Here are some highlights of the most recent U.S. office property report from Yardi Matrix: Office-using employment increased 1.6% year-over-year in November 2019. The average asking rate increased 2.3% year-over-year that month while the vacancy rate fell 10 basis points to 13.6%. Growth in demand for office space as measured by office-using employment is heavily concentrated in a handful of metros. The top 20 markets tracked by Yardi Matrix accounted for 64% of office-using employment growth from October 2018 to October 2019 but only about 42% of total employment growth. Transactions through November totaled $82.2 billion, on pace to match or exceed the $93 million recorded in 2018. Sixty-seven million square feet of space was delivered year to date through November and another 156 million square feet remains under construction. Learn more about key trends in national supply, demand and sales—along with the factors driving listing rate increases in Brooklyn, N.Y.; and why the office market economies in Nashville, Tenn., and Orlando, Fla., are riding high—in the Yardi Matrix national office report for December...

Did you know that you and your tenants spend more than one third of your lifetime at work? That’s a lot of time spent indoors. As our “second place,” the physical workspace of the future must facilitate wellness, satisfaction, and retention. Built-in features can then complement tenants’ initiatives in those areas. Thought leader Brian Eichenseer, General Manager of Hines commercial real estate investment firm, explores how connectivity, flexibility, and sustainability equip future properties for success. What do tenants want? “Today’s work environment focuses on creating a harmonious blend of open and private spaces that both encourage interaction and provide place for solitary retreat, experiential moments that draw a connection to the surrounding community and a sense of place, and sustainable features reflective of the environmentally conscious generation joining the workforce,” explains Eichenseer. That’s a tall order to fill. Creative developers are finding practical ways to deliver. Eichenseer addresses the key elements to fill that order: digital and physical connectivity, workplace flexibility and sustainability. Physical and Technical Connectivity Connectivity bears social and technological features. Socially, tenants seek spaces that are connected to the local community and provide staff with a sense of place and belonging, suggests Eichenseer. They desire shared spaces that encourage collaboration as well as private spaces that allow occupants to connect to their inner creativity and problem solving abilities. Accessibility to mass transit makes the connection between home and “second place” more seamless, says Eichenseer. Building near interstate access has long had its appeal. Newer to the scene, especially in rural areas and the Southeast, is bike and pedestrian travel accommodations. To address the latter, developers are incorporating bike storage and locker facilities into new projects. The big ticket item is internet connectivity. Tenants need to connect to their commercial property management...

The office real estate sector shows strong fundamentals as it appears to be near a peak, shares Yardi client Adam Rath, founder & owner of Rath Equity. The company started operating in the Cincinnati area since last year and is now focused on growing its base of industrial and office clients. In a wide-ranging conversation, he touched on the trends, challenges and opportunities in the metro’s commercial real estate market. What is your general view of the office sector? What are the main trends? Rath: The major factor contributing to a strong office and industrial market in Cincinnati is a strong local economy and revitalized downtown that has aided in the ability to retain educated workers and have accelerated a strong economic growth. The unemployment rate has compressed to under 4 percent. The Cincinnati office sector is currently strong and healthy. In the last few years, we have seen rising rents and vacancies going down. Also, sales are strong but appear to be reaching a peak at both cap rates and price per square foot. Tell us about the challenges you see in today’s market. Rath: The major challenge we are faced with today is economic uncertainty in the next one to three years. We have seen record growth/investment over the last few years and debt limits starting to reach pre-recession levels. Most people in the industry are starting to feel a pullback. The majority of the investors I speak to feel a pullback is needed to bring pricing within limits to deploy capital. This economic uncertainty should provide an opportunity for investment. What are the trickiest aspects of being a medium-sized company? Rath: Rath Equity was created to be a boutique investor-friendly brokerage and built to be able to adapt and pivot as...

