March 9, 2007 by jack petrie.

 About the Author

Tim Sanders is currently the leadership coach at Yahoo!  He is also the author of the New York Times bestseller “Love Is The Killer App”.  In the Acknowledgments, Tim credits Dr. Stephen R. Covey (”The Seven Habits of Highly Effective People”), Dale Carnegie (”How to Win Friends & Influence People”), Daniel Goleman (”Emotional Intelligence” and “Primal Leadership”) and Eckhard Tolle (”The Power of Now”) for inspiration.  Tim lives in northern California and can be visited at www.timsanders.com

Quick Snapshot

Tim’s premise, that likeability (the “L-factor”) may be the deciding factor in all competition, is supported by independent research conducted by many institutions (including Columbia and Yale Universities).  This research finds that likeability is a factor in everything from divorce rates, jury compensation, patient treatment, pay raises, presidential elections to promotions; or in a word, success, itself.

Tim’s Four Reasons Why Unlikeability Doesn’t Work

1. Short-Term Thinking Is Dying - we as a society are becoming more focused on the accountability for our actions.
2. Individualism Is Waning - collaboration and teamwork have become requirements in the home and workplace.
3. Boundaries Are Dissolving - between our personal and professional lives.
4. Success Has Been Redefined - from financial security to financial freedom.

Tim’s Five Reasons Why Likeability Works

1. Likeable People Bring Out The Best In Others
2. Likeable People Get Recognized
3. Likeable People Outperform
4. Likeable People Overcome Life’s Challenges
5. Likeable People Enjoy Better Health

The Four Elements of Likeability

1. Friendliness - Observe no unfriendliness, develop a friendly mindset and communicate friendliness
2. Relevance - Identify your frequent contacts and connect with others’ wants, needs and interests.
3. Empathy - Show an interest in how others feel, experience and respond to others’ feelings.
4. Realness - Be true to yourself and others and share your “realness”.

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March 8, 2007 by jack petrie.

3/7/07 NYSIA Sales & Marketing SIG Presentation Recap 

CRESA Partners recently hosted the March 7th, New York Software Industry Association (”NYSIA”) Sales & Marketing Special Interest Group (”SIG”) presentation on ”Marketing Therapy” at CRESA Partners’ New York City offices, hosted and moderated by Sherri Sklar of Sherri Sklar Strategies, LLC.

The presenter, John Follis, President of Follis Inc., presented his concept of “Marketing Therapy” and how it helps small businesses improve their marketing health. Over 45 NYSIA members attended and enjoyed the presentation.

Marketing Therapy Explained

Marketing Therapy is simply the application of highly creative, cost-effective solutions that tackle small companies’ marketing challenges and help grow their businesses.  The key marketing challenges a small business owner faces are typically:

1. a limited budget
2. a target market that is too narrow for mass media
3. a lack of marketing expertise
4. confusion over “non-traditional” marketing options
5. a lack of emotional objectivity with regard to their businesses.

Three Keys to Successful Marketing

According to Mr. Follis, to combat these challenges there are three key elements to a successful marketing program:

• Creativity
• Objectivity
• Marketing Expertise

In discussing creativity, Mr. Follis quotes his client, Kenneth Cole, who said “the best business solutions are usually more creative than expensive”.  He cites the story of how Cole started Kenneth Cole Productions to enable his company to qualify for a NYC film permit to park a showroom/trailer on the city streets during an important footwear trade show.

Mr. Follis emphasized the need for objectivity by discussing how business owners will hire a lawyer for legal help, an accountant for financial help, but attempt to do their marketing themselves.  This often results in one of two bad options: owners putting only 10% of their energies into marketing (”attracting”) and 90% into selling (”chasing”).  (The other bad option is the status quo: do nothing and hope for word-of-mouth referrals.)

With regard to marketing expertise, Mr. Follis positioned Marketing Therapy as a viable third option.

