San Francisco Commercial Real Estate Blog

Tech Firms and Startups Keep San Francisco Bay Area Office Market Steady

2008-07-07T10:40:39Z

The San Francisco Bay Area office market continues to remain stable in the face of uncertain economic times. Vacancy rates are holding in all markets throughout the Bay Area while prices have fallen more as a result of new owners of properties becoming more realistic to rental rate acceptance by tenants.

Tech and start up firms continue to lead the office market in terms of expansion and growth. Supported by VC money that is still high on tech, new firms are sprouting up daily. Unlike the tech boom of the dot com days these firms are not financed with big dollars and no controls on spending. VC firms are investing in more sound start up platforms and monitoring their investments much more carefully this time around.

This has led to some challenges to building owners. First, most of these new firms do not want to commit to long-term leases. Often these firms are looking for 1 to 2 year commitments that don't meet underwriting requirements by most corporate owners of properties. Landlords are looking for 3-5 year leases and in a number of cases 7-10 year commitments particularly if large tenant improvement dollars are required to secure the tenant.

These new tenants however are uncertain of their growth and success and are limited by their financial partners to making long-term commitments. Creative solutions are necessary to make both the landlord and the tenant happy. The good news is that San Francisco and the Bay Area are continuing to attract interest by these types of firms in our area.

How Gas Prices Could Effect Urban Markets

2008-06-06T15:32:07Z

Prior to the introduction of the automobile most people either lived in large urban areas or small town farming communities. Starting after World War II, cheap gas sent families out of the urban areas into the suburbs. Throughout the sixties and seventies many major cities throughout the United States saw a steep reduction of total population in their cities. Detroit and Philadelphia were examples that were ranked top in population and over a short period of time saw a dramatic fall as large influential suburban hubs attracted the population. Cities began to stabilize and in some cases grow over the last ten years as they began to transform themselves as new urban living opportunities including live-work type homes, new condos and attractive apartment living with amentias opened up. A younger population along with baby boomers ready to experience a new life after kids has found urban living attractive once again.

So how will gas prices affect urban living? Will families find it too expensive to live in the suburbs and consider coming back to the city regardless of the higher housing costs? Will businesses re-consider office space in suburbs in favor of urban markets that offer better mass transportation opportunities to get their employees to and from work? Will people accept living closer together in more high-density living units as developers squeeze more and more units in less and less available land?

Signs say yes. San Francisco continues to see higher housing prices in the face of a continued downward trend in housing throughout most suburban markets close to it. Philadelphia has seen an increase in its population for the first time in over 25 years.

Los Angeles, a city that had virtually no downtown residential community for over 60 years, now sees an explosion of condos, live work units and high-density apartments built in the core downtown area.

Cities of course have to plan for this potential growth now. Mass transportation, public parks and recreation areas will be keys to welcome families back to urban markets. Suburbs to survive will have to find new and innovative ways to keep families in their areas by providing better mass transportation opportunities while also finding ways to create incentives for companies to continue to consider urban markets for their businesses.

Vacancy Rates Remain Unchanged

2008-05-13T03:10:11Z

End of April Bay Area vacancy rate figures remained unchanged. San Francisco held at 6 percent, the same rate since January. San Mateo at 7 percent, the same as November of last year and Oakland-East Bay up a point to 11 percent since January.

Rental rates did dip slightly in these same counties. San Francisco dropped to $33.50 from $35, San Mateo to $34.50 from $36.00 and Oakland-Easy Bay dropped to $23.00 from $24.00.

These rental rate drops have occurred as a result of less overall rental activity in Class A office buildings due to their overall vacancy rates of less than 5 percent, causing less available space to be in play this last quarter. Also new owners of buildings purchased in the heat of the commercial buying frenzy of the last three years have begun to lower their expectations to better meet market demand.

Overall, there is talk that 'the other shoe is about to drop' and that rental rates will fall and vacancies will increase; this has not happened as of yet.

Finally after 46 years

2008-05-12T15:46:57Z

After 46 long years starting with my first game in 1962 (Giants vs the Colt 45's) I finally caught a foul ball 2 weeks ago. (Rockies vs Giants) April 28th off of Ray Durham.

I was like a kid again. I have had about eight attempts catching a foul ball over the years. I have averaged about twenty ball games a year so after going to over 700 games I was due. Those eight attempts including the usual; the ball hitting the seat in front of me, or as a smaller kid, jumping the fence in left field at Candlestick and running for a home run ball only to be pushed aside by some big kid.

In a game in the late sixties I came really close. I was taken to the game by a family friend Bernie Diamond and was sitting on the 1st Base side in the box seats at Candlestick. The ball came right to me. I jumped knocked the beer of the guy next to me all over him and the popcorn in the hands of the guy next to me on the other side all over him touched the ball and dropped it.

2002 Game 6 of the playoffs against the St. Louis Cardinals I got a taste of what Bill Buckner must have felt like. On national television with the camera following the ball, the ball hit my hands dead on and I dropped it. It was so much in my hands that instead of booing me the fans around me went silent. I had one of my little league players next to me and I quickly asked him, Matt how come you didn't help me with that one. He responded, " Mr. Hansson it was so yours." The phone calls I received the next day asking if that was me that had dropped the ball didn't help either.

In 1996 at an opening day game, I was standing with my son and his friend and father. Both his father and I (the same age) were figuring that we had then seen over a 1000 games between us. My friend started to pray to God please just give me one ball and then Barry Bonds hit a foul ball that landed right in his hands. True story and proof there is a God.

