Office Max!

Jason and I are in the midst of a major life transition. We haven’t had one in a while, so I’ve been surprised at how it really does throw your life upside down. After months of planning and visioning, we are finally moving into our new office space, off of Baldwin St. on Madison’s Isthmus.

When you get involved in commercial real estate, you become involved in a more sophisticated method of investing your money. Commercial real estate and commercial real estate loans have a lot of “moving parts” and the approach that commercial lenders take is far different from those in residential lending.

1. Create a space that encourages design research: “the office space we inhabit is filled to bursting with games, toys, and other play objects”

Well, my new work place has had some management / investor issues lately and our alleged new offices are no longer our new offices.. this has now caused a bit of a problem as the lease on the current office space has expired end of last month. Luckily half the office is still free so they are using that for the management and callcenter staff, python development staff are working at my managers place and me (php development) and the sysadmin get to work from home - which is totally awesome other than the lack of social stimulation.

A few days ago I told about finding new office space and shared some of my mixed feelings, excitement and agony, over moving my business. Tomorrow is lease signing day and I hope I’m not jinxing the deal by writing this. Naaahhh … I’m not the superstitious kind. Que sera, sera…

Of course, count on the Times to try and undermine the WTC development - claiming that the construction of the office space, which is 20% less than was existed pre 9/11 would create a glut in the market. Okay then. How about we trash the brand new headquarters you're building in midtown that used eminent domain to obtain the property from other property owners and exceeds the prior office space in that location.

(Editor’s Note: I recently came across an interesting blog put together by Stephen Cugier and Nick Papa from Grubb & Ellis that focuses on Seattle’s commercial real estate market. In talking with them, I thought it would be interesting to have them post an occasional article on aspects of commercial real estate that might be of interest to people who generally follow the residential side of things. This first post by Nick will likely be particularly interesting for investors thinking of expanding into commercial real estate. )

Hot-Desking is the sort of incredibly stupid idea that happens when the money people make decisions that adversely direct those who teach. Tear down the offices and make one giant work room. We don’t need cubicles. We only need desks! A giant sea of identical desks as far as the eye can see!

It's true. One of the reasons I love Christmas despite the many reasons I hate Christmas is that everything turns minty. M&M's issue mint M&M's, everyone has billions of Ande's candies, Thin Mints of every variety and brand are in every office space and living room I go to (or at least in my fantasy world they would be). I cannot get enough mint at this time of the year. Candy canes, chocolate and mint, tree bark - you know the flat chocolate with pieces of candy canes in it. Give it all to me and let me eat it! Maybe that is one of the reasons why one of my favorite things is a Christmas stocking. Most of it is candy, at least in my family, and nearly all of it is minty or peanut buttery.

Office Space, which ranks among the best movie comedies of all time, did something which no movie, to my knowledge, has ever done before. It brazenly stole its central plot line from another movie and loudly proclaimed doing so.

They are not the only businesses to leave town. A leisurely drive up Taylor Street reveals a multitude of closed offices left behind in corporate restructures, consolidations and relocations. Estimates of vacant commercial space in town are as high as twenty-five percent. Of course it's not just the commercial taxes we miss and find hard to replace, it's the loss of good paying jobs. Our citizens need work within the city limits and one by one those jobs are disappearing.

My boss has this habit, every now and again, of sitting right next to me - at a table a few metres away - eating his lunch. It’s highly annoying - and sometimes nerving….. I think its his way of getting away from his office space… erm… Its nice weather outside - go sit out there… I dunno!!

Organization. Spending some hardcore time in my office (or any other space, quite frankly) moving efficiently through a pile of stuff that should never have accumulated is most satisfactory.

I've ranted about this office space for as long as I can remember, and I cannot believe that one of my visitors could give a rat's patootie that I'm a sometimes slob or that I'm fighting my personal organizational demons in a mean way.

Now, Milwaukee’s first microbrewery is being recognized for the dubious distinction of having the ugliest office space in America.

The benefits of a home based business are significant and the drawbacks of having an office (rent, lease contracts, having to be somewhere at a certain time) are added worries that you don’t need to opt for unless you can see a clear reason why you need an office. Personally I am glad I have been there and done that regarding an office so I know what it takes to locate and contract for commercial space. One day if I ever want to start my own retail business or restaurant I will have skills to fall back on. For the time being I’m happy working from home and enjoy watching my bank balance increase rather than syphoned away to rent.

I mentioned that my company just won a contract to do some development assistance work here and we’re opening up a project office. Well part of my duties here is to find suitable office space within our budget. The Arme.nians first instinct when they see foreigners is to jack up the price of everything, and finding a big enough space in the center of town is proving to be very difficult. We went out with a real estate agent recommended by a local subcontractor and went to a few inappropriate and over priced places before he took us to a dilapidated looking office under an old Russian style apartment block. We greeted the owner and went in for a tour. I knew this place wasn’t going to work out and walked out after 5 minutes.

The Scandinavians have done a lot of research in the area. One Swedish study followed a number of companies which gave grants to employees to construct home offices. Employees continued to travel to work 2-3 days per week and worked from home the rest of the time. The results were staggering. The company saved money from the move - even though there was a significant set-up cost for the home offices. The savings occured because teleworkers no longer needed full-time office accommodation and could share "hot-desks" with other teleworkers. This led to significant savings on expensive rents for commercial space. The workers saved on commuting cost and increased the value of their homes to boot. The most interesting find was that productivity was much higher in the home office, away from the distractions of colleagues, phones etc.

Last year, expanding and relocating tenants leased about 400,000 SF of additional office space in Uptown and downtown. A half-dozen office projects in the works for the area could add more than 2 million SF of office space in the next two years.

Question: How flush are the current capital markets for commercial real estate? Answer: It just doesn't stop. As one veteran industry economist says, “Goldilocks is back” to describe the perfect temperature for real estate borrowers and investors.

San Francisco's commercial real estate market showed signs of improvement in the first quarter, with prime office rents up 6 percent from the same period last year and the office vacancy rate down 3 percent.

If one were to poll the general public as to the perceived level of capital markets sophistication of the average commercial real estate sponsor, I believe the consensus opinion would show them to be savvy financial professionals. However, the reality is that I have witnessed time and again these perceived savvy, experienced commercial real estate sponsors arrive at their capital formation strategy by default, rather than by design.