Moving your office? Here is a timeline and some tips.

WHAT AND HOW LONG IS THE RELOCATION PROCESS

TIMELINE

YOU SHOULD BEGIN RELOCATION EFFORTS 4 TO 6 MONTHS BEFORE THE MOVE DATE

WEEK 1

DEFINE YOUR REQUIREMENTS FOR A NEW LOCATION. THIS INCLUDES MEETING WITH MANAGERS AND DEPARTMENT HEADS. TAKING TIME UPFRONT TO DETERMINE A CLEAR CONCISE PICTURE OF WHAT YOU ARE LOOKING FOR WILL SAVE LOTS OF TIME IN THE FUTURE

WEEK 2

BEGIN INSPECTION TOURS OF THE MOST QUALIFIED PROPERTIES

CONDUCT PRELIMINARY SPACE PLANNING IF NEEDED.

WEEKS 3-4

MAP OUT YOUR NEGOTIATION STRATEGY. PRIORITIZE WHAT MATTERS MOST TO YOU. ( RENT REBATE, TENNANT IMPROVEMENT ALLOWANCE, PRIORITY PARKING SPACES, BASE RENT CONCESSIONS, TERM, ANNUAL RENT ADJUSTMENTS, EARLY TERMINATION ALLOWANCE, GUARANTEES, SECURITY DEPOSITS ETC.)

OPEN NEGOTIATIONS WITH A LETTER OF INTENT

RESPOND TO COUNTER OFFERS

WORK WITH SPACE PLANNERS

EVALUATE VARIOUS OFFERS

WEEKS 5-6

UPON ACCEPTANCE OF THE LETTER OF INTENT. ATTORNEYS TO NEGOTIATE THE LEASE

WEEK7

LEASE SIGNING

AT THIS TIME WORKING DRAWINGS FOR TENANT IMPROVEMENTS BASED ON THE SPACE PLAN CAN BE UNDETAKEN. (UNTIL THE LEASE IS SIGNED THE LANDLORD WILL MOST LIKELY NOT BE WILLING TO COMMIT HIS CAPITAL TO A PROJECT THAT MAY OR MAY NOT HAPPEN)

WEEKS 8-24

PLANS AND PERMITS CAN TAKE FROM 2 – 6 WEEKS, DEPENDING ON THE VARIOUS APPROVALS REQUUIRED.

DEPENDING ON HOW MUCH BUILD OUT IS REQUIRED, TENANT IMPROVEMENTS COULD TAKE FROM 8 – 12 WEEKS TO CONSTRUCT.

LIST OF PLAYERS INVOLVED IN A MOVE

YOU NEED A GOOD TEAM TO ASSURE A SMOOTH RELOCATION PROCESS.

1. COMMERCIAL REAL ESTATE BROKER REPRESENTING YOUR INTERESTS

2. ATTORNEY

3.ARCHITECT/SPACE PLANNER (OFTEN FURNISHED BY LANDLORD)

4.TELECOM

5. I. T.

6. MOVING COMPANY

7. OFFICE FURNITURE

8.GENERAL CONTRACTOR (SOMETIMES FURNISHED BY LANDLORD)

9. BANK (IF PURCHASING)

10 BUILDING INSPECTOR (IN SOME INSTANCES)

Biggest Suburban Lease Signed Since 2010

Acco Brands to move in biggest suburban lease since 2010

By: Ryan Ori January 11, 2012

(Crain's) — In the largest suburban office lease in more than a year, Acco Brands Corp. is moving its headquarters to a 189,092-square-foot office building at Kemper Lakes Business Center in Long Grove.

Acco Brands says it will occupy all of the three-story, Class A building, a 10% increase from its current space. It currently occupies 170,139 square feet at 300 Tower Parkway in north suburban Lincolnshire.

The move to 4 Corporate Drive in the northwest suburb is another boost to the Lake County submarket, which is awash in office space but has experienced a recent rally of sorts.

The submarket had an area-worst 28.1% vacancy rate to end 2011, according to Chicago-based Jones Lang LaSalle Inc. But that was down from 29.7% a year earlier, with help from four leases of more than 100,000 square feet in 2011.

Acco Brands, an office and computer products supplier, plans to move into its new building in March 2013, a company spokesman says. It has about 450 employees in Lincolnshire and 4,000 worldwide.

Terms of the 10-year lease were not disclosed. It was the largest suburban lease since third-quarter 2010 and the largest relocation since first-quarter 2010.

