increase in the vacancy rate in not only Chicago, but all major markets. The higher the unemployment, the greater the increase in the office vacancy rate in that office space market. This in turn will help turn the office rental rates lower providing better deals for those tenants who are looking for space.
Taking advantage of these opportunities can be tricky, especially if you are considering sublease space. There are risks involved and it is important that you get professional advice. A great source is to use a tenant representative; a licensed real estate professional who specializes in office space leasing and sales. They have a fiduciary responsibility to look after your best interest. Avoid using listing agents. No matter what they tell you, they represent the landlord. Typically a tenant rep will not cost you anything since they share in commissions offered by the landlord. It is a win-win for you. Make sure and level the playing field and have an advocate who know the tricks of the trade. They will make sure you not only get great space at the best price, but also avoid potentially business crippling mistakes.
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