February 3rd, 2016
As we’ve discussed before, many organizations are looking into new and improved workplace solutions as a way to cut costs and increase productivity. Often, however, implementing cost-saving efficiencies conflicts with the goal of fostering a workplace that retains and attracts talent. These experiments can be expensive both in the capital to create a new workplace, but also in the risk that what you have planned and are now implementing may not increase productivity, collaboration or be the space new or existing employees like.
Take, for instance, the “open office plan,” in which cubicles and walled-off offices give way to more shared and collaborative space. (and usually less “me space”) Collaboration and a communal feel are wonderful, but too often, less personal space results in less privacy and added noise issues and distractions. If a worker’s job is to be continually collaborating with those around them, then a small slice of a work surface may suffice. However, if an employee’s work requires that they have some visual privacy and quiet, then the shared table solution may not work.
One tangible and quickly identified result of an open office plan is the reduction in space per employee, seats, etc. But what companies many times fail to realize is that these workplace changes are experiments, and until the new solution has been used, tested, and analyzed no one can call it a success. Identifying that a workplace layout change has increased productivity and collaboration while supporting hiring and retention takes time – years, even – to understand. It may look cool and fresh, but may not result in a more productive and cost-efficient workplace for your business.
This isn’t to say companies can’t be bold and take risks in exploring new options. So how should companies approach such a challenge? As a wise man once said, “walk before you run”. Pilot new workplace experiments in a few locations. Analyze various measurements for determining success, and survey your employees both before and after over a period of time to see how it’s working. Appoint teams to observe how the new workplace is being used throughout the day and work week. Are the collaboration zones actually being used for group work? Are meeting rooms and spaces being continually used? Do employees complain about constant distractions in the new shared layout?
Understand the way your employees work, communicate, and perform first before you determine what your new workplace should become. And when you determine a change is needed, remember: walk before you run.
Look out for our future blog in which we will explore different types of share workplace options in the marketplace today.
January 27th, 2016
Your company’s office is where you come to do work, but it’s also so much more: a physical representation of your company’s brand, a place where the culture of your company lives and breathes – and yes, a major expense. A global portfolio of real estate holds significant value, and therefore the opportunities should be thoroughly leveraged.
Of course, it’s imperative to focus on business objectives first, into which real estate decisions should fit. For example, it’s typical to get a request from a site leader stating that headcount is increasing, and more space is needed. In the end, expanding and taking more space may be the best outcome, but there are many questions to ask first that may lead to an alternative strategy. Adopting a global real estate strategy can be a key contributor to business initiatives, which include:
- Reducing operating costs
- Increasing capital available for investment
- Entering a new market or expand customer base
- Providing support to existing customers
- Attracting and/or retaining talent
- Improving employee engagement & culture
- Improving brand & customer experience
As real estate options are being weighed, market experts (like Cresa) can identify the opportunities in specific markets, such as:
- Cost and availability in the market
- Access to the required talent
- Proximity to your customers, existing locations, and source of materials
- Quality of life & lifestyle in the market
Far too many companies fail to be proactive about evaluating the opportunities within their existing portfolio, and become reactive to lease expiration dates, or sudden demands for additional space. Additionally, those who take a holistic view of their portfolio instead of addressing sites individually have the most advantage of capitalizing on impactful results.
Vice President, Global Account Management
Laura is currently working on strategic initiatives and value-add projects for Akamai Technologies. In collaboration with Akamai’s Global Real Estate + Workplace Productivity team, Laura ensures that Cresa’s integrated services strategically align the company’s real estate with their ultimate business goals.
January 20th, 2016
People ask us all the time: what difference does a Cresa Project Manager really bring to a real estate search?
It’s a great question, the answers to which could save you time, money, and headaches compared to planning for your upcoming lease expiration or office relocation with in-house staff. Here are several of the best arguments for letting Cresa’s experienced Project Managers handle your real estate transition:
Less work – and worry! – for you
Hiring a Cresa Project Manager (“PM”) is going to make your life a lot easier — whether you are a seasoned real estate or facilities professional managing a large portfolio or a human resources or finance manager tasked with overseeing your upcoming office relocation. A Cresa PM frees up your time so you can focus on your own job. He or she will pay close attention to ensure that your project is completed per the outlined scope, your budget and schedules are met or exceeded, and that there is a consistent thread of integration from project kick off through move-in weekend.
We’re in touch with the vendors and contractors on a daily basis so you don’t have to be. That’s peace of mind!