“Big deals are getting done in the suburbs, and there are a lot still in the pipeline,” says Dan McCarthy, a Jones Lang LaSalle senior vice-president who represented pharmacy benefits manager Catalyst Rx in a 106,000-square-foot lease in Bannockburn in the fall. “The large corporations that have the ability to make a commitment right now are locking in some great deals.

“It's the small and mid-size spaces that aren't being absorbed. That's going to have to change for the market to get healthy.”

The headquarters move is not connected to Acco's pending acquisition of packing company MeadWestvaco Corp.'s office supplies business, the Acco spokesman says. Most MeadWestvaco employees in that deal are expected to continue working in Kettering, Ohio, he says.

Acco's move would provide enough extra space to take on additional employees if needed, the spokesman says. The headquarters has executives and employees in sales, marketing, purchasing, sourcing, human relations, legal and corporate communications, he says.

The new building will include engineering and product innovation labs. The Kemper Lakes complex's amenities include a 600-seat auditorium, fitness center, day care and cafeteria. The office buildings are alongside a golf course.

“We're excited about the opportunity to provide our people with a working environment that offers state-of-the-art amenities and the ability to accommodate future business growth,” Acco President Boris Elisman says in a statement. “Our employees will be involved in every stage of the design of our office space, ensuring that we create the ideal environment for collaboration and product innovation.”

The Kemper Lakes campus has four buildings with a combined 1.1 million square feet. Philadelphia-based BPG Properties Ltd. bought it for $30.6 million in 2005, when it was 20% leased, and has done about $35 million in renovation work, says Chicago-based BPG senior vice-president Joseph Neverauskas says.

Kemper Lakes is 62% occupied and will be about 80% leased when Acco moves in, and no leases will expire before then, Mr. Neverauskas says. Two tenants will be moved from the building Acco will occupy to other space in the complex, Mr. Neverauskas says.

“Over the past few years activity has been pretty slow,” Mr. Neverauskas says. “The Chicago suburbs have been stagnant during this recession we've just had.

“I think the market is improving, but until the economy picks up and employment starts to grow, it's still a bumpy road. The key is to have quality product with great amenities.”

Acco was represented by Lou Hall, an executive director in the Chicago office of Cushman & Wakefield Inc., which also manages the office campus.

BPG was represented by Principal Steve Kling and Senior Vice-president David Florent of Colliers International.

Acco makes a range of office supplies such as planners, laminating equipment, shredders, power adapters, staplers, binders, dry-erase boards and audio-visual equipment. The company markets products in more than 100 countries under names including Swingline, Day-Timer, Kensington, Wilson Jones, Rexel, NOBO and Quartet.

Thank you

It is hard to believe that another year has come and gone. Both Jim and I here at Chicago Commercial Realty Brokerage, THE CCRB, want to thank you for all your support. Whether that support came in the form of a transaction we did together, a referral you gave us or just a friendly conversation, we thank you. Everyone here at THE CCRB wishes you health, happiness and prosperity for the New Year.

Happy New Year.

Gradual Improvement

CRE Pricing Recovery Continues With September Rebound

Third-Quarter CoStar Sales Data Reflects Less Distress, Firmer Retail Pricing and Broadening Strength Across the Spectrum of CRE Properties

By Randyl Drummer

November 16, 2011

Commercial Real Estate prices resumed their steady if modest rise in September following a pause the previous month, helping lift the CoStar National Composite Index to a nearly 1% gain in pricing for the third quarter of 2011 over the previous three months.

Two main factors, the ongoing decline in distressed sales activity and the recovery in pricing of retail and multifamily sales -- drove the 0.9% increase for the quarter and the modest 0.4% bump, according to the latest release of the CoStar Commercial Repeat Sale Index (CCRSI).

CoStar counted 825 sales pairs for September, 682 general property purchases and 143 investment grade deals, in slightly lower transaction activity from the previous month. By comparison, only 385 transactions were recorded in January 2009, the bottom of the last downturn, and the September figure is within the historical range of the real estate boom period from 2004 to 2008.

Total deal dollar volume declined slightly in September by 1.2% from its six-month average, chiefly reflected in the general property index, which fell 5.9%, while investment grade volume remained at about par with its six-month average.

Distress sales accounted for 25% of repeat-sale transactions in September and have declined steadily as a percentage of total sales from a peak of 35.4% in March 2011. While distress sales have drifted down over the past six months, the overall level remains high, suggesting that distress continues to be a significant factor in CRE pricing.

Both the investment-grade and general commercial property indices rose about a half-percentage point in September - further evidence that the pricing bifurcation between high-quality and lesser-quality assets is starting to level out. The fifth consecutive monthly increase pushed the general property index to a 1.6% gain during the third quarter over the prior three months, the second straight quarter of positive price growth. The Investment Grade Index edged down 1.4% in the third quarter, reflecting the August softening in pricing.

