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RENTABLE VS USABLE
When it comes time for office tenants to start previewing alternative spaces in which to place their businesses an often overlooked, and certainly undervalued concept, is the difference between “rentable” square footage, and “usable” square footage. Unfortunately, not paying attention to this detail can be an expensive mistake.
Office buildings are essentially made up of two different categories of space; office area and common area. Office area is the actual space occupied by the tenants of the building, while common area is every other square foot of the building. Shared bathrooms, hallways, the building lobby, and electrical rooms are the most obvious examples of “common area” space. One might think that having a big, gorgeous lobby is therefore a burden to the landlord because they could be using the lobby square footage as an additional office space to lease out, thereby creating revenue. However, the landlord already is leasing that space out, and if you are in the building, you’re paying for it.
In Chicago, tenants pay for more square footage than they have the exclusive use of. They also pay for their share of the common areas of the building, based on the percentage of square footage they take up in relation …
Read more...WHAT DOES YOUR SPACE SAY ABOUT YOU?
Space matters. It really matters.
Your space is an extension of your culture. It should give you a visual taste of the company’s culture.
Chicago Creative Space Introduction from ChicagoCreativeSpace on Vimeo.
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A YEAR OF SIGNIFICANT LEASING ACTIVITY
Here’s a snapshot of some of the more notable leasing activity in the central business district. The market is fluid and ever changing.
161 N CLARK ST
- Chicago Title and Trust is vacating the building and moving to 10 S LaSalle St.
- Grant Thornton will be vacating 175 W Jackson and moving into 137,000 sf of former Chicago Title and Trust space at 161 N Clark St in 2015 and secured naming rights to the building. This puts occupancy at this building back up to 95%
- With so few significant leases set to expire in the next couple of years and occupancy at 95%, Tishman sold the nearly 1.1 million sf tower for about $325 per sf ($348 million) to John Buck and South Korean investors. This amount was unheard of when they purchased the building in 2007.
1000 W FULTON ST
- Google agreed to lease about 200,000 sf at 1000 W Fulton St (which is currently undergoing massive renovations) in 2016. It currently occupies about 150,000 sf of office space at 20 W Kinzie. This is on the heels of the Motorola Mobility (now under the Google umbrella also) just completed at the Merchandise Mart for 572,000 sf.
- The presence of Google in buildings just north of the …
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IS GOOGLE’S NEW OFFICE MORE TRANSIT FRIENDLY THAT ITS OLD OFFICE?
In a recent article written by Eric Jaffe of The Atlantic titled: Google’s New Chicago Home Isn’t More Transit-Friendly, But It Is More Highway-Friendly Eric cites a study done by Lauren Ames Fischer, who lived in Chicago before coming to Columbia University as an urban planning doctoral student, where she disputes the notion that Google’s move was driven by the new transit hub at the Morgan Street Station.
In fact, Fischer ran a transit anlaysis and found her hunch backs up the idea that transit did not play the role everyone, including Mayor Emmanuel, has touted. Although Google’s new location at 1000 W. Fulton Street does have strong transit access its old location on Kinzie Street did too. Her study concludes the new headquarter loses on transit criteria or at best ties.
Fisher says,
“I think there’s enough to celebrate in just saying that firms are choosing to stay in urban locations — and particularly with the West Loop, urban locations that are up-and-coming and not necessarily fully established as employment centers,” says Fischer. “We don’t have to take the next step and say that transit causes this.”
For a sneak peak at Google’s new headquarters have a look at Fulton 1K’s marketing video.
THE STATE OF THE CBD OFFICE MARKET – Q2 2013
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WORLD BUSINESS CHICAGO REPORTS FEDERAL RESERVE’S BEIGE BOOK RESULTS
World Business Chicago does an excellent job of summarizing the key economic indicators of the Federal Reserve’s Beige Book survey.
“Chicago District Beige Book Highlights (March 2013):
- Growth in consumer spending decreased, and some contacts suggested that the end of the payroll tax holiday was having an increasingly negative effect. Lingering winter weather prevented retailers from selling spring-related merchandise, which drove up inventories. Regardless, sales during the Easter holiday mostly followed expectations.
- Business spending was up as inventories increased slightly, and spending on software, equipment, and structures increased. The labor market showed modest improvement, and contacts indicated that demand for highly skilled profession and manufacturing positions continued to outpace supply. Opportunities for recent college graduates were up, and employers saw greater competition to fill internships.
- Construction and real estate activity improved; residential construction increased as demand for multi-family housing remained strong, and single-family grew. Increases in non-residential construction remained moderate, but commercial real estate conditions improved as rents increased and vacancy rates decreased.
- Growth in manufacturing slowed, with some contacts speculating that it was hampered by uncertainty surrounding the federal budget sequestration – however, they reported little evidence of this is their shipments. Demand for steel was flat, mining activity …
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BECOMING A US CITIZEN – A PERSONAL JOURNEY
I was born in Canada but have lived in this country for the last 13 years with work visas and eventually a green card, which I obtained when I married my husband, Alex. I decided to become a US citizen when our attorney suggested that doing so would make things easier for estate planning purposes.
My appointment to take the oath to become a US citizen was set for Friday November 30th at 9 am at the United States Immigration Service (USIS) office in downtown Chicago. When I arrived I was ushered through through metal detectors by security officers who didn’t seem the least bit interested in being friendly, attentive, or polite. After I reached the second floor I was told to sit in a very specific area of the waiting room (“Between these lines here, not those lines there“) with the mass of other immigrants. A government officer began getting us up row-by-row to enter the auditorium. (They were exceptionally concerned that we did this row-by-row and at a certain, controllable speed.) It annoyed me that they were moving us into the auditorium in such an inefficient way rather than simply having everyone walk into the room and sit down. …
Read more...THE VALUE OF A LEASE COMP
Using lease comps to assist a client in understanding where their lease economics should end up at the end of a negotiation needs to be reviewed. Prospective clients are told how important it is for a brokerage firm to have these details – and lots of them – to use in helping establish their negotiation end-point.
“Hogwash!”, I say.
Leverage is what establishes the bottom of the barrel economics with landlords not lease comps.
Every deal is unique, every client is unique. Reliance on lease comps is a poor substitute for applying a process that drives the outcome. Even if you could standardize the transaction details, all a comp represents is a unique set of conditions in a single moment of time that cannot easily be generalized to any other deal. You get all you need to know about where prices are going by looking at asking lease rate trends, applying a process to create leverage and letting the process drive the outcome.
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