by Jodi Summers
Spread across the country in such desirable cities as Los Angeles, Dallas, Houston, Washington, D.C., and West Palm Beach, FL. all totaled, nearly 2 million square feet of office space.
Here’s what’s included in the deal:
• Los Angeles – 500 North Brand Ave. Located in the heart of Glendale’s Central Business District, this 22-story, 413,274-square-foot office building provides tenants with one of the area’s most exceptional office space alternatives. This premier high-rise is conveniently located adjacent to numerous retail, restaurants, and hotel amenities, including the Glendale Galleria, the to-be built Americana at Brand, and the Burbank-Glendale-Pasadena Airport (Bob Hope Airport).
• Washington, D.C – One Washingtonian Center, a Class A, LEED, 14-story, 315,929-square-foot office building in the Gaithersburg submarket of Washington, D.C. that recently renewed a lease with Sodexo Inc. to keep its headquarters in the building. Sodexo, is on Fortune’s list of The World’s Most Admired Companies, has the ambition is to become the premier expert in Quality of Daily Life service solutions.
• Palm Beach – Esperante Corporate Center, a 20-story, 256,151-square-foot, and LEED Gold landmark located at the gateway to Palm Beach – Esperante Corporate Center commands spectacular views of the Atlantic, the Intracoastal Waterway and Downtown. Having recently completed a $4.5 million renovation, achieving status, this Class A asset offers WiFi-enabled common areas, a 24/7 lobby attendant, valet parking and a six-story atrium ideal for corporate events. Tenants automatically become members of 5-Star Worldwide, an exclusive program of tenant services that adds value to every square foot.
• Houston – 2603 Augusta, a 16-story, 243,348-square-foot office building located in the West Loop/Galleria area, described as “Houston’s premier submarket.” 2603 Augusta offers Class A, boutique office space and all the amenities of the Galleria at your doorstep.
• Dallas – Preston Commons, 8111-8117 Preston Rd., Dallas 75225 – an office complex totaling 427,800 square feet that includes a pair of eight-story buildings located in the Preston Center submarket of Dallas. The building description boasts, “A revolution in tenant service, 5-Star Worldwide is an uncommonly smart choice for tenants who need a wide array of business and personal amenities to include conference facilities, technical support, a cafe and 5-Star Worldwide personal attention.”
• Dallas – Sterling Plaza, a 302,747-square-foot building asset at 5949 Sherry Lane in the Preston Center submarket of Dallas. Sterling Plaza has one prime objective: To become North Dallas’s premiere office destination offering VALUE, SERVICE, and a fabulous package of AMENITIES. Here, tenants enjoy a one-of-a-kind 5-Star Worldwide amenities program featuring executive conference facilities and concierge services. Come see why Sterling Plaza is “Where Business Shines.”
Interested? Contact us. We’re here to help you with your real estate needs. Please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – firstname.lastname@example.org or 310.392.1211, and let us move forward together.
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.
Here is the schedule for when commercial buildings need to keep and disclose energy usage records:
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.
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.
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.
by Jodi Summers
Let’s talk about this gifted generation of Americans – called Echo Boomers, due to the significant increase in birth rates during the 1980s and into the 1990s and / or Millennials because they came of age in the new millennium. They are well-educated, enterprising and have had the bejesus scared out of them by the recession. Success is important to them – thus their office needs are important.
Have you noticed the architecture at our own Silicon Beach? Cutting edge companies like Google, Yahoo and Red Bull offer a combination of interior and exterior workspace..the interior being punctuated by open floor plans. Individual offices with walls and doors are at a bare minimum.
“It’s not just the Googles of the world anymore—it’s law firms, big real estate firms and different kinds of companies,” observes Steven Heller, an attorney with Gilchrist & Rutter PC in Santa Monica. “More creative space is permeating out as traditional businesses understand the benefits to having offices with communal space. It can be more efficient for their business because there’s a lot more collaboration going on.”
“These changes raise a host of land use and leasing issues for the industry,” Heller continues, “Building investors and operators must evaluate lease provisions carefully so that they are calibrated to appropriately accommodate and adjust to the changing use of office space.”
Possible creative-space concern for building owners is when tenants become too creative and design the office in such a way that it could have limited appeal to future tenants. Would a jungle gym become a fixture?
And what of parking? Should it still be one parking space per 500 square feet of office?
More employees can fit into the open-office layout, offers attorney Elisa Paster, also with Gilchrist & Rutter PC. “One the one hand, more people occupying a single space creates a greater parking demand. But at the same time, parking burden is relieved by telecommuting, alternate work schedules and increased use of public transportation. Building operators need to act proactively to make sure these changing uses match with municipal requirements.”
Welcome to the next generation of office space.
by Jodi Summers
Environmentally conscious real estate leases faster and at better terms than traditional buildings, yet it is extremely difficult for property owners to finance green upgrades. A recent McGraw-Hill survey concluded that building owners looking for finances to pay for energy retrofits for their properties are often are forced to rely on their personal resources rather than outside funding.