Sales of non-distressed property sales posted solid quarterly price increases of 2.3% for general properties and 1.9% for all commercial properties. Distressed property sales continued their gradual decline.

The CCRSI Multifamily Index posted a 2.1% pricing gain following the strong 7.3% increase in the second quarter. The multifamily index has jumped 12.3% and outperformed all the other property indices since bottoming out in the second quarter of 2010.

The Retail Index posted the highest gain, rising an impressive 5% over last quarter. However, retail has a lot of ground to make up and was still 3.9% below the same period last year, and 32.8% below its peak.

"Despite great uncertainties in current economic conditions, the commercial real estate market recovery continued, albeit slowly and at a bumpy pace. The steady and solid recovery of the General Commercial Index also indicated broad interest in commercial real estate among investors," according to the monthly CoStar report.

Still, many challenges remain. While overall U.S. retail and multifamily prices advanced in the third quarter, office and industrial prices retreated, and pricing for everything except apartments continues to oscillate in 2011, with the lack of a clear upward trend reflecting the uneven recovery for those sectors in the volatile economy.

Despite the gradual strengthening in pricing of higher-end properties, the investment-grade repeat sales index remained 35.8% below its August 2007 peak, with the composite and general property indices both down from last year and nearly 34% below their peak.

The Office Index fell by 5.1% in the third quarter after posting a strong 15.5% gain in the previous three months. Office is 38.5% below its second-quarter 2008 peak, the largest decline among the four property types. Similarly, the Industrial Index fell by 3.6% in the third quarter, with prices presently 9.3% below the same period last year and 33.1% below their early 2008 peak.

The latest CCRSI results reflect trends noted by CoStar analysts during the recent round of third-quarter market reviews for the office, industrial, retail and apartment sectors.

"The demand for real estate in terms of capital is returning. There is tremendous pressure on investment managers to place money, principally because real estate looks cheap relative to other asset types," said Walter Page, director of research and office specialist for Property & Portfolio Research (PPR), CoStar’s forecasting and analytics subsidiary, during the third-quarter office review last month.

While continuing to struggle, general property transaction activity is showing some improvement of late. While the office market is seeing the lowest level of pricing among the property types by historical numbers, high-quality assets that have traded at premium prices have fueled recent improvements on that front, said Jay Spivey, CoStar director of analytics.

While still prevalent , distress is not as deep in real estate markets as some had expected. The recent Operation Twist move by the Federal Reserve to lower interest rates may have slowed the momentum of distressed sales by flattening the yield curve for banks, Senior Real Estate Strategist Suzanne Mulvee said during the CoStar’s retail outlook.

The Northeast, which saw the smallest pricing losses during the recession, recorded an increase of 2%, the largest quarterly price increase among the CCRSI’s four regional indices. The Northeast Index was only 19.8% below its peak value at the end of the third quarter. By comparison, pricing was 34.8% below peak value in the South, and down 36.4% and 40.1% in the West and Midwest, respectively.

Further color on the quarterly CCRSI regional results includes the following:

• All property types in the Northeast except retail showed price increases, led by office at 2.1%, multifamily (1.3%) and industrial, barely, at 0.1%. The Northeast retail index declined by 3.34%.

• In the West, the composite index posted a 1.36% quarterly increase, offsetting declines over the same period last year. Retail led all gainers at 10.1%, followed by multifamily at 0.2%. However, a 3.7% decline in office prices wiped out gains made in the region since the third quarter of 2010. The West’s industrial index continued its two-year decline, falling another 1.7% in the third quarter.

• The composite index edged up slightly by 0.5% in the South during the quarter, but is still 2.6% below the same time last year. Price gains were mainly in retail (8.9%) and industrial (6.7%). But a big quarterly decline of 6.4% in office mostly offset those gains.•

• Of the four regions, the Midwest is still waiting for prices to reach bottom, with the Midwest Composite Index declining by another 0.8% in the third quarter and currently 9.8% below the same period last year. Prices for all property types except for office continued to fall in the quarter and overall, the Midwest’s prices are 40.4% below their peak -- the largest decline among the four regions.




Good News for Chicagoland Industrial Market

BRIGHT SPOT: Investor Appetite For Warehouse Property Continues to Grow

Improving Fundamentals And Reliable Returns -- Especially For Well-Located Big Boxes -- Lure Institutional Capital Back to Industrial Market

By Randyl Drummer

October 26, 2011

While the economy is volatile and leasing is healthy but not exactly stellar, investment sales of warehouse properties continued to strengthen in the third quarter, with a number of large transactions underscoring the growing demand for this historically safe and reliable sector of commercial real estate.

