Jodi Summers = Office Real Estate

AB 1103 SAYS IT’S TIME TO MONITOR COMMERCIAL ENERGY USAGE

by Jodi Summers

Time flies. Do you remember back in 2007 when Arnold Schwarzenegger was governor and the state assembly passed AB 1103 Commercial Building Energy Use Disclosure Program? It was supposed to begin in 2010, but of course, it got changed and delayed and modified and finally, low and behold, the time to disclose energy data is upon us. The first phase of the Energy Use Disclosure Requirements begins July 1, 2013.

To refresh our memories, Assembly Bills 1103 and 531 require owners of nonresidential buildings located in California to disclose energy usage of such buildings in advance of any sale, lease, or financing of the entire building.

NEW RULES

Here is the schedule for when commercial buildings need to keep and disclose energy usage records:

1. On and after July 1, 2013, for buildings with a total gross floor area of more than 50,000 square feet;

2. On and after January 1, 2014, for buildings with a total gross floor area between 10,000 square feet and 50,000 square feet; and

3. On and after July 1, 2014, for buildings with a total gross floor area between 5,000 square feet 10,000 square feet.

AB 1103 and 531

Assembly Bill 1103, signed into law on October 12, 2007, requires the tracking of the energy use of all nonresidential buildings and the disclosure of such energy use as part of the sale, lease, or financing of an entire nonresidential building. T

The disclosure requirement is intended to “motivate building operators to take actions to improve their buildings’ energy profiles” and “to allow building owners and operators to compare their buildings’ performance to that of similar buildings and to manage their buildings’ energy costs.”

Since we’re talking government, AB 1103 then added Section 25402.10 which contained a compliance deadline of January 1, 2010. Assembly Bill 531 removed that deadline, and replaced it with the disclosure of energy usage data on a schedule of compliance established by the State Energy Resources Conservation and Development Commission.

HOW TO COMPLY

Compliance with Assembly Bills 1103 and 531 expects owners of nonresidential buildings to take certain actions at least 30 days before the sale, lease, or financing of the entire building.

1. Register for an account with “Portfolio Manager,” the U.S. Environmental Protection Agency’s ENERGY STAR program online tool for managing building energy use data.

2. Create a profile within Portfolio Manager for the nonresidential building.

3. Use Portfolio Manager to request that utilities serving the building release the last 12 months of energy use data for the building to Portfolio Manager. What you’ll get is:

• Disclosure Summary Sheet;
• Statement of Energy Performance;
• Data Checklist; and
• Facility Summary (collectively, the “Disclosure Data”).

4. After the utility data has been provided, download the Disclosure Data; and provide the Disclosure Data as part of the sale, lease, or financing.

(Regulations section 1683(a) + 1684(c).)

Here’s the curious caveat, there is no specific penalty for non-compliance, but a failure to disclose a building’s energy usage could be viewed as a material fact in the transaction.

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http://www.allenmatkins.com/en/Publications/Legal-Alerts/2013/02/02_19_2013_Energy-Use-Disclosure-Requirements.aspx?utm_source=Listrak&utm_medium=Email&utm_term=http%3a%2f%2fwww.allenmatkins.com%2fen%2fPublications%2fLegal-Alerts%2f2013%2f02%2f02_19_2013_Energy-Use-Disclosure-Requirements.aspx&utm_campaign=Green+Building+Update+-+February+21%2c+2013

http://www.socalgreenrealestateblog.com/?p=2656

http://www.allenmatkins.com/Publications/Legal-Alerts/2013/02/02_19_2013_Energy-Use-Disclosure-Requirements.aspx

http://www.socalofficerealestateblog.com/?p=2348

http://www.energy.ca.gov/ab1103/

http://www.socalmultiunitrealestateblog.com/?p=2368

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SOCAL OFFICE REAL ESTATE SNAPSHOT – MARCH 2013 – THE GOOD NEWS IS SPREADING

by Jodi Summers

Have you been wondering how the job market fared during Mr. Obama’s first term? The economy added 594,000 jobs through October of 2012, according to the Wall Street journal. Private sector payrolls rose by $1.9 million. We continue on…since the President’s re-election we have been on a strong path. November showed robust job creation at 247,000 new jobs.

