Jones Lang LaSalle Boston Blog

Hidden competition – part 2

May 17, 2012

From Matt Giffune
Vice President
Jones Lang LaSalle

This post also appears on Matt’s personal blog http://mattgiffune.wordpress.com/.

To the tenant, a landlord is the guy that comes around and asks if everything is OK, sends you tickets to the game, and offers you space when you may not need it.

To the tenant rep broker the landlord is the guy that says “Bring your tenant to my building, we love paying brokers.” Or “We treat our tenants well, they will be in good hands.” What landlords don’t necessarily broadcast is that they will do anything in their power to keep rents competitive and deal costs low. That is their business and that is completely fair.

From the tenant rep perspective,however, this presents a serious challenge – explaining to a tenant why they need a broker. That is a topic for another Boston Blog post, but the basic argument from the tenant rep is that if a landlord offers a tenant a “market deal,” there should be a commission imputed into the rent. And because “market deals” typically involve brokers, landlords expect to pay a commission on every deal. That is how they underwrite their investments. So when a landlord does not pay a commission and the tenant gets a “market deal,” the commission is left on the table for the landlord, and the landlord wins.

It isn’t stripped out of the rent or disclosed that it exists. Therefore tenants may actually end up paying a premium when dealing directly with their landlord.

-Matt

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Satisfaction guaranteed

May 15, 2012

From Chelsey Fitch
Property Manager
Jones Lang LaSalle

How do you keep tenants happy during a full lobby renovation? Odds are you aren’t going to keep them completely happy since there will be inevitable disruption and inconvenience along with accessibility and egress issues.

You have to first keep them focused on the end product and how nice the space will be once it is finished. Don’t forget to keep your messages upbeat by stressing the features and benefits the renovation will have on them once complete. During the renovation keep in mind a couple of important factors.

First, communication is key. Make sure that tenants are informed of what is going to take place every step of the way. Be sure to send out periodic updates on the progress of the renovation and any changes to the original scope.
Make sure to schedule a preliminary meeting with the tenants to discuss how the renovation will affect their daily business operations and what they should expect. Be sure to clearly answer any questions or concerns they may have. Remember to keep everything positive and focus on the end result.

Give tenants a visual display of what the project will look like once complete. Make sure these sketches are clearly displayed and show how the space will ultimately look. You can say how beautiful the space will look to the tenants all day, but images make it believable.

Keeping tenants happy during a renovation project is not easy, but with clear communication and collaboration headaches can be alleviated. Remember to focus on the positive and communicate every step of the way. Happy renovations!

-Chelsey

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Hidden competition – part 1

May 11, 2012

From Matt Giffune
Vice President
Jones Lang LaSalle

This post also appears on Matt’s personal blog http://mattgiffune.wordpress.com/.

Tenant representation is perhaps the most competitive arena within the commercial real estate brokerage industry. Real estate companies large and small are all chasing the same group of space occupiers through cold calling, relationship building, networking, entertaining, etc. There is only so much business to go around.

To tenants, brokers tend to all look and sound the same. Even exclusively tenant rep firms must compete with the traditional brokerages that represent landlords. No matter what you call yourself as a broker, you have competition coming from every angle. Tenants are very demanding of their service providers to deliver more solutions for lower cost. It’s a battle out there.

There is a hidden layer of competition for tenant rep brokers – landlords. Yes, landlords compete for tenant rep business. Not in the sense that they actually represent tenants, but they absorb commissions that are otherwise to be earned by brokers who advise tenants on renewals and sometimes new deals.

I’m not suggesting that this is at all wrong or unethical. I represent landlords as well as tenants. It is simply the nature of the business. If a landlord can negotiate a favorable deal without having to pay a broker, it’s in their best interest to do so. As a tenant rep broker, however, you should be aware that the sales path may actually take you through the landlord.

-Matt

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Etched in stone

May 8, 2012

From Lori Mabardi
Research Manager
Jones Lang LaSalle

The ground breaking has occurred on a 12,000 square foot Innovation Center in the middle of the Seaport District. This is the first part of the 23-acre Seaport Square development project.

Here, start-ups will be able to meet, share ideas and innovate. See the recent Boston Globe article.

Mayor Menino is asking the community to select a name for the Center. The city has created a website for submissions. My pick is iSea Center. What do you think?

Visit http://www.wherewillyougather.org to submit your idea. The name you select may be etched on the side of the building and be part of the District’s fabric forever.

Good luck.

-Lori

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Releasing hospital pressure – part 2

May 3, 2012

From Tim King
Vice President, Healthcare
Jones Lang LaSalle

My Jones Lang LaSalle colleague Managing Director Scott Latimer was the next presenter at the MHA’s recent Healthcare Construction Conference. He began by describing his paradigm beyond zip codes for strategically locating physician and ambulatory networks based on statistical and psycho-demographic information.

In his case study of the Denver area, he found an uneven match between current sites and desired locations for serving its patient base. These types of mismatches are vital to successful location strategy, proper sizing and spacing per patient volume throughout.

Client panelists from Reliant Group and Beaumont Health System described their solution and positive results in working with Jones Lang LaSalle. They fielded questions from an audience of individuals responsible for their bottom line. I was impressed with the candor and new thinking expressed.

New England hospitals must do a better job of controlling cost and managing their real estate portfolios. Nationally the trend to consider real estate solutions is much more prevalent and accepted.

The New England market is now becoming aware. The changes will happen quickly. The use of strategic information and analysis to take advantage of market changes is part of the new way of thinking, forced by the current market difficulties.

