Archive for January 2007

Green Buildings are the Places to Be

Did you know that in the U.S., buildings account for: 

  • 36% of total energy use
  • 65% of electricity consumption
  • 30% of greenhouse gas emissions
  • 30% of raw materials use
  • 30% of waste output (136 million tons annually)
  • 12% of potable water consumption

As these figures suggest, we have passed the tipping point – being “green”, or energy efficient in office buildings is not just about conservation but about a higher standard for buildings.  In the near future, occupants will demand sustainability in their real estate to control costs, with environmental benefits being a secondary benefit. 

Businesses’ top two expenses frequently are human resources and energy (and if not the top two, real estate costs are another major expense).  Just as a poor location can have a negative impact on productivity, energy-efficient locations not only cut costs but can boost productivity.  Occupancy in a “green” building is good business practice by not just saving money but improving overall health and well-being for the inhabitants by providing natural air and light, fewer toxins and climate control

While slightly more expensive to build (an estimated <1%-4% additional for commercial buildings), environmental-friendly and energy efficient-systems can pay for themselves very quickly (11-36 months) as they are up to 20% less costly to operate.

Among the corporate adherents of the “green” building movement are institutions such as Adobe, Bank of America, Citigroup, Genzyme, IBM, Microsoft, PNC, Toyota, General Motors, Ford, Honda, Wal-Mart, Target and Home Depot.

Although New York City currently lags behind cities such as Seattle, Portland, Pittsburgh, Washington D.C. and Boston in adopting and implementing environmental standards in new construction, the following properties represent the “green” elite in New York City:

  • One Bryant Place/Bank of America Building – 42nd Street & Sixth Avenue (Currently under construction)
    • $115/rsf asking rent
    • Tenants will include:
      • Bank of America
      • Marathon Asset Management
      • Elie Tahari 
  • 300 West 57th Street/The Hearst Building – 57th Street & Eighth Avenue(Owned and fully-occupied by The Hearst Corporation)
  • 7 World Trade Center – Vesey & Greenwich Streets
    • $70/rsf asking rent
    • Tenants include:
      • Moody’s Corporation
      • ABN/Amro
      • Darby & Darby
  • 4 Times Square - 42nd Street & Broadway
    • Fully-leased to Conde Nast and Skadden Arps Slate Meagher & Flom

But if you’re unable to cough up triple-digit rents to get into a “green” building, what can the average midtown office tenant do to improve its carbon footprint before New York City suffers another blackout?  Here are suggestions for commercial tenants:

  • For tenants in existing spaces with long-term commitments:
    • Actively recycle paper, metal, glass
    • Turn off the lights at night
    • Purchase a scanner to conserve paper
    • Stop printing emails (ditto)
    • Purchase supplies locally
    • Modify layout to take advantage of existing natural light
    • Use mirrors to reflect existing lighting
    • Open the windows
    • Collect rainwater for plant irrigation
    • Use cacti for landscape plants
  • For tenants planning a relocation to a leased-facility:
    • Hire a “green” architect
    • Design a bright, open-plan layout
    • Install motion sensors for any artificial lighting
    • Install low-flow waterless or water-efficient bathroom fixtures
    • Purchase refurbished and pre-owned furniture and workstations
    • Use linoleum, not vinyl flooring
    • Install LED-illuminated signage
    • Use recyclable construction materials, such as:
      • Recycled steel
      • Recycled carpeting (carpet backing has 20,000 year landfill life)
      • Recycled ceiling tiles
      • Non-formaldehyde particle board
      • Consider alternative insulation (Habitat for Humanity utilizes recycled blue jeans and Styrofoam)
      • “Green” paint selection
  • For tenants planning a relocation to an owned-facility
    • Select site and design for sustainability
    • Employ and enable reusable energy sources
    • Install skylights
    • Install roof garden or “green” roof
    • Install sensors to monitor HVAC
    • Install “green” refrigeration systems
    • Use sustainable construction materials
    • Reduce operation of parking garage exhaust fans
    • Use porous paving materials in parking lots

By doing a portion of the above, tenants will see improvements in both operating costs and worker productivity that will outweigh the expense of implementation.

 

 

Fourth Quarter 2006 Market Overview

Tenant’s Viewpoint

In this landlords’ market, tenants should expect to see a continuing rise in overall occupancy costs.  This will result not only from increased rental rates and decreased concession packages but also increases in space measurements, whereby landlords raise the rentable square footage (”rsf”) of space returning to market, otherwise known as “remeasurement”, a landlord euphemism for increasing the “loss factor.” Tenants will need to accept that even if their requirements for useable space do not change, their rentable space may increase upon renewal or relocation by 10% - 25%.

With the cost of leasing space increasing dramatically, tenants need to continually assess their options and understand their negotiating leverage. Tenants aiming to lower occupancy costs should consider moving to areas such as Long Island City, Brooklyn and Jersey City with their lower rental rates, better concession packages and greater municipal incentives. Moves to these locations will, however, be strongly linked to the ability to retain key employees.

