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Property owners decide to default on loans

One trend emerging in commercial real estate mirrors a similar course in the housing market: Property owners are choosing to default on debts for buildings not worth the value of their loans, just as some homeowners leave mortgaged houses that have lost a good portion of their value.

This isnbt a matter of these commercial property owners—including Simon Property Group Inc. and Macerich Co.—not having the money to pay these debts; they do. Theybre just looking at it as a sound business decision, as explained in this Wall Street Journal article.

Although a huge question arising from homeownersb defaults is if they are morally obligated to pay off their debt, people in the business world arenbt putting as much of a stigma on property owners choosing not to pay and giving up buildings with values less than their debts.

How do you feel about commercial property owners choosing to default? Just click on bleave a commentb to weigh in with your thoughts.

Photo from realestatechannel.com

Building owners save energy one window at a time

You may remember our Although the costs of Heat Mirror technology are high, they allow for smaller heating and cooling systems, and eventually businesses will see a payback on their investment.

To learn more, check out this article from National Real Estate Investor.

Photos from NREI online

Retailers re-lease vacated big box sites

Following many storesb closings over the last couple of years, a number of retailers have announced expansion plans and are re-leasing vacated bbig boxb space.

Hhgregg, for example, has opened more than 30 stores in the last year and a half, with plans to open another 45 locations in 2011—and most of these new locations are in buildings formerly home to Circuit City stores.

CoStar Group reports,

According to The Big Box Dilemma, a new white paper issued by Colliers International, nearly one-third of the nation’s top 500 retailers have increased their growth plans for 2011 and beyond. Strong store sales during the first half of 2010 also may have emboldened these companies to lock in competitive lease rates in new locations.

Top-tier big box sites—those located in busy shopping centers and choice intersections—are making up the majority of retail occupancy growth, and Colliers International expects them to be backfilled within the next year or two.

Click here for more information. Noticed any vacated big box sites filling up near you? Let us know.

Photo from sturdyroots.com via Google image search

Office tenants learning to get by with less space

A recent marketplace trend reveals businesses are striving to make their workspaces more efficient and to decrease their square footage.

Law firms especially have started to reduce their space, and many are assigning more lawyers to a single assistant than in years past. Baker & McKenzie in Chicago is going to move down the street from its current office building to reduce space used per attorney by 300 square feet.

And many other corporations are moving or changing their space into more open floor plans to be able to house more employees in less space. Architects and furniture designers have taken note and are helping companies reduce their needed space by building flexible workbenches, for example. Even the federal government is trying to make better use of its space.

The trend may even carry on after the economy recovers. Click here for more information. For updates on marketplace trends, commercial real estate, real estate values and the changing workplace, subscribe to our blog by entering your email address in the box on the right-hand side of the page. Just confirm the subscription to make sure you start getting our updates delivered straight to your inbox.

Photo from picses.eu

Businesses Going Green: Chief Sustainability Officers

Since going green became bin,b many businesses have started naming Chief Sustainability Officers (CSOs) charged with keeping their companies environmentally friendly.

Right now a CSObs main focus is on climate and energy, Linda Fisher of DuPont told Site Selection magazine, but the field is ever-changing. CSOs must keep up with the next trend on the public agenda.

Furthermore, bBuildings represent about 40 percent of total energy use for society. Corporate real estate can play a bigger role in making progress against the goal of bNet Zero Energy Use in Buildings by 2050,bb she says.

Is your company striving to be more eco-friendly? What specifically has been implemented to make it happen?

Image from northwestern.edu

Fewer people going to a designated workplace

Recent technology has allowed many workers, whether business owners, freelancers or employees, to stay at home for work rather than make their way in to a specific workplace.

With iPads, BlackBerries and even just laptops, the thinking is: who needs a physical address or office anymore anyway? Anything that can be done there can be done at home.

As Florida Trend details in this article, the vice president of Meridian Design Associates recently began a satellite office in Clearwater, which he made out of a condo thatbs half residence, half workplace. His private space remains mainly in the bedroom, while the rest of the 1,000-square-foot space functions as an office.

And the benefits of working from home are alluringbmore flexibility in a schedule and no commute. Just keep in mind that there are downsides too. Work-from-homers often get lonely and have trouble separating their professional and personal lives.

Have you noticed a decrease in the number of people going in to work? Do you think itbs better to go in to an office or stay at home? Share your thoughts.

Photo credit: Mark Wemple for Florida Trend

Slow recovery may be on the horizon

For the past two years, office building rents and occupancies have continued to decline, but new research suggests this may slowly start to change.

Tenants have had the upper hand for a while now, but businessmen suggest landlord concession packages arenbt going to get any better from here, prompting more tenants to sign long-term leases now while the price is right. And if employment greatly increases in 2012 as expected, landlords will be better situated to battle for the advantage; as more jobs open up, rent prices can rise as well.

Job creation—absolutely key to the recovery—likely will occur very slowly in the coming months. But for now, we can relish in the fact that the worst may very well be behind us.

For additional information, click here.

The death of forecasting

I was speaking with a client on the phone the other day in regard to his office building that I provide leasing services for. He was lamenting over the fact that he wasnbt able to project occupancy in the coming quarters for his properties. bI used to be good at forecasting, Ken, now I donbt knowb&b

I chuckled at his statement and responded that I thought for the time being forecasting was a dead concept. Oh, we can make all the predictions we want, I told him, but based on what metrics? I also told him that I believed we had entered into a time of unprecedented uncertainty, and that the old norms had either bfaded away,b or, more accurately, blasted to smithereens. Even the government has caught on to this idea.

Chairman of the Federal Reserve Ben Bernanke has even testified before Congress this past week that the economy was unusually shrouded in mystery.

After my phone call concluded with my client I sat down and made a list of events or situations in the U.S. and abroad that are providing significant destabilizing influences:

1. High unemployment in the U.S.
2. A continued weak banking sector at home and abroad
3. The globalization of all financial markets—the global stock markets are no longer tied to their respective national economies
4. The European sovereign debt crisis and the war of ideology between austerity measures and economic stimulus
5. A record high U.S. budget deficit and the absorption of GDP it consumes to support it
6. The impact of technology automation on the workplace and its effect on the labor markets
7. Environmental disaster in the Gulf of Mexico (GOM) and its effect on the fisheries, tourism and energy sectors in the GOM area

Taking into account my clientbs interest in seeing his office properties fully leased, I believe the issue is what will stimulate employment growth? There needs to be some specific reason for U.S. employers to begin hiring. Only then will vacancy rates begin to decline. The overall effect on technological automation has acted and will continue to act as a limiting factor to hiring. If software can enable one worker to do the job of three (in certain industries), that certainly will hurt future employment growth.

In truth, I could list several more pages of destabilizing factors that are affecting the U.S. economy and its impact on commercial real estate. I predict that we have entered an age of extreme uncertainty. We have found ourselves stuck in a commonly quoted curse attributed to the ancient Chinese—bMay you live in interesting times.b I think webve definitely arrivedb&

—Ken Morris

CEOs using web video to engage customers

While many CEOs remain in the dark about social media, a few are using web video quite successfully to attract and engage customers.

One such CEO, Pam Liebman of the Corcoran Group in New York City, has created a video presence on During the videos, Pam answers questions from Facebook and Twitter followers about the state of the market, allowing her to demonstrate her knowledge and expertise to potential clients.

For details about 12 CEOs across disciplines creating a video web presence to enhance business, click here.

Is your company taking advantage of web videos? Let us know.


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