How office space can go green

‘Sustainability’ and ‘environment’ seem to be the words of the decade. With every organization trying to be eco-friendly, a company’s office space becomes a major aspect to be turned green. The increasing demand for the same is getting noticed by interior designers, real estate brokers, serviced office providers and workplace maintenance contractors.

For an office to go green, the process starts right from the choice of location, to the structure and its wiring, to sourcing materials and interior decoration, including a programme to orient employees about going green and finally having the same permeate into the daily functioning of the office.

Choice of location usually depends on proximity to clientele, a reputed business address etc… However, some companies have shifted to less crowded suburban area for larger space and a better surrounding environment. Space is directly proportional employee efficiency and inversely related to wastage, as offices which are smaller and cramped up lead to increased collection of dust and poor ventilation.

Air conditioning and lighting are an integral part of the office infrastructure and also 2 major considerations for the green office. Air pollution comes from a variety of sources including vehicle exhaust brought in by the ventilation, airborne pathogens, particles from carpets and paper, ozone, nitrogen oxide, carbon monoxide, carcinogenic Volatile Organic Compounds and carbon black generated by printers and photocopiers. Increased use of HEPA filters ensures clean air to employees and significantly improves productivity. It also ensures a longer life for the air conditioning system as it reduces deposits on filters and ducts.

Lighting is another major consideration for the green office. Compact fluorescents in pendant type fixtures that can be hung over desks or under cabinets ensure that only the required space is lit up. Outdated lighting is harsh on the eye, causes glare and also burns away more electricity. In addition to energy efficient lamps (eg: CFL, T53, T18), lighting controls can also be used to save energy.

The simple task of turning off the lights on leaving is unfortunately, frequently forgotten. If reminders and posters fail, try notes on the rear side of the door. If even those were to fail, resort to automatic controls which turn off lights when there is no one in the room. While there are complicated Ultrasonic and Infra-red detectors available, the more practical ones are vacancy detectors which require a person to manually turn on the lights but automatically turn them off when the people leave the room.

Sourcing materials which are organically safe and efficient also play a major role in the ’green office dream’. Nowadays many products come made of a single raw material (which is easy to recycle) rather than several different fittings put together. However, ‘going green’ is being taken to new heights by having office furniture made out of entirely recycled material.

The standard cliché of 'orienting your personnel' applies to going green as well. By clearly defining the need and the philosophy behind the company’s initiatives to go green, employees can clearly understand and respect the practices that are put into place. It also allows for innovative ‘green ideas’ from the employees.

Daily practices involve how the employees use the office space as well as how the various functions and work-essentials like printers, computers etc… are made ‘greener’. Some of the best and more practical practices include having stationary made of recycled paper and material, eco-friendly (CFL) lights, separation of garbage, rain-water harvesting, solar powered water heaters and lights and a complete cut on the usage of potentially toxic material in furniture, machines etc… Major office supplies players like Office Depot already sell recycled or eco-friendly paper. There are also complete portals for green office supplies right from stationary to cleaning and maintenance materials like Thegreenoffice.com and Greenofficestore.com.

Video-conferencing has received a lot of attention these days for its ‘green’ nature, besides the resultant long-term cost savings. Video conferencing has been recording steady growth in the recent past; though it took a small hit in 2009 due to an overall scaling back on infrastructure spends.

Printers with ‘save paper’ signs next to them are the simplest method to keeping wastage in check. Another consideration is the location and maintenance of printers and photocopiers which contribute significantly to the interior pollution. Here, Xerox solid ink offers a more clean and efficient solution as compared to standard toners. Recycling of cartridges by certified companies is also an emerging practice to go green.

But finally, what really matters is how small, daily practices are made more environment-friendly. For example, in the washrooms a switch from individually folded napkins to rolls can significantly reduce wastage. Also, try paper cups (available with handles) instead of the more prevalent Styrofoam.

Some serviced office providers, in particular, has been 'keeping it green' despite the mistaken preconception of it taking a direct hit at operating costs. For example, Icon Business Centres in Leeds has the highest BREAM (The Environmental Assessment Method for Buildings around the World) ranking in the entire industry with great practices like rain-water harvesting systems for sewage and combined heat and power systems. Another provider Avanta, one of the leading UK serviced office operators, started an ‘eco button campaign’ in December 2008 at all their centres. This involved the installation of power saving buttons for PCs when not in use. Avanta was able to save an average of 34 tons of CO2 for approximately 500 computers.

Commercial Real Estate Marketing - Mobile

Found this report on the scope of mobile marketing for the real estate industry.

Some good insights here into the potential of mobile technology as a medium for marketing small and medium commercial real estate brands. Considering the crazy pace at which this technology is developing (Eg: the iPhone and all the 'iPhone Killer' smartphones), it won't be long before these insights turn into some awesome marketing campaigns...

Mobile Marketing For Real Estate

300 Property Listing Websites

300 Best Commercial Real Estate Property Listing Websites

Global Office Space Trends - Grappling with the Power Shift

The Commercial Property industry globally is evolving and adapting rapidly, almost like mutation. Just like the internet which took power off the hands of publishers to users, the commercial property

industry’s evolution is being led by customers rather than by the clout of sellers and owners.

One of our 'Big Apple Crush' posts (http://allaboutofficespace.blogspot.com/2009/08/crisis-series-part-1-big-apple-crush.html) was about how the global financial crisis is leading to a shift from landlord-driven cash intensive deals to tenant-friendly short-term leases and lower upfront

costs. While tenants are being given more and more power, a strong need arises for owners to ensure a fair deal for themselves.