To some people catching foul balls are just plain lucky. In one game at Candlestick one guy caught two foul balls in the same game, a couple of innings apart.

Like a bucket list, catching a foul ball was definitely on my list. It was not a pretty catch. I moved over five empty seats and watched it fly to me. I kept thinking the last time I saw a ball heading my way without a glove and decided this time I would not try to catch it with my hands alone. So I guided the ball to my stomach so that it would hit me and then I could grab it. It almost worked. The ball hit my stomach and rolled to the seat in front of me but this time not to be denied. I jumped over the seat falling just in time to grab the ball.

It did not hit me at first what catching that ball really meant. In fact it was almost a letdown. It was not until the next day that I was riding an unbelievable high. I was telling everyone about it. Everyone was excited for me, others told their stories about catching their first ball or not. Some didn't get it. My sister told me "Hans its only a ball."

This was not about a ball - it was about a lifetime goal. As a salesperson we zero in our goals all the time. We aim to secure a new client that may be a long shot to get and if we are successful in getting that client it feels like the biggest day in your life.

Salespeople exist for days like this. Its about the rush. Its about the climb up the mountain that can't be achieved and doing it. That is why sometimes when you actually achieve your goal you could feel that temporary letdown I felt after finally catching this ball. You made it but the rush to get to that goal is what gets your adrenaline going. There s not a better feeling!

The Art of the Office Move in 2008

2008-04-22T15:30:57Z

The year 2008 will be year of uncertainty in the office market nationwide. The speculative buying of commercial real estate over the last several years has pushed office market rental increases in double digits in many urban markets. Now with a possible slow down in the economy, landlords are feeling uneasy as to whether they can achieve their projected rental rates while tenants that need office space this year are entering a market where vacancy rates are low and therefore alternatives are harder to come by in these same markets.

Unlike the dot com market and its eventual bust this current office market will not see a fast raise of office space availability due to large failures of business. Although a recession could create some vacancies, the reality is that current low vacancies in a number of our markets are based more on the lack of building of office space going back over twenty years in some markets.

Some markets such as San Francisco have started building new office space for the first time since the mid 1980's. With over three million square feet of projected office space being built in the city this could open up real opportunities for lower rental rates in the future for office tenants if this new space cannot be absorbed quickly.

So what is an office tenant to do in 2008? First, an office tenant in a tight office market needs to be able to react quickly if they find a space that works for them. Competition particularly for smaller spaces does exist and if tenants are not able to present an offer, with all the necessary financials required for a landlord to make an informed decision, they could get beat out of that space.

Second, tenants have been accepting that the perfect space may not exist in today's market. If for instance views of the bay are required you may not find it. Don't make the mistake of not pulling the trigger on a space that could work because it is not 100 percent ideal. You need to be willing to accept less.

Third, be prepared to open your checkbook to cover overages in tenant improvements and security deposits that may be higher than the one month you put up for the last year. Tenant improvement costs continue to skyrocket and landlord allowances are not covering full build outs today. If the market does soften new owners of buildings may have trouble funding these shortfalls in tenant improvements, so be prepared to have to finance these improvements outside of the lease rate. Also, because of higher tenant improvements a number of buildings are requiring more than a month's security deposits. Get ready for that as well.

One suggestion is to work with your bank early in your office space search to secure the necessary financing ahead of time to cover tenant improvements and security deposits. Not all banks are aggressive in providing these types of loans; therefore, check out the smaller community banks as well as banks that are aggressively growing now. US Bank for instance is actively promoting loans to cover these types of needs.

Fourth, have you attorney on board. Make sure that you ask for a copy of the lease early even if it is not filled out so that your attorney can review these leases ahead of time. This will allow your attorney to advise you as to the fairness of the lease and what they anticipate will be the hours necessary to review and negotiate these leases. Remember in a tight market landlords are not anxious to spend a lot of money on lease review. Make sure that your attorney avoids rewriting landlord leases. It only means to raise legal costs for both sides while also leading to the possibility that another tenant could step in and take that space from you.

Finally ask your broker to investigate buildings that have not changed hands in the last three years. This is where you might find the best deals. Established owners, particularly those that survived the last boom and bust dot com market, understand that locking in good tenants at a fair market rate rather then a speculative one will provide stability for their asset vs. the new owner that has to find ways to get their building to perform to their original pro forma.

Brokers Wanted: Nice to be needed

2008-04-09T16:20:03Z

The year 2008 will be a year that real estate brokers in both residential and commercial real estate will be needed more than ever; and, as a result could have a successful year and build long lasting relationships with clients that would bring in more business. We in the profession always do best when there is uncertainty in the marketplace.

In residential real estate today both sellers and buyers need a broker's help more than ever to make decisions. In a hot market a broker is less needed because sellers know their house will sell with little effort and buyers will know there is little room to negotiate. A broker's role in a hot market is more of an "order taker" than a negotiator and consultant. In a hot market self service type real estate companies that promote owners to try to sell their own homes for fewer fees become more attractive. New agents with no experience come into the market looking to get rich quick and can actually sell a house or two with ease because of the need for so little negotiations. But in a soft market that's when the experienced real estate professional is needed the most so that both buyers and sellers can be guided to make the right decisions in such uncertain times.

The same occurs in commercial real estate. My best year in real estate still remains to be 1991. That was the year the country was facing a deep recession. Locally the San Francisco real estate market was still suffering from the earthquake of 1989. Things looked bad, but for me it was the year that I shined and truly established myself in this industry which has allowed me to carry forward relationships I developed in those hard times into deals for today.

