Jodi Summers = Office Real Estate

GOOD FOR A BAD MARKET – LOS ANGELES OFFICE REAL ESTATE

May 9, 2012 on 4:44 pm | In Fascinating Information, Green, Solutions, Statistics, Trends, Uncategorized | 4 Comments

By Jodi Summers

The Los Angeles office real estate market is still unimpressive, but, believe it or not, we’ve got it better than most, thanks to our focus on green and technology.

“The energy and the tech-driven markets are the clear standouts right now. It has become a reoccurring theme that markets in Texas and California are leading the nation in most demand and rent growth metrics,” supports Kevin Thorpe, Cassidy Turley’s chief economist.

While San Francisco led the country in rent growth compared to a year-ago, Los Angeles ranked in the top 10 markets, along with San Jose, Seattle, Austin, Denver, Miami, Orlando and Raleigh, NC. Overall, the West region led the way with the largest amount of new net demand, followed by the South, then the Midwest and the Northeast, respectively. Nationwide, nearly one third of markets reporting an uptick in sales.

“We are at a point where there is healthy job creation, but over 50% of the jobs created in recent months using office space were temp jobs,” shares Thorpe. “These jobs don’t move the needle immediately for the office sector, but they do set the stage for much stronger demand numbers down the road.”

Export statistics note that U.S. office rents hit bottom at the end of 2010. But given that there are still high vacancy levels, lease rates are not expected to increase anytime soon. It’s anticipated that office asking will increase by approximately 1% this year.

“Overall, the first quarter presented a mixed bag of results and expectations for the rest of the year,” notes John Sikaitis, senior vice president of research at Jones Lang LaSalle. “While the recovery slowed during the quarter, it remains intact.”

Technology expansion and startup activity gained momentum in almost every market with prospects for growth. Additionally, energy-heavy markets posted some of the largest leases and witnessed sales momentum and speculative new construction.

“Looking ahead to the remainder of 2012, markets will continue to recover, and in some cases contract, at different rates of speed,” observes Sikaitis. “Overall rents across most markets will grow, but at slow and measured paces unless some significant cushion of technology or energy pockets exist.”

http://www.costar.com/News/Article/Brokers-Report-CRE-Deal-Activity-Decelerating/137281?ref=/News/Article/Brokers-Report-CRE-Deal-Activity-Decelerating/137281&src=rss

http://www.socalofficerealestateblog.com/?p=2119

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SOCAL OFFICE REAL ESTATE SNAPSHOT – MAY 2012 > EXPERTS ARE OPTIMISTIC

April 30, 2012 on 12:21 am | In Fascinating Information, Market Snapshot, Trends, Uncategorized | 2 Comments

by Jodi Summers

Many of the experts say that Los Angeles office real estate is one of the strongest markets in the country, and yet building owners around Los Angeles are still crying for tenants. Believe it or not, we do have it better than most > thanks to our focus on new, small business models like green and technology. This thrust encouraged smaller businesses to lease office space during the first quarter of 2012, as well as contributing to the private sector adding 2.1 million jobs in the past 12 months.

“Rents have come down, space is cheap relative to history, and companies are taking advantage of that to move, upgrade or expand into new space, and we’ve seen steep increases from the bottom of the market in 2009,” notes Jay Spivey, CoStar senior director of research and analytics. “These leasing levels rival what we saw in the 2000 dot-com period.”

For the first time in several years, none of the top 20 U.S. office markets reported job losses in 1Q 2012. Leasing is now dominated by smaller tenants, with over 50% of transactions involving blocks of space measuring 2,000 square feet or less. At the same time, large tenants are very rare in the market, with transactions over 50,000 square feet representing less than 1% of total activity.

These signs of optimism are inspiring office building buyers. Nationally, the price per square foot has been creeping up to the $200/sf mark while cap rates have been dropping. Los Angeles has been the 8^th most popular market for office building purchases in the country over the past year.

Marcus and Millichap research notes that Los Angeles had an office vacancy of 15.2% at the end of the first quarter, down .3% from the previous year. The great recession has been tougher on California than other states. If you look at the numbers, Los Angeles, the second largest city in the country, ranks #15 in employment growth.

California will likely see continued slow, steady gains in employment through 2012, with the rest of the country and the state’s international trading partners inspiring faster growth in the coming years. The UCLA Anderson Forecast calls for a steady decrease in the California unemployment rate over the next two years, following a slow trajectory towards single-digit unemployment by the end of 2013 and reaching 7.7% by the end of 2014.

The Anderson Forecast calls for California employment growth of 1.9% in 2012, 2.0% in 2013 and 2.6% in 2014. Payrolls will grow more slowly, at 1.3%, 1.9% and 2.5%, respectively. Real personal income growth is forecast to be 2.4% in 2012, followed by 2.1% in 2013 and 3.2% in 2014.