Much ink has been spilled on the topic of Millennials and their influence on the modern workplace. This tech-savvy generation is willing to change tracks towards a more satisfying career path, and able to ride the rough waves of the gig economy. Millennials’ demand for a lively urban life is driving the revival of downtowns across the nation, and the development and expansion of a new office design plan: the coworking office. To go with this new office concept, employers are further trying to entice workers with a series of office perks that address the preferences and values of this generation. Office listings platform COMMERCIALCafé looked at one of the most recent additions to the growing range of work benefits―the option of bringing your pet to work―and compiled a list of the 50+ most pet-friendly coworking hubs in the U.S. Peruse the list below and read on for more details about the pros and cons of bringing pets to the office. The list is by no means comprehensive and remains open to suggestions. Among the venues that caught our attention is the whimsically named CO+HOOTS in Phoenix―recently acclaimed one of the most innovative coworking spaces in the U.S.―which invites visitors to meet the office dogs. Strongbox West in Atlanta―the city’s oldest coworking space―is not only a self-declared dog-friendly office, but a veritable ‘doggy daycare operation.’ The Box Jelly in Honolulu holds different events for owners and their pets, and they don’t shy away from welcoming unconventional companions. If you’re considering adopting a pet-friendly policy in your office, it’s good to weigh both pros and cons. There are several benefits of spending your workday with your beloved furry friend. For one, you can stop worrying about its safety and hurrying out the door as soon...

In a recent nationwide survey, Yardi office listings platform COMMERCIALCafé investigated what office employees across a variety of industries had to say about their work spaces. We asked 2,107 respondents from a wide range of ages (from Baby Boomers to Gen Zers), working in different fields (from tech to retail, education and entertainment) some questions about what they view as productivity killers in their current workspace, and what improvements could make a difference. The Quest for Privacy in the Office Most Americans work in an open-plan office—roughly 70% of workspaces in the nation currently sport this design. Employers have many reasons to love open-plan offices, as they are cost-effective and grant great flexibility in accommodating a growing workforce. Nevertheless, from our respondents’ point of view, there are several grievances that the offices they work in fail to address. What stands out most is the employees’ concern regarding the lack of privacy and high noise levels. Roughly 64% signaled they had trouble concentrating due to interruptions from their coworkers, while things like outdated equipment, air quality or poor lighting were raised as issues by around 33% of respondents. Designers are trying to address some of these problems and their current range of solutions combine the use of sound-absorbing materials for flooring, walls and furniture, panels and partitions to create a sense of privacy, and soundproofing quiet rooms or pods. Plants in the office can also contribute to bringing down noise levels and improve air quality, not to mention the added aesthetic appeal they provide. Millennials and Baby Boomers Agree: Private Offices Are Still the Best We know open-plan office designs are widespread, but does that mean they are also popular? Only 9.87% of surveyed workers indicated this layout as their ideal workspace. By comparison, roughly...

CBRE recently released the Spring 2017 North America Suburban Office Trends Report. Econometric advisors foresee positive net absorption and rent growth will continue throughout suburban office markets in the United States. A handful of cities stand out for their growth. For more than 27 quarters, the U.S. suburban office vacancy rate has refused to rise. Sluggish new supply in major suburbs cannot keep up with increasing tenant demand. Even suburbs that were slow to recover from the recession are now showing luster.  CBRE reports that several Florida markets, Milwaukee, Phoenix, and even Detroit posted year-over-year vacancy rate decreases of 200 bps or more in Q4 2016. Submarkets that cater to thriving industries, such as technology, stand to benefit the most from this trend. Major suburbs that offer energy efficient spaces and top-end amenities will also do well. The following 10 markets are slated for success throughout 2018. Suburban Atlanta Increasing by 10.1 percent, rates for Atlanta office space for rent ended 2016 at an average of $22.47 per sq. ft. Atlanta Business Chronicle reports that some areas of the metropolitan area just made history by breaking the $50 per foot barrier. Cambridge, Mass. The vacancy rate declined by 180 basis points by Q4 2016, ending at 3.8 percent. The average price came in at $65.26 per sq. ft. The new city of Cambridge has grown in large part due to the presence of technology powerhouses, Microsoft and Apple. The presence of academic professionals, employees of Cambridge Innovation Center and WeWork also contribute to the high demand for office spaces. Suburban Fort Lauderdale, Fla. At the end of Q4 2016, the suburb yielded 8.3 office rent growth, at a price of about $29 per sq. ft. New construction and the conversion of some retail spaces...

