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Equity Office Daily Brief: February 8, 2017

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Daily Brief

February 08, 2017

  EquilityOffice

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Office Landlords Roll Out New Perks

The Wall Street Journal

 

Rockefeller Center’s rooftop gardens, usually off limits to tenants, soon will host a new attraction: outdoor yoga classes. The new amenity is one of many that U.S. office-building owners have started offering in a market coping with increasing supply and weaker-than-usual demand...

 


Big Investors Cut Back on Commercial Property as Bull Market Loses Steam

The Wall Street Journal

 

Some prominent real-estate investors are reducing their holdings and getting more selective about new deals, in a sign that the eight-year bull market for U.S. commercial property is coming to a close. Asset managers at pension funds and endowments, as well as...

 


Winning the Space Race

Commercial Property Executive

 

The office sector has experienced tremendous growth and innovation in the past few years. Driven by the demand for creative workspaces, the office market has evolved as owners redevelop and reposition their office buildings to meet the changing preferences of their tenants. The...

 


LA City Council committee opposes historic designation for Parker Center

Los Angeles Daily News

 

 A City Council committee voted today against designating Parker Center, the Los Angeles Police Department’s former headquarters, an historic monument. The building is viewed by some as a symbol of the department’s troubled past on race relations, and the committee ultimately went...

 



BLOG & ONLINE NEWS

 

Shaun Stiles and Katie Cowan Join Cushman & Wakefield

RENTV.com

 

Industry veterans Shaun Stiles and Katie Cowan have joined Cushman & Wakefield. Stiles joins as Executive Director and Cowan joins as Director. The new appointments will be based out of the firm’s Downtown Los Angeles office. As Executive Director, Shaun Stiles will...

 


Tech Firm Signing is a Virtual Reality for Marina Business Center

RENTV.com

 

Upload Inc recently signed a lease for 20k sf of office space in Marina Del Rey. The lease, valued at $8.25 mil, is for a term of seven years and two months, which averages out to about $4.80/sf/mo. The building is...

 


Exclusive: Liquidspace report highlights rise of flex office space

Bisnow

 

The flex office market is booming, in large part due to the demands of tech companies — which is transforming the way office space is leased.Flex-space leasing platform LiquidSpace took a closer look at flex office trends in a report released...

 

FULL TEXT


Office Landlords Roll Out New Perks

The Wall Street Journal

 

Rockefeller Center’s rooftop gardens, usually off limits to tenants, soon will host a new attraction: outdoor yoga classes.

The new amenity is one of many that U.S. office-building owners have started offering in a market coping with increasing supply and weaker-than-usual demand at this stage of the economic recovery.

Tishman Speyer, the owner of Rockefeller Center in Manhattan, is rolling out a range of amenities that go well beyond the cleaning, heating and security services landlords typically provide tenants. Workers in the complex can now get emergency day care, 15-minute meal delivery and visits from manicurists and hairstylists.

Office-building owners throughout the country are increasing their offerings as they try to become more competitive. Workers can sign up for massages, attend art events or get a manicure before a night out. Tenants or their employees usually have to pay for these additional services, but landlords are charging below-market rates and making them more convenient.

“We want to fundamentally change the expectation that people have from their office buildings,” said Rob Speyer, chief executive of family controlled Tishman Speyer.

Landlords want to become more competitive partly because rent and occupancy trends, while improving, are still far from robust.

The amount of space tenants occupied in 2016, compared with the previous year, rose by 38.6 million square feet, according to data firm Reis Inc. That was down from the 45.4 million square feet in so-called absorption in 2015. Developers added 33.5 million square feet of space last year, compared with 37.3 million in 2015, Reis said.

Companies are leasing less space partly because they are wary of expanding too quickly, like they did in the years leading up to the last recession. At the same time, companies are able to lease less space per employee by eliminating amenities that have become obsolete, such as law libraries.

The amenities push is modeled in part after the workplaces of technology companies and startups. These spaces tend to be amenity-rich and targeted at young workers. For example, WeWork Cos., a startup that provides shared workspaces in communities of entrepreneurs and small businesses, offers beer on tap and ping pong at some of its locations.

Technology companies began offering services like day care, dry cleaning and massages when they established Silicon Valley campuses away from urban centers, said Ben Tranel, a principal at Gensler, an architecture firm that specializes in office design.