The Employment Development Department notes that California’s unemployment rate rose .1% to 11.0% in March – a year ago, the unemployment rate was 11.9%. In Los Angeles County, the unemployment rate remained unchanged last month at 11.8%. In March 2011, the unemployment rate was 12.2%. Last month, total nonfarm employment expanded by 12,800 jobs. Between March 2011 and March 2012, the number of jobs in Los Angeles County increased by 36,700 or by 1.0%.

We’re here to help you with your commercial and investment property needs. Please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

http://www.costar.com/News/Article/Brokers-Report-CRE-Deal-Activity-Decelerating/137281?ref=/News/Article/Brokers-Report-CRE-Deal-Activity-Decelerating/137281&src=rss

http://www.socalofficerealestateblog.com/?p=2112

http://uclaforecast.com/contents/archive/2012/media_32812_1.asp

http://www.costar.com/News/Article/Office-Market-Nears-Rent-Growth-Tipping-Point/137927?ref=100&iid=278&cid=383F14EEE265B182474DA2442BACBBBF

http://laedc.org/eedge/index.html#1

GREENING OFFICE REAL ESTATE AT WARP SPEED

April 20, 2012 on 12:54 am | In Fascinating Information, Government, Green, Property Maintenance, Trends, Uncategorized, Winning Properties | 3 Comments

by Jodi Summers

We evolve and we learn. When it comes to building efficiency, we are advancing at warp speed. The Department of Energy has revealed that buildings meeting the new 2010 energy efficiency standard will conserve 18.5% more energy than structures using the previous 2007 DOE standard. It’s like making the jump to hyperspace.

The DOE did some pretty serious study to come up with the new codes. For its findings, DOE simulated 16 representative building types in 15 U.S. climate locations. In addition, they analyzed the energy codes published by the American National Standards Institute/American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the Illuminating Engineering Society of North America.

The evolved 2010 standard covers a wide spectrum of the energy-related components and systems in buildings ranging from simple storage units to complex energy usage locations like hospitals and laboratories. The size of the structures also ranged from under 1,000 square feet to the largest buildings in the world.

States are expected to review Standard 90.1, Energy Standard for Buildings and update their building code to meet or exceed the energy efficiency of the new standard within two years. Certification statements by the states are due October 18, 2013.

California requires our state-developed commercial code the 2008 Building Energy Efficiency Standards, comprising Title 24, Parts 1 and 6, of the California Code of Regulations.

The DOE boasts that the newer version of the standard contains 19 positive impacts on energy efficiency. Among the modifications are new requirements for daylighting controls under skylights; increased use of heat recovery; cool roofs in hot climates; skylights and daylighting in some building types; reduced ventilation energy; supply air temperature reset for non-peak conditions; efficiency requirements for data centers; control of exterior lighting; and occupancy sensors for many specific applications.

Over a 20-year span, green buildings can $53 to $71 per square foot back on investment. LEED and Energy Star certified buildings achieve significantly higher rents, sale prices and occupancy rates as well as lower capitalization rates potentially reflecting lower investment risk…and green buildings make the world a better place.

http://www1.eere.energy.gov/buildings/news_detail.html?news_id=17913&utm_source=Listrak&utm_medium=Email&utm_term=http%3a%2f%2fwww1.eere.energy.gov%2fbuildings%2fnews_detail.html%3fnews_id%3d17913&utm_campaign=Green+Building+Update+-+December+19%2c+2011

http://en.wikipedia.org/wiki/Green_building

http://www.energy.ca.gov/title24/2008standards/

http://www.energycodes.gov/status/documents/Standard_901-2010_Final_Determination.pdf

http://www.energycodes.gov/commercial.stm

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10 STEPS TO A MORE ENERGY EFFICIENT OFFICE

April 10, 2012 on 12:52 am | In Green, Office Fodder, Property Maintenance, Trends, Uncategorized | 1 Comment

Edited by Jodi Summers

We all need to live greener. Here are some innovative, inexpensive approaches to greening your real estate:

1. Start with a clean slate. Instead of reducing consumption, start with nothing and justify how much energy you actually need. Do you need to install a high-efficiency air conditioner or are you able to retrofit the building so effectively that it doesn’t need air conditioning? Limbo, limbo, limbo how low can you go should your approach to building energy performance.

2. Mind the Gaps. Air infiltration grows with time. Check the weather-stripping at doors and windows and seal those cracks. Don’t know where to start? Get a building energy audit (through your utility) with infrared imaging to show exactly where the heat is escaping. You will be surprised at what you see.