Trading activity increased across the board in the third quarter, with investors particularly interested in large industrial portfolios in solid markets and a shrinking supply of vacant mega-big-box warehouses in the nation’s key distribution portals, according to Hans Nordby, managing director of Property and Portfolio Research, CoStar’s analytics and forecasting division.

Unlike the top-flight office and apartment markets where prices for core properties have been bid up dramatically over the last couple of years, investors haven’t "backed up the truck" and loaded up on warehouse assets. The industrial sector, however, is the next stop on the investment capital train, said Nordby, who co-presented CoStar’s Third-Quarter 2011 Industrial Outlook and Review with senior real estate economist Shaw Lupton.

Four of the five markets with the largest year-to-date investment sales totals are among the country’s largest distribution hubs, led by Chicago with $2 billion in sales; the San Francisco Bay Area and Los Angeles, each $1.6 billion; Atlanta, $1.3 billion and the nation’s hottest distribution leasing market, Southern California’s Inland Empire, with $1.1 billion in sales.

Ripples from heightened retail and wholesale sales that started 18 months ago, combined with a near freeze in the construction of new warehouses, is resulting in a very rapid turnaround in occupancy rates in super-big boxes of 500,000 square feet or more -- and investors are taking notice, Nordby said.

Granted, not all metros are sharing equally in this sharpening appetite for distribution buildings. Rustbelt markets with the highest exposure to manufacturing and the U.S. auto industry are still seeing weak overall sales, including Western Michigan, Cleveland, Cincinnati, Milwaukee and Detroit.

The strength of industrial real estate is reflected in its comparative lack of distress. Distressed sales, which barely rose above 20% of total warehouse transactions during the worst of the down market, have fallen to about 15%, where they’re likely to stay for at least the next year to 18 months. That compares to 35%-40% distress among hotels, Nordby said.

Despite unspectacular internal rates of return, returns on less flashy warehouse investments are relatively predictable, just the ticket for life insurance companies and other institutional investors who are seeking respite from the rising prices for the best office and apartment assets.

"Slow and steady wins the race. Dull is good," the PPR managing director said.

Some of the top trades of the third quarter illustrate the draw of investors toward big boxes, well-performing portfolios and smaller properties in solid markets.

• In the coveted Washington, D.C. market, Washington Real Estate Investment Trust (NYSE: WRIT) sold 40 buildings totaling 2.06 million square feet for $235.8 million to AREA Property Partners and Adler Realty Services in a deal that closed late last summer.

• ProLogis (NYSE: PLD), in its continuing portfolio realignment following the merger with AMB Property (NYSE: AMB) sold 13 buildings in functional markets in Utah, Texas, California, Ohio, Georgia, Arizona and Indiana totaling 2.8 million square feet for $118 million to Clarion Partners . The 91% occupied portfolio sold at a healthy capitalization rate of about 7%. ProLogis, encouraged by the investor reception, is now said to be marketing a second portfolio that could fetch up to $250 million.

• The quarter also saw triple-net transactions such as the sale of the 1 million-square-foot PetSmart Distribution Center in Ottawa, IL, by Inland Western Real Estate Trust to American Realty Capital Trust for $48.6 million. In Orange County, the 415,000-square-foot warehouse at 17871 Von Karman in Irvine sold to Menlo Equities for $47 million.

Steady leasing fundamentals should continue to fuel investor confidence for the next couple of years, especially in national hubs such as the Inland Empire, Dallas, Atlanta and Indianapolis.

"We think the intermodal demand story -- of goods coming in through major sea ports and traveling inland via rail -- will continue to be an important demand driver into the future," Lupton said.

The third quarter was the sixth straight quarter of positive warehouse absorption at 29 million square feet, for a total of about 80 million square feet year to date. The top five markets of Inland Empire, Dallas-Fort Worth, Detroit, Chicago and Atlanta accounted for half of that total. More than three-quarters of the 210 warehouse markets tracked by CoStar have seen positive absorption in 2011.

Space under construction, restricted mostly to large build to suit projects, is a mere one-tenth of 1% of total inventory, compared to 1.5% during the boom years. Developers, however, are cautiously starting to make moves in certain tightening markets such as the Inland Empire, where occupancy in the largest buildings now hovers at around 97%.

"If I’m a tenant needing more than 500,000 square feet in the Inland Empire, I’m either going to build my own building or move to Phoenix, where occupancy in the largest buildings is only 82%," Lupton noted.

