San Francisco Commercial Real Estate Blog

Starboard TCN Worldwide Announces Lease Modification Services

Hans Hansson (Starboard TCN Worldwide) — Thu, 23 Jul 2009 15:13:35 -0500

In today's economic climate many businesses are facing declining sales by 20 percent or more from the time they originally signed their lease. With the prospect that sales will stay flat or continue to decline for the rest of this year and the next, businesses everywhere are trying to figure out how they can renegotiate their budgets to pay the rent. Landlords also have worries in this economic climate. Many are seeing tenants fail or come knocking on their doors for rent relief. Starboard TCN Worldwide offers a new service aimed at assisting business manage rental costs and keeping tenants in place with a lease modification service know as 'Blend and Extend'.

Starboard TCN's commercial real estate professionals set our service apart by taking the time to validate the need for a reduction. Many owners have their leases rates tied to the financing of their buildings so they have little room to work within to assist their tenants through this downturn. However, the prospect for both the tenant and the landlord is worse if the tenant's business fails and they have to vacate the building. We work to provide the necessary information to a landlord to go to their lenders or investors to support such a move.

Who is qualified for a 'Blend and Extend' lease modification? Typically you are a candidate if your firm has seen sales or revenue cut by 20 percent or more. Our real estate professionals will evaluate your business in a variety of ways. Looking at the tenant's ability to pay rent and if the business is financially strong enough to continue business through this down cycle, we will then create a matrix to present to the landlord.

Through our negotiations with the landlord we aim to lower your current rental rate for the period remaining in your lease term to an affordable rent level based on your finances. In exchange we will offer the landlord an extension of your existing term to make up the loss in rent as a result of this reduction. To fill an office or retail vacancy landlords typically have to wait three months or more before a tenant is secured and rent is collected, 'Blend and Extend' eliminates this potential period without rent income for the landlord.

If tenant improvements are required that vacancy could last considerably longer. Landlords also contribute in most cases to tenant improvements have to pay brokers, attorneys, architects and other service providers fees to secure the tenant etc. By extending the lease we calculate possible loss of revenue as part of our matrix that we present to the landlord on the tenant's behalf. This gives everyone the ability to learn that it is in the best interests of both the landlord and the tenant to consider seriously a lease modification.

If you are interested in this service please contact us at 415-765-6900. We would be more than happy to send one of our qualified agents to see if your firm would qualify.

Removing Commercial Real Estate from Prop 13 Protection is Simply a Bad Idea for Businesses

Hans Hansson (Starboard TCN Worldwide) — Fri, 12 Jun 2009 14:37:10 -0500

California voters recently rejected state budget measures intended to shore up our declining budget, which has stirred up talk about the need to revisit overturning Proposition 13, particularly with commercial properties. But removing commercial real estate from Proposition 13 protection may have many unintended negative consequences for business owners.

Supporters of overturning Proposition 13 have used Bank of America to illustrate the potential revenue loss to the state of California. They suggest that Bank of America owns many branches that were purchased years ago at rates way below current market value, therefore they are taxed at a rate far below their potential reassessed values. This example is being used to show that there is somehow an inequity that needs to be corrected.

The Bank of America example, however, is misleading. Most Bank of America sites are actually under long-term leases not owned by Bank of America. These properties, like other commercial properties, are constantly being bought and sold leading to property tax adjustments.

Also, for the majority of commercial properties this model is simply not true. Unlike residential real estate, commercial properties tend to trade hands far more often thereby automatically readjusting values for tax purposes. Commercial properties require constant upgrades and tenant improvements to meet the requirements of new tenants. Every time a commercial property owner files for a building permit the cost of these improvements triggers a reassessment, effectively offsetting the effects of the Proposition 13 tax shelter.

In addition, commercial property taxes are not typically paid by the building owner but by the building tenants. Retail NNN leases have the retailer paying these taxes. In office buildings, the tenants pay any increases over a base year for property taxes. With our economy in such a poor state the last thing that retailers and businesses need is the pass-through of more taxes.

I believe that Governor Schwarzenegger said it best, "the voters have spoken and they are not interested in any tax increases". What government should focus on is spending more time living within its means rather than burden our already weak economy with more business taxes.