We’ll build the right team.
Not only will your Cresa PM alleviate the day-to-day pressures of the project, they’ll bring a depth of knowledge and level of experience to the search that is rarely found in-house.
Let’s face it: this is what we do, day in, day out. With hundreds of projects under our belt, we bring a high level of expertise to each project we work on. From day 1, we put a great deal of thought into putting together the team of vendors, contractors and architects/engineers most likely to result in a successful project – all procured through a competitive bid process to ensure you’re getting the best value possible. This is one of the most important pieces of the puzzle.
Because we have worked on many projects in a great deal of markets we know what to look for and what to plan for to mitigate risk and ensure all aspects of the project are properly coordinated.
We provide integration.
Something that truly differentiates Cresa from other firms is the integration of PM with our real estate transaction managers. From the very first real estate kickoff meeting your Cresa PM is by your side, ensuring all details are covered and planned for. We develop test fit plans to show clients how potential space might look, and we are able to right-size their space to ensure they are not leasing too much — or too little. We quantify build-out costs, from architectural and engineering fees to furniture and relocation costs. We develop project schedules and overall project budgets that we manage throughout the project life cycle. Throughout the duration of the project, the Transaction Manger and Project Manager remain closely connected. That’s integration.
We’ll get you moved in smoothly.
Finally, we are heavily involved in the relocation planning and management aspect of the project. We spend a lot of time meeting with end users to ensure communication is clear and there is no confusion during the relocation phase. The move is the one part of the project that the entire employee pool sees, and an experience we want to ensure is as smooth as possible.
Leave it to us.
Why hire Cresa for your next project? It just makes sense. Who wouldn’t want to save time, ensure their project is delivered on time and within budget and have someone with a high level of expertise guide you through the process? That’s a no-brainer. Give us a call, and we’ll tell you more!
Senior Advisor, Project Management
Amy works side by side with her clients to understand and develop their workplace strategy. She provides a wide range of project management services to her clients from the initiation of the real estate process, to oversight of the design and construction, team selection and management of cabling, audio visual, furniture procurement and relocation planning and management.
December 16th, 2015
Here at Cresa Boston, we have adopted the open office plan, wherein most employees share desk space, without the separation of walls or cubicles. The theory behind the open plan is that today’s employee (especially millennials) wants to collaborate and interact more fluidly with his or her colleagues throughout the day, and those walls of yesteryear were just not conducive to the 21st century worker.
But what if I need to read through a complicated lease for one of my clients and can’t be distracted by the brainstorming session a few feet away? I’m going to take the lease into one of the private breakout rooms in order to concentrate.
Some have assumed that all millennials prefer the open office plan, and even suggest we’re driving the return to grouped-together desks in open environments. But as a millennial myself, I feel a 100% open office has limits. I’m not alone. One study, out of Finland, found that millennials in open offices feel just as distracted by co-workers laughing or talking as their older colleagues. The New Yorker looked at the “open office trap” in-depth, discovering that many workers find such spaces “damaging to the workers’ attention spans, productivity, creative thinking, and satisfaction.”
To combat the distraction inherent in open offices, many companies are building out spaces with a combination of collaborative and more private spaces. Other companies are adopting “hoteled” or “untethered” office spaces, wherein office and desk spaces – there are usually a good mixture of all types – are open and able to be used on a first come, first served basis by all employees, from executives on down. As the Los Angeles Times reported a few years back:
“Desktop computers were replaced with laptops that can be stored in lockers in the new office. Upon arriving, employees collect their telephone headsets, laptops and key files. They then head to one of 10 “neighborhoods” where employees doing similar tasks such as legal work or property management cluster. Or they can set up in the heart of the office near the front door that looks like a cross between an upscale hotel lobby and a coffee bar.
Workstations have telephones, keyboards and monitors that employees plug into, and they can sit, stand or even walk on a treadmill while they work. There are media-equipped conference rooms for meetings and small booths for making private phone calls.”
But a collaborative office design does not automatically facilitate a collaborative culture. Collaborative, social culture starts with a company’s mission and leadership – not just with how the desks are arranged.
How is collaborative culture fostered? I like this approach of equipping each team member for “robust participation” by communicating company expectations, setting team goals, fostering a creative atmosphere, building cohesion, knowing one another, and leveraging each team member’s strengths. It’s quite possible to put all the desks in the middle of a loft while failing to foster collaboration in these ways.
