Commercial Real Estate Dynamics Lead The Advance Group to Seek Creative Solutions in Partnership with Clients.
We’ve known that 2010 was going to be a pivotal year for the industry,” says T. James Molloy. “In fact, our business plan anticipates opportunities in the midst of a challenging market. And when Mary Ann Tighe, chief executive of the New York Tri-State Region for CB Richard Ellis, was interviewed for a New York Times article recently and indicated that 22 million square feet leased in 2000 will expire in 2010 and will create a “decision point” for companies, we wanted to see how different sectors would address the dynamic between falling prices and rising inventories. We interviewed key executives, spoke to our clients, and searched the Web for the most interesting and helpful information. This is what we learned.
FIRST, HOW BAD IS IT?
CNBC recently interviewed Steve Ross, chairman of Vornado Realty Trust, and Bill Rudin, president of Rudin Management, about their outlook on the New York real estate market. Ross spoke of a “slow motion recovery,” with the market still seeking a bottom, maybe in 3-5 years. Rudin seemed a little more optimistic, noting that there has been a dramatic decrease in price of 30-40%, but he is optimistic that things aremoving in the right direction. Rudin points out that tenants aremoving to quality, the “flight to quality,” citing as an example moves from 3rd Ave. to Park Ave.
Christina Lewis, writing for The Wall Street Journal, noted “Rent for office space is falling at the fastest pace in more than a decade as vacancies create a glut and landlords slash prices to attract tenants.” Her article noted that the biggest office rent declines over the past 12 months were 18.5% in New York, the largest decline among major cities as reported by Reis Inc. The nation’s most trusted provider of impartial commercial restate performance information and analysis at the metro, sub market and property level.
While there is nothing new here, she goes on to say, “For tenants, however, falling rents represent opportunities to save. Landlords are offering concessions, in the form of free rent and build-out costs.”
The Real Share NEW YORK Conference, held on October 28th, 2009, provided additional insights. A consensus opinion, among the most influential and knowledgeable real estate leaders, was that the commercial market, if not at the bottom, was close to the bottom. Deals were in the works, people were looking, and companies were coming back. One tactic being used by buyer and seller is “blend and extend,” extending, for example, a 2-3 year lease at $80/ sq. ft. with a new lease at $40/sq. ft.
A key message was to keep a building occupied and running. It was noted that the cost to get a new tenant, including acquisition, clean up, improvements, downtime, and leasing commissions, could be as much as $100/sq. ft.
This was our hint to explore the notion of creative use, and we turned to an article by Damian Joseph posted October 8 in businessweek.com.
Joseph decided to contact some of the premier architectural and design firms to answer the question, “What could be done with vacant commercial real estate that would kick start a local or national economy?” The responses were illuminating, once again reinforcing the adage that necessity is the mother of invention.
- Office as community think-tank. Target local non-profits and community groups to use general multi-purpose space and unused office furniture.
- Office as hospitality suite. Repurpose space to connect company partners, affiliates, vendors, and interested parties. These “offices away from home” help create business value and goodwill.
- Employee Health & Engagement. Turn empty space into child play areas, quiet rooms for nursing mothers, or socialization areas. (Source: Gensler, a global architecture, design, planning and consulting firm.)
MINI CASE HISTORY
This is not an economy when a landlord can afford to lose any tenants. Strategies to retain tenants include upgrading space and condensing the footprint of existing space. However the space is reconfigured, one absolute imperative is that the tenant must keep working; no downtime can be tolerated. The Advance Group addresses this challenge with an experienced team that knows how to work with other trades and allocate the project into specific phases. On some projects, this means starting to work Friday evening and finishing before the doors open Monday morning. Other projects require the use of swing space, where furniture and electronics are dissembled then reassembled in a temporary location without the least interruption to productivity.
THE ADVANCE GROUP CREATIVE OPPORTUNITIES TEAM
We at The Advance Group don’t have a crystal ball on the economy, and there are obvious concerns about it. But we’ve learned that a creative attitude can open new opportunities. That is why we’ve set up our own Creative Opportunities Team to help our clients explore new options. We’re set up to brainstorm ideas, and provide value-engineered solutions from our side of the business.
For example, our furniture installation unit can help with the latest ideas in space utilization and furniture re-deployment. Our storage solutions unit can help identify ways to reduce space needs while also improving compliance. And, our integrated services can produce moving solutions that ensure the best final cost. Contact Anthony Parziale at 1-800-448-4807, ext. 249. It’s another way we can help move you into the future.
