Letb s face it—more and more companies are leaning toward the concept of a virtual office, due in part to the current state of our economy. The idea of working from home is very appealing to employees since they can choose the setting in which they work and wear whatever they want. Employers might like the idea that business expenses can be drastically cut. As with any major business decision, there are some serious issues to consider.
As reported on E-Commerce Times, managers are still clinging to the philosophy that working from home results in lower productivity from employees, as well as wasted resources. An additional concern for managers is that when employees work from home they cannot be managed as effectively as they would if everyone were in the same physical location. A shocking discovery from a study commissioned by Citrix Online revealed that one-fifth of U.S. respondents would willingly give up 5 percent of their salary in order to work away from the office one or two times per week.
The biggest challenge for employers is effective management when it comes to the virtual office. Virtual workplace environments should have set standards and be managed like any other business plan. Another big challenge for managers is virtual security. In general, employee-owned devices cause a great deal of concern since they are not controlled by IT organizations and can be improperly figured. Unauthorized or insecure access to the company Intranet raises a great deal of concern over data leakage from notebooks when firewalls have been opened in order to support teleworkers.
Obviously, there are many things to think about before setting up a virtual office. We want to know if it would be worth the hassle. Leave us a comment and tell us what you think.
Photo credit: Commuteconnection.com.
In the business world, a smartphone is a necessity. Microsoft has yet to make a huge impact in the smartphone marketplace when you compare its Windows Mobile 6.5 to the tough competition from Apple and Google on the consumer side and Blackberry on the business side. However, that may be about to change.
Microsoft is releasing the Windows Phone 7 in September. Due to the tight control Microsoft is maintaining over the operating system of this phone, early reviews have revealed mixed opinions for the Phone 7 handset, according to All Business. Phone 7 features a lot of Microsoftb s b usual suspects,b music and videos from Zune, Bing-based maps and searching, and a mobile version of Xbox Live for gaming. The biggest strength of this phone is the intelligently integrated Office Suite, with which users can access Word documents and Excel spreadsheets, view PowerPoint presentations and collaborate with SharePoint, making Phone 7 an option for business people who are on the go.
But there are a few flaws to consider with this early version of Phone 7. This smartphone is currently unable to copy and paste, a feature found within the competition. Phone 7 also lacks Flash, but Adobe has said it should be available in the months following the launch. Multi-tasking on this phone is available only on first-party apps. For example, you can play your Zune songs while checking text messages, but you canb t do that from the Pandora app.
Click here for more information. And donb t forget to let us know what you think about this new option from Microsoft. Will you consider this phone for your business needs? Leave a comment to let us know.
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Doing business in the United States is about to get a whole lot more complicated and expensive.B Recent proposed rule changes by the FASB (Financial Accounting Standards Board), if set in place, will have a dramatic and severe impact on the way that US companies treat their leased real estate.B If the proposed FASB change takes effect all lease expense based accounting will be eliminated and all leases will be treated as a debt obligation to be reported on the balance sheet.B The proposed standard replaces FAS 13 in the United States andB will affectB companies that lease real estateB in the following manner:
The proposed changes currently scheduled to take effect in 2013 couldB notB come atB a worse time for the US economy struggling to recoverB in the worst economic environment since the Great Depression, andB presently could be headed into a “double dip” recession.B The commercial real estate and banking sectors of the economy already weakened by the steep correction over the previous two years could be hammered to its knees by the proposed rule changes.B Very few sectors of the economy are as interwoven as commercial real estate and banking into the overall equation.
The net effect of the proposed change will be profoundly negative – B far reaching in scope and time.B Companies will soonB be required to report aB significantly higher amount of debt on their balance sheet, which could affect the overall valuation of the entity and perhaps trigger defaults with their lenders on preexisting debt covenants.B The dynamic between commercial landlord and tenant will change as the ruleB creates an incentive forB the lessee to sign shorter term leasesB in an effort toB lower the negative impact on the balance sheet – lease options to renew will soon be a thing of the past.B Consequently, B landlords will charge a higher rent and shift more of the burden of renovation costs to the tenant as the ability to amortize those costs diminishes for those shorter term leases.B Landlords will suffer because they will no longer be able to secure long term financing asB lenders will not provide a ten year loan for a property that could only have three year leases on average – constantly having to chase after financing every 3-5 years will be expensive and time consuming.B Buildings with short term leases are considered less stable, hence worth less, and so its likely that property values will decline further which will also result in more volatility in the property and capital markets.B US companies could be valued dramatically lower due to the effect of placing all operating leases on the balance sheet which could have a profoundly negative affect on the equities markets for some time to come.