The Power of the Word “No” and How You Deal with it in Your Life

Hans Hansson (Starboard TCN Worldwide) — Tue, 05 May 2009 12:30:26 -0500

"No", arguably the most important word in the world. The use of the word "No" has had the most important impact for all us personally as well for everyone as a whole. "No" has lead to wars, has lead to personal failure, and has lead to lost opportunity. It has held us back and it continues to prevent us to succeed. "No" is easier to say then yes and therefore in the "ying and yang" of life it appears that it keeps us off balance.

Some people automatically say "No". My mother for instance says "No" to any opportunity first. "Mom do you want to go out today?" "No". "Mom do you want to consider this way to do it?" "No". But in my mom's case as well as many, using "No" as their first answer means they are really looking for a yes. They want to be convinced that yes is the right answer and are waiting for someone or something to convince them to say yes.

"No" is also not always a negative. It can be a positive. Take football for instance. You play offense to score, you play defense to prevent a score. Yes you want to score when you play offense and "No" you don't want the other team to score when you play defense. "No" in this case is a positive decision.

"No" can appear to be the right decision sometimes and you can convince yourself that "No" is a positive move. Yet, the decision to say "No" could have very bad consequences. Take the San Francisco Giants decision to say "No" to trading Gaylord Perry for a young up and coming rookie named Steve Carlton instead of their ultimate decision to saying yes to trading Perry for "Sudden Sam" McDowell. Perry and Carlton ending up in the Hall of Fame. "Sudden Sam" proved not to be so "Sudden" and didn't last more than a year with the Giants.

Working in sales, we know that if we make 100 cold calls, that in order to get two yeses, we have to hear "No" 98 times. But successful salespeople look at "No" differently, they look at "No" as "yes is around the corner". They look at "No" as a challenge to get a yes. They know that if they continue to work on people that say "No", eventually they will say yes.

One of the most important decisions I learned from my salesman Dad occurred when I made the sales call with him as a teenager. My Dad was all about servicing a client but his idea of servicing a client crossed way beyond just serving his product it was assisting his clients in whatever they needed whether it related to his product or not.

My dad was a manufacturer's representative and handled a number of different food related products selling to vending machine operators. One early morning, we visited a customer and my father pitched the idea to have this customer switch his current coffee brand to my dad's. My dad obviously had made this pitch a number of times before without success but this time the customer said yes and would order. Soon after, the phone rang and this customer had a major problem with a series of vending machines that were down in an important client. His mechanic was not able to fix the vending machines and the client was extremely upset. My dad immediately volunteered to help, which he did quite regularly. It took the entire day but my dad by himself helped get the machines up and running again. When he returned to his customer's office expecting to take the order they had discussed earlier that morning, the customer said, "Thanks for helping us today. However, while you were gone, the current coffee vendor came in and we gave him our order. So "No" we will not be switching coffee brands at this time."

That "No" was devastating to me. I could not understand why my Dad did not go into that customer's office and punch the guy. I asked my Dad if he were mad, he looked so calm. "Dad why did you take that?" I asked. His respond was something that I have never forgotten, "Son, we will get them the next time, he will eventually say yes." As it turned out, the customer eventually did say yes and my dad had their business for a number of years later.

Salespeople cannot exist with a negative "No". They can only exist with a "No" that will lead to a positive yes. See how you use no in your life. It has such powerful consequences on how you deal with it.

What do You do when You are Overmatched?

Hans Hansson (Starboard TCN Worldwide) — Wed, 01 Apr 2009 11:35:14 -0500

As salespeople we have a high ego drive, we are also assertive, creative and multi task well. We usually have a strong idea orientation and can think on our feet well. Typically, our knowledge base is limited in scope. We tend to know something about a lot of things. However, we are not analytic types so we tend not to know most things very thoroughly (although we may think so).

Salespeople work daily with clients that seek and truly need our ability to bounce ideas off of as well as develop quick plans of action. Our clients can be analytic types or types like us, but what happens when you run into that client that you truly know knows more than you do?

Over my twenty five years in sales and management and in my years prior to that playing in politics, I have been fortunate to have known several US Presidents, Governors and Mayors and other elected officials. I have also dealt with many heads of large corporation firms. But with meeting all of these people (most were probably a lot smarter than I am) only three people that I have ever met I felt truly intimidated by and truly unable to communicate at their level.