“Large tech companies are considered the forerunner of providing a lot of amenities and personal services as a perk,” said Mr. Tranel. “The work environment needs to support more than just work; it needs to create a place want to be in and enable socializing and collaborating.”

In downtown Los Angeles, Brookfield Office Properties Inc., one of the largest U.S. office landlords, has started renovating the ground floor of its buildings to make way for art installations and cultural events.

Time Equities Inc., a big owner of suburban office buildings as well as other real estate, has introduced features like tenant lounges, coffee bars and courtyards at office parks in Parsippany, N.J., and Southfield, Mich.

“We’re looking for any overlooked spaces that we can improve,” said Paul Kelterborn, the firm’s director of design innovation.

In New York, the Empire State Building operates a 15,000-square-foot fitness center within the landmark building for tenants. “Companies are paying attention to the things that affect their employees’ happiness,” said Tom Durels, executive vice president, director of leasing and operations at the building’s owner, Empire State Realty Trust.

At Rockefeller Center, which has a respectable 94% occupancy rate, Tishman Speyer also has partnered with outside companies to offer human-resources and information-technology support to smaller tenants in the complex. The 293 tenants in the complex will be able to buy these and other services at a preferred rate, Mr. Speyer said.

The Rockefeller Center program took 12 months to develop and will be gradually introduced to all of Tishman Speyer’s office buildings in coming years. The firm controls 46.7 million square feet of space in nine states.

“The services will be different depending on the market and the culture of the office community,” Mr. Speyer said. “This is the direction the industry is heading in.”

-Emily Nonko

Big Investors Cut Back on Commercial Property as Bull Market Loses Steam

The Wall Street Journal

 

Some prominent real-estate investors are reducing their holdings and getting more selective about new deals, in a sign that the eight-year bull market for U.S. commercial property is coming to a close.

Asset managers at pension funds and endowments, as well as private-equity firms and other big investors, are throttling back on new acquisitions, selling more assets and shifting to less risky strategies as a way to protect against potential losses in a downturn.

Additional selling could put stress on the market because demand for property has started to flag. Commercial real-estate deal volume decreased by $58.3 billion, or 11%, in 2016, the first annual decrease since 2009, according to data firm Real Capital Analytics, a sign that investor appetite is waning.

Caution among investors in the $11 trillion U.S. commercial-property sector is being driven by lofty prices, the length of the market cycle so far and the recent rise in interest rates, which makes bonds look more attractive compared with commercial property. Also, developers are adding new supply of some property types at the fastest rate since the recovery began.

Few investors predict a crash along the lines of the 2008 downturn because debt levels aren’t nearly as high and the economy continues to show signs of strength. Some believe office buildings, malls, apartment buildings and other commercial property will continue to enjoy rising rents and occupancy rates if President Donald Trump’s pro-growth economic plans work as intended.

But certain property types are weakening. Under siege by online shopping, retail space saw “signs of a correction” last year with 30 metropolitan areas showing an increase in vacancy over 2015, according to Reis Inc., a data firm.

In the office market, the largest commercial real estate sector in terms of value, tenants occupied an additional 38.5 million square feet in 2016, thanks to the expanding economy, Reis said. But that was down from 44.5 million square feet of “absorption” in 2015.

Also office rent growth decelerated partly because “tenants continue to lease less square feet per employee than they had in previous recoveries,” Reis said.

Investors that have picked up the pace of selling to lock in profits include private-equity firm Blackstone Group LP, real-estate giant Brookfield Asset Management, United Parcel Service Inc.’s pension trust and Harvard Management Co., which manages Harvard University’s endowment.

When these big investors do buy, they are focusing more on niche properties such as self-storage warehouses and biomedical facilities, which haven’t seen the sharp price rise of trophy office buildings and rental apartments.

“We definitely have a risk-off mentality,” said Judy McMahan, a portfolio manager for UPS’s $32 billion pension trust. “We’re being careful.”

The pension trust sold more property than it bought last year, and its new acquisitions included senior housing and industrial space in the U.K., Ms. McMahan said.

Brookfield also increased the pace of its selling, unloading about $3 billion in property in 2016 compared with about half that much in 2015. The firm is using the capital to buy niche property types that haven’t seen such sharp increases in pricing, like self-storage facilities and student housing in the U.K.

