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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...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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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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JOBLESS CLAIMS – EXPECTATION 380K PRINT AT 412K
In the week ending April 9, the advance figure for seasonally adjusted initial claims was 412,000, an increase of 27,000 from the previous week’s revised figure of 385,000. The 4-week moving average was 395,750, an increase of 5,500 from the previous week’s revised average of 390,250.
The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending April 2, a decrease of 0.1 percentage point from the prior week’s unrevised rate of 3.0 percent. The advance number for seasonally adjusted insured unemployment during the week ending April 2 was 3,680,000, a decrease of 58,000 from the preceding week’s revised level of 3,738,000. The 4-week moving average was 3,728,750, a decrease of 20,750 from the preceding week’s revised average of 3,749,500. The advance number of actual initial claims under state programs, unadjusted, totaled 443,503 in the week ending April 9, an increase of 89,686 from the previous week. There were 514,136 initial claims in the comparable week in 2010.
Jobs drive office space absorption….
A MISS ON RETAIL SALES
“The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $389.3 billion, an increase of 0.4 percent (±0.5%)* from the previous month, and 7.1 percent (±0.7%) above March 2010. Total sales for the January through March 2011 period were up 8.1 percent (±0.5%) from the same period a year ago. The January to February 2011 percent change was revised from +1.0 percent (±0.5%) to +1.1 percent (±0.2%).”
“Gasoline stations sales were up 16.7 percent (±1.7%) from March 2010.”
This confirms that the economy in Q1 slowed down materially toward the end, and was certainly not as had been predicted early in 2011.
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