About John Follis

John spent the first fifteen years of his career with Madison Avenue’s top agencies, including his own, Follis DeVito Verdi, a highly-awarded firm of the 90’s.  Since 1986, John has been President of Follis Inc., which works with a variety of businesses and industries.  John has been a contributing columnist for ADWEEK, a marketing professor at Fashion Institute of Technology and a White House and United Nations honoree for his public service campaign against child abuse.  For more information on “Marketing Therapy” or John’s marketing guide “How to Attract and Excite Your Prospects”, visit his website, www.follisinc.com.

Harvard MBA Moderator

Sherri Sklar Strategies, LLC is a sales, marketing and business development consulting firm that delivers measurable results from assessment, proven strategies, and excellence in execution. Sherri Sklar has built a star track record in helping organizations (including CRESA Partners) obtain exceptional results. Over the last 20 years, she has enabled organizations to make dramatic turnarounds, helping under-performing divisions achieve significant growth in the most difficult of marketplace conditions. Ms. Sklar has helped organizations in marketing strategy and execution, sales strategy, sales execution and performance, business development strategy, channel management, and communication skills training. A frequent presenter at seminars and conferences, Ms. Sklar practices and teaches ‘peak performance delivery’, a proprietary technique Ms. Sklar employs to help clients achieve optimal results. Ms. Sklar received her MBA from Harvard Business School and her BA from Newcomb College at Tulane University.

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March 7, 2007 by jack petrie.

 Word of Mouth Marketing iBreakfast Report 

CRESA Partners recently sponsored the February 1st, 2007 iBreakfast panel discussion on Word of Mouth Marketing.  Panelist Andy Sernovitz of the Word of Mouth Marketing Association presented the concept of Word of Mouth Marketing (”WOMM”), the four lessons of WOMM (including the five T’s of WOMM) and the WOMM Manifesto.

Everything You Need to Know About WOMM

Lesson One: The Definition of Word Of Mouth Marketing 

Word of Mouth Marketing is a) giving people a reason to talk about you and b) making it easier for the conversation to take place.  It’s C to C Marketing - when a consumer tells a consumer about you.  Actually, it’s B to C to C.  When it comes out of the mouth of a marketer, it’s marketing.  When a real person repeats it, it’s word of mouth.  It’s more than just marketing - it’s also product design and customer service.  People talk about fantastic stuff and great treatment from companies they like.

Lesson Two: The Four Rules of Word of Mouth

1. Be Interesting - Nobody talks about boring companies, boring products, boring ads.  Everyone can be interesting.  Before you run an ad, before you launch a product, ask your spouse about it.  Trust me…if he or she finds it interesting, you’ve got a winner.
2. Make People Happy - Create amazing products.  Provide excellent service.  Go the extra mile.  Make sure the work you do gets people energized, excited, and eager to tell a friend.
3. Earn Trust and Respect - Nobody talks about a company that they don’t trust or don’t like.  Earn the respect of your customers.  Be good to them.  Talk to them.  Honor their intelligence.  Fulfill their needs.  Stay honest.  Every company can be nicer, and every one of us can work to make our company a little better to its customers.
4. Make It Easy - Find a simple topic that is easy to repeat.  Not your formal brand statement, not your product description.  Forget elevator pitch…it’s the pass-in-the-hall test.  What can people tell a friend about you in one sentence?  Then do everything you can to make it easy to share that topic.  Use tell-a-friend forms on your website.  Put it in an email.  Pass out flyers.  Blog it.  Stick it on a t-shirt.