The U.S. commercial real estate market took something of a respite in 2016, during a year characterized by political volatility. Compared to the previous year, when the market fired on all cylinders, office players were more cautious in 2016, with leasing and sales activity cooling down to more sustainable levels, per most industry reports. Office tenants were reluctant to make any major moves pending the conclusion of the presidential election, thus lease renewals and consolidations took the stage in the past year. Though office sales activity also decreased 7% year-over-year, according to Colliers, the national transaction volume was still the fourth-highest yearly total in the past 15 years, reaching $140.5 billion. We enlisted the help of Yardi Matrix sales data to round up a list of the 50 largest office deals of 2016. The results of our analysis aren’t all that surprising: the New York City office investment market remains the most attractive destination for both local and offshore buyers, though other markets also landed a good deal of capital in the past year. The U.S. office market is poised to become even more attractive in the future, especially to foreign investors, if Brexit goes through. Check out the list of the top 50 largest office deals of 2016 on the CommercialCafe blog. NYC Home to Largest Single-Asset Sale of the Year The priciest office transaction in New York City and the second-largest overall office deal of the year was the $1.93 billion sale of the AXA Equitable Center at 787 Seventh Avenue in Manhattan. One of the biggest investments in pension fund CalPERS’ history, the sale closed Jan. 27, 2016, at $1,179 per square foot. The 51-story, 1.6 million-square-foot tower is LEED certified and includes 49,000 square feet of retail space, a parking garage and access to the underground concourse of Rockefeller Center. CalPERS bought the...

Creating an optimal work environment can prove daunting. It’s often impractical – and prohibitively expensive – to provide each employee with their own private domain. On the other hand, the surprisingly popular open office strategy has been shown to negatively impact productivity and morale. So what’s the solution for distracted staff and budget-conscious employers? In a 2014 dispatch for The New Yorker, Maria Konnikova laid out all the negatives of the wall-less workspace in “The Open-Office Trap.” Konnikova begins with a brief history of the open office, which originated in 1950s Germany and has spread to over 70% of offices worldwide. This wide-scale adoption runs counter to mounting evidence open office space increases stress, reduces productivity and leaves personnel feeling resentful and dissatisfied. Much of the adverse effects of an open office can be traced back to the psychological need for privacy and control. In fact, a 2005 study revealed, “the ability to control environment had a significant effect on team cohesion and satisfaction.” Additionally, in a 2011 survey by organizational psychologist Matthew Davis, open offices were found uncontrolled interactions with coworkers created “higher levels of stress, and lower levels of concentration and motivation.” Noise, of course, is yet another drawback of the open office plan. Overhearing phone calls and being subjected to unsolicited comments are just some of the challenges presented by the barrier-free workstation. Konnikova cites several studies indicating noise can result in both physical and psychological symptoms. For example, unwelcome sound adversely influences cognitive function and mental recall, and can even trigger the “fight-or-flight” response. So what’s the solution? Over at Slate, associate editor L.V. Anderson proposes a few simple ways to reign in the chatter and clamor rumbling unabated across desks and workstations. Anderson advises employers take advantage of instant messaging apps...