ENTER Property Management Consultants - firms which take the pains of managing realty assets off the hands of the owners and with their expertise, not only manage but also optimize the owner's assets as cash generators. Though not a very new concept, property management is seeing increasing popularity in the current economic scenario. A Property Manager manages the accounts and finances of the real estate properties, and participates in or initiates litigation with tenants, contractors and insurance agencies. Though litigation is usually considered a separate function, set aside for trained attorneys, property management consultants are offering more value with this added function.

This service was usually in the hands of real estate consultants and business consultants on a short-term, project to project basis. However, more and more property management consultants are becoming valued long term partners to landlords as well as other enterprises which own considerable real estate assets. So much so that big names like Jones Lang Lasalle are busy grabbing their chunks of this new need along with a swarm of small players and consultants.

Aggregate Office Space Demand Drivers

Source: www.property-investing.org

Financial Crisis - Big Mortgage, small value

The last post was about American commercial real estate investors packing, folding, and moving house from their traditional investment back-office - Europe. Now, let’s take a glance at why these investors found no backers and shut operations.

To start off with rhetoric… did you good folks know that U.S. banks are holding about $1.7 trillion of mortgages backed by commercial property that is fast losing value? 1.7 TRILLION DOLLARS! For realtors and investors alike, this is certainly not good news.

According to new report by Deutsche Bank AG, as property value declines and scarce credit continue to drive commercial property developers and investors into default, total lifetime losses on banks’ $1 trillion “core” commercial-mortgage holdings, or those backed by income-producing properties, would reach between 11.6% and 15.3%, or $115 billion and $150 billion. Those expected losses would be at least as large as those on loans originated and bundled into commercial-mortgage-backed securities, from 2005 and 2008, a period of cheap and reckless credit, Deutsche Bank estimates.

Are you scared yet? Well, we all should be. What’s worrisome is the fact that this is not an area-centric issue. The repercussions of the American investor with an empty pocket could have a domino effect in the office space industry world over, the kind of which is unfathomable, and in a not-a-pretty-picture way.

Not that so far the problem is only restricted to the US. But yet it’s only ‘US puppet countries’ that are hit as of now. But if the dominos do tumble, then we’re talking about carnage as far as the Middle-East and Central Asia.

Financial Crisis Series Part 1 - The Big Apple Crush

This is the first post in my ‘Crisis Series’, which will track how the global financial crisis is pounding the commercial office space industry.

So let’s start with Uncle Sam’s neighborhood… where it all started!

The recession is carpet-bombing the American Office Space sector. Just to put the issue in perspective, let’s look at the happenings in the 4 major commercial centers:

1. Office property rents in San Francisco witnessed a massive 24% decline in the Q1 2009 from a year earlier (the biggest decline since the dot-com bust in 2001). To top that, vacancy rates saw a scary increase from 10.1% in June 2008 to 14.1% in June 2009. In fact, commercial property purchases have come to a full screeching halt in San Francisco.

2. In Dallas, Class A office space dropped to $21.64 per SF and Class B office space fell to $17.38 per SF in June 2009. Class C buildings are thus caught in the domino effect, where Class A and Class B properties are lowering rates to stay competitive. The few successful businesses in Dallas are thus on a roll, being able to upgrade from Class C to B and B to A (almost as if Wal-Mart is selling office space).

3. The ‘Meltdown in Manhattan’ (New York), on the other hand, saw overall vacancy rate increasing to 0.9 % points during Q2 2009, compared to a 1.6% point increase during Q1 2009. Manhattan’s overall availability rate, which includes space available within the next 12 months, increased to 11.5 % in Q2 2009, up from 10.5% at the end of Q1 2009. The famous Madison Avenue experienced declines in average ground floor asking rents and a corresponding increase in availability. That means we’ll soon see retailers taking advantage of market opportunities that have not been present on Madison Avenue in several years.

4. Washington D.C., with its large governmental employment sector, still has its nose above water... but not for long! Vacancy rates in the capital jumped to 10.2% in Q2 2009 as compared to 8.5% in Q1 2009 due to the delivery of 2.6 million SF of vacant space. Nearby, in Northern Virginia, net absorption remained negative in Q2 2009 but did not drop as low as the previous two quarters, thanks to some government-related leasing activity and a huge deal by Raytheon for 602,790 SF. And in Suburban Maryland, Q2 2009 net absorption remained negative and vacancy rates increased to 13.9% from 13.1% in Q1 2009.

“No people, no space needed”:

Vacancy rates are soaring as a result of:

1. The new Central Business District deliveries totaling 3.2 million SF (but more than two-thirds of newly constructed area was vacant at the end of June 2009)

2. The current 26-year high unemployment rate (almost 10%) which has led to major lack of demand for available office space

3. The rising available sublease space and a 19% decline in overall office leasing activity

Happy hours months for tenants:

American landlords are getting jittery. In the worst recession seen in decades, ‘not-so-affected’ tenants have a major advantage as landlords desperately try to lure them with attractively low rents. Landlords have definitely been driven to the wall, because they do not usually compete on rents as that could bring down the valuation of a building. They offer other incentives, which they’ve apparently run short of. Furthermore, commercial real estate is not always a ‘real-time’ indicator of the health of an economy. There’s always a lag between the recovery of the economy as a whole and the recovery in this sector. So even if the economy starts to grow in Q1 2010, it doesn’t mean that landlords will feel any respite in the near future. The deeper-pocketed tenants will be able to strike some sweet deals soon...

Brief respite:

Projects that are already in the pipeline continue to move forward. A good 10 million square feet of office space is scheduled to be delivered in 2010. Though personally, I think this will just add more vacant space and slow down the initial recovery.

But crisis or no crisis, the Americans are putting their money and efforts in what they do best! Considering the fact that the development of the 1.7 million-square-foot office complex in Alexandria for the U.S. Department of Defence is going strong and will be complete in September 2011, as originally scheduled...