3. Simple task, big saving. Install light switches with built-in occupancy and/or daylight sensors in every room. Buy task lamps so employees have spot lighting as needed. Create a lighting landscape; you’ll realize you probably need only half the level of ambient lighting you’re using. And if your HVAC system isn’t programmed, that is a 21st century must-have for homes and commercial buildings.

4. Retro Fits. Retro-commissioning applies a quality assurance process “retroactively” – to an existing building. It consists of investigating how and why a building’s systems are operated and maintained and identifying ways to improve overall

building performance.

5. Community Green. Support energy efficiency financing programs in your community, and chamber of commerce. New programs may include third-party businesses paying for efficiency upgrades through your property taxes (PACE) and “on bill” through your utility. Properties greened through these programs produce predictable, replicable and relatively low-risk value in energy efficiency.

6. Golden State. California is the Golden State, clear up the window clutter and let the sun shine in. Perhaps a little selective demolition to open up the work areas, improves the space plan, and let the sun shine in. An easy fix > a fresh coat of light-colored paint and replace those depressing yellowed ceiling panels. Watch your employees get more enthusiastic about coming to work.

7. Film your windows. Window films have transformed in the past decade. Gone are the tinted sun shades. New retrofit films are practically clear and achieve nearly 50% heat rejection – both inside and outside, depending on the season. Combine this with sealing and retrofitting your windows for exceptional performance.

8. Ducts + seals. We’re not talking wildlife here. Recent studies indicate that leaking ductwork is one of the primary construction defects in both commercial and residential buildings, with common repercussions resulting in 10-25% leakage in commercial buildings and ridiculously more in homes. Do yourself a fever and check existing ductwork for leakage. A number of terrific elastomeric products are available for addressing this.

9. Made in the shade. Add awnings, trees, green roofs. In Southern California we need to do what we can to cool our buildings. Indirect lighting is much more effective than the sun streaming through your afternoon energy.

10. Congratulate yourself. Human behavior has a huge impact on energy efficiency. Studies suggest people influence building energy consumption between 12-17%. Create a green team, install a real-time energy and water consumption display, monitor every aspect of the building’s performance and reward facilities staff for great management.

Bravo.

http://www.greenbiz.com/blog/2011/12/28/10-ways-boost-your-buildings-energy-efficiency-2012

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SOCAL OFFICE REAL ESTATE SNAPSHOT – APRIL 2012 > FORWARD PROGRESS?

March 30, 2012 on 10:35 pm | In Market Snapshot, Statistics, Trends, Uncategorized | 2 Comments

by Jodi Summers

The Los Angeles office real estate market is in motion. After being beaten up and left lie in a pool of its own excrement, a helping hand from a stranger – a.k.a. outside investors – has had the impact of Michelangelo’s God creates Adam in sending the jiggle of life into the Los Angeles area office real estate marketplace. As spring arrives office real estate market is moving forward with faith in salvation.

The median sale price per square foot for office properties in the metro Los Angeles area has been recuperating and gaining strength for the past four months.

Loopnet notes that the current median sale price of office space in metro L.A. is $197.11 < 25.2% below the highest median sale price over the past three years < $263.42 in March 2009. Our grace, the current price is 4% higher than the three-year-low set in November 2011.

This hope comes as employers added workers for the 17th consecutive month; with strong private-sector job growth is propelling the recovery. February saw the addition of 42,000 full-time, office-using positions, and 415,000 jobs over the past year. According to Marcus & Millichap’s Research Brief blog, employers are backfilling unused desks and cubicles that linger as reminders of the recession. New, expanded space needs will continue to emerge and generate nearly 47 million square feet of net absorption during 2012, with vacancies falling to 16.6% nationally…

This optimism is not reflecting in asking prices > Office buyers, if you’re looking for value, now is the time! For office properties for sale in the metro Los Angeles in February area for the month, the average asking price was $239.98 per square foot, a new three-year low, and a year-over-year decline of 3.4%.Prior to this, the record three-year low was in August 2011 at $240.59.

“Orange County and San Diego are among the Sunbelt markets which have surpassed the national average in total non-farm, total private, professional and business-services job growth, driving positive net office absorption,” explains Peter Belisle, southwest market director for Jones Lang LaSalle, on GlobeSt.com. “Los Angeles and Las Vegas have registered below-average rates of growth, but both geographies have seen growth in nearly all employment sectors turn into positive territory at the end of 2011 and gain traction in recent months, a sign that these geographies are finally joining the recovery.”

Those at the Bureau of Labor Statistics are saying that nationwide unemployment was holding @ 8.3% February > the lowest level in three years. Los Angeles is holding @ 11.8% For office properties in metro L.A. in February, the average asking lease rate was $21.87 per square foot < their lowest price in three years! Year-over-year this translates to a drop of 1.1% and a decline of 0.3% from the end of the fourth quarter of 2011. This month, lease rates for office properties are at their lowest in three years.