Maybe that sounds new and appealing; or, perhaps it’s not how your company rolls. Either way, keep in mind that every office layout plan has its pros and cons, and like so many aspects of 21st century life, perhaps the best plan is that which offers the most variety.
As part of Cresa Boston’s suburban market team, Gabrielle provides transaction and account management services to tenants primarily in the Route 128 North marketplace. Her responsibilities include developing new business, strategic planning, analyzing real estate markets, and negotiating lease transactions.
Tags: Boston, commercial real estate, CRE, Cresa, Cresa Boston, Design, Gabrielle Beaudry, Office, Open Office
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December 9th, 2015
You’re at the car wash, expecting to spend $20 for a basic wash. When you arrive, though, the attendant tells you your car wash will be 30 percent off today. She then tells you that for just a few bucks more, she can add on a wax treatment. Having come in expecting to spend a certain amount, of course you agree to the add-on that brings you up to your budget. This is a no-brainer.
Unfortunately, this same logic is sometimes not applied by commercial tenants engaging in building projects. Typically, a client/owner has a certain dollar amount they expect to spend on construction. If the final spend comes in lower than the budgeted amount, it’s a success, right? Not always. Many clients would rather see the money they were going to spend anyway reinvested back into the project.
For those who make the construction budgets, such add-ons and upgrades beyond a client’s basic needs are an afterthought. Budgets are often set before the first design meeting takes place, at which point the client hears about the elegant lighting, glass office fronts, hardwood flooring, murals, and other amenities that will improve the environment. While part of project management is to make sure architects adhere to an original budget, sometimes bids come in lower than the original budget and in hindsight it could have accommodated some of those upgrades.
This is where add alternates come in handy. Add alternates are simply line items that are priced outside the base scope of work that can later be added in. For example, if an original budget for a project is $100,000 and captures a scope that supports the client’s basic needs, the project manager and architect can then develop a list of improvements or a client’s wish list — e.g. better light fixtures and a glass wall in the conference room — for competitive bidding. If, after receiving hard bids, the base scope costs come to $90,000, the conference room wall at $10,000, and better light fixtures at $20,000, the client now has choices: 1) accept the glass wall and include it into the original construction costs; 2) accept the improved light fixtures, knowing they will have to come out of pocket; or 3) take the savings.
Add alternates allow clients to understand the cost associated with their wish list items and gives them an opportunity to approve or reject the items in it — at competitive pricing and without causing delays to design or construction.
Just like taking advantage of the wax upgrade at the car wash, add alternatives are a no-brainer for project managers.
Senior Advisor, Project Management
Mike has over 10 years of experience in commercial construction, including general contracting, construction management, project management, and facilities management. His experience allows his clients to remain focused their day-to-day roles while feeling confident that their project is professionally managed.
November 30th, 2015
As a tenant, a commercial space advertised as “turnkey” — meaning the landlord completes the design and build-out of an office space rather than the tenant — can be a tempting proposition. After all, the costly and time-consuming office renovation is one less headache for a company to worry about during their real estate search. Right?
Not so fast. There are several reasons why turnkey might spell trouble for a tenant. Just ask a tenant we heard about recently who entered into a turnkey agreement on a new office space. The cost of the landlord’s build-out exceeded its budget, and the tenant was forced to write a check for the difference. What’s more, the work wasn’t completed on time, forcing the tenant to pay a 200% holdover penalty at their existing space.
There are a few key points to consider when faced with a potential turnkey build-out:
- One, don’t be fooled: a landlord is not going to take any financial risk with this approach. This means the landlord may price the work high to avoid financial exposure, resulting in the tenant paying more for the work and creating a profit center for the landlord.
- Additional tenant costs can also arise when the landlord does not provide a detailed scope of work but delivers change orders later in the project. Connected to this, with the landlord selecting contractors, a tenant has no control over the quality of the work.
- As we see in the tenant horror story above, turnkey leases are risky because the landlord maintains complete control of the schedule, which can result in delays to the tenant and possible hold-over in their existing space. (and all the added costs that go along with it)
And what about when turnkey isn’t turnkey? In many leases, there is work outside the turnkey scope that the landlord will not plan or manage — meaning this falls on the tenant.
Our position is that it is almost always better for the tenant to control the budget, schedule of renovations and build-out unless the scope of improvements is limited to minor cosmetic items such as paint and carpet. Instead of going with a risky turn-key approach, negotiate in a tenant improvement allowance and hire a project representative like Cresa to manage the design and construction.