Granted, there are some options green loans, but the routes are not traditional. The government and utility companies are doing their share to facilitate green loans. Out of the box choices may include ESCO (energy service company) financing, energy service agreements, government loan programs, PACE (property assessed clean energy) programs, and on-bill utility financing.
Richard L. Kauffman, senior advisor to the secretary, Department of Energy suggests that owners should be look to capital market investors, state bonds, local banks and government incentives to generate the necessary capital for individual green improvements to their existing commercial buildings.
If you want to try the traditional route, instead of asking the bank for a green loan, try rolling the cost of energy efficient improvements into a building retrofit or renovation. This is an easy way to sidestep lenders’ reluctance to loan on green improvements as a stand-alone investment.
The issue at hand many banks is that green lending is a new thing. They have yet to assimilate green loans in into their underwriting programs…which may require years of data for evaluating risk and assessing the long-term financial impact from green investments.
Research and statistics show that Energy Star and LEED-certified buildings can attract higher rents and generate increased demand from tenants < and that a green property can garner a better lease rates and higher sales price. Lenders aren’t persuaded by research. They want empirical data on risks, and actual cost vs. performance data, not just assurances of what a new technology is expected to deliver.
By Jodi Summers
Heads up to the accounting department > you may think your company has a green policy, but many businesses are missing key green financial opportunities. The reason? A lack of communication / collaboration between tax and sustainability departments.
Here’s the rub > 28% of tax directors believe their company has a sustainability strategy or is developing one, compared to 90% of CSOs recently surveyed by Ernst & Young LLP. Get on it before you CEO finds out. Think RSIO > Reduce, Switch, Innovate, Offset
“Reducing energy consumption and carbon emissions, switching to alternative energy and fuel sources, innovating for cleaner technologies and offsetting carbon emissions – all of these efforts have tax considerations,” said Paul Naumoff, Global and Americas Leader of Climate Change and Sustainability Services and CleanTech Tax Services. “Companies with tax departments that aren’t taking sustainability efforts into account are missing an opportunity.”
Apparently, many businesses are leaving green of money saving opportunities on the table. Only 16% of companies with an environmental sustainability strategy have their finance departments actively involved, according to the Ernst & Young survey titled “Working Together: Linking sustainability and tax to reduce the cost of implementing sustainability initiatives.” The survey featured responses from 223 senior executives at companies. Of the survey respondents, 19% were Chief Sustainability Officer (CSOs), while 81% were tax directors or their equivalent.
All cushy with their positions, employees are not keeping up to speed with state and local green incentives, as more than 37% of survey respondents are unaware of incentives for sustainability initiatives. Sure, more than 80% of finance department are aware of federal tax deductions for energy efficient buildings and incentives for renewable energy, but when it came to state tax credits and incentives, awareness levels hovered around 50%…and a meager 17% noted that their companies actually use available green incentives. In other words, companies are spending a lot more money than they need to spend.
Ernst & Young LLP notes that a company can effectively internally communicate sustainability initiatives and identify incentive opportunities throughout the organization by framing the discussion in broad categories:
· Reduce consumption of natural resources and carbon emissions.
- Switch to alternative energy and fuel sources.
- Innovate and develop new clean technology and less carbon-intensive or lower-emitting products and services to meet the demands of the transforming economy.
- Offset carbon emissions.
Opening up a corporate dialogue using RSIO framework allows companies to better identify incentives and tax credit opportunities related to their sustainability initiatives > improving their return on investment.
Some national examples of incentives include:
· Federal: IRC Section 179D: An energy efficiency tax deduction for commercial buildings can help reduce the cost of green building strategies and help building owners minimize energy consumption and improve energy efficiency.
- LEED Buildings: Businesses can make use of the framework provided by the Leadership in Energy and Environmental Design (LEED) to achieve specific environmental sustainability metrics in their building construction. LEED incentives are currently offered by 5 states, 18 counties and over 69 cities and towns. These include property tax abatements, income tax credits, and non-monetary benefits such as expedited permitting.
· Federal: IRC Section 45 & 48: For facilities that produce and sell electricity generated from certain renewable resources, Section 45 provides an annual credit per kilowatt hour of energy sold to an unrelated person or company for each of the first 10 years of operation of a renewable energy facility.
· Federal: The U.S. Department of Energy’s (DOE) Funding Opportunity Announcements: DOE provides grants for energy efficiency and renewable energy projects.
· Companies looking to invest in developing countries can leverage Clean Development Mechanisms (CDMs), which, as defined in the Kyoto Protocol, allow companies to invest in projects in developing countries that can be shown to measurably reduce greenhouse gas emissions. After a CDM project has been implemented, project participants receive Carbon Emission Reduction (CER) credits. Companies in industrialized countries can credit the CERs earned through their investments in CDM projects toward their emission targets, sell their CERs to buyers in other industrialized countries or trade them on global carbon markets.
In California, check with Sacramento and local governments to find benefits specific to our area. Sites like www.ey.com/climatechange are a recommended place to start.
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