With the summer winding down (in calendar days, definitely not the heat...), let's take a look at a mid-year office market update and see how Houston stacks up against some other big markets in the country. According to CoStar U.S. office leasing remained very strong, despite slower than expected job growth. As we alluded to in our 2011 Q1 report, Houston office tenants have been taking advantage of very favorable concessions (i.e. giveaways from landlords) and rental rates and upgrading to nicer facilities offering bargain lease terms. The trend seems to be carrying on.
Building Class for commercial real estate in Houston refers to the quality of property. Class A office buildings are Generally 100,000 sq. ft. or larger (five or more floors), concrete and steel construction, built after 1980, business/support amenities, and well located with great traffic access. These properties are usually very well-managed with on site support day in and day out. Class B buildings are typically renovated and in good locations. Newer buildings are smaller in size, could be wood frame construction, and/or in non-prime location. They still have high quality management and tenants. Class C buildings refer to older, un-renovated and of any size in average to fair condition. Building infrastructure and technology is outdated. You'll often notice older/slower elevators, low ceilings, smaller bathrooms not in pristine condition, and poor parking conditions when touring a C class building.
In our attempt to show the world all of the different office leasing options in Houston, we came across another great concept that's perfect for entrepreneurs, start-ups, or anyone looking for their own desk or Houston coworking spaceaway from home.
The news broke a few days ago that the Borders Bookstore chain has filed for bankruptcy and will likely see close to 400 stores close down nationwide. Houston will most likely lose it's remaining five Houston Borders locations, which will add to the large amounts of vacant Houston retail space the city has been carrying for years. Not long ago we saw another big box retailer, Circuit City, share a similar fate and some of those vacancies have yet to be filled nationwide.
After reading, Where Real Estate Listings Fail, we thought we would address how this translates to the search for office space listings online. You would think looking for commercial real estate to lease in Houston would be easy in this technology driven age (I mean I can find the best chinese food within a mile on my iPhone in seconds). This is not for lack of trying... there are hundreds of websites dedicated to listing properties, which include many attributes, including photos, descriptions, and prices. What consumers do not know is that online listings can be dangerous and counter-productive for a few reasons.
Mashable recently had an interesting post, The Love Equation: How Match.com Calculates Your Ideal Mate. Since one of TheSquareFoot’s goals is help “match” you to the right resources to lease commercial property (whether it be the right tenant broker or empowering you with educational content and tools), I thought it would be interesting to look at the most interesting similarities between Match.com’s equation and TheSquareFoot.
In the landlord-tenant relationship for an office in Houston, commercial lease default occurs when the tenant fails to pay the proper rent in a timely manner. As a safety net, landlords commonly require a new tenant to pay a security deposit, which may be used to offset defaults in payment of rent and other monetary obligations under the rental agreement. Generally, the landlord is required to give the tenant notice of the default before eviction or the application of the security deposit proceeds to the payment in default. The fixing of a definite default date for payment of rent can be critical if it becomes necessary to evict a tenant for a default in the payment of rent. Houston commercial landlords may often require a background and/or reference check on prospective tenants in an attempt to minimize defaults in rent payments.
This article from yesterday's Wall Street Journal discusses the "widening divide" seen in the recoveries of suburban and central business district (CBD) properties following the Great Recession. As usual, most of the data highlighted in the article centers around the major East Coast markets of New York, Washington DC, and Boston. The trends seem to pervade other markets as well, with Houston commercial real estate being not all too dissimilar.
Written by: Ben Debayle, a tenant rep broker with The Finial Group specializing in greater Houston.
In this blog post on Globe St, Tony LoPinto (their recruiting expert) discusses recent decisions by Google and Twitter to locate their employees in city locations. He notes that this a new trend, different from days past where technology companies choose offices in suburban locations. Google's purchase of 111 Eight Ave at the end of last year was the largest purchase of commercial real estate by a tenant in US history. Sorry Chevron.
Since we are obsessed with improving the process for finding office space in Houston, it is only natural we also love finding really cool and unique spaces. Every week, we are going to feature a new office space in Houston and our first feature is Primer Grey. Primer Grey is a marketing design firm in Houston and they office in East Downtown Houston (the hip people call it EaDo).
As a CPA, tech, and CRE geek (I am the life of the party...), I found the recent article on Globe Street pertaining to the new commercial real estate leases accounting rules particularly interesting. The article points out the uncertainty surrounding when the new lease accounting rules will come into place. Having experience in the accounting world, uncertainty and drafts constantly changing is nothing new. What is interesting is the type of personalities at play between folks in the commercial real estate in Houston world versus the accounting world. From dealing with both sides, I will let you guess who would be more fun to converse with in a social setting...