Vivian Aronica and Kevin Murray Join The Advance Group Sales Team
Hiring Now Means We Are Creating a Better Tomorrow. Most companies are not exploring new strategies to create future growth. It was with thought in mind that The Advance Group hired Vivian Aronica and Kevin Murray as key members of their new business acquisition strategy.
Vivian joins as Director of Business Development, a newly created position. “Vivian brings exceptional energy and selling skills to every assignment.” said Mr. Parziale, VP of Sales and Marketing. Vivian has over 8 years of industry experience and know how. Not only is she well versed in all facets of office moving but her previous years of versatile sales experience brings flexibility and problem solving to developing new relationships. “I am thrilled to be part of The Advance Group,” she says. “Jim Molloy has developed an incredible team, and has invested in the finest marketing materials and customer service programs in the industry.”
Kevin joins as Vice President, Sales. His experience includes project management for some of the biggest names in both corporate and government sectors and moves of all sizes, including moving Smith Barney across New York City to managing the relocation of 3,300 people as part of a Naval Air Command 3-year project. A veteran of the FITCO start-up, Kevin later managed his own company, Relocation Logistics, with clients such as Limited Brands (Victoria’s Secret) and Oppenheimer.
“The decision to join The Advance Group was an easy one, especially after I reviewed the new selling tools. There’s nothing like it in the industry,” states Kevin.
“We have a great team and it will continue to get better. I’m pleased with how our new team members are blending with our seasoned veterans, and that concrete results are already being made,” adds Jim Molloy.
RXR REALTY LLC
Project: North Shore Regional office space at 35 Pinelawn Road in Melville.
Scope: Pack and move contents, computer equipment, and furniture for 80 employees in order for renovations of office space to take place. Disassemble, move, & reassemble all workstations. Project was to be done in 3 phases over 3 weekends and to be coordinated with construction, new carpeting installation, and painting of office space.
Challenge: Project had to be accomplished on a tight schedule with zero downtime to the tenant. Move out had to take place on Friday evening and move back had to take place on Sunday afternoon. Our Project Management Team and labor had to work in conjunction with other trades in order to complete the project on time.
Results: North Shore Regional experienced no downtime and it was business as usual on Monday morning following each phase.
“The Advance Group always delivers for me. Our projects always require working on a tight schedule with zero downtime to our tenants. When new challenges arise, The Advance Group’s Project Management Team is always ready to provide creative solutions.”
Carlton Wenz – Sr. V.P. Leasing, Long Island Division.
SAGE PARTS PLUS INC.
Project: Move facility from 35 Dubon Court in Farmingdale to 30 Hub Drive in Melville over one weekend.
Scope: Move 35 truckloads of contents, computer equipment, and office furniture for 75 employees. Sequentially pack, move & unpack entire parts inventory totaling 400 shelving units.
Challenge: On Friday night of move weekend, the management of Sage realized they would not be able to move the contents of their warehouse on-time utilizing their own warehouse staff.
Results: The Advance Group responded immediately with 2 Project Managers, 25 Movers, & 5 Trucks. The move was completed on-time and Sage’s facility in Farmingdale was completely moved over the weekend.
“Anthony Parziale and his team are organized and professional. Kevin Lewis is a great Project Manager. He was able to draw upon extra resources in an instant. The project couldn’t have succeeded without him and The Advance Group.”
Harry Zuckerman – Vice President, Operations
THE ATLANTIC GROUP
Project: Royce & Associates, LLC- furniture installation project at 745 5th Avenue.
Scope: Deliver and install office furniture for private offices, open area workstations, and conference rooms for 200 employees across four floors at new headquarters. FITCO the furniture installation business unit of The Advance Group worked with representatives from The Atlantic Group, Ted Moudis & Associates, Arnold Furniture, Aragon Construction, and Royce & Associates. Planning began months in advance.
Challenge: Work with a variety of other trades in raw space to build and install complex workstations, high-end furniture, and millwork. The project required the precise installation of custom workstations, private office furniture, conference tables, bookcases, and a custom reception desk. The project had to be completed on a tight schedule over one month, allowing only 1 week per floor.
Results: The project was successfully completed on time. FITCO’s Project Management Team was on site when the office opened to give employees their keys, show them their new workspace, and explain how to use and adjust their furnishings.
“The FITCO’s Project Management Team really took the time to explain things to me and be sure I understood what they needed from me to keep the project on track and within budget. Their attention to detail totally makes them stand out from the pack.”
Cheryl Williams – Project Manager, The Atlantic Group