The company recently put on the block a 49% stake in its sprawling Brookfield Place complex in Manhattan. The complex just finished overhauling its retail space and filling the 2.5 million square feet of office space emptied in 2013.

“We think now is an opportune time to reduce some of our exposure to that asset,” said Brian Kingston, Brookfield senior managing partner. “We can recycle the capital into higher returning investment opportunities.”

Since 2009, investors have been handsomely rewarded for purchases of office buildings, warehouses, apartment buildings and other commercial property.

Thanks to low interest rates and the improving U.S. economy, a valuation index published by Green Street Advisors has increased 107% since hitting its crash-era low in May 2009. But that rocketing growth is slowing. The Green Street index, which focuses on top-quality U.S. commercial property owned by real-estate investment trusts, has stayed flat since mid-2016, according to Green Street.

Another closely followed metric—an index compiled by the National Council of Real Estate Investment Fiduciaries—showed total returns from commercial real estate rising 9.2% in the year ended Sept. 30, 2016, a sharp decline from 13.5% for the 12 months ended in the third quarter of 2015 and growth ranging from 11% to 14% in each of the previous five years.

Fund investors are pulling back as well. Quarterly distributions and redemptions from open-ended funds that buy low-risk properties, a popular investment vehicle among institutional investors, doubled during the first nine months of 2016, after ticking up just 11% in 2015, according to the council.

Much of the bull market has been fueled by low interest rates, which encouraged investors to forsake bonds and stretch for more yield. But rates have jumped since Election Day. Real-estate investment trusts took the first hit, with equity REITs declining 2.9% in the fourth quarter of last year compared with a gain of 5.3% for the S&P 500, according to Green Street.

This year through Monday, equity REITs have had a total return of 0.38%, compared with 1.9% for the S&P 500, Green Street said.

Also, until recently, the rise in property values was fueled by developers keeping new supply in check. But that, too, is beginning to change with certain property types. For example, more than 378,000 new apartments are expected to be completed across the country this year, almost 35% more than the 20-year average, according to real-estate tracker Axiometrics Inc.

Private investors say the real estate they are chasing these days often is either real estate that is less risky or properties that can be improved and sold quickly, rather than those—like developments—that might not be finished until the economy is well into the next down cycle.

For example, private-equity giant KKR & Co. moved quickly to find a buyer last year after it purchased the landmark Sullivan Center in the Chicago Loop for $267 million. A few months after the deal closed, KKR sold the retail portion of the 946,000-square-foot building to Acadia Realty Trust.

“Given we are in the later stage of the real-estate cycle, we have been focused on business plans that require less time to create value,” said Chris Lee, co-head of real-estate credit at KKR.

Blackstone sold more property than it bought last year, according to Kenneth Caplan, the firm’s chief investment officer for real estate. Sales have included more traditional property types such as apartment buildings and hotels. One of its biggest buys last year was BioMed Realty Trust Inc., which leases offices to the life-science industry. “It’s later in the cycle where you have to be more targeted,” Mr. Caplan said.

Harvard’s endowment is among the big institutions that sold more property last year than it purchased, according to people familiar with the matter. A spokeswoman for the endowment declined to comment.

Institutions that sell property acknowledge values could keep rising, but said they want to play it safe.

“Some of the investments we disposed of, if we held on to them another year or so, it’s possible we’d make more money,” said Ms. McMahan of UPS. “However, we felt it was the appropriate time to monetize our gains.”

- Grant

Winning the Space Race

Commercial Property Executive

 

The office sector has experienced tremendous growth and innovation in the past few years. Driven by the demand for creative workspaces, the office market has evolved as owners redevelop and reposition their office buildings to meet the changing preferences of their tenants.

The rising popularity of co-working spaces, for example, has challenged the boundaries of traditional office environments, prompting landlords to rethink their office spaces.

Today’s forward-thinking office users also understand the central role of culture in recruitment and retention, and are increasingly seeking higher-image spaces that reflect their brand and encourage innovation. Office owners must take note of these trends and cater to the tastes of the modern workforce in order to successfully lease their buildings.

During our experience in acquiring and repositioning value-add properties throughout Los Angeles, we’ve identified three innovative strategies that office owners are pursuing to drive leasing and maximize occupancy.