Commercial real estate this year is going to need experience in its agents more than ever. Owners that bought property over the last three years are going to have a hard time achieving the rental numbers they had projected for these acquisitions. Tenants coming off leases signed five years ago are going to be hit with sticker shock. If we are entering a recession, businesses may simply be unwilling to pay higher rents in the face of possible revenue reductions in their own business.

Both landlords and tenants will need that extra voice from a real estate broker to guide them through this uncertainty.

Brokers look for the welcome mats it is your year to shine, grow and ultimately establish your presence long term in this business.

When Things Go Bad - Go to Lunch

2008-04-07T04:37:54Z

As a salesperson you will have good days and bad. Some days everything is clicking and sales are coming in, other days everything that you have been working on falls apart and you feel like nothing you do is working.

Years ago I had a particularly bad day. My largest deal had fallen apart and the next phone call was to find out that a deal I just closed was now in trouble as well, it really seemed like I could do nothing right. A broker friend of mine came over and he proceeded to tell me he just lost his biggest deal of his career but instead of being down he looked at me and said you know what good brokers do with they are having a bad day? You go to lunch he said, "lets go".

We decided not to only go to lunch but do something entirely different. We ended up at a Disney Store and had bought our kids some coloring books. On the way back to the office as we were going up the elevator holding our Mickey Mouse bags, my broker friend announces loudly "oh boy" really looking forward to an afternoon of coloring! Everyone in the elevator kind of froze but he and I just starting laughing uncontrollably.

When we got back to the office we felt totally relaxed and ready to go. The first call revived my big deal that I had lost and the next call developed into a new client.

Anytime you are locked into a tough situation or cannot figure something out, the best thing to do is take a break. My son in college called me up last week stuck on a homework project. He was not happy, he felt frozen and could not come up with any answers and was becoming very frustrated. This of course started the floodgates of everything that was going wrong in his life. I quickly told him, stop what you are doing right now and go take a swim. He said, "Swim, it's 19 degrees outside." I said, "Yes but there is a pool in the gym, go now."

He did and guess what? When he got back his mind was clear and ideas started flowing again.

Breaking your state of mind by doing something totally out of character or something you had not done in awhile is pretty basic, yet so many times we continue to try to grind it out getting more and more frustrated as things continue not to work out. So remember next time you are in a "bad mood," deals are falling apart and the world looks like it is collapsing around you think about going to lunch and maybe do a little coloring .

Musical Chairs with Office Space?

2008-03-24T17:28:23Z

Between 2008 and 2011, San Francisco will see more than 3 million square feet of new office space come onto the market. This will be the largest increase in new office space in San Francisco since 1985. In addition, if all the residential units that are at the permit stage or that have applied for permits are built, San Francisco will see 45,000 new condo units available for purchase during a similar period.

Wall Street certainly believes in San Francisco. Real estate investment trusts (REITs) have pegged San Francisco to sustain rents as much as $100 per square foot by 2009. Although this is high by San Francisco standards, it is half the rate projected for New York. Yes, tenants should be nervous. But so should landlords.

I started in this business in 1984 in a similar market. Rents were $52 per square foot at 44 Montgomery Street and climbing while new office space was coming on the market. What happened next? The market collapsed.

Build it and they will come? They didn't come in the 80s. What Wall Street fails to understand is that San Francisco is not New York; it is not Chicago; it is not even Atlanta. San Francisco is a solid mature office market that relies not on headquarters-type businesses but on startups, independent firms, and branch offices of major companies. There is a ceiling to what these firms can afford to pay in rent. If they cannot afford the rent but need a San Francisco address, they will simply reduce their space requirements and move most of their operations to a cheaper market.

Here is what I believe will happen in the next several years. New buildings will fail to land tenants prior to occupancy. They will look outside the San Francisco market for tenants willing to move or expand into the city. But these tenants will not materialize; doing business in San Francisco will become prohibitively expensive. Landlords of new buildings will have to raid current Class A buildings for tenants. At that point, "musical offices" will begin.

New Class A buildings will raid tenants from old Class A buildings by offering competing rates for a new product. Faced with losing their tenants, older Class A buildings will look to tenants in Class B buildings, offering upgrades to Class A buildings for Class B rents. Class B buildings will look to Class C buildings to fill their new vacancies; in the process, the rental market will collapse.

Building owners must focus not on Wall Street predictions but what tenants can pay in rent. As a general rule, tenants can afford to pay 6-8% of gross receipts toward rent. Companies that pay more than that will find themselves in trouble. When building owners push rents too high, they too will be in trouble.

My prediction of musical offices is based not on theory but on history: This is exactly what happened in the 1980s. We should consider ourselves warned.

“The Perfect Storm”? The Turnaround of the San Francisco Bay Area Office Market

2008-03-12T08:10:10Z

For years, Wall Street viewed the San Francisco office market as stable but mature. It no longer was considered a headquarters market, but its core markets-including technology and medical research-its strong branch market, and its attractiveness continued to draw a robust workforce.

Wall Street also pegged office market rents in the San Francisco Bay Area to those in New York. Historically, Bay Area rental rents on average have been about 50% of New York rents. In 2007, New York Class A office rents hit $200 per square foot. With the Bay Area's office market average rental rates as low as $28 per square foot in 2005, the Bay Area looked like a real bargain. As a result, buyers flooded the Bay Area, buying and selling some buildings two or three times in a couple of years, with each buyer anticipating higher and higher rental rates.

