Warren Buffet

Your telling me.  It is  true in commercial real estate also.

‘We’re having a hard time finding things to buy’: Warren Buffett’s eternal lament.

A Lyft Driver’s Car

Los Angeles companies continue to densify and fit more employees into less space.  The problem is where to park these employees.  Planners are betting the farm on new forms of public transit to solve this problem  Even with public transit, the problem is how to get from the train or light rail station to the office.  There is still a lot of street parking in Los Angeles as well as under-utilized lots.  However, this  parking is not within acceptable walking distance.  In Los Angeles, if you cannot open your car door and fall into the front door, it is not an acceptable walk. To solve the problem, about 20 years ago, the cities mandated mandatory ride sharing programs.  Companies complained of the expense, and the rideshare legislation was rescinded.

Now social media and collaboration has produced another form of private ride sharing in companies like Lyft and Uber.   Lyft is  an iphone or adroid app you use to summon a driver and pay him a suggested donation.  I have been told that in Los Angeles, these donations can be less than two thirds of the price of a cab ride. You can see the available Lyfts near you on your smartphone and whether they are coming to get you.

Companies or landlords could contract with Lyft drivers to pick employees up from the Expo station or other areas with available parking and take the employees to work.  This process may end up being less expensive them hiring a valet or building additional parking spaces.  At $10 a day for rides back and forth to work from a nearby location–the Lyft would cost $200 per month.  OK, that is more expensive than most parking lots but not prohibitive.  Throw in some car pooling, and the price goes down.

Another alternative is for companies to do their own Lyft.  Designate those with parking as the drivers and the others as the passengers.  The passengers can send an alert out and a nearby driver can respond for a pickup on the way to the office. If no driver is available, the office can send out a designated driver for pickup.  Phone apps like instant messaging or Find My Friends or GPS Tracking can be used to facilitate pickup and logistics.

Fitbit

The Fibit is one of many social media wearable smart pedometers in the market today.  The Fitbit (like the Nike Fuelband and the Jawbone Up) tracks your steps, calories, miles, and aerobics.  You can share your results with friends also using the device and create a competitive environment.  Walking can burn calories.  You get almost  as much calorie burn per mile whether you run or walk, although you will  not get the same cardio benefits in a walk.  The Fitbit or these other devises try to get you addicted to walking.  The goal is at least 10,000 steps a day.  If you subtract 3,000 steps you would get anyway in daily living, you achieve about 7,000 extra steps.  That can equate to a little over 3 miles per day (equivalent to a half hour or more run for many).

Our office building at 10951 Pico Boulevard is a third of a mile from plentiful free  parking along the new Expo Line.  We can give employees who give up parking a Fitbit if they use the Expo Line parking.  Each day, the employees would get 1385 fit bit points (steps)  for a seven minute walk to and from work toward their 10,000 steps.  Thus, both the exercise and parking problems are solved.

Many buildings  will be at a competitive disadvantage because of their design. Further, changing office density (workers per square foot) is becoming a heavy drag on a stronger recovery in the office market.  Business are finding ways to fit more people into less space.  This is not your father’s recovery.  Companies are shrinking their per-employee square foot requirements while demanding more collaborative space. Even as tech and media companies hire, other companies continue to shed employees.   The net result is a slower office recovery than in previous cycles.  We have seen this manifest in continued high tenant improvements and free rent even in strong markets like the Santa Monica.  Business are demanding and getting the latest and greatest tenant improvements.  With vacancies still over 10% in most markets, Landlords are forced to comply or they comply to maximize contract rents.

In today’s Los Angeles Times (October 13), one broker explains:

One big reason this office market recovery is much slower than others is that many firms are packing more workers into less space.

The ho-hum recovery has hit downtown Los Angeles especially hard, said broker David Kutzer of Newmark Grubb Knight Frank. Law firms, banks and other corporate businesses have been cutting back on private offices and workers’ cube space. Open floor plans are becoming the norm.

“There is far less ‘me’ space and more ‘we’ space,” Kutzer said.

See:  Los Angeles Office Market’s Ho Hum Recovery

In Los Angeles and San Francisco, the market is driven by tech and/or media tenants who desire creative spaces.  These tenants want more power, flexible lease terms, open and high ceilings, less offices, more conference rooms, bigger kitchens, and non-corridor entries.   The new density is creating a special problem for Los Angeles office buildings.  Businesses now need parking that most buildings do not have.  Businesses now need more than 3 spaces per 1000 square feet as their density skyrockets above 4 employees per 1000. The success of Hackman’s Hayden Place and the Reserve and Hercules campuses  in Playa Vista can be attributable to their creative design and plentiful parking.

You can read the full article below.

How Will Older Office Buildings Compete in the New Workplace? – CoStar Group.

Who sits near who can be as important as the design of the office itself.  This article explores the importance of the seat chart.   However, the practice remains more of a judgement call than a science.  See the full article below.

The New Science of Who Sits Where at Work – WSJ.com.

By eliminating the drop ceilings, the architects opened up the ground level, which had been broken up into several rooms. This not only revealed the original beams, it also brought a much more expansive sense of space. Photo by Misha Gravenor.

Read the full article below

Echo Logical | Dwell.

San Francisco Business Journal story on the sale of 539 Bryant and 410 Townsend

Storied SoMa tech buildings sell, smashing records – San Francisco Business Times.