FOCUS ON WHAT’S IMPORTANT
Companies searching for new office or industrial space in today’s soft office market, or conversely today’s healthy industrial market and listing brokers and landlords are guilty of this as well… They often tend to focus almost exclusively on rental rate. In other words, the lowest price should be enough to positively influence a tenant’s decision to lease space in a building. The result? We’re “commoditizing” commercial space alternatives while losing the focus on what is right and best for the tenant.
SPACE ISSUES BEYOND PRICE
Let me be the first to say that economics are always important and competing buildings must be reasonably similar. However, economics are not the most important element when it comes to making a real estate decision. I have often told clients, “What difference does it make if the landlord provides the space at no cost, if the space is not functional and does not effectively work for you?” Retail clients generally seem to have a better handle on weighing the intangibles when they make space decisions. They understand that there are issues far more important than price. Issues such as exposure, vehicle traffic counts, ease of access, parking and neighboring tenants. Issues that will impact their long‐term success more than a marginal reduction in their base rental rate.
TOTAL COST SOLUTION
So many components go into a good real estate decision, and price is only one of those components. Tenants need to look at a “total cost solution” rather than just a “rental rate” solution. The latter is the proverbial tail wagging the dog kind of decision, and decisions like that never work well over the long term. That’s why establishing a preliminary budget is critical to the process. So that companies don’t waste time looking at what they can’t afford. Companies often do themselves a disservice by discounting the importance that a well thought out facilities plan plays in their long‐term success. Space, like any other component of a firm’s business plan, should function strategically. Ultimately, ensuring long‐term success for the firm. The list of items that ensure long‐term success generally relegates price to the lower tier of importance.
RANKING CRITICAL ISSUES
Companies must address, evaluate and rank the importance of critical issues. These may include parking availability, access, visibility, building efficiency, flexibility to expand and contract, on‐site or close‐by amenities, public transportation availability, security, sustainability issues, building management, landlord financial viability ‐‐‐ and, obviously, the financial structure. Whether internally generated or broker generated, tenants must understand the total cost of the deal. One deal may provide more dollars for tenant improvements; another deal may offer less tenant improvement dollars but more free rent. Yet another may offer to graduate or step the rent and pay moving costs. And in the end, a simple consideration like ease of client access or proximity to public transportation may trump the lower base rent deal.
Guard against making an impulsive, “head in the sand” facility evaluation. Select a member of your team and a competent real estate broker who will ensure that your firm makes a well thought out space decision, not a decision based on a single issue like rental rate. Make sure you have completed the proper due diligence before signing on the bottom line!
NEED HELP FINDING THE RIGHT SPACE?
Reach out to one of our
TRUSTED. DEDICATED. EXPERIENCED.
brokers at Paramount Real Estate Corporation:
Industrial: Fred Hedberg, CCIM, SIOR, Principal
Phil Simonet, Principal
John Young, CCIM, Vice President
Joseph Schultz, Associate
Jack Buttenhoff, Associate
Office: Nancy Powell, Vice President
FOCUS ON WHAT’S IMPORTANT
Our Newest Tenant at RMC Corporate Center
RMC Corporate Center welcomes its newest tenant Welsh Construction. Welsh Construction secured the beautiful endcap space in this Minnetonka building. After removal of the acoustical grid and tile ceilings, the tenant was able to take advantage of the heavily glassed space. The newly built office configuration shows that desirable space can come from older building stock, providing the property is as relevant today as it was back in the early 1980’s when constructed. Quality construction never goes out of style!
Tenants at RMC Corporate Center are poised to take advantage of SWLRT with a small station directly across Bren Road East. The new station and many other amenities are within walking distance. With 14’-0” clear heights, good parking ratios, excellent park amenities, including walking trails and green space, the property is a great option for a wide range of space users. In addition, super easy access and exiting due to the change in some one-ways make this property desirable for any business.
Thanks to Brad Bohlman of Colliers for his assistance on this lease.
For more information about Welsh Construction visit their website at: https://www.welshconstruct.com
Don’t miss out on our current space options at RMC Corporate Center:
-2,814 SF office-warehouse; with drive-in door
-4,000 SF office-warehouse; with 2 dock doors
-5,000 SF all office
Written by: Nancy Powell | Vice President
Q3 2020: OFFICE MARKET UPDATE
According to the Bureau of Labor Statistics (BLS), the unemployment rate for the Mpls-St Paul metropolitan statistical area (MSA) increased 500 basis points. To 7.9% for August 2020 from 2.9% for August 2019. The unemployment rate for the US was 8.4% in August 2020 up from 3.7% last year. State of Minnesota unemployment rate was 7.4%. The Mpls-St Paul MSA saw a decrease in job growth. As well as a decrease in office job growth in professional, financial and information dropping 21,300 during the same period.
