Delphi Real Estate Blog

January 17, 2013

Lets focus on the Office Space transaction!

After all isn’t that what real estate is really all about; Independent, localized acquision or disposition of real estate? My head spins from all this Integrated Services stuff, this strategic portfolio analysis insuring alignment of the real estate with business objectives. Don’t get me wrong, I love all that stuff but I think that more focus should given to the transaction. There are a lot of places where the basic transaction can be improved especially in deals from 5,000 to 25,000 square feet.

Let’s look at several areas where the transaction process can be substantially improved:

  1. Communication – In today’s world with Ipads, Ipods, Androids and Quad Core Desktops the creation, dissemination and management of information should be finely honed to provide the real estate team with timely, accurate, relevant, information. Dashboards, repositories, archives and managed databases can easily be used to improve the communications channels for each transaction.
  2. Architectural and Construction – I can’t think of a weaker part of the transaction than the mystery that surrounds the issues related to construction; cost as well as fit. This is the place that receives the least attention from the acquisition team of a 5-25,000 sf office deal.
    —  We need an architect day 1! We need to know what we are looking for, how big it needs to be and what special issues will make the space work or not. It should be done by the architect, I repeat,  day 1!
    — We need a construction estimator every time we plan to make an offer on space. Without knowing how much it will cost to construct the space and what the cost differences are between spaces we are shooting in the dark every time we make an offer and end up suffering the consequences.
  3. Demographics – Now surely no self respecting 5000 square foot tenant would even consider doing  demographic analysis before they start looking for space. Certainly his broker never did!  It goes back to the theory ” forget about where they say they want to be, where should they be”. It’s really not that hard to take everybody’s zip codes and pump them into a simple program to estimate commuting times and access to current and future labor pools. Also it’s probably a good idea to know where their competitors, vendors and customers are and throw that into the mix as well. Deciding where to locate is influenced by numerous factors including employee attraction and retention, workplace productivity, proximity to labor and alignment with your corporate brand. This applies to equally to small tenants as well as large ones.
  4. Supervision – Every deal should include the involvement of a senior level broker. These deals are too important to our customer to be handled by the junior trainee so they can “cut their teeth”, while the senior brokers are off chasing big deals. Proper use of communications tools can insure that senior brokers are kept integrally involved in every transaction, no matter how small. It kills me when I hear a senior broker say “let the junior broker learn from their mistakes”. Not only do I not believe that they will learn anything by making mistakes, I certainly don’t think it’s fair to our customers.

Let’s improve the Transaction Process before we analyze the portfolio.

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