Lesson Three: The Three Reasons People Talk About You

1. You.  They Like You and Your Stuff - They like you.  They feel a connection to your company, they respect what you do, and they want to support you.  So they bring their friends.  People feel driven to share things they like with their friends, so their friends can enjoy them too.  Create great products and services that inspire them.  (Think about TiVo, the best album ever, the best cookie you ever ate, or the spot remover that actually works.)  Be likeable.  Make great stuff.  Provide great service.
2. Them.  Talking Makes Them Feel Good.  People talk because it makes them feel special, smart, connected, in the know, and important.  (Think about the restaurant guy, the what’s-on-sale maven, the computer guru.)  People also feel good when they can help others find what they need or solve problems.  (Think about the guy who always knows which contractor to call or which car to buy.)  Provide reasons to talk that make your talkers feel smart and special.
3. Us.  They Feel Connected to the Group.  Talking about a company and being passionate about it makes us feel like part of a family.  We talk about it because it makes us feel included on the team.  (Think about Harley owners, Apple junkies, sports fans, and anyone who loves a great band.)  Rally the team.  Give them shirts, private discussion groups, special events, and public recognition.

Lesson Four: Making It Happen - The Five “T’s” of WOMM

1. Talkers: Find The People Who Like To Talk - Are they your customers?  Neighborhood moms?  Doctors?  Bloggers?  Think about the people who are most likely to tell a friend about what you are doing.  Make sure they know about your new topic of conversation.
2. Topics: Give Them A Reason To Talk - Give people a reason to talk about you.  It doesn’t need to be fancy.  A special sale, good service, a neat new feature, a better flavor, a funny package.  (Remember the Gateway computers that came in cow-patterned boxes?)
3. Tools: Help The Message Spread Faster And Further - Do everything you can to make it easy for talkers to pass along your topic.  Include postcards and stickers in the box when you ship a package.  Put up a chat room so people can talk to each other.  Join a blog conversation.  Hand out samples.  (Did you ever get one of those emails with a “secret” coupon that was supposedly for employees only?  Did you forward it?)
4. Taking Part: Join The Conversation - Conversations die out when there’s only one person talking.  When people are talking about you, answer them.  Reply to their email.  Comment on blogs that write about you.  Send a lot of thank-you notes.
5. Tracking: Measure And Understand What People Are Saying - The word of mouth conversation is the best feedback you’re ever going to get.  It’s far better than any other kind of market research, because it is the authentic voice of the consumer.  Hear what people are saying, learn from it, and use it to be a better company.

The Word of Mouth Marketing Manifesto

1. Happy customers are your best advertising.  Make people happy.
2. Marketing is easy: Earn the respect and recommendation of your customers.  They will do your marketing for you, for free.
3. Ethics and good service come first.
4. UR the UE: You are the user experience (not what your ads say you are).
5. Negative word of mouth is an opportunity.  Listen and learn.
6. People are already talking.  Your only option is to join the conversation.
7. Be interesting or be invisible.
8. If it’s not worth talking about, it’s not worth doing.
9. Make the story of your company a good one.
10. It is more fun to work at a company that people want to talk about.
11. Use the power of word of mouth to make business treat people better.
12. Honest marketing makes more money.

From “Word of Mouth Marketing: How Smart Companies Get People Talking” by Andy Sernovitz.   www.wordofmouthbook.com

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March 6, 2007 by jack petrie.

 I often say that one of the perks of working in commercial real estate in NYC is that a broker doesn’t just deal in properties, but in landmarks & icons.

Having recently subleased a client’s floor in the tower, I’ve come to understand how no other property in the world occupies a higher place in our emotional landscape than 405 Lexington Avenue, famously known as the Chrysler Building.

Having worked in the building in 2003, I certainly know its flaws: landmarked obsolescences such as wind-whipped window frames, outmoded plumbing, creaky elevators.  (The two most bizarre days of the year were the semiannual treks of the window washers to our floor - to climb outside the 47th floor facade, supported by a mere canvas belt, to manually wash each window’s exterior and thereby juxtaposing their career’s unique combination of monotony and danger.)