The U.S. unemployment rate was at 7.9% in January. Los Angeles County unemployment stood at 10.2%, according to latest figures.

Office real estate is showing a sign of life as the economy comes out of hibernation. In January 2011, no office properties were sold in Los Angeles, according to Clarus Market Metrics. January 2013 saw 5 office properties sold. Infinitely better than 0.

And, here’s something noteworthy about office properties that are selling < notice that they are selling are spending a fraction of the time on the market. In January, office properties sold in 103 days, while the average office property had spent 932 day on the market. So, if you figure 60 days to close escrow, these properties are priced right, desirable, and well market, so they’re getting chosen early in the market cycle. Selling at the rate of 5 per month, there is an estimated 46-month supply of office buildings available for sale in Los Angeles.

Another positive sign for office real estate > tenant demand is up, opening the door for widespread rental rate increases this year, according to CoStar Group’s Year-End 2012 Office Review & Outlook.

Nationwide, in the fourth quarter, tenants absorbed a net 24 million square feet of space, bringing the 2012 total to 59 million square feet of net absorption for the year, up from 41 million square feet in 2011.

Texas continues to be strong with Houston and Dallas-Fort Worth in full recovery. Former recession-hammered metros like Phoenix, Atlanta and Orange County, CA, where the local economies have benefited from increased office hiring and a gradually improving housing market. Finally, Phoenix office vacancy rates have fallen under 20%.

Rent growth rose 1.7% year over year in 2012 and still is moving upward. CoStar projects that average growth will reach 3% next year. The rising rent phenomenon will be beyond A-list, A-market properties, but will spread to more markets as limited supply is absorbed. Secondary and tertiary markets, get enthused…but not so much…

Employers still need to add more than 3.2 million jobs to get back to the level of employment in January, 2008.

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.

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http://blogs.wsj.com/economics/2013/02/01/obamas-jobs-record-looks-better/

http://www.costar.com/News/Article/Recovering-Office-Demand-Sets-Stage-For-Rent-Growth-Across-The-US/145245?ref=100&iid=320&cid=383F14EEE265B182474DA2442BACBBBF

http://laedc.org/eedge/archive/2013/ee020413.html#2

http://www.calmis.ca.gov/file/lfmonth/la$pds.pdf

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http://static.guim.co.uk/sys-images/Admin/BkFill/Default_image_group/2011/10/13/1318504054832/Cycling-students-006.jpg

http://www.socalofficerealestateblog.com/?p=2342

WINNERS SHARE THEIR VISION OF THE OFFICE BUILDING OF THE FUTURE

by Jodi Summers

NAIOP, the Commercial Real Estate Development Association, has chosen four companies as winners of its inaugural Office Building of the Future design competition….and one is a local hero.

The winners of this competition are:

Gensler, Los Angeles, Calif.

Hickok Cole Architects, Washington, D.C.

The Miller Hull Partnership, Seattle, Wash.

Pickard Chilton, New Haven, Conn.

The Office Building of the Future submissions detailed each firm’s vision and concept plan for utilization trends, sustainability and new building technologies. Each company submitted site plan views and perspective sketches that highlighted future building features, materials, technology and trends, and hard cost budget estimates.

The winners identified several common themes that will drive change in what is considered an “office” in 2020. The biggest change is from personal technology, employees more capable of completing service and information-based tasks wherever they choose. The advantage of the office of the future is that it will provide an array of flexible workspaces.

Gensler – Los Angeles’ own Gensler Architecture has the vision of a “hackable” building which they define as “an existing structure that has been updated beyond recognition and that incorporates a diverse mix of multiple uses within a building.” According to Gensler, “Hacking is a culture, not a technology. We believe it represents the most dynamic, pragmatic and sustainable vision for the future of office buildings and the future of work.”