I've now seen two separate articles in the last several days about how available large blocks of Texas office space are decreasing. Our friend Coy Davidson was commenting on the Houston market over the weekend (does he ever sleep?!?) noting how the increased leasing velocity in the city has led to fewer options for tenants needing large spaces. This lovely graph shows the decreasing availability quarter-over-quarter for the last 3 quarters. In all three buckets, the number of available spaces has decreased by about 20%. This is great news for the landlords but it leaves fewer options for tenants looking for Texas office space
In commercial real estate in Texas, Lease Holdover (aka Tenancy at Sufferance) occurs when a tenant remains in the property after the expiration of the lease. The tenant can legally continue to occupy the space as long as the landlord continues to accept rent payments. If the landlord ceases to accept rent payments from the holdover tenant, it is considered trespassing and the landlord can then evict the tenant and force the tenant to vacate the property at any time, and without notice.
Of course the huge news is the buzz around commercial real estate in downtown Houston this week is Chevron’s acquisition of 1400 Louisiana to go along with 1500 Louisiana, which it already owns. The deal is believed to be one of the richest of it’s kind for a Houston office building in terms of price per square foot. This news is interesting in light of Exxon's move of its corporate headquarters relocation to The Woodlands, which is completely counter to Chevron's decision to focus on the downtown Houston area.
At TheSquareFoot, we have been discussing our launch with many members of the commercial real estate agentcommunity. Most importantly, since our first product will be geared towards commercial real estate industry in Houston, their feedback is of paramount importance. You should already know based on our posts, we believe the smartest way for a tenant to find space is to use qualified commercial real estate brokers in Houston.
After checking out the 2011 Q1 Houston office leasing outlook a while back, we knew tenants were gaining confidence as more business owners were willing to lease and renew office space in Houston. While the numbers certainly don’t lie, I wanted to see where some other positive signs were coming from and found this article pertaining to the office furniture industry as well as other service providers, and how they have adjusted during the really tough times. One can imagine how they too took a huge hit when leasing and expansion activity came to a halt across the U.S.
Written By: a Houston based associate of an international law firm representing clients in a broad range of developments, financings, dispositions and acquisitions of a variety of commercial projects, including the sale, acquisition, leasing, financing and development of mixed-use, office, retail, industrial and energy facilities.
With our second TheSquareFoot family trip to Austin just mere hours away, I figured it was time to write a little something on the Austin commercial real estate market again. This time, I'll leave out the Torchy's references (after this one), but suffice it to say we did get both breakfast and lunch there during our last trip to town.
Anchor Tenant typically refers to a large store in a retail shopping center (usually a department store or major retail outfit like HEB or Walmart) which the landlord has strategically rented space to in order to draw in large crowds and funnel them into other stores within the center. Name recognition and prestige of these large users are the appealing factors that will drive in other tenants and shoppers. Because of the value that an anchor tenant can provide the landlord as far as appeal to other smaller tenants and heavy traffic draw, discounted rental rates can often be given to these large users. It's not uncommon for an anchor tenant to reserve the right to approve the selection of a center's other tenants in order to prevent competing (and much smaller) tenants from taking away customers. That's how much value a well-respected anchor tenant, like an Apple store can bring!
A few months back, I wrote about the current executive office search options in Houston. I thought it was time to give one of them a try.
Reading the news of Exxon's move to the Woodlands as well as one of our previous posts on whether Houston's workforce will continue urban sprawl has sparked intense conversations on what this means for Houston residential and commercial real estate in The Woodlands as well as whether this is the right move for Exxon.
This article in yesterday's Wall Street Journal discusses the recent development (forgive the pun) of Germans "moving back into city centers, abandoning outside villages." In the opening sentence, this is attributed to aging populations and to people putting added value on sustainability and green living. This is a trend that is sprouting up in the states as well except here we call our "villages", "suburbs" and our "lifts", "elevators."
Last week, we posted about options for avoiding long-term leases including subleasing a Houston office rental, which is a very relevant topic both locally and nationwide. Subleasing was mentioned as a viable option for lease term flexibility and I wanted to expand on that topic a bit more.
After discussing our vision with someone who has had a painful experience looking for commercial space in Houston, the apt analogy was -
As usual (we don't have fun lives...), I was looking through all the Houston commercial space options. This time, I was trying to find the best way to find a tenant broker in Houston. In turns out this is as difficult as finding commercial space.
After reading this except from a recent BestVendor Blog post, I thought about the short term lease options in Houston -
In 1994, the Americans with Disabilities Act was passed to prevent discrimination of the disabled in employment, government services, transportation, public accommodations, and telecommunications. ADA requires all business and public facilities to be accessible by the handicapped, which meant that at the time of the act, existing physical barriers had to be moved all over and policies and standards had to be changed.