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.


August 31, 2009

Condé Nast Leases Space To The Economist

Filed under: Subleasing Office Space — Jonathan Rudes @ 4:54 pm
Wednesday, Aug 19

WWD Gets New Neighbors As Condé Nast Leases Space To The Economist

The Economist is on the move and will soon be sharing a cafeteria with the stylistas at WWD.

Yesterday, the Economist Group announced that it has leased nearly 62,000 square feet of space from Condé Nast-owned Advanced Magazine Publishers at 750 3rd Ave. The financial publication will be taking over the fifth and sixth floors at the Condé building currently occupied by Fairchild Publications titles including WWD, Footwear News, W and the Condé Nast bridal group.

Space has been opening up on 750 3rd Ave for a while as Condé has cut staff and expenses. When men’s wear trade DNR folded last year (disclosure: I used to work there) its second floor offices were cleared out and the few remaining staffers who transitioned to WWD were moved to an office off of FN‘s space on the eighth floor. It looks like there will be more movement in the building as they prepare for the new tenant.

The Economist Group is planning to relocate from its long-time home at 111 West 57th Street in the second quarter of next year.

August 19, 2009

Goldman Sachs Is City’s No. 1 Source of Sublease Office Space as Supply Mushrooms

Filed under: Subleasing Office Space — Jonathan Rudes @ 10:27 am

 By Dana Rubinstein August 17, 2009 | 12:20 p.m

Should a businesswoman faced with declining revenue, an uncertain future, and enough vacant office space to host a U2 concert decide to put said empty space on the market, she’s bound to encounter a nasty truth: There’s stiff competition out there, a lot of it from Goldman Sachs. “There’s actually more sublease space on the market than during the last downturn,” said Jones Lang LaSalle vice president James Delmonte, referring to the 2001-2004 recession. “There’s more direct space as well.” To wit: New York City’s supply of sublease space has mushroomed a preposterous 139.2 percent since the second quarter of 2007, from 7,141,426 square feet to 17,083,224 square feet. During the height of the last recession, sublease space peaked at the much lower quantity of 14,366,608 square feet. By way of comparison—though, really, what American city’s office market can really compare to New York’s?—Washington’s sublease supply has grown 84.2 percent in the same time period; Los Angeles’, 70.1 percent; Chicago’s, 37.6 percent.

Most of New York City’s sublease space is coming from the devastated financial sector. The No. 1 source of sublease space—citywide and nationwide—is Goldman Sachs, with 597,000 square feet available at 77 Water Street. No 2: Barclays (Lehman Brothers), which has 456,842 square feet available at 277 Park Avenue. Perhaps needless to say, the surfeit of sublease space has sent rents marketwide plummeting. “When there’s more sublease space on the market, there’s more pressure on landlords to be competitive,” Mr. Delmonte said. In the third quarter of 2008, the average rent for a square foot of space in Manhattan was $73.14. In the second quarter of 2009: $59.36.

July 7, 2009

Subleasing Your Space in New York City

Filed under: Subleasing Office Space — Jonathan Rudes @ 4:13 pm

There are a lot of things to consider when you are thinking about subleasing your space. First we need to know how long is your lease, what you are paying in relation to market value, and how long a term you still have left. Then you want to review the legal issues relating to the sublease, are there any restrictions or are you even allowed to sublease according to your lease. Let’s look at the competition, the market and the potential clients. Would you like to know the costs of subleasing, how long it takes and what other “team” members you might need to help out. Happy to discuss it, confidentially, candidly and professionally.

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