The Mpls-St Paul office market, consisting of over 128 msf of space in seven counties across the metro topping 95,000 sf negative absorption for Q3 2020. The vacancy rate for the market stands at 12.5% for all properties. Multi-tenant properties posted 16.4% vacancy with over 64,000 sf negative absorption. The average asking lease rate for Mpls-St Paul came in at $25.02 psf FSG. During Q3 2020 there were 9 construction projects throughout the market totaling just over 1.3 msf.
During the Q3 2020 the market experienced over 1.1 msf of leasing activity in 251 transactions. Class A properties vacancy rate dropped for all properties this quarter to 10.3% compared to 8.8%. It also dropped to 15% for multi-tenant properties compared to 12.7% Q2 2020. For multi-tenant properties the Northwest market posted the lowest vacancy rate at 10.6%, Mpls CBD vacancy was 18.7%, St Paul CBD was 18.4% and suburban markets was 14.6%. Southwest market posted the most positive absorption of 137,000 sf with The Nerdery leasing 60,000 sf and new delivery of Bridgewater Corp. The West market posted the largest negative absorption of 125,000 sf for all property types led by Dominium space available for lease with 53,000 sf.
The Mpls-St Paul market consists of single and multi-tenant office buildings 20,000 sf or larger or part of a complex larger than 20,000 sf. The geographic area includes Anoka, Carver, Dakota, Hennepin, Ramsey, Scott and Washington counties. The tracked set does not include medical or government properties. All tracked properties are existing. Statistically, net absorption will be calculated based on occupancy change during the current quarter. Asking lease rates are based on an average asking rate and noted on a FSG terms with Net type leases grossed up.
View Full Report: Q3 2020 MNCAR Office Market Report
Source: Minnesota Association of Realtors (MNCAR)
Office Market Trends – MNCAR | Q2-2019 | Minneapolis-St. Paul
According to the Bureau of Labor Statistics (BLS), the unemployment rate for the office market in Mpls-St. Paul metropolitan statistical area (MSA) increased 40 basis points from 2.7% in May 2019 to 2.3% in May 2018. The unemployment rate for the U.S. was at 3.6% in May 2019, down from 3.8% for the Y-o-Y for the US. The Mpls-St. Paul MSA saw a decrease in office job growth, professional, financial and information increased by 1,200 during the same period.
The Mpls-St.Paul office market, consisting of over 127M SF of space in seven counties across the metro posting 131,600 SF positive absorption for Q2 2019. The vacancy rate for the market stands at 11.3% for all properties for Q2 2019. Total year-to-date absorption is 256,750 SF. Multi-tenant properties posted 14.9% with 175,000 SF positive absorption . The average asking lease rate for Mpls-St. Paul came in at $24.30 PSF FSG. To date, there are 15 construction projects throughout the market totaling over 2.7M SF.
During the second quarter 2019 the market experienced over 1.1M SF of leasing activity and the vacancy rate finished the quarter at 11.3% in total. Class A properties ended the year at 8.6% for all properties and 12.7% for multi-tenant properties. The West market posted the lowest vacancy rate at 11.3% for multi-tenant properties. For the second quarter the West Market carried the market with the most positive absorption of 63,000 SF. St Paul CBD posted the largest negative absorption of 90,000 SF.
READ ENTIRE REPORT: Q2_19_Mpls-St_Paul_Office_Market_Report
Written By: MNCAR/Redi Comps
Press Release | Powell Represents OffiCenters in Lease Renewal at North Loop
MINNEAPOLIS, MN. Nancy Powell, Vice President at Paramount recently assisted our long-term client, OffiCenters in a lease renewal at their North Loop location in Minneapolis. Lori, the founder and CEO of the locally held co-working and executive office sharing solutions corporation, is not daunted by the influx of co-working competitors, in fact she says “bring it on!” For 35 years they have brought office sharing solutions to Minneapolis and St. Paul.
With 5 locations, OffiCenters offers nearly 100,000 square feet of office space solutions. They focus on the needs of their customer, OffiCenters is not afraid to relocate to find the right space solution. In fact in the past few years, Nancy has assisted them in relocating three of their centers.
NEW LOCATION: Union Plaza OffiCenter: 333 Washington Avenue N, Suite 300, Minneapolis MN
by a Twin Cities Industry Professional
The CoWorking Industry
The CoWorking industry has taken the world by storm. In 2005, there were only 3 verified CoWorking spaces in the entire world. And as of 2017, that number had skyrocketed to a staggering 15,000 and that number is slated to double by the end of 2018. These figures are a testament to the rise in digital workplaces and remote working.
