Monthly Archives: August 2010

No Parking on the Dance Floor

By Ken Ashley

(DETROIT) August 20, 2010

We CAN fit all the cars!

As we return from a business trip to Motown, the seemingly mundane subject of parking comes to mind. In fact, parking, and how much of it you can get in a lease, is gathering more and more attention in today’s commercial real estate marketplace. While always a factor in considering space options, those buildings that can offer higher ratios are bound to attract today’s tenants who are densifying at an amazing rate.

In urban submarkets and large urban centers such as New York, LA and Chicago, parking ratios as low as 1 space per 1,000 square feet leased are common place. However, in many cities around the US, developers sprawled out into suburban markets and built product that has ratios of 3, 4 or higher spaces per 1,000 square feet.  Some of these buildings were built in the 70’s or even earlier during the time of large offices (think  Mad Men) and have exceedingly slim parking ratios. While we might pine for those simpler times, today’s corporate America is  hyper-efficient on all levels, including real estate and by extension, parking.

Our team is involved in several requirements across the country that are actually considering mandating that landlords build parking decks or artificially increase (i.e. pump up parking at the expense of other tenants) ratios offered for their use. One tenant was willing to take more space than needed for bodies to accommodate cars (!). Tenants may fall in love with a building, but quickly move on because they can’t fit the cars — no matter the employees.

In light of this trend, we were very interested in this recent article by Tyler Cowen (a professor of economics at George Mason University) in the New York Times entitled “Free Parking Comes at a Price.” Professor Cowen’s main point in the article (as the title would suggest) is that as a society, we are encouraging bad behavior by making it easy and free to park one’s car.

We’ll leave the bigger societal issues of charging for parking to the Times, but what caught our eye was the following quote: “If developers were allowed to face directly the high land costs of providing so much parking, the number of spaces would be a result of a careful economic calculation rather than a matter of satisfying a legal requirement. Parking would be scarcer, and more likely to have a price — or a higher one than it does now…” Parking, which is so often overlooked in financial analysis of deals in the suburbs does indeed have value.

For decades, developers have built most things, including parking, based on zoning requirements, which in effect allowed local governments to set the parking ratios. However, in light of the frequency of very high parking ratio needs from tenants, developers and landlords would be well advised to carefully examine parking ratios. We can certainly see a day where building values are impacted based on the availability of this precious commodity.

Tenants will increasingly find that older product doesn’t fit their needs on many levels with parking being a key issue. However, we are learning from first hand experience that landlords are willing to do what it takes to make deals, including getting very creative on parking. Our advice? In cases where you need to fit a lot of folks into a small space, don’t assume buildings won’t accommodate. But ask early and ask often.

And now we hope you will indulge us as we hum the great ’80s hit No Parking on the Dance Floor in honor of this issue. Here’s the video for those of you who missed that decade for one reason or another. Enjoy.

Here that booming bass? Now move it!

Play A Country Song Backwards

By Ken Ashley

(ATLANTA) August 6, 2010

I admit, it is confusing. Our team is busy and our clients growing. I see smiles on the faces of CFO’s we work with. And yet the Wall Street Journal reports that the U.S job market loses steam. Much of the popular media over the past several weeks has suggested we are at a pause in the recovery.

So, while the general media is worried about the sky falling (again), we took a gander at what the commercial real estate world is saying about where things are in the sector:

  • A recent article in NREI reports a surge property sales in the first half of 2010
  • CoStar is reporting that publicly traded commercial real estate services firms are seeing double digit increases in revenue
  • Cushman & Wakefield released a report of mid-year numbers showing the first decline in US office vacancy since 2007
  • Real Estate Forum in it’s own version of a mid-year wrap is mixed, but offers “the clouds are beginning to lift on property fundamentals and investment sales, but the uncertain strength of the economy makes forecasting a dicey proposition.”
  • Recent posts in this very blog here and here suggest respectively that national vacancy has peaked and that now is an opportune time to lease space from the tenant’s perspective.

Yes, it is hard to tell if we are moving out of the summer and economic malaise and into a period of economic growth. Yes, we need sustained recovery in the job market. But isn’t the fact-pattern interesting in the industry reports? Something is happening in our industry which is simply harbinger of the broader economy.

As Todd Harrison says in a post at MarketWatch.com, the “(financial crisis), for lack of a better analogy, has gone airborne, migrating from the tangible to the amorphous, from Wall Street to Main Street, from a distant coexistence to an emerging class war. It, like most viruses, will arrive in waves and infect those who haven’t been inoculated with a steady stream of financial consciousness.” Or perhaps the “virus” will prey upon those that absorb the negative.

Maybe we should all take a deep breath and remember the wisdom of the country band Rascal Flatts in their hit song “Play A Country Song Backwards.” In other words, reverse the negative spin and you will suddenly see that our economy has stopped getting worse and in many sectors is healing and getting better. Recovery is indeed underway, even if it took a breather.

In case you want to hum the song on the way to work for a little inspiration, here is the video with the words below:

Facing Backwards?

I was sitting on a wooden stool
In a barbecue joint in Tennessee
When this old boy walked in
And he sat right down next to me
I could tell he’d been through some hard times
There were tear stains on his old shirt
And he said you wanna know what you get
When you play a country song backwards

You get your house back
You get your dog back
You get your best friend Jackson back
You get your truck back
You get your hair back
You get your first and second jobs back
Your front porch swing
Going ding ling ,ling,ling
Your bling bling bling and a diamond ring
Your get your farm with a barn and a boat and the Harley
That old black cat named Charlie
Sounds a little crazy, a little scattered and absurd
But that’s what you get when you play a country song backwards

Well I never heard it said quite like that
It hit me in the face cause that’s where I’m at
I almost fell flat out on the floor
He said wait a minute that’s not all there’s even more

You get your mind back
And your nerves back
Your achy breaky heart back
You get your pride back
You get your life back
You get your first real love back
You get your big screen tv, dvd and a washing machine
You get the pond and the lawn and the rake and the mower
You go back where life was slower
It sounds a little crazy a little scattered and absurd
But that’s what you get
When you play a country song backwards
Oh play that song
whoo!!!

We sat there and talked about how it would be
if we could just turn it all around and change this C-R-A-P
You get your house back
You get your dog back
You get your best friend Jackson back
You get your truck back
You get your hair back
You get your first and second jobs back
Your front porch swing
Going ding ling ling ling
Your bling bling bling and a diamond ring
Your get your farm with a barn and a boat and the Harley
That old black cat named Charlie
You get your mind back
And your nerves back
Your achey breaky heart back
You get your pride back
You get your life back
You get your first real love back
ohh big screen tv, dvd and a washing machine
You get the pond and the lawn and the rake and the mower
You go back when life was slower
It sounds a little crazy a little scattered and absurd
But that’s what you get
When you play a country song backwards