Tech-Friendly Features 

Commercial real estate owners are increasingly integrating technology into their daily business practices and catering to the tech startup community to drive leasing at their office buildings.

According to a report by JLL, strong job growth in the technology sector continues to be the number-one driver of office leasing. The tech market has experienced a 4.5 percent year-over-year increase in employment gains, accounting for over 4.5 million square feet in leasing activity in tech-centric markets such as the San Francisco Bay area, Seattle, and New York City at one point in 2016.

For many tech companies, access to high-speed internet service can be the determining factor in a leasing decision. One of the primary factors in our decision to acquire an office building in Culver City, Calif., was the city’s plan to build a fiber optics loop that will run right next to the building. By providing fast, convenient fiber access throughout an property, owners can attract and retain tech-dependent tenants.

Due in large part to the nature of their work, technology tenants place tremendous value on technological integration and are always looking for ways to optimize efficiency and productivity. By incorporating charging stations, video conferencing options, and tech devices in shared meeting rooms, owners can appeal to the tech workforce and streamline their business operations, which in turn promotes tenant retention.

A Whole New Menu

Integrating on-site food amenities and diverse options can play an essential role in boosting employee morale, which in turn enables office users to attract and retain employees.

Millennials’ food preferences, in particular, are shifting from national chain restaurants toward choices that offer fresh, locally sourced ingredients, customized menu items and elevated customer service. By catering to these changing tastes, owners can offer additional value to tenants, while also generating an additional revenue stream from food tenants.

For example, we recently decided to convert the ground-floor of one of our office buildings in downtown Los Angeles into retail space. In selecting the restaurant to fill the space, we assessed the food preferences of our other tenants and found that many of their employees preferred fresh-casual food options over popular fast-casual chains. As a result, we elected to bring in a poke eatery that would meet the food preferences of our tenants’ employees.

Bringing the food directly to tenants is yet another way that some landlords are differentiating themselves from the competition. Because Millennial workers prize the convenience offered by food trucks, many new office buildings are integrating loading space for the trucks.

Create a Culture of Collaboration

When it comes to the modern workplace, culture is everything. A survey by CBRE found that 78 percent of millennials value workplace quality when choosing an employer, and 69 percent would trade other benefits for a better workspace. Creating a workplace environment that fosters collaboration and innovation is crucial to building long-term tenant relationships.

By offering open, collaborative spaces, indoor/outdoor amenity areas, and flexible tech buildouts, owners can help create a work culture that will appeal to the needs of their tenants and their employees.

The demand for creative live/work/play environments reflects a fundamental shift. Today’s Millennials seek office environments that encourage a balance between work and recreation.

For example, the  CBRE survey found that one-third of millennials prefer collaborative workspaces, and that more than one-third want fitness centers at work. With that in mind, many office owners are providing on-site gyms, coffee bars and other amenities. In addition, the mobile nature of today’s workplace makes it essential that landlords provide tenants with the flexibility to work in communal spaces and access high speed Wi-Fi anywhere in the building.

As the office sector evolves, landlords must think creatively in order to drive occupancy and generate long-term value. Integrating the latest technology, providing on-site food amenities, and investing in improvements that foster creativity will go a long way toward attracting and retaining the high-quality tenants that are essential to stable cash flow and solid returns on investment.

-Tim Lee is vice president of corporate development and legal affairs at Olive Hill Group, a Los Angeles-based investor, operator, and developer. Since 1996, the firm and its affiliates have invested in more than $2.4 billion in a diverse portfolio of office, retail, hospitality and multifamily assets encompassing upward of 15 million square feet. 

LA City Council committee opposes historic designation for Parker Center

Los Angeles Daily News

 

 A City Council committee voted today against designating Parker Center, the Los Angeles Police Department’s former headquarters, an historic monument.

The building is viewed by some as a symbol of the department’s troubled past on race relations, and the committee ultimately went with that view over the recommendation of the Cultural Heritage Commission to grant it historical status.

The committee members seemed too impacted by Parker Center’s sometimes dark history, and the fact that a key part of Little Tokyo was demolished to have it built because the city acquired the property through eminent domain.

Councilman Jose Huizar, the Planning and Land Use Management Committee chair, summed up his colleagues views with passionate remarks and sounded for a moment as if he was fighting tears.