Everyone has a Chrysler Building story:

• From the historic - Chrysler was constructed from 1928-1930, and during a race to momentarily occupy the status as World’s Tallest Building, the seven-story, 185 foot spire was secretly delivered to the site in sections, assembled inside the elevator shaft, and hoisted through a roof opening in a matter of hours to claim the crown (from 40 Wall Street, currently, The Trump Building), but only until the completion of the Empire State Building the following year. 
• Chrysler also claimed its status in 1930 as the World’s Tallest Man-Made Structure from The Eiffel Tower.
• Chrysler remains the largest brick building in the world and was the first large building to extensively use exterior metalwork.
• Chrysler was home to the studio of LIFE Magazine’s first female photojournalist, Margaret Bourke-White, whose photography of the gargoyles and spires remain classics today.
• Chrysler was commissioned by Chrysler Company founder Walter P. Chrysler and would later become the North American HQ of Daimler-Chrysler, who would never occupy the property and who would eventually buyout of their lease obligation (at a rumored 100% of their fully escalated rent obligation.)
• Chrysler’s ornamentations on the tower and setbacks reference the era of the automobile, with metal hubcaps, radiator cap gargoyles, car fenders, and hood ornaments.  Additionally, the interior ceiling fresco depicts scenes from the Chrysler assembly line.
• To the mundane - the lobby security will tell you endless stories of the daily visits by tourists to the front desk asking for directions to the observation deck.

No better conversational icebreaker exists than this property.  My mother’s 80-year old husband and I share the experience of working in this building (a floor apart) at different times.  No other building spans generations like the Chrysler Building. 

No other building has such a place in of American history.

At the time of it’s construction, $75 dollars would equate to three weeks pay for the average worker and would bring home two washing machines.

Today it buys a square foot of real estate on the 57th floor.

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March 5, 2007 by jack petrie.

Tenant Sticker Shock 

As companies across Manhattan consider renewing their leases or expanding or relocating their businesses, many have been shocked by what landlords are now proposing for rental rates.  In many cases, lease proposals are coming in at 125% – 150% of what rates were a year ago, and in some cases, the proposed rent is more than double what the company is currently paying! 

Shift in Market Dynamics

Unfortunately, for companies looking to lease space today, the days of a favorable tenants’ market are long gone.  With vacancy rates at recent historical lows and tenant absorption substantially up, landlords are negotiating from a position of strength and confidence.  No longer are landlords hungry to find tenants for their properties and willing to do “whatever it takes” to persuade tenants to sign leases in their buildings.  The market has shifted, which for tenants translates into increased rental rates and a lowering of tenant improvement allowances, free rent, and other concessions, particularly lease flexibility options and clauses.
 

Market Evidence (2004-2006)

An example of these rate increases can be seen in some of the Midtown submarkets: Midtown Class A buildings which were averaging $53.91 per rentable square foot (rsf) in 2004, finished 2006 leasing for an average of $61.72/rsf, a 14.5% increase.  In the Plaza District, the increase from 2004 to 2006 in Class A rents was even more dramatic – from an average of $61.55/rsf in 2004 to $71.47/rsf at the close of 2006, a 16.1% increase.  In Downtown Manhattan, Class A space which leased for $34.40/rsf in 2004 was averaging for $43.05/rsf last year, a staggering 25.1% increase.  Even in Midtown South, a historical haven for cost conscious tenants, average leasing across all property classes rose by 18% from $31.38/rsf in 2004 to $37.02/rsf at the end of last year.  As the first quarter of 2007 nears closing, those rental rates seem almost nostalgic as a substantial portion of this year’s rent increases are already taking place.
 

Possible Solutions 

So….how do companies manage their costs in an environment like today where landlords are inflexible, rents are high and concessions are low?   
 

Most people do not realize that office space and facilities represent the 2^nd or 3^rd largest expense on a company’s balance sheet, next to payroll and inventory.  Effective management of these costs can be one of the major determining factors in the profitability and productivity of a company as a whole.  Overpaying for office space or facilities can often translate into the inability of a company to hire or retain quality employees, make a strategic acquisition, or create or expand a product line.  
 