What Wall Street did not consider were the tenants who will be entering the market in the next couple of years and their options for keeping rental costs down. In addition, the looming recession is sure to impact rental rates.
During the dot-com boom, many traditional firms were forced to downsize their offices to pay high rental rates. After the dot-com economy went bust in 2001, Bay Area office vacancy rates exceeded 20%. Many tenants entering the marketplace today signed their leases five years ago-when they could afford to take on more space than they needed so they could compete for employees and absorb future growth. It was not uncommon for firms to lease entire floors in the face of rents 60-80% less than what they had been paying in the dot-com days. Now that these leases are expiring, firms that took surplus space can simply downsize their offices to keep their total rental costs in line. This means overall less demand for office space.

What can a business actually afford to pay in rent? The rule of thumb is that businesses should spend no more than 6-8% of gross revenue on rent. If rents exceed this calculation, businesses will be forced to make adjustments by taking less space and consolidating their offices or moving their employees to cheaper office space in other markets.

These two factors-the reality of the situation that tenants face today and the impending recession-could lead to a "perfect storm": an adjustment in rental rates and a major correction in office building values. Such a turnaround would be felt throughout the economy.

What are you Worth?

2008-03-10T17:02:30Z

Any experienced salesperson that is considered 'tops' in their field develops a plan of action to achieve a specific goal every year. They carefully study what is working for them and what is not; and they are constantly fine tuning that plan to make sure it is performing to their goals.

The question that is really asked, but should be the foundation of any great plan is, how much does a salesperson have to earn every hour of every working day to meet their annual goal.

If a salesperson does not bring their goal to an hourly rate it is very easy to waste time on unproductive activities that will take that person away from their goal.

Here is an example. If your goal is to make $200,000 a year, and you plan to take three weeks off for vacation time, you divide $200,000 by 49 weeks. Then divide that again by 40 hours and you will need to earn $100 per hour to achieve your goal.

Now, with this information you can organize your day ahead of time planning each hour with the question is this hour going to be spent on an activity that could achieve my goal?

By gauging your production with an hourly program you will become much more disciplined and focused to meet your annual goals.

It will also make you much more positive and committed to each day because your daily 'plan of attack' becomes measurable at the end of each day.

You plan to take three weeks off a year, plan to work an average of 9 hours a day.

Looking at a Cluttered Desk Tells You a lot about a Person

2008-03-07T07:20:06Z

When I bought my first apartment building years ago, the previous owner took me aside with this advice. No matter how nice a potential tenant may look, make sure you walk back with them to their car and take a good look inside. If the car is a mess, you can also count that your apartment unit will look like the inside of the car as well in a very short time.

What truly is amazing to me is that some of the most successful salespeople I have met can have more files and papers scattered around and still be very successful.

Within TCN I was introduced to the top agents of this firm that had piles of files, three feet high all around their desk. There was not one inch of desk that did not have paper on it.

I realize that everyone has a system and if it works for you great, but even the most successful salespeople should always be looking to improve.

Today there is no reason to have clutter. With the advancements of scanning, all documents from major leases to business cards can be filed onto your computer. With remote access capabilities from your desktop, you could easily retrieve any document or information you may need from any remote computer to your PDA and cell phone with ease and efficiency.

Old dogs can learn new tricks and the most successful agent knows that he has to constantly seek new ways to be more responsive to their clients; as well as, remain as competitively advantaged as they can because if they don't someone else will start taking their business.

It Really Is All About Service

2008-03-06T02:53:01Z

A successful salesperson needs three characteristics:

The ability to open up opportunities: A successful salesperson asks questions such as, "Do you need what I have to offer?" and is able to convince the potential customer that he or she is the right person to provide that product or service
The ability to service the client
The ability to close the deal

Can a salesperson be successful with one or two traits but not all three?

Over the years, I have seen very good salespeople who are excellent "door openers." One agent I worked with could generate business with little effort. He was inquisitive, easy to speak to, and apparently genuinely interested. He was not afraid to ask if a person had a "real estate need" he could help them with. Once he got into a deal, he was aggressive in trying to close it. He was great at making deals, but he was eventually let go because customers complained that their accounts were not being properly serviced.

This agent had opening and closing a transaction down pat. His problem was that he did not provide service during the transaction. He loved the excitement of getting the business, and he loved closing a deal. What he disliked-and frankly never understood-was the need to service the customer.

Tony Robbins said the most important trait of being an excellent salesperson is to be a leader. He further described the various types of leaders. Leaders such as Hitler and Stalin lead by fear and by exhibiting power and control. These leaders see those whom they lead as servants who will help them reach their ultimate goal. Robbins' favorite leader is the "servant leader." This type includes Christ and Gandhi; these leaders serve their people.

If you are not about servicing people, being a salesperson is not a long-term career for you. One telling sign that you will be doomed for failure is whether you are counting your commissions before you start a transaction. With more than 25 years experience as a salesperson, I can advise that you should never focus on the fee before the transaction is complete. Sure, you may have a sense of what potential fee could be earned; every good salesperson needs to determine the best use of time. But if you are focused on the fee or the commission, you will find it difficult to provide true unbiased service for your client.

How many deals have you been involved with where the best decision for the client was not the best decision regarding the amount you could earn? If you waver at all about giving the right advice, you are not a servant leader.

Ten Reasons Why a Client Will Not Work with You

2008-03-05T02:21:32Z

If you're in the commercial real estate field, at some point you've questioned why a client didn't choose you to handle their real estate transaction. Here are ten possible reasons.

