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| are those which house executive, administrative, and operational departments |
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| house production, manufacturing, distribution, and warehousing functions |
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| house point-of-sale selling functions. |
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| By architecture, there are three general types of office building: |
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| garden, low/mid-rise, high-rise |
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| One or two stories; sometimes a basement level; often small suite-oriented; typically, suburban locations; image-conscious; landscaping important. |
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| 3-10 stories in many markets; steel, masonry and concrete construction is the norm; all locations and grades. |
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| Over 10 stories in many markets; steel and concrete construction with varying types of skin, e.g., marble, glass, special plastics. |
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| single tenant, multi-tenant, mixed-use, office parks |
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| usually built according to the design specifications of the occupant. The building may have some excess space that can be leased or subleased until it can be absorbed by the tenant. |
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| usually designed to be suitable to most types of tenants and may have one or more major tenants. |
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| include space for office, retail, and hotel and convention center activities. |
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| low-density developments that create a business environment of their own. Several buildings may be occupied by one or more tenants. Office parks usually are in suburban locations. |
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| break rooms, exercise and recreational facilities, security offices, food service areas, external lounging areas, shared business services, and supporting retail uses. |
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| distance between exterior window or wall and the common area corridor; bay depth determines the tenant's layout and space usage. |
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| structural and/or suspended (false); suspending enhances aesthetics, boosts lighting, and allows for concealment of ducting, computer, telephone, and electrical systems. |
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| internal supports; may be "wet," containing plumbing for water facilities. |
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| elevators, lobbies, corridors, restrooms, janitorial utility rooms, stairwells, safety equipment, storage, and building systems areas; these are common areas, excluded from a tenant’s usable area (see discussion of usable area later); may be in the center of the building or off-center. Center cores are best for multi-tenant buildings while off-center cores allow for maximum employee/SF efficiency desired by people-intensive users. |
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| Class A adequacy standards: one elevator for every 40,000 SF (rentable); speed of 35'/second; 5'x 7' platform for mid or high rises; 30 second maximum waiting time. |
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| electrical and telephone ducts built into the concrete floor; permits mid-bay outlets and hookups for clerical-intensive uses or tenants desiring flex-space or work-space configurations. |
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| load-bearing capacity of the floor (exclusive of structural elements); 75-100 lbs/SF typical in high-rises. Floor load will determine who can use the space, for instance, users with large dead storage needs (books, documents) require a greater floor load than those without such needs. |
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| a cross-section of the unoccupied building indicating core and usable areas. |
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| heating, ventilation, and air conditioning. Adequacy standard: 1 ton per 300 SF or 15 employees, depending on ambient climate and energy-efficient items (double-pane windows); may be single system or independent units on each floor; Class A space should have control zones for every 1,000-1,500 rentable SF. |
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| emergency power, sprinklers, centralized control-console of safety systems, automatic door releasers, emergency stairs (external), smoke detectors, smoke evacuators, fire alarms, extinguishers. |
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| also called add-on factor, loss factor; the difference between rentable and usable area, usually expressed as a percentage of rentable area. See usable area later. |
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| window separators where partitioning walls are attachable; distance between mullions determines how office space can be configured with permanent walls. |
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| spaces required are set by local code; rule of thumb is 1 space for every 200 SF of rentable space; a critical amenity in major markets, with a significant effect on rent; often the subject of lease and price negotiation. |
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| the standard hours during which building services and systems are available to the tenant, whether at the landlord's expense or the tenant's; an important lease negotiating item. |
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| foundation, structural support (girders, beams, columns), and the roof. |
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| the outer surfacing and floor coverings affixed to the shell, e.g., windows, brick, marble, etc. |
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| also called build-out, finish; improvements to the existing premises completed for the tenant's particular requirements; paid for by tenant or landlord or both, as negotiated; usually a standard allowance if provided by the landlord (Tenant Improvement Allowance). |
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| single or dual pane (a major quality and energy efficiency item); tinted or reflective. |
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| Space Measurement Standards |
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| Office landlords often quote rents in terms of rentable square feet (RSF). Users are concerned about the rent per square foot of space they can actually use, or their usable square feet (USF). This difference creates an opportunity for a commercial and investment agent to provide analysis and advice. The following definitions and methods of comparison may be useful. |
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| Gross building area is a building's total area in square feet. It is the sum of the total floor areas for an entire building, including shafts, stairwells, other vertical penetrations, basements and garages that are within the building but are not considered rentable area. |
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| Rentable area is the amount of space available for rent to tenants. The area may be measured differently from one market to another. It usually includes support columns and pillars but excludes corridors, lobbies, restrooms, elevator core, stairways, and other vertical penetrations of the floor, unless exclusively used by the tenant. |
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| Usable area is the area that a tenant can actually occupy. It is usually measured between the inside finished surfaces of the outer walls, the tenant side of corridor walls and other permanent walls, and the center line of demising walls that separate one usable area from another. Columns are included in usable square feet. |
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| true or false:if a floor has 10,000 rentable square feet and total usable area of 9,000 square feet, the load factor is 10%: |
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| true; 10,000 minus 9,000 = 1,000 ...1,000/ 10,000 = 10% load factor |
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| true or false: Load factor is the percentage of a building’s rentable area that is not available for use. |
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The percentage of a building's rentable area that is actually available for use is the building's efficiency factor.