Hickok Cole Architects – According to Hickok Cole Architects’ winning submission, “No one is tied to a desk and there are ample opportunities for diverse work environments, such as lounge work areas, communal tables, benching areas, hive configurations, individual work stations, and shared office amenities.”

The Miller Hull Partnership – The Miller Hull Partnership’s b(HIVE) concept represents “a building that becomes a part of an agile, adaptable business machine, somewhere between a hands-on community and the raw edge of technology.” Their vision includes 1) flexible, open space that is fast and inexpensive to build; 2) collaboration space that is carefully customized for tenants and easy to reconfigure; and 3) retail space on the ground floor with a diverse mix of uses.

Pickard Chilton – Pickard Chilton’s approach identifies three distinct principles. 1) Human qualities: A healthy workplace that is conducive to the productivity and well-being of employees, with qualities such as abundant natural light, access to fresh air, customizable work areas and greater collaboration spaces; 2) Business objectives: Innovative design and construction, efficient floor plates and multipurpose spaces support the owner’s business objectives; 3) Sustainability: The office building of the future incorporates an advanced system monitor to track, measure and display data about building performance to allow potential tenants to make informed decisions about their workplace and enable a high-performance building to stand out within a highly completive real estate market.

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http://www.naiop.org/en/About-NAIOP/News/NAIOP-News/2012/091812-NAIOP-Inaugural-Office-Building-of-the-Future-Design-Competition.aspx

http://ad009cdnb.archdaily.net/wp-content/uploads/2012/11/1353660790-genslers-hackable-buildings-2-537×358-528×352.jpg

http://www.socalofficerealestateblog.com/?p=2300

http://www.washingtonpost.com/business/capitalbusiness/reimagining-the-hoover-building-on-pennsylvania-ave/2012/10/26/d45141ca-1fac-11e2-9cd5-b55c38388962_gallery.html#photo=1

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http://www.naiop.org/~/media/eLibrary/Development/1180peachtree_symphonytower.ashx

THE OFFICE OF THE FUTURE

by Jodi Summers

Corner offices and cubicles are so last century. The new millennium workspace is versatile, with options for focused, individual work and also fully equipped to support collaborative groups, team projects and social interaction.

NAIOP, the Commercial Real Estate Development Association, recently held the Office Building of the Future design competition. The winning designers identified several common themes that could drive changes in how we “office” in the future. The biggest driver for change is personal technology, which has untethered workers from by providing the capability of completing service and information-based tasks from wherever they choose. An individual with a laptop can work from home, or at a wi-fi equipped location, or any variety of locations along the road.

The company of the future doesn’t have one grand office rather they have several smaller hub locations, closer to their workforce and rapid transit. This will result in a reduction of the average size of any individual office location, but shouldn’t impact demand.

“Office design is changing rapidly and our industry needs to position itself ahead of the curve,” offers Thomas J. Bisacquino, NAIOP president and chief executive officer. “This unique competition opened the door to thinking about what an ‘office’ may look like in the very near future.”

On the green side, the office building of the future should also be more affordable to build and operate, thanks to advances and cost reductions in construction materials and systems. Sustainability will become financially viable. Net-zero buildings will meet the demands of tenants as well as the improved building performance sought by building owners and developers.

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http://www.naiop.org/en/About-NAIOP/News/NAIOP-News/2012/091812-NAIOP-Inaugural-Office-Building-of-the-Future-Design-Competition.aspx

http://www.youtube.com/watch?v=XRv46VioM-Y

http://www.socalofficerealestateblog.com/?p=2297

http://ad009cdnb.archdaily.net/wp-content/uploads/2012/11/1353660790-genslers-hackable-buildings-2-537×358-528×352.jpg

http://www.naiop.org/~/media/Images/Home%20Page%20Images/MemberNews05_960x385.ashx?mw=960&mh=385

http://ad009cdnb.archdaily.net/wp-content/uploads/2012/11/1353660796-genslers-hackable-buildings-3-528×351.jpg

http://naiop.dev.berndtgroup.net/~/media/eLibrary/Development/officeoffuturebostonconsulting.ashx

http://www.costar.com/News/Article/Mixed-Use-20-The-Office-Building-of-the-Future/143317?ref=100&iid=306&cid=383F14EEE265B182474DA2442BACBBBF