1. As a broker, you did not help your client manage risk. Clients have risks; that is the downside to a decision to move to a particular location or to purchase a particular piece of property. Brokers are sometimes excited about stating the positive aspects of an investment without looking at the client's risks. If the client does not think you are taking their risks into consideration, you will lose their trust and then their business.

2. The terms and price of your deal are wrong. If you have not investigated what the client is expecting to spend and you are concentrating on more square footage than the client needs, you could lose the client when they realize that the opportunity is not affordable.

3. The client needs help, but you have not defined how you can provide that help. A client hires you because they have a need. If you do not respond to that need, you will lose their business.

4. The client has no budget. Clients know that they need to expand their office space to meet their growth projections, but they often do not have a realistic budget that includes all aspects of their growth needs. If you do not educate the client up front as to the true costs of their new space, you will lose the business.

5. You have not convinced the client that what you are offering is the right product or service. You need to understand who your competition is and how you can best position yourself as being different enough from the competition and more closely aligned with your client's needs than the competition.

6. The client is just a looker-they do not plan to buy anything. Don't spent too many active sales hours on clients that you have not pre-qualified.

7. The client is using you as a prospect-they aren't really interested. Yes it is important to stay in touch with prospects, but make sure you evaluate the time you spend prospecting each client to ensure that you are not wasting time on clients you never will get.

8. You haven't asked the client the right questions. If a client is undecided on whether they will work with you, you might need to ask: Have I let my client know that I know what they are looking for and need?

9. The person who you think is the decision maker has no authority. Confirm that the person you're dealing with has the authority to make decisions.

10. You represent the wrong firm and/or the client doesn't want to work with you. This hurts, but you may not click with a prospective client. Learn to move on.

Learning to make money on word of mouth referrals

2008-03-04T03:57:48Z

No matter what type of sales product or service you have, over 80% of any sales that you generate will come from word of mouth. Someone that you have sold to before, a friend, a college roommate, or even your mother, will pass your name to someone that also needs your product or service. In fact, most people are more than willing to offer a name if someone asks them if they know of someone that can help them.

Therefore, as a salesperson everything you do must be aimed at getting these word of mouth referrals. So what do you have to remember?

First, it starts with your initial sales. Ask yourself, did I provide such a good service to my customer that they would be willing to buy from me again, or tell someone else to buy from me in the future?

Second, did I let them know that if they felt I did a decent job that I would appreciate them passing my name along to anyone that they believe may need my product or service?

Third, do I have a system in place where I am staying in touch with my past clients effectively so that they will continue to remember me when someone asks for help that I could be of service to?

Fourth, am I using my existing sales contacts to possibly refer business to other vendors that in turn may one day refer business back to me?

All of the above can be considered textbook 101 in sales, but the majority of us do not spend the necessary time cultivating new business opportunities from old business contacts. We seem to prefer working constantly on new opportunities.

Wouldn't it be easier and wouldn't there be more loyalty in terms of these possible word of mouth referrals than starting with brand new business opportunities each time?

Your Word Is Your Bond

2008-03-03T05:18:16Z

I must be getting old: I am spending way too much time thinking about the "good old days." A friend reminded me that I need to realize that people evolve; I cannot change that direction and go backwards but need to adapt to today's ways and learn to adjust.

I recently received a call from the owner of a small furniture store from whom I have bought a number of items from over the last six months. We have become friends, and I have enjoyed his many stories. The owner called me to tell me that he was staring at my business card, which I had handed to him during my last visit, and he did not realize that I am in commercial real estate. He had just listed his building for sale with a local residential firm and didn't want me to find out from someone else. I told him that I appreciated his consideration of my feelings. This man is 91 years old.

It was not so long ago when all business was transacted in such a considered way. A person's word was their bond, and their contract was their word. Today we press for written exclusives with attorney fee provisions.

How did society evolve this way? What happened to a verbal service contract, where I would help you find office space and you would assure me that you would use me in this effort exclusively?

The real problem today is that relationships are not respected. They are also not deep-seated, we don't know our clients as well as we used to. This is due partly to the fact that people don't stay with one employer for a long time, so relationships are not long term. In addition, people don't spend time developing relationships like we used to. Taking a client to lunch to establish a stronger bond is almost as rare as taking someone out to play golf.

I plan to continue to conduct business in the old way. I will continue to trust everyone until I learn that they cannot be trusted and I will continue to stand by my word.

Top Salespeople Get Help

2008-02-29T03:39:07Z

Seven years ago I hired a coach to improve the way I do business. It was one of the most important and successful moves I have made in more than 20 years in sales. The coach broke down some personal barriers that prevented me from looking beyond my production goals and addressed how I could achieve success at an entirely different level of performance.

Top salespeople need to seek help. This is not an easy task for a number of reasons. First, salespeople have egos: They usually believe that they can do their business all by themselves. Second, salespeople typically find it difficult to accept advice from others. Third, salespeople are typically not very organized or detailed-they are good multi-taskers and known for having quick responses to issues that lead to success. Finally, salespeople hate to spend money on their business-particularly commission-only salespeople who provide services, such as real estate brokers. Salespeople use many different excuses to scare themselves away from spending money ahead of received earnings, including the lack of guaranteed income.

My coach taught me that to truly be successful, one must break away from the barriers that prevent the achievement of greatness. He immediately discerned that I spend more time adminstrating deals than selling, negotiating, and closing deals. He broke down my annual income into an hourly wage. Then he subtracted my administrative time to figure out what my hourly wage would look like if I switched my administrative hours to sales hours. I discovered that if I could eliminate my administrative hours, I could more than double my income.