Why is this happening? The FASB and it’s international partner the IASB (International Accounting Standards Board) got together to develop a unified approach to accounting in recognition of a globalized economy.B The FASB/IASB recommendations are designed to provide more transparency and comparability and to eliminate off balance sheet transactions. At present, it is estimated that the value of operating leases for publicly traded companies in the US is between 1.3 and 2 trillion dollars. The proposed rule changes stem in part from spectacular business failures in the pastB such as Enron, which was a company that borrowed more than it was worth in part by using off balance sheet transactions.
While its understandable that the FASB (which answers only to the US SEC) would strive for greater clarity in US accounting practices the far reaching and grosslyB negative affects the proposed rule changes will have, B must be studied and carefully considered by all stakeholders.B TheB way commercial real estate is leased and sold will change overnight.B Already, US companies with multiple locations areB scrambling to analyze how the rule changes will affect their balance sheets and overall real estate strategies. Many companies will soon start asking whether its better to own their real estate instead of leasing it because it will be on the balance sheet anyway. Those companies with multiple locations (like retailers and banks) could be at a competitive disadvantage to those that have a lower real estate footprint or already own their facilities.B
Members of theB accounting communityB have been quotedB B thatB the solution in many cases would be for companies to purchase their real estate now instead of leasing, and frankly, I find that to be extremely naive.B A company that leases a space or a floor within a multi-tenanted property won’t easily be able to justB convert itsB leased space toB an owned space, especially if the property is owned by a REIT or another institution that purchased that asset based on a specific set of parameters (including longer lease terms for the tenants in the property to create a minimum rate of return for that asset). Furthermore, I don’tB think B it likely that REITs, pension funds and insurance companies will be eager to start carving up their ‘tier-1’ assets into condominium vehicles for their tenants to convert to owners as a result of the new accounting rule.B One of the primary reasons that companies lease their real estate instead of purchase it is because it is hard to predict what their needs will be beyond a typical 5-10 year lease term.B B The purchase ofB real estate is not a liquid asset and cannot be disposed of easily which means making strategic changes over a shorter time period will be exceedingly difficult.
So, here we find ourselves already mired in an era of overwhelming uncertainty with the old paradigms seemingly and unnervingly being killed on a daily basis.B B Along comes the FASB, rushing like a fireman late to the fire with a can of gasoline in handB – all in the name of clarity and theB prevention of another ENRON.B The economic cost of the new FASB rule will be devastating as its likely that there will be a global devaluationB inB B the value of real estate assetsB as well asB equities already during a time of – you guessed it, devaluation.B The FASB may just have created an economic stimulus package for the accounting profession, and I am sure that the accountants hired to find every last nickel of assets and debts will do so. After the dust settles a few years from now, after the great upheaval this will cause, the accountantsB whoB did the findingB B ofB the last nickel will find that its made out of wood, and will have to be tossed in the bonfire at company headquarters to keep themselves warm…
Let me know what you think.
As more and more work piles on fewer and fewer employees, workersb stress levels are through the roof. In fact, 75 percent of Americans are on the brink of a meltdown, according to a Fairleigh Dickinson University report.
The results: more job-related errors, employees calling in sick and higher turnover rates, to name a few.
Most of the companies trying to address high stress levels are suggesting workers see mental health counselors through employee assistance programs.
But not only are employees stressed about work, they also have finances, job security and families to worry about. Stress in this economy is high in most facets of life. And the longer work-hours and endless to-do lists of high-up executives doesnb t make them the most susceptible to stress-related heart disease, for example. The workers lower on the totem pole who worry about set hours, job security and unsupportive bosses suffer more from stress, neuroscientist Robert Sapolsky explains.
Click here for more information from The Miami Herald. Have you noticed stress on the rise in your workplace? Is your company addressing this stress?
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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 isnb t 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. Theyb re 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 arenb t 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 b leave a commentb to weigh in with your thoughts.
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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
Following many storesb closings over the last couple of years, a number of retailers have announced expansion plans and are re-leasing vacated b big 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.
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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.
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Since going green became b in,b many businesses have started naming Chief Sustainability Officers (CSOs) charged with keeping their companies environmentally friendly.
Right now a CSOb s 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, b Buildings 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 b Net Zero Energy Use in Buildings by 2050,b b she says.
Is your company striving to be more eco-friendly? What specifically has been implemented to make it happen?
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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 thatb s 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 alluringb more 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 itb s better to go in to an office or stay at home? Share your thoughts.
Photo credit: Mark Wemple for Florida Trend