Surf the Market Waves

Although intuitive, a good rule to remember in the current environment is: Sign long term leases when rental rates are low; sign short term leases when rental rates are high.  So, in a market like we have today, the key (if possible) is to renew in your existing space for short periods of time or find a short term sublease to get you through this segment of the real estate cycle.  Once the market shifts again and rates go back down, then sign longer term leases to lock in lower rental rates and enable your company to get through the next cycle of upward trending rents.  On a short term renewal, assuming you do not need to make significant modifications to your space, most landlords will be willing to give you a break on the rent in exchange for minimal retrofit costs. 
 

Salvage the Value of Existing Spaces  

If you cannot renew or expand short term in your existing building, or if you cannot postpone relocating your company, I would offer a few recommendations:  First, try to find a space that has been previously occupied by another tenant that is built out in similar condition to how you need your space to layout.  In a market where you are already looking at high rents and reduced concessions, the less a landlord has to spend to build out your space, the more money overall that you will be able to save on the transaction. 
 

Employ a Bidding Process to Keep Construction Vendors Honest 

If you have to retrofit, most landlords today are offering insufficient tenant improvement allowances to cover total costs.  Exacerbating this condition is the fact that there has been a nationwide increase in the cost of raw materials and labor.  As a result, many tenants are getting stuck with unexpected bills (of up to hundreds of thousands of dollars) because they did not realize that the cost to build out their office space was going to exceed their allowance.  Make sure that you have multiple contractors bid out your proposed tenant improvements to protect against unwelcome surprises.
 

Expand Your Boundaries 

Third, you may want to consider looking at less expensive buildings for the short term until the market turns around.  For example, if you are currently in a Class A building, you may want to consider leasing space in a Class B or a back-office building, assuming of course that it would not be detrimental to your business to do so.  Many companies are taking advantage of this strategy in today’s market to try to keep their office and facilities costs at a reasonable level.
 

Don’t Ignore Hidden Costs 

Lastly, it is important that you evaluate all of your relocation costs, as there are a number of other items outside of tenant improvements that will be important for you to account for.  A few of these items include cabling, telecommunications, furniture purchase and installation, the physical move, new stationery, updated marketing materials, announcements, the financial impact of downtime, and increased commute times (which could cause decreased productivity and turnover).  It is imperative to factor each of these costs into your analysis so that you can evaluate the total cost of your potential relocation.
 

Ultimately, one’s perspective on the marketplace boils down to which side of the fence you are on.  If you are a landlord or developer, times are good.  If you are a tenant however, this is not a market to be excited about, and careful planning and execution is critical.  Having a trusted advisor on your team will be a big advantage in helping you to navigate effectively through today’s marketplace.
 

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March 2, 2007 by jack petrie.

Deal Enables E.ON To Sublease Its 10,600 rsf to Travelport, Ltd.

CRESA Partners has negotiated a deal enabling E.ON North America, Inc., to sublease 10,612 rentable square feet (rsf) to Travelport, Ltd. at the Chrysler Building at 405 Lexington Avenue. E.ON North America is a subsidiary of a German-based utility and energy firm.
 

Former Cendant Corporation Subsidiary

Travelport, Inc., previously located at 9 West 57^th Street, will take immediate occupancy of the entire 57^th floor for a term of four years and three months.  The subtenant was sold in June of last year by Cendant Corporation to an affiliate of The Blackstone Group for $4.3 billion.  

“Many international companies are beginning to question triple-digit rents in trophy buildings, debating whether the cost provides enough value,” says Mr. Petrie. “Some, such as E.ON, are choosing to sublease their properties, and redirect their resources.”    

German-American Chamber of Commerce Members

According to Mr. Petrie, Altana AG, a German pharmaceutical firm, has also engaged CRESA Partners to dispose of its office space at 712 Fifth Avenue. Both E.ON and Altana are members of the German-American Chamber of Commerce, whose many members have worked with CRESA Partners on both leasing and disposition transactions.

“With rents continuing to escalate, all companies need to reevaluate their space and their needs,” says Mr. Petrie. “If a tenant is paying exorbitant prices, but is not getting enough value out of the space, it should consider subleasing its current space and looking to relocate to a more affordable building.”   

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March 1, 2007 by jack petrie.

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