SOCAL OFFICE REAL ESTATE SNAPSHOT – FEBRUARY 2013 > LOOKS LIKE A DEAL, SMELLS LIKE A DEAL…

by Jodi Summers

Everyone is looking at real estate in the Los Angeles office market because it looks like a deal. Sales velocity for Los Angeles county office buildings accelerated 54% in the last year…and prices were still on the decline. The median sale price for office properties sold in 2012 was $184 per square foot, according to a recent Marcus and Millichap study. This is a drop of 9% year-over-year, and close to $100 per square foot lower than the market high.

Countywide, cap rates on occupied office building sales averaged in the high-6% range over the past year; with best-in-class properties trading closer to 5%. Stabilized office properties in outlying areas of the county changed hands in the 7% area.

Although investors are still prominent in the office real estate market, more owner users are getting back into the game. In 2012, county employers hired 52,000 workers – a 1.4% increase from 2011. As far as businesses using office space go, growth strength was in technology and legal.

Looking forward, this year, office-using employment is expected to expand 3% as 29,000 individuals are added to payrolls. Prognosticators predict that asking rents in Los Angeles County will rise 1.0% to $32.40 per square foot. Looking back, in 2012, the average asking rent for Class A space advanced 0.9% year-over-year to $37.43. Class B/C asking rents hiked 0.6% over the same time to $25.70 per square foot. In the previous year, Class A and Class B/C asking rents decreased 1.4 and 0.5%, respectively.

Class A office space in Los Angeles begins the year with a 14.3% vacancy rate. Vacancy for Class B/C office space is at 16%. In 2013, it’s believed that the 14.9% office vacancy rate we have seen for the past two years will shrink.

Developers, sniffing opportunity, completed construction projects totaling 116,000 square feet of space over the last four quarters, amounting to a 0.1% increase to stock…but that’s just the beginning…the planning pipeline has 6.7 million square of office space begging for construction, with a majority of new construction concentrated in the San Fernando Valley and Westside Cities submarkets.

In 2013, builders will complete 1.1 million square feet of office space, up from 309,000 square feet of space added last year, and surpassing the most recent five-year average completion rate of 820,000 square feet annually.

It looks like opportunity…it smells like opportunity…is it? Yes…positive momentum is finally returning to the Los Angeles office real estate market.

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.

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http://www.marcusmillichap.com/research/reports/Office/LosAngeles_3Q12_LOR.pdf

http://www.socalofficerealestateblog.com/?p=2320

http://www.gallup.com/poll/159863/americans-tough-improving-job-market.aspx

http://www.cbpa.com

http://www.theatlanticcities.com/jobs-and-economy/2013/01/top-us-metros-year-end-2012-pay-increases/4343/

http://www.costar.com/News/Article/Do-a-Few-Good-Weeks-Portend-a-Good-Year-Ahead-/144948?ref=100&iid=319&cid=383F14EEE265B182474DA2442BACBBBF

http://topics.time.com/real-estate/articles/3/

http://www.oldtrailvillage.com/news/?tag=commercial-real-estate

REHABBING YOUR CLASSIC OFFICE BUILDING

Edited by Jodi Summers

The National Trust for Historic Preservation defines rehabilitate as: “To repair a structure and make it usable again while preserving those portions or features of the property that are historically and culturally significant.”

To successfully rehabilitate a historic building, they are offering us 10 basic principles to keep in mind when undertaking a rehabilitation project.

Of course, every project is different and will have different needs and solutions. But this handy reference guide is a great way to get you started.

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http://www.slideshare.net/PreservationNation/10-on-tuesday-10-basic-principles-for-rehabbing-the-right-way