As time goes on and the Pandemic light at the end of the tunnel continues to be most distant, companies may be more open to embracing hybrid and even total remote working and not expecting a return to the office. “Digital.com’s survey found the increasing embrace of remote work is one of the top factors…Read More→

Apartment rent collections nationwide which were in the 90+% range the past few months appears to have sunk to the 82% level. Retail rent collections reported in the 25% range. At some point this will impact the banking and financial sectors when landlords cannot pay their mortgages without sufficient rents coming in. Will this lead…Read More→

As this issue is in print, it was prepared well before COVID-19 came on the horizon, but was just recently distributed.  One big headline read “Regardless of where you fit into the commercial real estate system, or what asset class(es) you work with, one thing is for sure: 2020 will be a year to remember!”…Read More→

Twitter just announced to its 1,000 San Francisco office employees that if they wanted to continue working from home, they could on a permanent basis. What will happen to Twitter’s very cool downtown HQ remains to be seen. The San Francisco Business Times also interviewed a number of smaller 2,000-4,000 square foot office users in…Read More→

Miriam Hall of Bisnow reported yesterday that Vornado Realty Trust said two-thirds of delinquent tenants were credit-worthy, ‘but businesses are hurting and the future is uncertain’.” Vornado collated 90% of office rents and 53% of retail rents in April and May looks to be similar. Office occupancy is currently 5%. Vice-Chairman David Greenbaum said “I…Read More→

First, it is important to keep in mind a win-win collaborative negotiation and at almost all costs to avoid litigation and the court system. Tenant asks for three months’ rent relief; Landlord compromises and accepts 50% rent for three months with no repayment. Tenant asks for three months’ rent relief; Landlord accepts 50% rent for…Read More→

Over the past week I have been on a number of commercial real estate podcasts and webinars, trying to learn what is happening and will happen to our commercial real estate market in the United States. Here are a few nuggets I have picked up. One international real estate company interviewed a number of their…Read More→

According to Bloomberg News April 1, 2020, WeWork is asking landlords to cuts its rent by 30%, in some cases offering revenue-sharing agreements. Early indications are landlords are reluctant. As of June 30, 2019, WeWork is on the hook for $47 billion in lease liabilities.

Greg Kraut, the co-founder and CEO of New York-based KPG Funds, in Commercial Observer April 2, 202, stated ‘The commercial mortgage-backed securities (CMBS) market has essentially collapsed and the broader $20 trillion commercial real estate market is on the verge of collapse as well. We still have time to prevent this catastrophic event, but we need…Read More→

Buildings Magazine November 2019 had an article on what amenities tenants should be investing in. Sodexo surveyed 3,593 employees around the world, and here are some of the results: For ‘Experience Enhancers’, Café or restaurant 71%; medical services/clinic: 66%; Car sharing or shuttle services: 62%; vending services: 61%. For ‘Experience Essentials’, Cleaning of the workplace:…Read More→

Just a few days ago I toured the almost-complete 30,000 square foot Industrious co-working facility under construction in Walnut Creek. It’s novel location is on the second floor of Broadway Plaza, one of the premier shopping centers in California, with offices looking out over the plaza and shops. With 112 private offices ranging from one…Read More→

“A search conducted in the US and UK shows the presence of surveillance cameras in urban settings caused a significant decrease in property crimes on the streets and in subway stations, and a decrease of 50 percent in parking lots.” Wired November 2019

“WeWork may have been pulled back from the edge of insolvency by its biggest investor, but many of its landlords are still preparing for a worst-case scenario…Multiple potential WeWork lease deals in New York City are said to be canceled or halted, and scores of possible deals in London are now in jeopardy as WeWork…Read More→

What, haven’t you heard about the Bay Area’s outrageous cost of housing and California’s crazy high tax structure? You could expand anywhere in the United States, go where the average price of a decent home is $250,000 or less, which might be just the down payment in the Bay Area! Then again, if you were…Read More→

WeWork has 528 locations in 111 cities in 29 countries as of June 2019. Before its valuation collapsed from 48 billion to 20 billion during the past month, it had identified 280 additional cities as targets. In 2018 it lost 1.6 billion and the first six months of 2019 it lost $690 million. “Landlords have…Read More→

I just attended the annual SIOR Conference in Portland (Society of Office and Industrial Realtors) an international group of 3,300 commercial brokers who have to take a lot of classes and document they are in the top few percent of the nation’s commercial real estate experts. I’ve been a member for 34 years and it…Read More→

First time since the Great Recession that I’ve heard multiple commercial real estate brokers broach the possibility of an upcoming real estate “crash”. In my opinion, crash is too harsh, but with rising interest rates, cap rates (price divided by net income) will also go up, resulting in property values going down. A number of…Read More→

Commercial real estate financing experts report today’s 10-year financing at 4.75%, with expectations this will rise to 5.75% by this time next year.

The Internet of Things will become increasingly important in the operations of commercial buildings, keeping operating costs down, increasing building efficiencies, and improving employee satisfaction with their work environment. As one small example, if air conditioning repairs can be made before the unit breaks due to sensors and new technology, this can save money. If…Read More→

In my opinion, over time there will be a greater rent spread between newer, smarter office buildings as compared with class B and C “dumber” buildings. There will be a number of reasons for this increasingly larger rent differential. Modern Class A office buildings with state of the art building systems can run much more…Read More→

A number of the major commercial brokerage companies reported a spike in the cost of office tenant improvements. In some regions the tenant improvement costs are rising much faster than the rental rates. Increases from 10 to 21% are hammering office landlords. “Key factors affecting the sudden rise in TI allowances include: 1) a significant…Read More→

At the recent Commercial Real Estate Allen Matkin’s / UCLA’s forecast, for California and overall, office space has reached the peak for this cycle with office rates as high as they will be for the foreseeable future. Warehouses are hot and for the East Bay, San Joaquin and Sacramento counties will remain sizzling for the…Read More→

“Of the Bay Area residents who are still here, nearly half of those surveyed recently said they plan to move out of the region in the next few years, according to a poll released in June by the Bay Area Council.” (Bay Area News Group, July 15, 2018) Folks are leaving in droves, selling their…Read More→

According to Geraldine Serrano of the Bedford Team, who specializes in Cost Segregation, regarding the New Trump Tax Bill, “As a result of the new tax bill, one of the biggest changes for commercial real estate buyers is in the area of bonus depreciation. The bottom line is that buyers are now eligible to deduct…Read More→

Past SIOR President Geoffrey Kasselman predicts that office space may one day be occupied 24/7, and there are major users “that may rhyme with Zamazon and Zoogle that are trying to negotiate with large-portfolio commercial landlords now — they want a landing pad on the top of their buildings so they can recharge the drone…Read More→

Canopy is opening a new shared workspace on Jackson Square, San Francisco. The 11,000 square-foot facility will be a “serene, distraction-free environment for up to 250 members to concentrate, connect and do their best work.” That ratio works out to 44 square feet per employee. If we imagine that everyone were to show up one…Read More→