The (executive) Suite Life: Appreciating the importance of transit when selecting an office space

As I type this, I’m sitting in an office at Avenue Business Center, which occupies the entire third floor at 500 N. Michigan Ave.  I mention the address because it is not only a feature but also a benefit of the space.  Size of the office space, location in the city, proximity to clients or other businesses, quality of the space – these are all factors that get a lot of attention during a site selection process.  One factor that frequently is overlooked when doing a space search is transit access.  The location of the office where I am working demonstrates the value of convenience.  I can walk half of a block from my home to pick up my choice of bus line that will run express down Lake Shore Drive and drop me off right in front of my building – total commute time: 20-25 minutes.  In stark contrast is my roommate’s commute – living downtown, but working in the north suburbs, he takes a bus west to a train north to a shuttle that drops him at his office complex – total commute time: 60-75 minutes on a good day, plus 3 changes of transit type, which can add additional latency.  My roommate is a very special exception to the rule; most of my peers in the late generation X/early generation Y (already in the work force) are not willing to accept the commutes that our parents have historically.  We want immediate action and quality of life and office location can have a substantial impact on our employment decisions.

Now, that isn’t to say that no employers are taking transit into consideration when evaluating their space.  The US Government “gets it”.  Working on the GSA projects for the US Census Bureau, I was impressed that proximity to bus line was a question included on the market survey forms, to ensure that the employees at the Census Bureau would have access to transit to and from work.  If you are in the market to evaluate your location and ways to improve your top line (i.e. the revenue from hiring the best, brightest and most productive), take into consideration where they live and how far they’re willing to travel.  You may find that a small time investment up-front will yield substantial returns down the road.

Since I saved so much time on my commute, I was able to sleep in 15 more minutes and still have almost half an hour on each side of my work day to be more productive.

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Going on day 2 at Avenue Business Center

Today I’m actually doing double duty.  I’ve been at my old office in the morning and will be working out of my office suite at Avenue Business Center. Although it is nice to see my colleagues in the real estate office, I am becoming more aware of the benefit of having my own space from which to work. Despite the moniker of “shared space”, having my own office changes my outlook on getting work done and also permits me more control over the environment in which I work. Not to mention the fact that I am exposed daily to a variety of other business professionals and their respective talents – essentially, Avenue Business Center is creating a melting pot of Chicago professionals and I have the privilege of being part of it.

A Tale of Six Cities – CFO.com’s Alix Stuart analyzes corporate real estate stats in six major US cities

Alix Stuart’s A Tale of Six Cities is a well-written article about considerations a CFO must make related to real estate and peripheral costs impacted by real estate, like cost of living.  In the article, Alix identifies six major cities – 2 on the East Coast, 2 on the West Coast and 2 in the Central US – pairs of which account for three major points on the tenant/landlord power spectrum.  Below is a chart that identifies the six cities, linked to their respective reviews, and where they fall in the spectrum.  NOTE: This is not to say that Chicago and Austin are necessarily “value cities”, nor that New York and San Francisco are cut-throat, but rather that these classifications are relative to each other.

Power of Tenant/Landlord City #1 City #2
Stronger Landlord New York City, NY San Francisco, CA
Moderate Las Vegas, NV Charlotte, NC
Stronger Tenant Chicago, IL Austin, TX

For any corporation occupying space in one of these markets, Alix’s analysis of each market, paired with real-world examples and statistics, provides some insight into where the market is trending and whether it will continue to remain a financial opportunity… or hazard.  One thing that I did find absent from the report, however, is whether the average rent per square foot is net or gross.  I would imagine gross, but as we all know, it’s a bad idea to assume.

As a little added bonus, the final page of the article comprises five tips for dealing with rent-hungry landlords.  I particularly admire Jeff Klausner’s wily strategy of negotiating an option to buy their single-tenant office building and then flipping the property for a $2 million profit – now that’s unlocking hidden value.

Happy Holidays from Corporate Real Estate

To all my regular readers and to my occasional viewers,

Have a wonderful holiday!  Regardless of what you practice, I’ve found that this time of year there is one thing that we all celebrate – sharing special times with loved ones.  So, whether you take an annual trip, stay in town with your family, celebrate Christmas time a little differently (like me – Charlie Wilson’s War, followed by dinner at Dee’s) or even find yourself in the office over the next couple of days, the important thing is that you get the privilege to remind yourself of those close to you and how special they are to you and you to them.

Stay warm, stay cozy, but most of all, stay away from Chicago… Old Man Winter has arrived and I suspect he’ll be around for a while.

Seriously though, wishing the best for you and yours,

Jacob Cynamon
Editor, Corporate Real Estate

Somebody’s had some fun with the Chicago Loop

This weekend, I was out on a date and we took a tour around Chicago.  Being a bit of an architecture buff, I decided to snap a few photographs of some of my favorite buildings.  Having spent several years working in 77 West Wacker, I decided to grab a photo of the entire West Wacker strip to showcase my old haunt (see below).

Wacker Drive from the North

As we walked along, I decided to take a photo looking down Clark Street.  I got the full facade of my old building… and a little surprise down the street (highlighted in red, below).

77 W. Wacker and a view down Clark Street

Clearly something was up.  As we continued around the Loop, I decided to get to the bottom of things and took one more photo.  Am I mistaken or is the Sears Tower just a mite bit out of place?  I don’t recall being able to get off the Brown Line right in front of Chicago’s tallest skyscraper.

Sears Tower on Wells Street

At this point, you’re probably aware that I’ve been pulling your leg, just a bit.  We were actually at the Museum of Science and Industry, where they have a great exhibit demonstrating commercial and passenger train travel between Chicago and Seattle.  Since the exhibit creators had a limited area in which to create a believable Chicago cityscape, they clearly took liberties with the layout of the office buildings in the Loop.  A fun exercise for real estate professionals and architecture enthusiasts is to check out this exhibit and see which building are absent and which major streets the designers decided weren’t necessary – my apologies, Mr. Burnham.

Another commercial broker takes the leap into the 21st century

I was excited to recently discover that a fellow commercial real estate professional has decided to come full throttle into the world of technology by creating a blog devoted to commercial real estate activities in Chicago.  The Chicago Commercial Real Estate blog will hopefully provide another well-written, frequently updated source of insight on commercial real estate activity in the Windy City.

Nice to See Chicago Taking the LEED with Merchandise Mart

Although I’m not a Chicago native, I have adopted the city as my own, so I’ve got “hometown pride” when I hear about news like this.  Commercial Property News recently reported on the move for the Merchandise Mart to attain LEED certification.  I love that they dropped such lines as “the world’s largest building after the Pentagon” and “a major milestone was reached with the world’s largest commercial building going green.”  A testament to Chicago’s continuing effort to “go green”, whether as a result of or despite Mayor Daley’s efforts and initiatives.  But I’m not here to get into politics, so I’ll just say congratulations to Chris Kennedy and Vornado for their accomplishment with the Merchandise Mart green effort and hope that it sparks even more sustainable development in our Windy City.