We figured out what it would cost me to hire an administrative assistant-less than 20% of my hourly sales production. Then we looked at what my sales production would be if I had a marketing person to make sales calls, send out marketing pieces, and stay in touch with existing clients. We figured that could possibly increase my business by 25%, while costing me 25% of my hourly sales production.

If I implemented his suggestions, I could potentially double my sales production by eliminating my administration time and hiring a marketing assistant. Based on my then-current income, these two moves would cost me about 25%, against the total amount of new business gained.

Was this a gamble? Yes, but the dividends I received were almost immediate. I got to do more of what I like to do and am best at-selling. In turn, I was a more effective and happier salesperson.

Few salespeople will take this leap of faith and agree to spend money to get to the next level of business-but those who do are usually happy with the results. Top salespeople understand that to succeed at the highest level, they can't do it by themselves.

New Mobile Tools to Look At

2008-02-28T02:15:06Z

It has been awhile since any new mobile tools have been introduced that could truly make you more efficient, but that is about to change. A new generation of mobile phones is entering the market that is worth considering changing to as well as new mobile search tools.

Since the iphone was introduced exclusively to ATT, other phone carriers are now introducing phones similar in function and design. Verizon, for instance, has introduced the Voyager. This phone has a similar type iphone interface, but also includes a sliding keyboard. Like the iphone it offers more consumer based type functions and applications then for business based. For instance, both phones do not allow tasks and to-do lists to be synched with your office exchange services. But for Internet access and email both are far superior for ease of use.

For business users Blackberry has introduced new models that offer enhanced viewing functions; however, new PDAS on the new Windows Mobile 6 platform is my choice to consider. Mobile 6 fully integrates with your office making your mobile phone a true virtual office. Email, your to-do lists synching your most important web sites that you use which are all far superior on a mobile 6 phone than anything else I have tested. Verizon has the new 6800 model coming out soon along with the new Samsung T-710. Both of these phones are truly next generation type phones that are worth spending money on.

In addition to phones, two similar products are now available to mobile users. Live Search from Microsoft and Yahoo to Go. These search engines offer city by city searches for everything you can possibly need plus they offer you news, stock and sports reports instantaneously. The interface particularly with Yahoo to Go is a must. It is very easy to use and offers you one place to go just like its name. The mapping functions are particularly easy to use with GPS type quality functions and they are pretty much both free.

A new web site that I have found to keep you up-to-date on the latest technology gadgets is http://www.engadget.com/ . Although not big on comparison of products and detail they are one of the best sites to capture photos of up and coming products that have yet to be introduced to the public. These are worth the look for any techie types of gadget people like me.

The Importance of Face-to Face Meetings

2008-02-26T02:47:37Z

Today a salesperson can talk to a client on the phone and close a transaction using email-without ever meeting in person. But when was the last time you made a face-to-face cold call? When was the last time you conducted a face-to-face presentation? When was the last time you introduced yourself and your services to a client over lunch?

In the old days, a relationship would start with a handshake and a conversation. Today, with phones and email, there is very little connection between a salesperson and the buyer of services.

I am completing a deal right now where my entire face time with my client has been less than three hours, yet the transaction has gone on for more than five months. Proposals were made, countered, and accepted through email. Questions about strategies to secure the best deal were answered through email and the occasional phone call. The good news is that we are close to completing this transaction; the bad news is that this client might not know me if he ran into me on the street.

What does this mean? A successful salesperson not only secures and closes business but also maintains long-term relationships that lead to future business opportunities. To accomplish this, a professional salesperson understands that the buyer must have confidence in and must recall that salesperson when it is time for a referral or to use the services once again. For commercial real estate agents, clients typically are not clients again for 3-5 years-the average time of a lease obligation.

Will a deal consummated through email and a couple of phone calls create a lasting impression on the client? I don't think so.

Face-to-face contact enhances the bond between a service provider and a client. If a client can look you in the eye and feel confident that you are the right provider of services, you will land a client that will provide repeat business.

Salespeople should spend time building long-lasting relationships through face-to-face contact. Yes, it will does take time; yes, you might close more deals on the phone and via email. But in the long run, if your clients feel they know you and your capabilities, they will have the confidence to do business with you, again as well as to refer you to their friends.

Communicate with the Right People in the Right Way

2008-02-25T02:50:51Z

One of the toughest lessons for any salesperson to learn is how to find the right decision maker and how to speak to that person. As salespeople, we may be convinced that we are talking to the people who can make the decision to close a transaction only to find out that they are not. This can result in losing the deal altogether.

By dealing with the wrong the decision maker, you leave open the possibility that the real decision maker is working with or interviewing someone else. In addition, the real decision maker may already have a relationship with a salesperson that he or she wants to maintain, and therefore will not hire you regardless of your efforts.

If you are lucky and the real decision maker accepts your services through the recommendation of a non-decision maker, you may not be able to develop the necessary rapport to provide credibility to you recommendations. You risk losing the transaction because of the failure to communicate in the right way with the right person.

How do you find the right decision makers and how do you address them? The easy answer to the first part of that query is to ask questions up front. We are often so excited to have an audience with someone who is willing to listen to our sales pitch that we immediately assume they are the decision makers and we proceed with the pitch. Instead, ask the person who is listening simple leading questions:

"What is the process on your end to make a final decision happen?"
"Who ultimately will make the final decision to move forward?"
"What other parties are involved before we can move forward?"

Then ask if it is possible to involve all the players involved in this early stage of the negotiation process.