Yardi client Avison Young recently released “Five generations: Is the need for new workplace structures myth or reality?” The white paper explores the perceived need to overhaul workplace layouts in order to accommodate multi-generational employees. Generations have replaced one another in the workplace since, well, the dawn of the workplace. Yet the introduction of Millennials has employers grasping for new ways to catch and keep the newcomers’ attention without isolating older employees. According to the U.S. Census Bureau, Millennials are the largest generation. Ever. There are currently 83.1 million young adults in the U.S. alone, representing more than one quarter of the nation’s population. The group is a dominate force to be reckoned with. Employers are still learning how to reckon. The first challenge: Millennials are hard to keep on board. The report suggest that Millennial attrition costs are nearly twice that of older workers, “For an organization of 1,000 employees, the additional cost of replacing Millennials could average as much as $300,000 annually.” Stereotypes would suggest that this is because Millennials lack loyalty. Any new carrot could whisk them away to another company. The report reveals the error of this assumption. Jennifer Deal, research scientist with the Center for Creative Leadership, discovered level within the company correlates to loyalty rather than age. The next assumption is that the workplace itself is wrong for Millennials, hence the tendency for employers to create “hip” spaces that should feel more welcoming to Millennials. Organizations are creating lines in the budget for arcades, cafes, sleeping pods, slides,—the list continues. This, too, is a potentially erroneous strategy. How does one measure the ROI of a hoverboard? “Our research shows that when you hold the stereotypes up to the light, they don’t cast much of a shadow,” explains Deal....

Plants do more than beautify your office space. They are a tested, effective, low-cost—and now, low maintenance—way to make your office space a better place to work. The presence of greenery results in increased productivity, improved morale, more amicable interpersonal relations, higher air quality, and decreased stress and anxiety. If those seem like haughty claims, consider the research: The Journal of Experimental Psychology reveals that the presence of greenery in an office space boosts productivity by 15 percent. Plant life is proven to enhance concentration, which not only supports productivity but also fosters creative problem solving and faster learning. When employees are burdened by stress, fuses run short and interpersonal conflicts may escalate. Studies by the Horticulture Research Institute suggests that indoor plants demonstrably reduce stress, thus improve mood and morale in the workplace. In the long term, emotional stress is a contributing factor to the top six leading causes of fatal illness. By reducing stress, businesses can improve employee health and cut costs on absenteeism and health care. It is common knowledge that plants can reduce the presence of carbon dioxide outside. It’s equally as important to note that some plants can combat volatile organic compounds (VOCs) that are commonly found indoors. VOCs are found in paints, adhesives, flooring, furniture, and other office products. Cleaner air contributes to employee health, as well as a reduction in minor setbacks such as headaches and fatigue. Plants have proven their value. So why aren’t more offices packed wall to ceiling with greenery? Terra Basche of Santa Barbara-based Terra Malia Designs recalls common misconceptions about indoor plants. “People think potted indoor plants should be placed in the corner and out of the way. Plants are cared for, but otherwise no one interacts with them. Terra Malia Designs...

“Choose a job you love, and you will never have to work a day in your life.” -Confucius Geekitecture – a new term I’ve just invented to describe the development of office space by new technology titans – is becoming a real trend. Apple, Facebook, Google, and Amazon are showing off innovative architectural plans for their impressive new headquarters’. These projects may look drastically different, but they have major commonalities, namely that they are focused on innovation, sustainability, collaboration, and beauty. By capturing the attention of the general public, these technology innovators are showing that they can transfer their design and development skills to physical plant as well as virtual products. Let’s take a look at a few of the projects planned. Apple is building a jaw-dropping 2.8 billion square feet spaceship-like corporate campus on approximately 176 acres, property that was previously owned by HP. Apple Campus 2 will be four stories high, encompassing a mix of office, research and development space and open land. It’s planned to accommodate up to 14,200 employees who will unfold their activity in a unified, secure and private campus which connects with outdoor opportunities for recreation, relaxation and reflection. The top priority for Apple’s project is the environment. The company is committed to power the campus with renewable energy, provided by fuel cells and approximately 8 megawatts of photovoltaics. This solar installation will be one of the largest in the world for a corporate campus. Some of the campus’ amenities are a striking restaurant, a Corporate Fitness Center of approximately 100,000 square feet, and a 1,000-seat Corporate Auditorium of around 120,000 square feet. The project replaces existing asphalt and hardscape with over 100 acres of landscaped green space. The professionals behind it are London architects Foster + Partners,...