Market Overview

Not since the boom days of the dot com era has Manhattan experienced such demand and subsequent rent increases for commercial office space. During 2006, rents for Class A space in Midtown increased 21% settling in at an average of $67.45 per rsf.  All indicators suggest that the City’s economy will continue to strengthen well into 2007, and create over 50,000 new jobs.  While major financial institutions and corporations can weather this environment of rising rents, servicee and smaller businesses as well as non-profit organizations will need to be proactive in respect to their real estate planning. The traditional lower cost markets such as the Garment District, Downtown, Chelsea and Tribeca are experiencing some of the city’s highest rental increases compelling many businesses and non-profits to consider Long Island City, Brooklyn and Jersey City.  To date, tenants have seemed very willing to absorb the increases in occupancy costs rather than risk losing key employees by relocating outside the city.

Trends & Statistics

Midtown
In the final quarter of 2006, average office rents rose $4.03/rsf (6.4%) to $67.45/rsf for Class A space. The asking price for Class B space saw an increase of $1.33/rsf (3.1%).  Vacancy rates continued to drop decreasing by 0.4% from 5.5% to 5.1% within Class A space and by 0.9% in Class B space from 5.0% to 4.1%.  Class A net absorption was 693,081 rsf and Class B net absorption was 521,113 rsf for Q4 ‘06.

Midtown South
Average asking rents continued to steadily increase rising $0.80/rsf from $39.25/rsf to $40.05/rsf .  Net absorption was 233,244 rsf for Class A&B space combined.  Vacancy rates dropped 0.3% to 4.9% from 5.2% in the previous quarter.
Downtown
Downtown Class A space rose $0.47/rsf from $44.80/rsf to $45.27/rsf, while Class B space experienced a much greater increase of $4.25/rsf (13.0%) from $32.13/rsf to $36.38/rsf.  Total net absorption was 710,317 rsf and 232,519 rsf for Class A and Class B space, respectively.  Class A vacancy rates dropped 1.0% from 11.3% to 10.3%. Class B vacancy rates saw a similar decline, dropping from 10.8% to 10.0%.

PixFusion Signs With Marvel For Spider-Man

Produces Personalized Video for Children      

CRESA Partners’ client, PixFusion LLC www.pixfusion.com, creator of personalized, branded video products, has signed a multi-year licensing deal with Marvel/Spider-Man™ Merchandising L.P. (NYSE: MVL) www.marvel.com, one of the world’s most prominent character-based entertainment companies, for the licensing of Spider-Man™ and his family of characters.

‘I Am the Amazing Spider-Man’      

Under terms of the agreement, PixFusion is using its patented technology to publish a photo-personalized Spider-Man video, “I Am the Amazing Spider-Man.” Available through PixFusion’s Kideo brand Web site (www.kideo.com), the video joins current licensed titles starring Dora the Explorer, Care Bears and Arthur. Using its patented process, PixFusion takes a child’s color photo sent by e-mail or via regular mail and transforms it into a 25-minute action packed adventure based on “Spider-Man-The Animated Series” (MTV) and starring the featured child as the “web-slinger” himself, battling many of the legendary Spider-Man™ villains such as Electro and Lizard.

The DVD also contains exciting bonus features including educational content and a music video set to the classic theme song from the 1960s animated cartoon with the child swinging into action “Spidey Style.” “I Am the Amazing Spider-Man” is a wonderful addition to our current product line,” said Marc E. Jaffe, PixFusion CEO. “Children and fans alike will love watching themselves as Spider-Man taking on his arch enemies.”

iParenting Media Award Recipient     

PixFusion LLC (www.pixfusion.com), established in 2001 with offices in both New York City and Palm Beach, Florida, creates personalized branded video products and services and uses its patented technology to automate the production of its finished products. PixFusion, recently awarded an iParenting Media Award, has proprietary content agreements and is continuing to expand its distribution networks to offer its personalized products direct to consumers and through retailers, manufacturers and other indirect channels. The company has commercialized children video products through its Kideo brand (www.kideo.com), a successful enterprise selling DVD videos to parents and grandparents of children ages one to seven. Kideo’s existing content is licensed from some of the most prominent and respected pre-school brands including Dora the Explorer and Arthur. In addition to its consumer entertainment division, PixFusion has also entered into several licenses of its proprietary intellectual property platform based on the strength of its long standing patent portfolio.

Marvel Entertainment, Inc.     

With a library of over 5,000 characters, Marvel Entertainment, Inc. is one of the world’s most prominent character-based entertainment companies. Marvel’s operations are focused on utilizing its character franchises in licensing, entertainment, publishing and toys. Areas of emphasis include feature films, DVD/home video, consumer products, video games, action figures and role-playing toys, television and promotions. Rooted in the creative success of over sixty years of comic book publishing, Marvel’s strategy is to leverage its character franchises in a growing array of opportunities around the world. More information at http://www.marvel.com/

 

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