Before you meet the real decision makers, find out as much as you can about them. Visit the company web site: discover their background-schools attended, firms worked for, age, general status in the company. Keep in mind the decision makers' status when you develop a strategy to approach them. Read the company mission statement; the real decision makers were likely involved in its creation, and the mission statement will give good clues as to what makes the decision makers tick. Ask non-decision makers about the decision makers-what is important to them.

Figure out how you plan to speak with the decision makers. There are a seven different personality profiles; find out what kinds of personalities the real decision makers have and then address them accordingly. For instance, if someone has an analytical personality, he or she will be interested in facts. An impulsive personality will favor bullet points. Study basic personality profiles and apply that knowledge every time you meet anybody in the sales process. A basic understanding of who you're pitching to will help create rapport, which is key to eventual success.

Why Major Price Differences Between Similar Buildings

2008-02-22T03:44:29Z

In over twenty years of being an office leasing broker in San Francisco, I have never witnessed such a price variance between similar buildings. Today's comparable class "A" office buildings that were once a dollar or two apart in price can be as much as $15-$20.00 a square foot apart.

We visited eight buildings of similar quality in a recent tour with a law firm. These buildings have not changed significantly in the last twenty years yet prices ranges were from a low of $36.00 dollars to a high of $66.00 per square foot. The only major difference was that the lower priced buildings had long-term owners and the higher priced buildings had new owners.

The reason why is the new owners bought their buildings, in most cases, with a low vacancy rate of less than 5 percent. In the financing world a building with 95 percent occupancy rate is considered fully leased. Therefore, within a portfolio of assets these purchases are looking for future higher rents based upon future vacancy that does not exist on their books. As a result any deal that can be done higher than their last market rate deal can create millions of dollars in new value to their asset because the last deal done will set the rental rate value for the entire building.

The reason owners can make this strategy work is that these new owners are quickly consolidating the office market to just a few players thereby becoming the market players and controlling prices as a result.

What may reverse this trend could be the latest vacancy rates that have stalled at seven percent for most of the second quarter. Anticipated further reductions in the overall vacancy rate is not happening and therefore may put pressure as more units in each of these buildings becomes available to begin lower prices to compete.

One building property manager pushing prices to the high fifties with some very nice "spec suites" available indicated that tours were way down and had not seen any offers in months. This kind of news could be welcoming to tenants entering the market in the next year.

How to Keep Your Business Going in the Face of Distractions

2008-02-20T15:09:50Z

You are a successful salesperson who is accustomed to year after year of solid sales performance. Suddenly, a personal distraction occurs that derails your efforts. What can you do to prepare for the inevitable day when you lose a loved one, face a personal financial loss, or experience a health crisis that will require you to divert your attention from your day-to-day business?

In sales, unlike in other professions, if we divert our attention from current clients and future client opportunities for any amount of time, we are pushed back to the starting point. If you are accustomed to a certain lifestyle as a result of being a top sales performer, the prospect of starting all over could be daunting, if not devastating.

A personal loss can have a compound effect when you are away from your business long enough to kill it or severely damage your ability to maintain a high performance level. A 20-year broker recently lost his daughter. The fight for her life took my friend out of business for one year; now that she is gone and he is attempting to get his business going again, he is nowhere near his past performance.

What can you do to prepare for such inevitabilities? First, keep in touch with your "long distance" clients as much as possible. In real estate, once you complete a transaction you may not do another deal with that client until the current lease is up-that could be 2 to 5 years down the road. Staying in touch with clients in person or by direct mail, newsletters, or email campaigns is essential to making sure they remember you.

Second, make sure you have a fellow salesperson you can count on to pick up your business in your absence. Even if you are an independent salesperson, you need someone you trust who knows your business. You can do the same with them. This becomes an insurance policy, but in order for this relationship to work, it must be in place and ongoing well before a problem actually develops.

Third, follow up on your business, however difficult it may be during a personal setback. Your business is your financial lifeline, and it must continue to be worked. Of course, this is extremely difficult when your attention is focused on other matters. You may feel a sense of hopelessness, but keeping your business going will be important later as you attempt to get back to a more or less normal state.

Fourth, let your clients know what is going on. Yes, you risk that you may lose clients, but you also gain the possibility that they will cut you some slack. Accept help from other salespeople whom you can recommend to take over in your absence.

No one wants to think that personal distractions will keep them away from their successful business, but it does happen. Planning ahead for that day is key to avoiding possible financial ruin as well as to making sure your business is still there when you are able to focus on it again.

Why Is Cold Calling so Difficult?

2008-02-19T16:53:58Z

Is cold calling a lost art? Why do even the most successful salespeople fail to schedule cold calling as a daily top priority? The desire to skip cold calling is even reflected in book sales: a popular business book is called Give up Cold Calling for Networking. Salespeople today seem to find every way possible to develop new business except to cold call. Do they think cold calling is beneath them? Do they hold themselves to a higher standard than what cold calling requires?

We all know why we should cold call, yet we simply do not do it. Instead, we decide that a "warm call" is the better approach.

Cold calling takes patience, the ability to accept rejection, and a daily commitment of time in order to be successful. Because younger generations want immediate satisfaction and don't accept rejection well, cold calling seems to be thing of the past.

Things have changed since I started in the business in 1984. Today voice mail can either prevent a true cold call from happening or enhance the prospect of a warm return call if the right message is left.

Fewer and fewer firms have live receptionists, which again can be positive or negative. Known as the gatekeeper, a live receptionist can be the best friend or the worst nightmare for a cold caller. In the past, learning how to get through the gatekeeper was a training lesson in itself. The automated attendant has changed all that. Now with proper research, a salesperson may identify the correct decision maker and connect directly to his or her voice mail.