Cold and flu season is a headache for companies around the nation. The Integrated Benefits Institute states that US companies lose $227 billion each year in lost productivity. Those losses are the results of illness-induced absenteeism and presenteeism (when illness prevents workers from fulfilling their potential). Cut your losses and protect your employees with a few creative housekeeping tips. These small investments could save you thousands—or more—in the long run. Equip Your Team for Cleanliness A study conducted by the University of Arizona reveals that it takes about four hours for traces of infectious viruses to spread to solid surfaces throughout your office. These viruses can thrive on surfaces for up to 48 hours. Strategically place disinfecting wipes throughout the office. Employees can wipe down their workspaces throughout the day. You may be surprised by how many employees take advantage of the wipes! Some employees will want to avoid conventional antibacterial wipes. To promote cleanliness for all, consider supplying this simple, natural cleaner as well: one drop of lemon essential oil per four ounces of water in a spray bottle. High-quality lemon essential oils have proven antiseptic, antimicrobial, and bactericidal properties. It’s a natural alternative for employees who might not use conventional disinfectant wipes in their workspaces. Restock Your Break Room Wisely The traditional break room setup usually includes coffee, tea, sugar, and creamer. In fall and winter, consider adding a few fresh lemons and raw honey to the mix. Breathing in warm teas stimulates the cilia of the nose, helping to block out germs. Honey is a natural sweetener that doubles as an antibacterial agent. It’s also a beloved soothing agent for irritated throats. Lemon adds flavor to teas while helping to thin mucus, thus minimizing the irritation caused by postnasal drip. Stock...

With every change of season, you can expect new complaints about the thermostat setting. This isn’t (necessarily) because employees are grouchy. Studies suggest that previously recommended temperature settings are outdated and biased. International reports vary on the optimal setting for thermal comfort in office buildings. The United States Department of Labor Occupational and Safety Administration recommends anywhere from 68°F – 76°F. Many offices implement seasonal temperature standards established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) in the 1960s; though temperatures vary based on humidity and other factors, ASHRAE recommends thermal comfort temperatures as low as 67°F. Such low temperatures are problematic for two reasons. Primarily, men set the standards for the workplace in the 1960s. Men’s thermal comfort temperature is lower differs from that of women. Studies published by the US National Library of Medicine reveal that men prefer an environment that is roughly 72°F whereas women are most comfortable in an environment of about 77°F. (Temperature preferences are influenced by metabolism rates and fat to muscle ratios.) The American workplace is more diverse than it was in the 60s, but thermal comfort guidelines have yet to catch up. Changes in workplace norms also affect our comfort levels. Business attire isn’t what it was in the 1960s. Most noticeably, men and women wear fewer suits. Clothing materials have also changed. In place of traditional wool or gabardine, clothiers now manufacture a host of breathable business wear fabrics. When indoors, modern employees may feel cooler than their 1960s counterparts because of clothing choices. Changing indoor temperatures could result in cost savings for a business. Decreasing the strain on central cooling systems results in lower utility costs. E Source estimates that HVAC systems require 42 percent of electricity and 86 percent of...