“The building does embody an important story about the history of policing in Los Angeles,” Huizar said, but added that “in some instances, abuse of power, cruelty and racism.

“This building epitomizes the (Chief William) Parker era, and it also epitomizes an unfortunate myopic relationship to its stakeholders, including but not limited to the long-term members of the Little Tokyo community.”

 

 

Parker Center has been mostly empty since 2009 when the department moved to new headquarters about a block away, and some historical conservationists are trying to save the structure as the city is developing a plan to tear it down.

The Cultural Heritage Commission recommended that Parker Center be given historic-cultural status, but the city’s Bureau of Engineering has recommended tearing it down to build a new 750,000-square-foot civic building.

The decision on what to do with Parker Center will now move to the Entertainment and Facilities Committee, which had been holding off on a vote on the development plan until the Planning and Land Use Committee’s vote on the historical monument status.

 

 

Even if Parker Center were to have been named a historical monument, the city could still have demolished the building if no viable option for preservation was found.

The Bureau of Engineering’s report also considers alternatives, such as fully rehabilitating the structure or constructing a new 588,000 square-feet civic building around Parker Center while preserving and rehabilitating much of the original building.

However, the report found those alternatives do not help meet the city’s estimated need for 1.1 million new square feet of office space for city workers in the Civic Center area.Preserving and rehabilitating Parker Center while building around it would cost $621 million, versus $514 million for tearing it down and building a new structure on the site, the report found.

However, the Los Angeles Conservancy, a nonprofit historical preservation group, objects to tearing Parker Center down and also questions the dollar estimates in the report. The conservancy says preserving Parker Center will save the city $50 million.

“We believe that there is a big enough discrepancy of $50 million dollars that the city should take a breath and bring in an independent cost estimator that has some preservation experience and really look at whether there is a possibility of finding a real win-win solution,” Linda Dishman, president and CEO of conservancy, told the Entertainment and Facilities Committee in January.

 

 

Parker Center was designed by Welton Becket, who also designed the Capitol Records building, Music Center and Cinerama Dome. It was made nationally famous on the Jack Webb-starring police drama “Dragnet,” as well as other television series and films.

But for many, Parker Center symbolizes the LAPD’s dark past on race relations, starting with its name.

The building was originally known as the Police Facilities Building. In 1969, it was named after former Chief William H. Parker, the chief from 1950 until his death in 1966. Allegations of racial discrimination by police and abuse against the black community are part of Parker’s legacy, which included the 1965 Watts Riots.

After four LAPD officers were acquitted in 1992 of assault in the videotaped beating of motorist Rodney King, violent riots broke out across the city and Parker Center was targeted by protesters who set fire to a parking kiosk and threw rocks at the building.

Adrian Scott Fine, the Los Angeles Conservancy’s director of advocacy, told City News Service in January that all history — positive or negative — is worthy of preservation.

“It has a negative history, or a difficult history, but ultimately history is history and you can’t pick and choose or arbitrarily pick and choose which history you prefer to keep versus others that you throw away,” Fine said.

“We’ve always acknowledged that Parker Center does have different meaning and perspectives for different people, and that is part of what is important, is it illustrates just how far Los Angeles has come as a place.”

-Criag Clough

Shaun Stiles and Katie Cowan Join Cushman & Wakefield

RENTV.com

 

Industry veterans Shaun Stiles and Katie Cowan have joined Cushman & Wakefield. Stiles joins as Executive Director and Cowan joins as Director. The new appointments will be based out of the firm’s Downtown Los Angeles office. As Executive Director, Shaun Stiles will focus on agency leasing and tenant representation in the Tri-Cities market as well as continue his focus on the life science industry. With over 26 years of experience, he is one of the premier brokers in the Tri-Cities market with an impressive track record and invaluable knowledge and insight of the local commercial real estate industry. Notable landlord clients include Hines, JP Morgan, Beacon, LNR, IDS, Steelwave, Alliance Bernstein, and Alexandria and notable tenant representation clients include Bluebeam, Inc., Xencor, Stewart Title, Alliant Insurance, Genzyme, Employers Insurance Group, and Charter Communications. Stiles joins Cushman & Wakefield from JLL where he most recently served as Executive Vice President. As Director, Katie Cowan will focus on agency leasing, tenant representation, and landlord representation in the Tri-Cities, Downtown, and San Gabriel Valley markets. She provides clients with resourceful real estate solutions through her knowledge in marketing, lease negotiations, and transactions and has represented both owners and tenants in a broad range of transactions including Bluebeam, Inc., Beacon, Stewart Title, Alliant Insurance, Genzyme, Hines, Equity Office, PKF Consulting, Employers Insurance Fund, and NBC Universal. Key assignments include 888 East Walnut, 1055 Colorado, 611 North Brand, and 400/450 North Brand, all in the-Tri-Cities. Cowan joins Cushman & Wakefield from JLL where she most recently served as Vice President. 