-Tim

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Releasing hospital pressure – part 1

May 1, 2012

From Tim King
Vice President, Healthcare
Jones Lang LaSalle

The mounting pressures on hospitals and corresponding real estate solutions were addressed at the Massachusetts Hospital Association’s annual Healthcare Construction Conference last Friday. I served as moderator for a panel of my Jones Lang LaSalle colleagues, and clients titled Unlocking the Strategic Potential of Hospital Real Estate.

Industry expert Managing Director Richard Taylor kicked things off in the MHA’s new Conference Center with an outlook for hospitals 2012 and beyond. With margins between 0-2%, reimbursement (payments) sinking lower, and the uncertain future of the Patient Protection and Affordable Care Act overlaying all of this, the pressures on hospital administrators are palpable. Real estate significantly impacts a hospital’s balance sheet, and will play an important “non-clinical” role in higher efficiencies going forward.

Richard reviewed a six-step strategy for cost optimization beginning with a through audit of a hospital’s entire real estate portfolio. In a recent third party study that we commissioned through the Bloom Group, it was found that only 18% of hospital assets across the country are strategically managed. This, although strategically managed real estate has a four times greater likelihood to result in improved performance and higher margins.

Panelist and Capital Markets specialist Mindy Berman pointed out that demand for outpatient facilities is increasing, and that the financial market for this investment class is skyrocketing. By the year 2020, she expects it will represent 30% of the market. The key factor sustaining this and medical office growth is the need for institutions to add convenient, local and inexpensive locations to deliver higher percentages of appropriate care away from the major medical centers.

-Tim

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NEWiRE turns 30

April 26, 2012

From Courtney O’Neal
Associate
Jones Lang LaSalle

Yesterday the women of Boston’s real estate community donned their blazers and slid into their heels for the New England Women in Real Estate Annual Achievement Awards ceremony at the Fairmont Copley Plaza.

Marking the 30^th anniversary of NEWiRE’s founding, this year’s ceremony included Mayor Menino as a guest speaker. He congratulated the winners and thanked them for their years of hard work and dedication to Boston’s real estate community.

Channel 7 reporter Janet Wu acted as MC and introduced each award recipient recognized by their colleagues and peers. Tom Hynes of Colliers International was the first male to receive NEWiRE’s Leadership Award, for his unwavering dedication to the advancement of women in real estate.

Other recipients recognized for their willingness to chart their own path, collaborate to provide superior client service, professional achievements, and enthusiasm for giving back to the community were: Sarah Lagosh of Eastdil, Aurora Cammarata of Spagnolo Gisness, Patricia Forbes of Diversified Project Management, Stucture Tone’s Kristin Poulin, Ellen Rotherman of Red Thread, Cheeta Lorian Miho Soga of Nitsch Engineering, and Tabetha McCartney of Jewish Community Housing for the Elderly.

I congratulate the award recipients and commend NEWIRE for all that it has achieved, and look forward to the next 30.

-Courtney

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Package AC Units to Save Energy

April 24, 2012

From Bob Best
Executive Vice President
Jones Lang LaSalle

A study published late last year by the Pacific Northwest National Laboratory indicates that control strategies for existing package air conditioning units could dramatically reduce energy use in commercial buildings.

Consider that package cooling equipment is used in 46% of commercial buildings, representing over 60% of all floor space.

The study shows that basic retrofit strategies for these existing AC units would cut energy use by 24% to 35% and reduce costs by 38%. Multi-speed fan controls and demand-controlled ventilation are two of the most effective measures for improving energy efficiency. Other measures noted include air-side economizers.

The impact could be staggering. As the study notes, if only half the units in the country are retro-fitted with the “modified control package option,” the savings are equivalent to removing 16 coal-powered (200MW) power plants.

-Bob

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Rents are rising in Kendall Square

April 19, 2012

Don Domoretsky, the co-lead of our Life Science practice group in Boston, says Kendall Square rents are quickly rising. Lab space is up more than 10 percent from a year ago.

“The supply is really marginal,” he said as part of WBUR-FM’s recent two-part series on the life science and technology markets.

Case in point is 150 Second Street in Cambridge, where Skanska is developing a new 120,000-square-foot lab/research and development building on spec. The design for 150 Second Street, a 3-story LEED Certified Gold project designed by Elkus Manfredi, is conceived with environmental and energy efficiency front of mind.

Kendall Square is a ground zero for life science organizations, making it one of the most competitive and resilient markets in the nation. The rising demand for space here, however, is forcing some companies to move outside the innovation cluster of Kendall Square to the Innovation District of Boston’s Seaport District, suburban clusters along Route 128, and the Longwood Medical Area.

NAIOP’s 10th Anniversary Bus Tour on May 2 will roll through the markets that are home to the world’s leading pharmas.

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Channeling good vibes

April 17, 2012

From Lori Mabardi
Research Manager
Jones Lang LaSalle

According to a recent Jones Lang LaSalle Research study, the Seaport District stands out as one of the strongest submarkets in the US. A ranking of 118 submarkets across the top 40 metro areas ranks the Seaport District fourth in total net absorption as a percentage of stock.

Some tenants are choosing to leave neighboring submarkets to come to the Seaport. Examples include recent leases signed by Bernkopf Goodman and Boston Plan for Excellence (both coming from the Financial District), and Occhiuti, Rohlicek & Tsao, LLP (from Cambridge).

With an availability rate that has dropped 880 basis points year-over-year, and rents up a staggering 14.6% over the same period, it’s clear the submarket is in growth mode. With rent spreads to Back Bay, Financial District and Cambridge in the $7-10 range, it’s also a value play.

Something good is happening on the other side of the Channel!

-Lori