Demand is also starting to pick up for smaller-bay buildings serving local markets in Seattle and other West Coast and Sunbelt metros where the housing market is finally starting to recover.

The national warehouse vacancy rate has now dropped about 70 basis points from its 2009 peak of about 10.4%, with about 1,300 of the 1,900 industrial submarkets tracked by CoStar seeing vacancy declines. The narrowing spread between falling availability and vacancy rates is a sign that quoted rents may soon see renewed growth, Lupton said.

Willis Tower starts to shed terror fears after 10 years

A decade after terrorism fears made Sears Tower a no-go zone for tenants, the Western Hemisphere's tallest office building is showing signs of recovery.

Leasing plunged nearly 20% after Sept. 11, as rumors swirled that the 110-story building was next on terrorists' target list. Major tenants Goldman Sachs Group Inc. and Ernst & Young U.S. LLP defected, and real estate brokers struggled to persuade others to even consider the 1,450-foot-tall tower at 233 S. Wacker Drive.

Currently 82.8% leased, the building is still far from its pre-Sept. 11 peak of nearly 98%. But brokers say they're noticing a change in attitudes toward the recently renamed Willis Tower. Some aggressive rent offers, along with the headline-grabbing 2009 decision by United Airlines to rent more than 600,000 square feet, gave the building a boost. These days, tenants are at least willing to consider moving there.

“People look at it today more favorably than they did right after 9/11,” says David Matthews, a Jones Lang LaSalle Inc. executive vice-president who represented United Continental Holdings Inc. in its move there. “People don't talk about it in terms of 9/11 anymore. They see it as a prominent building in downtown Chicago.”

Willis Tower matters to all of Chicago because of its impact on business, real estate, tourism and the city's image. A struggling, lightly occupied Willis Tower could depress leasing rates throughout downtown.

The tower's owners, Skokie-based American Landmark Properties Ltd. and New York investors Joseph Chetrit and Joseph Moinan, are ready to cash in on the building's improving image. They've listed it for sale at $1.5 billion, nearly twice what they paid in 2004. Real estate experts say they'd be lucky to get $1 billion.

BIG NUMBERS

Every weekday, 8,000 to 10,000 people work in the tower, and 1.4 million visitors are expected on the 103rd-floor Skydeck this year. That would be a 40% boost since the Ledge, a set of glass balconies with a view 1,353 feet straight down, was added in 2009.

Willis Tower was 97.6% leased at the end of 2000 but bottomed out at 78.5% in late 2006. The nearly 3.8 million rentable square feet was 93% leased at the end of 2009 and ended 2010 at 87.5%.

The key challenge is to lease the 315,000 square feet vacated by investment bank Goldman Sachs in 2005. No large-scale leases expire in the next three years, says Michael Kazmierczak, a senior vice-president at leasing agent U.S. Equities Realty LLC.

The biggest new tenant in years, United Continental, is moving 3,800 employees into 650,000 square feet on 12 floors by mid-2012. In doing so, United is absorbing much of the 387,000 square feet accounting firm Ernst & Young vacated in 2010. Brokers note the symbolism of an airline moving in.

“When United committed to move in, I think a lot of people thought, if they're moving in there, the security must be resolved,” says Rick Schuham, a executive vice-president at New York-based Studley Inc. who represents tenants. “I think that was a game-changer for them.”

Other big leases extending into the mid-2020s are London-based Willis Group Holdings PLC, which obtained naming rights in a 2009 deal for 140,000 square feet, and law firm Schiff Hardin LLP, an original tenant, with 217,000 square feet.

BELOW-AVERAGE

The tower's 82.8% occupancy rate is the worst since 2008, when the recession and real estate collapse sent commercial office vacancies soaring across the country. The Class A office occupancy rate downtown is 83.7%, according to Washington, D.C.-based real estate data firm CoStar Group Inc.'s mid-year office market report.

Inking new deals has required lower rents and other concessions, including a nearly $36-million subsidy from the city of Chicago for United. Long-term leases are now $15 to $20 per square foot, with the building offering $50 to $80 a foot in improvements and about a month of free rent for every year on the lease—all fairly standard, brokers say.

“I am still not sure the story would be as positive without the incentives that have been provided to tenants such as United,” says Thomas Volini, an executive vice-president at London-based Colliers International who represents tenants.

Read more: http://www.chicagobusiness.com/article/20110903/ISSUE01/309039974/willis-tower-starts-to-shed-terror-fears-10-years-after-sept-11#ixzz1XBRhEhvY
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Industrial demand falls in second quarter | Trend Of The Week | Crain's Chicago Business

Industrial demand falls in second quarter | Trend Of The Week | Crain's Chicago Business