Warrants give the property owner the right to buy the company’s (tenant) stock at a predetermined price with no time restriction. Warrants are not common in most markets and are typically not accepted by large property owners in lieu of LC’s or security deposits.
As conveyancing methodology Warrants are even less common since the April stock market correction, even in markets like San Francisco, with new economy companies not even offering (the October market decline only underlines this trend).
Guarantee by corporate parent, venture capital firm or individual. This option is less attractive to banks, who prefer the liquidity of an LC. There are other factors, beyond the strength of the company and the lease structure which serve to protect the property owners and financial institutions.
Property owners will monitor the amount of revenue that new economy leases represent on a portfolio-wide basis. These risks would be far more difficult to get around if the markets were not so tight.
An important mitigant for the property owners (less so for the banks) is the strong office market – there was virtually no concern regarding the re-leasing of space. Of course, many property owners are choosing simply to avoid new economy companies, preferring the established to the new economy companies – potentially less return, but significantly less risk.
Stock market volatility has contributed to this conservatism, with property owners choosing the traditional credit tenant, even at lower rents, over the high-flying new economy tenant.
The extent of the inquiry and the underwriting varies among and between property owners and banks. For example, banks are rarely comfortable with a venture capital-funded transaction, and avoid projects with significant exposure to private or pre-public companies.
Banks seek a diverse market, which often reflects the diversity of the potential tenant base. Exposure to new economy tenants is also evaluated settlement agent perth a more exposed market may require additional measures for the bank to get comfortable. Banks seek to structure a risky deal not as a credit loan, but as a real estate loan.
In markets that have seen significant rent growth, achieving levels that many believe are not sustainable, banks will avoid underwriting to these rent spikes, underwriting to levels achieved several years ago in some markets.
None of the financial institutions we spoke with had funded a Telecom Hotel, although all stated this was an area in need of research (See Appendix for a more detailed explanation of the Telco Hotel).
Other structural factors used to mitigate risk are reserve accounts , including debt service reserve, escrow accounts, and quick amortization.
Some brokers encourage clients to seek out sublease space. Companies attempting to lower overall lease payments through a sublease arrangement are more likely to accept the spotty credit of a new economy company.
Real estate information flow has always been limited because there have been few sources of published financial and qualitative data available to interested parties.Because of this, inefficient markets developed because information could only be accessed via specific parties.
As the Internet has evolved, however, property and market information has been increasingly disseminated to the public, thereby reducing the broker’s role as an information provider. . In the short-term, this may reduce leasing costs as less skillful brokers cut their costs to attract business. expert conveyancing specialist.
Even in traditional downtowns, like the Financial District in San Francisco, landlords are ripping out ceilings and walls to expose pipes, beams and brick. in terms of finish, preferred location, and even dress policies. Many refer to the desire for a unique finish, “Zen” rooms, open working environments.
Traditional industries are adopting these preferences , according to Arthur Andersen, “the enthusiasm for eBusiness and its ‘relaxed’ culture is leading other industries to adopt web company office use preferences.
By concentrating in certain districts or submarkets, technology companies generate demand for space by traditional companies attempting to attract the tech companies as clients and also to improve their image with a “hip” location.
What some refer to as “ wannabes,” this group includes advertising agencies, recruiters and law firms.The style of space varies by market, in certain markets s and start-ups and technology companies prefer campus style environments (San Diego, Northern Virginia)
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While in others they want “trendy” downtown space (South of Market in San Francisco, Silicon Alley in New York City). New economy companies are also critical in defining the technology needs of office space.
The importance of new economy companies in the upgrading of space is reflected in the markets fielding the greatest demands. In the markets with the most high-tech exposure and the longest new economy.
History (primarily the West Coast), technology demands and standard upgrades are more extensive for all tenants and new economy demands spilling over to more traditional tenants. According to Grubb & Ellis, nearly all of their tenants in these West Coast markets are not only aware of and concerned about technology, but are making specific demands regarding it.
In newer high-tech areas and markets with more limited high-tech exposure, demands across the board are less sophisticated, with the broader market not yet speaking the new economy language.
Somewhat surprisingly, even markets like Boston and metro Washington, DC report that the average tenant is making relatively few demands related to technology (which may be due in part to the extremely tight markets).
More sophisticated demands are present in these markets, but only with a small number of high-tech and larger tenants, not in the broader population.
It is not clear at this point the extent to which West Coast-level demands will become more common in other markets – like the rent spikes credited to the same industries, these demands could normalize over time.
Another defining factor is the size of the company, it is often as important as what the tenant does in determining their technology demands. Larger space users (over 50,000 square feet) with internal IT departments may have a number of technology requests regardless of the industry they represent.
The number one tenant demand regarding technology is a telecommunications services package.Larger, more sophisticated companies not only want access, but want access to multiple providers.
While all were noted by multiple property owners and real estate brokers, we have attempted to list them in order of the frequency with which they were mentioned. Above standard electrical (up to 12 watts/SF of power).There are certain demands unrelated to technology itself but for the most part unique to the new economy company Commercial conveyancers know everything .
Many are seeking shorter leases and additional space provisions to accommodate aggressive growth expectations. Many need the space immediately and therefore seek speedy lease negotiations and fit-out. In addition, the right location, especially if a corporate logo display is involved, is critical, helping the fledgling company attract capital.
Most property owners we spoke with are taking significant steps to accommodate these demands, both from a lease negotiation/structure standpoint and a technology/upgrade standpoint.
Many are attempting to be more flexible to accommodate the unique demands of high growth new economy companies. Some companies offer built-out space and “pre-negotiated documents” to shorten the lease negotiation period.
For the right tenant in the right space, owners may also be more flexible on lease terms, particularly for more difficult to lease spaces. Technology helps the property owner meet the aggressive timing demands of these companies, with computers and the Internet providing easy access to both information and the necessary documentation.