A new generation of highly-efficient buildings, focused on carbon reduction and livability, demonstrate that smart living calls for tech and green combined. The green building movement is not limited to new construction projects; green principles can be easily incorporated into existing environments as well by overhauling interiors, using eco-friendly materials and supplies, and educating on green practices. Installing solar panels and occupancy sensors, putting in better insulation, using energy star-rated appliances or energy-efficient light bulbs are only a few of the improvements that property owners can make in order to green their offices without building from the ground up. DPR Construction, a national technical builder specializing in highly complex and sustainable projects, has achieved net-zero energy consumption in its Phoenix Regional Office, a 40-year old building located in the Discovery Triangle. The outfit has been officially certified as a Net-Zero Energy Building (NZEB) by the International Living Future Institute (ILFI) through its Living Building Challenge (SM) program, making it the largest building in the world and only the second in the United States to achieve NZEB certification to date. “Net-zero is possible, even in one of the most extreme climates in the country,” said Dave Elrod, Regional Manager, DPR Construction. “We purposely chose a building that was nearing the end of its intended life cycle in a redeveloping area to show our commitment to Phoenix and to demonstrate the impact revitalization can have on an urban environment. This building is another proof point of our ability to walk the walk of sustainability. Our Phoenix office will be a ‘living lab’ where anyone can see firsthand how our sustainable technologies work together in real life.” Among several outstanding enhancements, the high-profile office building includes operable windows that work in tandem with the energy monitoring system...

Joanne Massey is the controller for Sundance Square, the renowned Fort Worth property management firm owned by the Bass family that controls 35 city blocks of the city’s downtown core, including numerous historic buildings, and is considered one of America’s most successful urban revitalization efforts.  But her interest in cool stuff from the past doesn’t end when she leaves the office. In her free time, Joanne and her husband Robert enjoy shooting vintage lever action guns – “the kind that cowboys used to shoot” – in Cowboy Silhouette competitions. She’s reached the AAA level in many of the competition categories, which is no surprise when you learn that she’s a former national-caliber archery athlete. She got into Cowboy Silhouette after reconnecting with her husband, a college sweetheart whom she married four years ago. He was attending competitive rifle and shotgun events, so she tagged along. The Omaha native is also an avid golfer who hits the course several times a month. “I won’t go and just sit, that’s too boring,” she told us. While attending college at Texas Christian University, she was the top female collegiate archer in the state of Texas, and ranked in the top 10 nationally. Though the U.S. team selection process for the 1980 Olympic Games didn’t go in her favor, she has fond memories of her archery days. Joanne is also right on target with her career at Sundance Square, where she rose up through the Bass corporate accounting office to head up the accounting team for Sundance and oversee numerous major software transitions. Her team initially ran two high-rise office towers, then merged with another Bass-owned operation to form Sundance Square that oversees all of the downtown properties. She loves her job. “Being in a property management office,...

Lucy Billingsley’s distinguished career in real estate development ranks her among the nation’s leading female industry executives.  In the fourth decade of her career, she maintains great passion for the next project to command her attention. “My favorite deal is always the next one,” she told us during a recent interview. Billingsley Company, the Dallas-based company with land, office space, industrial, retail, single-family, multi-family, mixed-use and master-planned developments that she and her husband Henry founded in 1978, is flourishing. New phases of 10,000 unit master-planned rental communities The Neighborhoods of Austin Ranch and Cypress Waters are currently underway, and Billingsley is excited about changing the face of the multifamily experience. The company is also expanding its office and industrial holdings. Billingsley also devotes much of her time and energy to charitable work, and her philanthropy has included The Chiapas Project, Grameen Foundation USA, Women for Women International, National Geographic Society Council of Advisors, World Affairs Council (Dallas), Brain and Creativity Institute at USC, Council of Foreign Relations, The Hockaday School, and The Hunter and Stephanie Hunt Institute for Engineering and Humanity Advisory Board. In a short conversation, she filled us in on few views of the current marketplace, how she chooses philanthropic causes, and the lessons that her father, famed developer Trammel Crow, imparted to her. TBS: It’s been a challenging climate for real estate sales, investment and development over the last several years, although Texas come through the down economy very strongly. What do you see as the most pivotal focal points for property executives as the financial climate nationally continues to improve? LB: I think the multifamily world is a world that has made a significant and permanent shift in its role in America today – the shift is because the American...