Anew calendar year engages most
firms in the process of assessing
past performance and planning for future growth. This exercise is typically
focused on targeted opportunities to
expand their business, required financial
and human capital and, subsequently,
facility needs. However, current economic conditions have given rise to
some uncertainty as both landlords and
tenants look ahead.
“The flood of economic news is often
confusing and many times contradictory
depending on one’s perspective,” says
Anne-Marie Ayers, an office specialist
and first vice president with CB Richard
Ellis in Tampa. “The constant, however,
in any market cycle, is that landlords and
tenants alike are attuned not only to
operational efficiencies but also creating
an environment that fosters productivity. That common thread helps add some
clarity to the solution.”
Smart Business asked Ayers for her
insight about today’s office market conditions and how owners, in particular,
are preparing to address current and
expected future demand.
Does the Tampa office market reflect the current conditions of the residential market?
While the slowdown in the residential
sector has had some effect on tenants
directly or indirectly associated with
that industry, current conditions in the
office sector remain in much better balance. Even with recent new inventory,
vacancy rates remain relatively low and,
therefore, lease rates have risen. It is
important to remember that the universe
of commercial properties is much smaller than the residential sector, affording
developers and owners a better understanding of the competitive landscape.
Additionally, the time frame to deliver
new commercial products is also typically much longer due to a variety of regulatory, cost and construction factors.
While a longer lead time makes it somewhat harder to anticipate market conditions further out, it does provide the commercial development community
time to modify accordingly as it progresses through the planning process.
What are some of the key factors in planning
for today’s office environment?
Demand for space drives new development so owners are continually working
to address various aspects important to
tenants. Location still remains the primary consideration for most tenants.
Travel time, access to major road arteries and proximity to employees are key.
The value of time, in both personal and
professional lives, is increasingly important to today’s work force. Perhaps
equally important is the physical environment itself. LEED certification is
now driving a much more consistent
approach to operational design, construction and day-to-day efficiencies.
These efforts are not only directly beneficial to employee health, productivity
and retention, but also validate commitment to good community and corporate
stewardship. Leadership in this area is vitally important to smart growth, be it
here in Tampa or worldwide.
Can older properties compete with today’s
newer office structures?
As long as reasonable demand for
space continues and lease rates can justify additional capital investment, most
existing buildings can compete favorably. Again, fundamentals of good location, parking and proximity to residential and support amenities will serve to
support and enhance long-term value. In
addition, an older property has the
advantage of an existing tenant base in
place. In most cases, this is a plus for the
existing owner to continue that relationship. For many tenants, their current
location will typically be a viable alternative in addressing future needs. The
majority of our office inventory is controlled by institutional ownership that
have every motivation to maintain their
investment either for long-term hold or
to sell based on internal business decisions or as certain market conditions
may dictate.
With the market in balance, when should tenants begin to address their needs?
In a lease situation, tenants should be
actively engaged in addressing their
space needs eight to 12 months from the
expiration date of their current obligation. However, prior to that phase it is
very important that a tenant carefully
consider not only near-term but long-term requirements, as well. By taking the
time to plan ahead, tenants avoid potential disruption of their business and the
property owner can be in a much better
position to accommodate the tenant’s
long-term needs. That’s the real challenge in today’s economic environment,
but it really makes for a win-win situation for both parties.
ANNE-MARIE AYERS is an office specialist and first vice president with CB Richard Ellis in Tampa. Reach her at (813) 273-8422 or
[email protected].