Fortunately for both tenants and property owners, most buildings can accommodate these technology demands – a new, state-of-the-art building is not always necessary.
This upgrade is driven by a number of factors. By proactively addressing telecommunications access, property owners maintain control of the process and also capitalize on it.
Create or invest in a telecommunications services provider company and thereby deliver the services themselves. The majority of the property owners we spoke with are utilizing the first and second approaches.In the case of equity ownership, property owners typically use both the first and second approach, seeking to avoid any exclusive agreements (even with their own company) brisbane conveyancing .
While owning the backbone allows for more control, the risks and responsibilities typically outweigh this advantage (the owner is responsible to both the tenants and the TSP’s for maintaining the infrastructure and therefore is exposed to claims from both sides).
The property owners we interviewed believe that offering a choice of providers is important and most offer at least three providers, both wired (building-centric) and wireless.
The number of providers is often a function of demand – larger buildings with more demanding tenants can have between six and 10 providers. Some of the agreements are fee based (with the fee determined by the number of antennas/dishes and the size of the building) by master conveyancers .
Others are percentage based (the benchmark is five percent, but may depend on the square feet of access). TSP access is not without risk, although few property owners expressed concern (one owner mentioned the concern that the landlord would be blamed for any problems caused by the TSP).
These include damage to the building, interruptions in tenants’ services (for those using other TSP’s), and even injuries to TSP employees or tenants. For most property owners, additional revenue is not the primary reason behind these agreements, rather providing an important amenity to their tenants.
Revenues from these agreements can generate approximately 25 cents per square foot ($2,500 per year for 10,000-square-foot tenant), or for many property owners, approximately one percent of total revenues.
A new law, AB651, is expected to pass in the next session of the California legislature that considers a building owner a utility subject to the same regulation as other utilities if they charge an access fee for the telecommunications network.
Therefore, 90 percent of the deals made today in California are marketing agreements. The telecommunications company installs the infrastructure at their own expense and bills the tenant directly. Incumbent local exchange carriers (e.g. Bell Atlantic) cannot revenue share in this fashion by law because their rates are based on a cost of service and their cost of service would be falsely high.
Importantly, the ruling does not force property owners to give access to any and all telecommunications carriers. There are a number of additional technology-related amenities currently being developed and offered by property owners.
The following points detail a few of these programs. This upgrade, mentioned by just a few of our property owners, often involves an Intranet, either building specific or portfolio-wide. enants can use the building’s Intranet for a number of tasks, from submitting maintenance requests to ordering lunch. Several examples include.
E-Tenants offers B2B functions, where businesses can purchase office supplies, etc., and also B2C or concierge services (e-Tenants has an alliance with VIPdesk.com), where employees can get discounts on entertainment events.
E-Tenants provides a forum for maintenance requests, through the online Tenant Service Request program, and access to the Brandywine portfolio for any tenants considering expansion, relocation, etc.
Similar to e-Tenants, provided by Equity Office Properties. Allows smaller property owners to provide a similar service as that described above by creating web sites and Intranets for specific buildings conveyancing melbourne.
Captivate currently has agreements with 12 companies (some of which also have made equity investments) including Boston Properties, Equity Office, Reckson Associates, and TrizecHahn. Other companies marketing this service include Elevator News Network.
Technology and new economy companies have embraced flexible working environments, with movable floor plates, communal “team” workspaces, modular furniture, temporary desks and an open space design in which offices and sometimes even cubicles are eliminated.
Technology supports this open design through “noise reduction systems,” a system which broadcasts white noise. The 24/7 demands of many companies necessitate specially designed and zoned building systems.
Many technology and new economy companies are also seeking space offering a wide array of employee amenities, which they believe help attract quality employees in today’s tight labor market. Property owners are accommodating with parks, day- care, gyms, etc. Examples of flexible design are detailed below.
Conveyancing economy companies have been instrumental in the temporary office space trend. These temporary, serviced offices cater to those companies seeking to avoid a long-term lease – often a high-growth technology company.
The Irvine Company’s Flex Tech design. Designed by LPA, the flex tech buildings offer large open floor plates, building clusters which facilitate connections between buildings, “non- dedicated spaces” which are essentially open areas with access to the network and communications services, “outdoor rooms,” a large amount of open space and landscaping, cafeterias and fitness rooms.
The offices are typically furnished, and may offer Internet access, telecommunications and even receptionist services.
Together the partners have invested $7 million in eEmerge. In addition to providing consulting services to the tenants, Fluid will be instrumental in assessing the potential of new economy companies. Eureka provides Internet services, a data center, a help desk.
Even desktop computers linked to the network. Tenants pay anywhere from $2,000 to $40,000 per month, depending on the number of employees they bring. In addition, tenants are provided with longer-term options as they grow (and S.L. Green gets a pipeline of potential tenants).
Eckson Associates formed FrontLine Capital Group in 1997. Frontline is a venture capital firm actively investing and developing e-commerce and e-services companies. One of FrontLine’s significant investments is HQ Global Workplace (the majority share was purchased from Carr America in January 2000).
HQ’s merger with VANTAS in June of this year created the world’s largest serviced or executive office suite provider, with 469 business centers in 17 countries. The average lease term is nine months. Customers include 3Com Corporation, Siebel Systems, Ariba, and Parametric Technology Corporation.
Clients have access to answering services, technical assistance, and other business support services.Technology itself has not had an appreciable impact on the design of office space. Technology makes the flexible office environment possible, but does not necessitate it.
Much of technology’s impact is not visible, existing in the walls and ground and rarely if ever impacting aesthetics. Keycards, similar to those used in hotels, are used to unlock office doors and even get snacks from a vending machine conveyancers sydney .