Headlines scream: "Office vacancies down in New York amid cracks in sky-high rents." "Free rent in Atlanta office market." "Vacancy! Office space opens up in some of America's most wired cities; Industry trend or event?" The times never do stop changing, particularly in the always-dynamic world of commercial real estate. This time, however, it appears that the competitive economy and a savvier, more demanding tenant base have altered the face of commercial real estate for good.
No longer do high square footage and occupancy rates put a company on top. It takes a whole new way of thinking to stay in the race.
The steady slowdown in rent growth already this year has complicated things for owners and investors looking to achieve desired results through market appreciation. Consequently, today's building owners, developers, and managers in the commercial sector have to offer more than space to remain competitive and profitable. Creatively creating revenue beyond rent is a must.
What are the 2001 leaders doing to stay on top? Naturally, they're still renting,but they've also started to diversify. Technology is their first stop.
Buildings are now leased hard-wired with high-speed Internet connections, central control systems, andmore. Even lease management has become high-tech. No longer do clients have to pick up a phone to call the facilities manager. Web-based clients of such firms as CarrAmerica and General Growth properties can log online 24/7 and manage their lease and space. The days of waiting until the next business day to have a question answered seem to be over.
And what about costs and overhead? Even when rents are down, those don't go away. Some of today's leaders have figured out that the catch-phrase "There's power in numbers" is more than a cliché. In the new millennium, the word "consortium" means smart business.
In mid-2000, CB Richard Ellis formed an e-business alliance with Jones Lang LaSalle, Insignia Financial Group, and Trammell Crow Co. Octane Ventures LLC provides an automated transaction platform that offers integrated process management tools to its members. Member companies can use these tools to automate and streamline the entire transaction process from prospecting to property management issues.
It also allows the alliance to purchase property management, and maintenance, repair, and operations (MRO) products and services for U.S. clients through SiteStuff, the group's approved e-procurement platform. "Our goal has always been to provide a reliable and advanced information-sharing mechanism that aggregates best-of-class information for the benefit of the entire commercial real estate industry," says Joseph L. Fitzpatrick, executive vice president for the e-commerce interests of CB Richard Ellis and spokesperson for Octane.
Several of Project Octane's founding members - CB Richard Ellis, Jones Lang LaSalle, and Trammell Crow - also have climbed aboard another e-consortium of both commercial and residential real estate giants: Constellation Real Technologies. National players in this group include AMB Property Corp., Equity Office Properties Trust, Equity Residential Properties Trust, Kaufman & Broad Home Corp. and Simon Property Group.
This year's owner/developer/manager companies on our list have found other ways beyond technology and procurement to stay healthy in an increasingly sickly business atmosphere. Each has found unique ways - whether through acquisitions; landing big deals; or trying something new, something a little risky - to rise above industry challenges and keep thriving.
Robin Suttell, a freelance writer based in Cleveland, is a frequent contributing editor at Buildings and BI magazines. She provided research and editorial content for this year's "Who's Who in Commercial Buildings," featured throughout the August 2001 issue, pages 26-46. Although Buildings has made every effort to provide timely and complete information throughout the annual "Who's Who in Commercial Buildings," the accuracy of all listings cannot be guaranteed.