This is the key to avoiding turnkey trouble.
Principal, Project Management
Barry Dubé, an award-winning Cresa principal who heads local project management services in the Boston office, has more than 25 years of experience in the commercial real estate, including project management, development, relocation planning, design, construction, and facilities management. Cresa Boston’s Project Management team is one of the largest such groups in the Boston area, providing integrated, start-to-finish services with Cresa’s brokers for Transaction Management.
October 27th, 2015
When it comes to commercial lab and office space, Cambridge is still one of the hottest markets in the country. This is especially true in the life sciences industry, where recent years have brought a number of big arrivals, transactions, and expansions in that sector. The Oct. 8 announcement that Blackstone Group is acquiring Biomed Realty Trust – one of the nation’s largest life science-focused landlords – represents another significant change in the key players within the Cambridge life sciences market.
With the Biomed Acquisition and several other transactions over the last few years, 36 percent of the Cambridge lab market is now controlled by Blackstone, Jamestown Properties and Divco West – none of which had a presence in this segment of the market 24 months ago.
In December 2013, Atlanta-based Jamestown Properties purchased 245 First St. in Cambridge – a 300,000-square-foot office and lab complex – for $192 million (or $634/square foot). Jamestown’s historical niche is in retail properties, and that had been the bulk of its portfolio since entering the Boston market for the first time in 2012 with its $226 million purchase of 130,000 square feet across 28 buildings. Since that time, Jamestown has purchased a handful of office buildings in Greater Boston, but 245 First St. was their first lab building acquisition.
About a month after Jamestown’s entrance into the Cambridge lab market, West Coast-based Divco West acquired the 650,000-square-foot One Kendall Square complex from The Beal Companies for a little over $500 million (or $789/square foot). While Divco also owns office buildings in Greater Boston, One Kendall was its first large-scale lab property in the area.
Blackstone’s acquisition of Biomed earlier this month shifts the Cambridge lab ownership landscape yet again. Before Blackstone acquired it earlier this month for $8 billion, Biomed Realty Trust controlled roughly 2.3 million square feet in Cambridge, which represented 27 percent of that market, greatly enhancing Blackstone’s portfolio in the area.
There are a handful of other major players in this market on the landlord side. Alexandria Real Estate Equities controls 1.7 million square feet, or 20 percent, of the Cambridge market. Forest City oversees 1.3 million square feet, or 15 percent, of the market. And Massachusetts Institute of Technology owns 1.1 million square feet, or 13 percent, of the Cambridge market. With developments underway, each of these continue to expand their presence (and respective market share) in the market.
How are these changes impacting tenants? When big buyers enter a market and pay a high amount, they immediately start to look for ways to “add value” to the property, and tenants can expect rent increases to follow. We’ve already seen rents being pushed in this market, and we can be sure that a newly expanded Blackstone Group will continue that trend in a smoldering market for the foreseeable future.
October 5th, 2015
When we think of Boston, many things come to mind: Redcoats and Colonists, the Irish Diaspora, our rich sports heritage, the Marathon, our colleges and universities…dudes from Malden yelling at fish.
Actually, yes. Greater Boston is a national hub for some of the world’s biggest shoe brands – and it’s been that way for a while. You just didn’t know it because companies like Reebok and Clarks were treading lightly out in the suburbs. Not anymore. In the last year, several shoe companies have been making a lot of noise – and a big impression on the real estate market.
New Balance: If you’ve been on the Mass Pike near Boston in the last year, you’ve seen the hulking, shoe-like building the Massachusetts-based sneaker company has been building as its new headquarters. Well, the long-awaited Boston Landing is open now, dramatically changing the sight lines of drivers heading in and out of Boston.
Clarks: Far from being the fusty maker of leather mocs you think it is, the shoe company is Britain’s 14th largest company and has been doing booming business. Recently, Clarks America signed a lease for 120,000 square feet at 1265 Main Street in Waltham, the former Polaroid site.
Wolverine Worldwide: Maybe the biggest shoe company nobody is talking about, Wolverine – known mainly for its boots – owns huge brands such as Saucony, Merrell, Stride-Rite, and Sperry. In fact, in 2014, the parent company sold $2.76 billion worth of shoes. Last August, the company announced that it would be relocating its local operations to 180,000 square feet at 10 City Point in Waltham.