Looking for growth areas – and / or work? Expanding professional and business-service payrolls offset the loss of 18,000 financial-activities and information-sector positions, yielding a net gain of 32,000 full-time office-using jobs. Pundits expect the office vacancy rate at the end of the year to be down to 16.6%.

“The Sunbelt markets witnessed substantial drops in their overall economies in 2007-2009, with relatively no recovery in 2010-2011,” says John Sikaitis, senior vice president of research at JLL. However, despite ongoing negative perceptions, most of these markets are undergoing resurgence and poised for dramatic changes in 2012 and beyond.”

http://www.globest.com/news/12_310/losangeles/office/Job-Growth-Fuels-All-Sectors-Increases-Demand-Nationwide-319735.html

http://www.globest.com/news/12_313/losangeles/office/Resurging-Sunbelt-Economies-Point-To-Office-Growth-319871.html?ET=globest:e29728:277110a:&st=email

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http://blog.marcusmillichap.com/2012/03/14/hiring-momentum-adds-to-recovery-strength-surging-oil-prices-and-election-year-uncertainty-still-pose-risk/

http://blog.marcusmillichap.com/2012/02/03/economy-builds-momentum-as-january-hiring-surpasses-expectations-continuing-risks-warrant-caution/

http://www.loopnet.com/Los-Angeles_California_Market-Trends

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GOOGLE GREENS LEASED LOCAL LANDMARK OFFICE SPACE

March 25, 2012 on 12:02 am | In Bravo, Fascinating Information, Green, Historic Properties, New Developments, Property Maintenance, Uncategorized, Websites, Winning Properties | 3 Comments

450 ENGINEERS INVADE DURING NOVEMBER

By Jodi Summers

Google has about 170,000 square feet of office space under lease in the Venice area, 100,000 of it in the three buildings it has leased, the Binoculars Building and two adjacent office spaces.

Williams said that another 70,000 square feet at undisclosed locations has also been leased nearby, a common Google practice that ensures the company can maintain a long-term place in the community.

“We managed to hire almost 150 people last year,” Williams said. “We expect a steady rate of hiring, continuing to grow. The building we’re moving into should give us another year to a year and a half at current growth. Ideally, I’d like to keep it under 1,200 Googlers.” Williams acknowledged that things could change however.

Binocular building. By the time the press is over, you’ll know that it was built by Frank Gehry in 1985 as the west coast headquarters of advertising giant Chiat/Day. You’ll learn that the binoculars are the entrance to the parking garage, and that they were designed by husband and wife sculpting team Claes Oldenburg and Coosje van Bruggen. Dig deep enough and you may read about Chiat/Day’s failed office and paper-less work experiment, and that the three different building facades are actually a part of the same design, meant to reflect the nuances of the buildings around them.

When creating fresh office space, use a fresh approach. Google’s idea for their new space on Main St. Venice, put the user first. For the same reason Google chose one of the hippest locations in the country for their office space > 340 Main St., Venice, 90291 > in hopes of luring the best talent. They’ve taken the same approach to their office space in the Binoculars building > make it a user-friendly experience.

Google’s goal (try saying that 5x fast) is to create the healthiest work environments possible so Google masterminds can thrive and innovate. From concept through design, construction and operations, the search engine’s goal is to create a brick + mortar workplace that optimizing access to nature, clean air and daylight.

To keep the Google brain trust at peak performance, they avoid materials that contain volatile organic compounds (VOCs) and other known toxins that may harm human health. Furniture, carpet, flooring, toilets > all green, and augmented by dual stage air filtration systems to eliminate plankton-like particles and remaining VOCs, further augmenting indoor air quality. Or, they could Additionally, the location is so fine, they cay just open the west facing windows and let the ocean breeze come rolling through, as it does from 10:30 a.m. – sunset on all days except for Santa Ana conditions.

Betcha want to know > in North America, Google purchases materials free of the Living Building Challenge Red List Materials and EPA Chemicals of Concern, and through the Pharos Project. They also ask their suppliers to meet strict transparency requirements.

Google is also making an effort to shrink our environmental footprint by investing in the most efficient heating, cooling and lighting systems (and opening the windows). In Venice, like in their other offices, they will perform energy and water audits and implement conservation measures to develop best practices. Venice’s efficiency will be tallied into Google’s worldwide office talley.

Their internal Sustainable Pursuit program allows location teams to earn points based on their office’s green performance—whether it’s through green cleaning programs, water efficiency or innovative waste management strategies. Using Google Apps to help track progress and achieve set goals has helped Google meet or exceed the U.S. Green Building Council’s LEED standards, and make the world a greener place.