-Staff

Tech Firm Signing is a Virtual Reality for Marina Business Center

RENTV.com

 

Upload Inc recently signed a lease for 20k sf of office space in Marina Del Rey. The lease, valued at $8.25 mil, is for a term of seven years and two months, which averages out to about $4.80/sf/mo. The building is located at 4505 Glencoe Ave, within the 350k sf Marina Business Center I Campus, which includes other notable tenants such as Sony, DISC, and Thrive Market. The property is a 45k sf building that recently underwent a major renovation to provide a premium creative office environment. Upload’s new space offers 24’ ceilings with mezzanine, polished concrete floors, open floor plan, outdoor meeting areas, ample parking and building top signage visible from the adjacent 90 Fwy. With this new lease, San Francisco-based Upload Inc, a company involved in all aspects of the virtual and augmented reality (AR/VR) industry, is expanding into the Southern California market. The space will house approximately 100 employees and will be used as virtual reality co-working space. Move-in is occurring this month. Chris Strickfaden of NGKF and Scott Dobbins with Hankey Investments represented the landlord, Marina Business Center LLC, in the transaction. The tenant was repped by Jeff Pion and Carter Haslam of CBRE. Marina Business Center I is comprised of a 125k sf, mixed-use office building at the corner of Mindanao and Glencoe (across from Famous Jerry’s Deli) as well as six adjacent flex creative spaces in three separate buildings located at 4499, 4501, 4505 Glencoe, and 4503-4509 Glencoe. Upload Inc is involved in all aspects of the (AR/VR) industry. This includes coworking, startup incubation, education (from beginner to expert curriculum), and media. Upload's expansion to LA will bring unprecedented access to virtual reality equipment and resources that will usher in new talent and creative ventures. 

-Staff

Exclusive: Liquidspace report highlights rise of flex office space

Bisnow

 

The flex office market is booming, in large part due to the demands of tech companies — which is transforming the way office space is leased.Flex-space leasing platform LiquidSpace took a closer look at flex office trends in a report released today. Bisnow got an exclusive first look at the report. Flexible office is any space rented for less than a typical five- to 10-year lease. LiquidSpace's report focuses on spaces rented by the month for up to three years.

The company offers the ability for teams and companies to rent space for an hour up to three years. Spaces can be furnished or unfurnished and range from offering open or designated desks, private offices, team offices or an office suite.

While tech firms make up the bulk of demand, consulting, finance, media and real estate round out the top five sectors using flexible office, according to the report. Over 60% of demand comes from teams with four people or fewer.

Flex space is becoming popular because it allows tech firms and others to match their real estate with their business plans, which run at the pace of quarterly and yearly terms, LiquidSpace CEO Mark Gilbreath said.“It’s difficult for to think in terms of five- and 10-year amounts,” LiquidSpace director of product marketing Andy Liverman said. Offering flexible spaces with amenities in city cores helps to attract talented employees, Liverman said. Companies want to create stimulating environments where workers don’t feel shuffled off into a corner, Gilbreath said.

That has meant providing more collaborative space and options for where to work each day. “The dynamics of office have really changed when tenants can walk in with their own laptops and their own phone and suddenly the whole reason for having an office changes,” Liverman said. “You can now work in some ways wherever you want. Landlords are recognizing that.”

LiquidSpace offers a mobility manager that large enterprises can use to provide employees with options as to where they would like to work, according to Gilbreath. Millennials Are Impacting Demand For Flex OfficeThe flex space trend is growing as tech employers cater to the Millennial workforce. Millennials prefer more cultural amenities close by and love collaboration and sharing, according to Abraham Park, associate professor of finance at Pepperdine University's Graziadio School of Business and Management and director of the Fred Sands Institute of Real Estate.