One of the best salespeople I know believes that salespeople are peddlers, and that as soon as salespeople understand that that's who they really are, they will break through the barriers that prevent them for being the best salespeople they can be. But most people today would be embarrassed to admit that they are peddlers. In fact, they are embarrassed to be called salespeople. Calling ourselves consultants or advisors is much more rewarding. As consultants and advisors, we cannot be expected to cold call, can we?

New Office Space Not Ready Yet?

2008-02-18T03:21:49Z

You are scheduled to move into your new office space on August 1st and you just found out that the existing tenant would not be ready to move out in time; or, because of permit issues your tenant improvements will not be completed. What do you do now?

Today, tenants are fast-tracking their moves at a much faster pace then ever before. Five years ago it was typical to move into a space four to six months after tenants originally signed a lease. Today, the move could be within 45-60 days. There are a number of factors as to why tenants are choosing to move in so soon after a lease signing. First, in a tight office market, landlords give the tenant no choice. Second, offices today are more about computers than furniture and easier to move then former offices with lots of files and research materials that can now be found online. Third, businesses often times to accommodate growth simply need their space faster.

However, building permits; lack of construction workers; furniture dealers that no longer keep inventory available in warehouses; and other services that have to be scheduled can all delay a move.

If you find yourself looking at a delayed move date here are some options that you can consider.

1) If you have existing space you can notify your landlord that you will need to holdover. Holdover will cost you somewhere between 150-200% of your existing rent. This may not be an option in all cases depending on whether or not the landlord has already released your former space. Staying beyond your lease term could create a major liability problem for you if your landlord does not consent to the holdover.

2) You can telecommute. You could have your employees work from home. This could be accomplished if you check with your landlord and see if they would allow you to leave your server in place until your new space is completed.

3) You can rent space at an executive suite. Most people think of executive suites as a one room option but today executive suites can offer spaces to accommodate up to 7,000 square foot users. Although this would appear as an expensive option, this actually could be the best and simplest solution. Executive suites offer you a complete solution including phones, furniture conference rooms, and etc. It would also allow your existing furniture to remain with your moving company and avoid a second move, which can be costly.

4) You could find out if you could move into part of your space while the remaining space is built-out.

Although this seems like a potentially good option this could be a bad idea in terms of work environment for your employees. Construction noise, dust, and security are all concerns if you decide to take this option.

The first thing to do if you find out that your space is not ready is to check out your existing lease specifically looking at your holdover provisions. Make sure you know your rights before you call your existing landlord with the news. Also check your new lease and see what your rights are there. How much time does your new landlord have to complete your necessary improvements before they have liability.

One way to avoid this problem is also to plan certain parts of your move sooner then later, furniture vendors; moving companies; and, telecommunication firms can all be secured well before your lease is signed. It could make a major difference in preventing a delay for the move in the future.

Rare Clear Span Commercial Building With New Front Developement Potential

2008-02-18T03:13:41Z

Commercial Building For Sale
3201 SHATTUCK AVE BERKELEY, CA
PREMISES: Approx. 7,000 RSF

• Strong concrete floor

• Bow truss roof

• Clear span

• Favorable zoning that allows mixed-use for residential/commercial

• High visibility corner location

• Close to Ashby Avenue

RATE: $1,950,000.00

• SBA Financing Available

• Lease also considered

For more information please contact:

HANS HANSSON

415.765.6897

hans@starboardnet.com

Can "Branch Cities" Maintain "Headquarter Cities" Rental Rates?

2008-02-15T02:48:56Z

I came back from Boston and visiting with an affiliate there. As he described the Boston Office market, he described a market not unlike San Francisco. Vacancies there are heading to single digits. New buyers have purchased office buildings and have pushed rental rates over twenty percent so far this year, while existing owners have kept rental increases more in check. Like San Francisco, Boston is not a cheap place to live or work in. As a result it's once dominance as a headquarters town for insurance companies has changed dramatically. Just like San Francisco, firms have left one after another for cheaper office markets to do business.

Today Boston and San Francisco are known as "mature" branch office marketplaces. Both markets are still important financial centers with close proximity to world-renowned colleges and universities. They are also internationally known tourist locations, which carry weight in business circles for businesses needing to cover all major business hubs.

Yet, can companies pay office rents in a branch office market higher in most cases then their own headquarters? If a firm is located in Dallas, Atlanta, Chicago or Los Angeles that would be the case. Only New York has rental rates higher than San Francisco and Boston today.

Rents today for Class A office space on mid-level floors are now in the high sixties and low seventies in Boston. In San Francisco the rates are over fifty dollars. Both markets are asking $100.00 per foot for rare view space.

In the end, a business can only afford to pay six to eight percent of their total gross income on rent. Even if a business is successful, and if these businesses are coming off a high 20 to low 30 rental rate, signed three to five years ago and now will have to pay north of sixty dollars per square foot, businesses are going to have to rethink whether they can afford the same amount of space or have to reduce their next space needs. If margins are too way off, they may have to close their offices altogether or service these two markets out of a suburban marketplace.

Both markets have already seen more firms close their doors in this year than the last five years and the year is less than half over.

These markets are also planning major additions in office space over the next five years which will test whether these rents can continue to be achieved or whether rental rates will collapse once again with the face of higher vacancy rates.

I would bet that rental rates will decline starting in 2009; and, starting in 2010 don't be surprised to see a major price drop back to more 2006 rental rate values.