For instance, if a building has 10,000 square feet of rentable area and 9,000 square feet are usable, the building's efficiency is 90% percent. |
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The add-on factor is the percentage of usable area that is added to usable area to get rentable area. If rentable area is 110 per cent of usable, the add-on factor is 10 per cent.
(rentable sqft / usable sqft) - 1 |
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| A property has 5,000 rentable square feet and 4300 usable square feet. Its quoted rental rate is $16/rentable square foot. Calculate the property’s: |
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Load factor: 14% ((5,000-4,300)/5,000)
Efficiency factor: 86% (4,300/5,000)
Add-on factor: 16% ((5,000/4,300) – 1)
Rate per usable square foot: $18.60 ((5,000 x 16)/4,300) |
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| the number of square feet of available office space of a type as a percentage of the total square feet of that type in the market; indicates how much competition there is. |
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| the number of square feet of a type of space that is taken off the market (becomes occupied) over a certain time period; indicates how long it will take for a property to become occupied. |
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| transaction volume and transaction sizes |
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| the number of sales or leases completed over a period, plus the dollar amounts of the typical sale and lease; indicate the types of properties most in demand. |
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| true or false:Office demand is directly tied to the employment of people in office-using work; it is, literally, the number of present or projected office employees of various types multiplied by the average number of square feet required per employee of each type. The unit of office space demand, then, is employee square feet, or ESF. |
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| Tracking user demand by type or location is called |
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| disaggregated demand analysis. |
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| (Finance, Insurance and Real Estate) |
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| Request for proposal (RFP) |
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| the tenant's letter to the landlord stating essential leasing requirements and requesting the landlord to provide a "proposal to lease"; the first concrete step toward a deal. |
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| the landlord's non-binding response to the RFP detailing preliminary lease terms and specific responses to the tenant’s requirements; the beginning of the negotiation. |
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| tenant's non-binding statement of interest in leasing the property, subject to any number of terms, conditions, and contingencies; detailed "talking points" for the further negotiation of lease terms. |
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| the binding agreement between tenant and landlord that establishes all the relevant rights and obligations of the parties. |
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| Define three of the important market trends an office broker needs to keep track of. |
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vacancy—percentage of total space in the market that is currently available; measure of competition and supply-demand balance.
absorption—rate at which available space is being taken off the market, measured as square feet over a time period; measure of how long a particular property will take to lease or sell; also indicates supply-demand relationship.
employer activity—hiring firing, moving in or out of market; office employee demand translates to office space demand. |
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| Explain the concept of a market gap and how one can be identified in an office market. |
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| A gap is a quantitative difference between supply and demand for a type of space at a particular time; if there is more demand than supply, there is an opportunity for someone to profit by increasing the supply; if there is more supply than demand, the opportunity is to find value for buyers and tenants. Office supply is measured in square feet; office demand is measured in employee square feet, then converted to square feet for comparison with supply. |
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