I just came back from our Global Workspace Association conference in Austin, Texas and came away with a few interesting facts:
In July and August 2018, 306 new CoWorking centers were opened worldwide. 169 being in the United States. The number of new CoWorking locations are estimated to grow to almost 1,000 in the U.S. by the end of 2018. At the end of 2017, 44% of coworkers were female. By the end of 2018 that number will grow to almost 50% of coworkers being female. By the end of 2019, there will be approximately 1 million people coworking.
Not Only For Small Businesses
But CoWorking is not just for small businesses anymore. Global companies are using flexible space solutions as alternatives to taking or building their own workspaces. They are turning to large CoWorking companies like WeWork to house entire divisions of a company for special projects or teams, and in some cases entire divisions of a company. Studies providing workspace is expensive and can tie up capital. CoWorking can reduce their liabilities and long-term commitments by using flex space providers to house their workforce. Instead of CoWorking communities growing by one or two people at a time, large companies will place 40 or 50 people in a workspace and as many as hundreds of people at one time or over a short period of time.
These facts tell us that the workspace has changed dramatically. Particularly since trends in entrepreneurship and the evolution of the home based business has changed not only how work is done but also where work is done. In addition, technology has played a large part in the ability for workers to use the Internet to work anywhere they choose. CoWorking supports businesses by offering flexible workspace solutions, short term space commitments and the economies of sharing facilities and staff. In short, flex space and CoWorking works! Not just for small businesses but for every business.
“Life is short. Work someplace awesome!”
My background as a CoWorking service business started in 1981. I have seen the workspace evolve and change dramatically. In our early days, we looked for usually “one guy” to take a permanent private office. The offices looked very similar in that they had a basic desk, credenza, chair and a couple of side chairs. That format worked for years. And then technology took the lead. Computers and the internet allowed people to communicate at a different level. Email changed correspondence norms and encouraged less paper and mail costs. The pace of workspace became lightning fast, no more worrying about the fax machine or document delivery. Our target clients are road warriors who carry their office wherever they go whether it is home, auto, hotel or designated workspace.
Technology changed the definition of work. Today almost 90% of businesses created are home based. And home can be an excellent place to work: the dress code rocks, the commute is non-existent, and the economics for a small business make sense. But many people found home is not ideal for those who find distractions a challenge. The number one complaint of businesses that work from home is isolation. There is just no interaction with like-minded professionals or coworkers hanging out at the coffee station or the water cooler. That is where CoWorking hits a home run.
At OffiCenters we have conquered the isolation of entrepreneurial workers. Our workspaces push beyond four walls and include over 1,200 members in our community. We offer not just the space to work but options on collaboration and business challenges. We have networking groups, educational seminars, community outreach and charitable events, and mostly opportunities to meet the five generations of members in our workspaces. In my over 30-year career in workspace as a service, it has never been so exciting.
Conquering Isolation Problems
A recent survey of OffiCenters’ members (August 2018) showed 100% found our spaces conquered their isolation problems. 81% of members have made critical professional bounds within our community. 83% feel that joining a CoWorking community makes them more productive. 78% say they have increased their bottom line since joining OffiCenter. These are powerful numbers and we are proud to influence our community to success. We really emphasize working within our own community and for members to buy from one another whenever possible.
Over the last 8 years we have completely remodeled our workspaces to include not just single private offices but more meeting and conference room choices, team spaces, collaborative workspaces and 60 seat open areas in all of our locations. Our CoWorking spaces have a coffee shop type of environment only with a more professional feel and a lot better Wi-Fi connections.
OffiCenters has 7 locations in the Twin Cities area, which include: Bloomington, Edina, Minnetonka, St. Louis Park, Woodbury and the Minneapolis North Loop.
If you or anyone you know would like to try CoWorking,
please call us at (612) 349-2700 for a free day pass.
Lori Spiess, Founder of OffiCenters
Lori Spiess is the Founder of OffiCenters and has provided workspace solutions to the Twin Cities since 1981. She is an innovator; leader and motivator who help businesses do their best work. She was the first woman President of the Global Workspace Association (GWA). Her company won Most Innovative Workspace 2014 and she made Minnesota Real Power 50 list in 2015. Spiess, a recent cancer survivor, has a new motto: Life is short. Work someplace awesome!
You can view her location at https://officenters.com/.
Is Your Physical Space Helping or Hurting Your Hiring Efforts?