Converse: Like the New Balance project in Brighton, Converse’s build-to-suit headquarters at Lovejoy Wharf is becoming ubiquitous to commuters into Boston for the company logo in green greeting drivers on the Zakim Bridge. The Massachusetts-based maker of the legendary Chuck Taylor hi-top will occupy 187,000 square feet of the rehabbed building.
And these are just the big moves by sneaker companies in the last few years. Let’s not forget about Canton-based Reebok (which is booming again) or PUMA, which has an office at 1 Congress Street. Clearly, there’s something about the state’s business and real estate environment that’s piquing the interest of some of the world’s biggest shoe companies.
Here’s a suggestion: Let’s scrap “Beantown” and go with something a little more fitting. “Sole Town” has a nice ring to it, don’t you think?
September 30th, 2015
By now you’ve no doubt heard about the merger of Cushman Wakefield and DTZ, forming one of the world’s largest commercial real estate companies. The press release announcement boasted the two companies have a combined “$5 billion in revenue, 43,000 employees, more than 4.3 billion square feet under management, and $191 billion in transaction value.” The new Cushman Wakefield goes on to call the merger “game-changing” and “historic.”
Indeed, this merger is a big deal in Boston commercial real estate, and those numbers are nothing to be scoffed at. But does bigger always mean better? Many would argue that the combining of two industry whales to form a mega-company may not equal better service for their clients.
Here’s why: mega-companies run the risk of losing their identities because they’re too large to focus on what they do best. While mega-companies attempt to offer a full-service model, offering everything to everyone, corporate tenants need solutions that match their varying needs – which differ from context to context. Simply giving a client a menu of offerings and hoping that they will benefit from one of them just doesn’t work.
I know this first-hand. I worked for a larger company that, via acquisition and adding service lines, attempted to scale up. This strategy didn’t work for my former company, didn’t work for our clients, and ultimately diverted focus from our core identity and strengths. As a result, that company is no longer in business.
Even as big-city commercial real estate is controlled by fewer, but much larger firms, Cresa’s brand and model are all the more valuable. We remain focused solely on representing tenants, aligning their interest with ours. We know what our mission is, are clear in our strategy, and are seeing happy clients as a result: a 2015 Watkins Research Group study ranked Cresa the top firm in terms of client advocacy.
So we’ll gladly let the big firms keep getting bigger. Our tenant-focused, integrated service platform is growing, our vision is clear, and Cresa is stronger than ever. Our clients know that, industry experts know that, and many prospects are realizing that.
September 10th, 2015
Security deposits. They’re an important, albeit boilerplate, part of most lease agreements. You may not know what they’re for, however, or that they can be negotiable. Good news: we’re here to help.
What is a security deposit?
A security deposit is in place to protect the entire out-of-pocket expense a landlord must incur when signing and moving in a new tenant. It also protects the landlord against lease default or damages to the property by the tenant and the responsible parties.
How is the deposit amount determined?
Landlords will commonly factor the security deposit by calculating expenses such as the amount of capital awarded in tenant improvement, any commissions paid to brokers, or the cost of professional services like an architect, engineer, or lawyer.
But landlords will also take into consideration various factors about the tenant company in calculating a deposit amount. What does the company DO, and will they exist through the duration of the lease? Is the company fiscally solvent? What does the prospective tenant currently pay in rent, and could the increase in rent in the new space create a problem that could result in default? Finally, everything in real estate negotiations – including the security deposit – is cast in the light of current market conditions. In a market like the one we’re seeing now – a “landlord’s market” – deposits will be higher. In times of higher vacancy, the opposite is true.
It’s important to understand that there are different types of landlords, each of which will weight these factors differently when determining the security deposit. Private owners or real estate families are known for being concerned with credit of the tenant and the upfront cash because they do not want to go back to their investor for a cash call. They are often the most concerned about the security deposit. An institutional owner is highly concerned about credit of the tenant and the rent achieved over the term because of their need for a consistent cash flow over a long term for fund. Real estate investment trusts are primarily concerned with the credit of the tenant, rent and term because it affects stock prices; therefore, they are more likely to require a larger security deposit. Private equity owners are most concerned about achieving better rent rolls to create the most attractive product as they intend to sell the building in a short time. They tend to require (relatively) less security deposit.
Can security deposits be lowered? Yes! Here are a few ways to do it:
As you can see, when it comes to security deposits, there is more than meets the eye. With a little know-how, though, tenants can boost their financial security in negotiating deposit amounts.