Tag Archives: warehouse

Playing Russian Roulette With Corporate Real Estate

Post By : admin 21 June 2017 Leave a comment

I’m often asked, “Why shouldn’t I work with the big corporate real estate concerns in lieu of a boutique agency?” Actually, there are a lot of answers but my friend, Walt Batansky, CFO of Avocat Group, answered the biggest question in his eloquent essay entitled “Playing Russian Roulette with Corporate Real Estate”. You may read his piece here.

Bob Gibbons is a Real Estate Advisor & Tenant Advocate with REATA Commercial Realty, Inc. which is a tenant advisory firm based in Plano, Texas. Bob serves companies in Plano, Frisco, McKinney, Allen, Richardson, Addison, Dallas and the surrounding areas and specializes in companies which lease or buy office and warehouse properties.

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Office Utilization Far Less Than Expected

Post By : admin 12 January 2017 Leave a comment

Bisnow.com had an article on their website today which started by citing a study by the Harvard Business Review (HBR). It said that “office utilization peaks at 42% on any day, forcing an overhaul of how efficient spaces are designed.” The article goes on to talk about how this is changing the way offices and office campuses are being designed.

But what caught my attention was the 42% utilization. They don’t define what that means exactly so we are left to make our own assumptions. It makes me think that only 42% of the space is being used at any given time, or that only 42% of the people the office was built to accommodate are actually there. I’m not really sure, but either way, it sounds like office spaces are not being used to their full capacity.

This is consistent with something I heard at a lunch presentation today by Robert Jimenez of Granite Properties. Robert told a group of commercial real estate professionals that they are building 3.7 parking space for every 1,000 square feet (SF) in their suburban office buildings. But their own study of Granite Park in Plano shows that only 2.2 parking spaces per 1,000 SF are actually occupied on average. This would seem to support the HBR findings.

The takeaway for me is that landlords can allow much greater density in their buildings than previously thought and tenants could lease much less space for the same number of people. Perhaps it would be feasible to lease only 10,000 SF for 75 people instead of the 15-18,000 SF as previously thought. Of course, this will depend on the corporate culture, how many people get private offices, and, most importantly, whether the landlord can be convinced to allow this.

For creative ways to solve office space needs, please find us at www.texastenantrep.com.

Bob Gibbons is a Real Estate Advisor & Tenant Advocate with REATA Commercial Realty, Inc. which is a tenant advisory firm based in Plano, Texas. Bob serves companies in Plano, Frisco, McKinney, Allen, Richardson, Addison, Dallas and the surrounding areas and specializes in companies which lease or buy office and warehouse properties.

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Office Leasing Slows…Really?

Post By : admin 30 December 2016 Leave a comment

In today’s Dallas Morning News (DMN), the long-time real estate reporter, Steve Brown, had an article headlined Office Leasing Slows Down. Let me first say that I like Steve Brown. I have read his work for decades and have seen him speak a few times. His understanding of the real estate business is strong and his sense of history is amazing. But I have to pick a bone with him on this article and others which throw out statistics without proper background and context.

In this article, Steve features a Cushman & Wakefield (C&W) report regarding leasing activity in the Dallas Fort Worth area. The main gist of the article is that leasing activity has fallen by 40% in 2016 compared to 2015. Net absorption is the metric quoted and is the best barometer of demand for office space. Net absorption is simply the change in total office space occupied. For example, if 300 million square feet (SF) of space is occupied today and 303 million SF is occupied on March 31, 2017, then there would have been 3 million SF of positive absorption during that quarter.

The C&W report mentioned in Steve’s article states that absorption in 2015 was 5.2 million SF and it was only 2.9 million SF in 2016. Thus the 40% decline. I don’t have a problem with those facts. What I have a problem with is the impression given in the article that this is somehow an indication that the market is in bad shape. The first sentence of the article states, “Demand for Dallas-Fort Worth office space stalled in the fourth quarter.”

What does “stalled” lead you to believe? That it stopped? Or that it just slowed down a bit? I think most people would assume it means the market has stopped and we should be worried. But it didn’t and we shouldn’t…at least not based on the facts presented. Another 2.9 million SF was occupied and that still represents growth.

The article gives two primary reasons for the slow down. First, companies packing more people into the same space. This is accurate because I’ve seen it with my own clients. For example, it used to be that a law firm would lease 700-1,000 SF per attorney. Many firms these days are only leasing 400-600 per attorney. That’s significant, but it’s also more efficient and technology has provided this opportunity. Law firms have everything online and no longer need law libraries with hundreds of books.

The other main reason given for the slowdown is that large tenants like State Farm moved out of office space into their own buildings. Again, I don’t dispute that fact. State Farm moved out of several buildings and consolidated into its own campus in Richardson.

But was that negative absorption? The C&W report says it was and the DMN article spreads that word. And this is my real problem with the article. It doesn’t mention that only multi-tenant buildings are considered in the report. That is, buildings with more than one tenant occupying it. So when State Farm moved out of 1 million SF of multi-tenant buildings and moves into nearly 2 million SF in its own single-tenant campus, the C&W report (and Steve Brown at the DMN) tell you that represents 1 million SF of negative absorption and, by implication, the sky is falling.

That is misleading. Steve Brown should have disclosed that the report only considers multi-tenant office buildings and should have gone on to shown that absorption of all office buildings is actually 5 million SF if single-tenant properties are considered too. That would have provided a more-accurate picture of what’s going on in the market. A quote from one of the C&W brokers provided an oblique hint to this, but it should have been more explicit in the article.

So while the owners of multi-tenant office buildings may not be filling up their buildings quite as quickly in 2016 as they were in 2015, the overall health of the office building market of all types is strong. If not, rents wouldn’t still be rising. And they are.

You can read the DMN full article here.

Bob Gibbons is a Real Estate Advisor & Tenant Advocate with REATA Commercial Realty, Inc. which is a tenant advisory firm based in Plano, Texas. Bob serves companies in Plano, Frisco, McKinney, Allen, Richardson, Addison, Dallas and the surrounding areas and specializes in companies which lease or buy office and warehouse properties.

Categories: Uncategorized