Today, dozens of colleges in the Minneapolis/St Paul metropolitan area are pumping out graduates. Graduates who are eager to find jobs as well as a great company to work for. While you might believe you have the right space to attract the best candidates, it might be a good time to step back and reflect on what you have to offer and what these graduates want so that when this fresh batch of interviewees sit down to talk, you know what your company’s commercial real estate space says about your company.
Research shows, the current generation of graduates expect more from the companies they work for than generations of the past. This group values freedom, independence, and creative space. They view their office as a second home and they want to enjoy going there every single day. With the unemployment rate hovering around 3% and the knowledge that the average person will likely change jobs 12 times in their careers, you better believe your employees will find the work environment they are looking for if your company doesn’t have it.
Paramount recently represented a food distribution company, where the president expressed a desire for space that reflected the company’s culture. After considering several spaces that would have resulted in lower occupancy costs, leadership ultimately selected space that was more expensive but had amenities including a roof top patio overlooking the city that would allow their team to gather and test their product. For this company, it was critical that employees would interact with each other and their product on a regular basis. It was worth the extra expense to have a space that could support an outdoor grill area to make it happen.
How do you make your space reflect your culture?
So how do you make your space reflect your culture? Location, architecture, physical layout, furniture design, color, work spaces, and amenities are all aspects that can reflect your company culture. Today’s job seekers do consider these physical attributes when deciding where they want to work every day. So take some time and think to yourself; “does this space make me excited about working here? Does it embody the culture of the company? Is it functional? What aspects of your company’s space can be changed and altered to better reflect your culture and company goals?
Some ideas you might consider: Health & sports enthusiasts might cause you to look for space close to biking trails, space with fitness facilities and showers, you might even add bike storage options. If you’re a creative marketing company you might try looking for unique architecture or a visually appealing space lay out. Maybe all you need to do is add a few tap beers, an air hockey table, and a flat screen TV to up the “fun” factor. Whatever you do, make sure you are consistent with your message regarding your company culture. Make sure you appeal to the types of people you want to work for you.
Does Your Company Need New Space?
Paramount partnered with Make-A-Wish® Minnesota to help them find their new work space. Hear more about Make-A-Wish® Minnesota and their relationship with Fred Hedberg at Paramount Real Estate Corporation. Questions? Call Paramount at (952) 854-8290.
Two (2) office/ warehouse spaces located in Eagan are available For Lease immediately
Located just off Lone Oak Road and Neil Armstrong Road, with easy access to I-35E, I-494 and Hwy 55
Close proximity to downtown Saint Paul and MSP International Airport
Docks & drive-in doors available
Option #1: four (4) docks; one (1) drive-in door
Option #2: two (2) docks; one (1) drive-in door
16’ clear height
New Report by the Research Foundation
Office Space Demand Forecast:
Second Quarter 2016
Key report findings:
The national office market is forecast to absorb approximately 34.6 million square feet of space in 2016, down from 62.1 million square feet in 2015, as economic growth flattens in the U.S.
GDP growth, which slowed to 0.5 percent in the first quarter of 2016, is forecast to remain low, near 1 to 2 percent annualized growth, with the lower boundary of the GDP forecast dipping into slightly negative territory.
The current forecast projects net absorption of office space to regain some strength in 2017, totaling approximately 46.2 million square feet. However, this figure could change, depending on how the economy fares throughout the rest of 2016.
Economic Flattening Points to Declining Demand for U.S. Office Space Through 2017
The national office market is forecast to absorb approximately 34.6 million square feet of space in 2016, down from 62.1 million square feet in 2015, as economic growth flattens in the U.S., according to Dr. Hany Guirguis, Manhattan College, and Dr. Joshua Harris, University of Central Florida. Gross domestic product (GDP) growth, which slowed to 0.5 percent in the first quarter of 2016, is forecast by the model to remain low, near 1 to 2 percent annualized growth, with the lower boundary of the GDP forecast dipping into slightly negative territory. The current forecast projects net absorption of office space to regain some strength in 2017, totaling approximately 46.2 million square feet. However, this figure could change, depending on how the economy fares throughout the rest of 2016.
“Employment, both overall and in the office-using sectors, had maintained fairly steady growth until the most recent reading for April 2016, which registered only 160,000 net new jobs. This was well below the 200,000 jobs-per month threshold considered the minimum necessary for sustained economic growth,” says Harris. “We expect the overall declines in macroeconomic output to continue to result in lower employment gains for the rest of 2016.
Read more: Office Space Demand 2Q16
By: Dr. Joshua Harris, University of Central Florida and Dr. Hany Guirguis, Manhattan College