This generation also prefers to be in more urban cores. Employers want to retain high satisfaction and human capital. This means offering more amenities, which includes the space itself. “Any design that can create a unique space makes the office space less of a commodity and more of a strategic branding opportunity to attract a certain group of people,” Park said.Among the most attractive are buildings with history and noteworthy architecture, such as those in the Downtown Los Angeles arts district. These historical industrial manufacturing buildings are being converted into flex office and demand high valuation, Park said.

Recent projects include a mixed-use development from SunCal (above) and 670 Mesquit. “Whether used to be a factory or bank or department store with unique architecture, these are prime targets for conversions into flex space,” Park said. “If it’s just old and decrepit, those that successful.”

The push to be closer to urban centers has also impacted the multifamily sector, with more developments pushing into the city core. Cap rates in urban cores are much higher than those in suburban office areas as well, Park said.

He said there are people who want houses outside of the urban core, but the movement toward homeownership in suburbia is not likely to happen for 10 to 15 years. “Flex office is here to stay,” Park said. “It’s a great concept that the country and economy will continue to need, especially with changing cultural trends and a desire for a certain lifestyle for urbanization.”

Flex Office Not Just A San Francisco, New York PhenomenonIn cities where there haven’t been traditional tech hubs, landlords are using flex office as a tool to attract more growing companies. Liverman said in some cities, developers are reposting their properties and putting in flexible options as a first entry into that neighborhood.

LiquidSpace has facilitated 2.9 million transactions and connected 64,000 teams and companies with over 2,800 office locations. It also has streamlined the transaction process — providing a standard contract so landlord and tenant don’t have to go back and forth with lawyers. Liverman said LiquidSpace did a five-figure deal for 1k SF within 24 to 48 hours.

While workspace-as-a-service (co-working and business centers) makes up the bulk of the listings on LiquidSpace’s network, private business and direct landlords are increasingly seeking out ways to lease up unused space. Private businesses sharing extra space make up 30% of the public listings on LiquidSpace.

Direct landlord space doubled in the last year and now makes up 7% of listings. Traditional landlords and institutional owners are increasingly offering flex space and using tools, such as LiquidSpace, to connect tenants with space that would otherwise be left vacant.

These spaces are oddly shaped or too small to have been on a broker’s radar, but provide just enough space for a small startup company.

While New York and San Francisco long have been LiquidSpace’s largest markets and continue to grow given the concentration of demand, cities in Texas, including Dallas, Austin and Houston, are emerging as having a strong supply and demand for flex office. Chicago is also beginning to surge, Gilbreath said.

“San Francisco and New York are so prohibitively expensive, secondary markets are now becoming a place for higher growth and the shifting of assets,” Gilbreath said. “There’s also a general philosophy of 'work can happen anywhere.' It no longer holds true that tech firms have to be based in San Francisco and New York. The world is now a workplace.”

-Julie Littman

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Our inspiration is the "Internet Archive" USA. "Libraries exist to preserve society's cultural artefacts and to provide access to them. If libraries are to continue to foster education and scholarship in this era of digital technology, it's essential for them to extend those functions into the digital world." This is our library of unsolicited emails from around the world. See https://archive.org. Spamdex is in no way associated though. Supporters and members of http://spam.abuse.net Helping rid the internet of spam, one email at a time. Working with Inernet Aware to improve user knowlegde on keeping safe online. Many thanks to all our supporters including Vanilla Circus for providing SEO advice and other content syndication help | Link to us | Terms | Privacy | Cookies | Complaints | Copyright | Spam emails / ICO | Spam images | Sitemap | All hosting and cloud migration by Cloudworks.

Important: Users take note, this is Spamdex - The Spam Archive for the internet. Some of the pages indexed could contain offensive language or contain fraudulent offers. If an offer looks too good to be true it probably is! Please tread, carefully, all of the links should be fine. Clicking I agree means you agree to our terms and conditions. We cannot be held responsible etc etc.

The Spam Archive - Chronicling spam emails into readable web records

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Spamdex - The Spam Archive Located in London, SW19 8AE. Phone: 08000 0514541.