One attorney client of mine knew more about my business and knew more about buildings than I did but during our tours, it was clear that any topic that would arise would lead to a conversation where I would feel overmatched to discuss or debate. This client has turned out to be a close friend and we have discussed this very topic. This person is clearly able to communicate effectively with a wide variety of people, he does not come across full of himself, he simply is thoroughly knowledgeable on a number of topics.

As a salesperson when you run into people like this what is the best approach to consider and still service this client? Don't get in discussions, ask questions instead. Let your client talk, you listen and learn. There is nothing more that a person with real intelligence likes to do more than educate another. Instead of being the consultant be the driver! Learn to move the deal forward using the direction from your client not creating those directions yourself. You will never be overmatched and your client will appreciate the ability to direct and lead a deal while others are making it happen for them.

Why Property Management Will Gain More Importance in a Down Market

Hans Hansson (Starboard TCN Worldwide) — Mon, 23 Mar 2009 13:44:56 -0500

In good times with lower vacancies and higher rents, the importance of providing the highest standards of property management is not always emphasized. In fact, in a recent poll of commercial landlords the majority felt that property management firms were overall not very good. Some of the things that were pointed out were: the revolving door of property managers that came and went through their projects; lack of flexibility in accounting reports; poor follow through; lack of competing bidding on repairs and projects; and, mistakes made in operating expense pass-through calculations.

Several landlords note unless you were a large REIT that the larger commercial property management firms treated them with less service overall.

This coming year will offer many challenges to building owners such as higher vacancies, less revenues and tighter credit standards. To compete for a smaller amount of tenants, buildings will have to "shine" to win these tenants. That means from the lobby on up buildings will have to remain modern, clean and attractive while landlords have fewer funds to upgrade. Buildings will have to offer personal attention to their tenants to insure that they work with their tenants to survive these difficult times. They will also have to insure that they pass on all costs that they are legally able to pass on to insure maximum revenue.

To meet these challenges property management companies will have to change the way they do business. They will have to invest in better people; more supplicated software and provide more personal rapport with clients.

In order to meet this challenge, Starboard TCN Worldwide and Westlake Realty have formed a new company StarWest Property Management Services. StarWest combines two independent firms to provide personal leasing and management services with top-notch software applications. Westlake Realty has been providing property management services since 1972. In 2007 Westlake won the Northern California Property Management of the Year award. Westlake manages over 500 million dollars worth of real state throughout the Western United States. It offers a personalized financial application system that allows a landlord absolute review of everything that goes on with their property in a paperless world fully tailored to how the owner wants to view this information. It offers GPS technology to insure that support is provided and delivered as quickly as possible. It has long standing management staff that stays with a building.

If you are interested in learning more about StarWest please visit StarWestRealty.com or call us at 415-765-6900 for a free review of how we can handle your property management needs.

Sales Frozen? Time to Thaw Out

Hans Hansson (Starboard TCN Worldwide) — Mon, 02 Mar 2009 18:47:50 -0600

Frozen? Time to Thaw Out

As a salesperson do you feel frozen in these uncertain times? Are you finding it harder and harder to make your sales calls, concentrate on your marketing because you feel in despair? Are you having trouble simply getting starting in the morning? Welcome to the crowd. Yes it is tough out there regardless whether you are selling widgets or real estate.

Here are the hard facts. If you continue to be frozen your situation will become far worst and your future could be severely impacted. If your sales cycle takes time to develop and you have no business to count on now, you will be suffering through the next few months. But if you apply yourself and work your business for the future you will at least have a “light at the end of the tunnel”. If you spend all your time playing defensive, looking at cutbacks, figuring out how to stretch your credit lines and not spend time on developing new business you will fail.

This is not an economy that will be working anytime soon so you need to re-invent yourself quickly or face a potential real disaster. The old saying “only the strongest will survive” is truer today that ever before.

So what do you need to do? Re-engage!!!!!!! First you have to spend every day planning your day with real goals to develop new business. Cold calls--you will commit to cold calls from 9-10 each day. Marketing--you will commit each day to developing and following on a marketing plan. Networking--you will commit each day to attend or create a networking event. This is not something you set forth to do and let anything interrupt.

You need to make sure that you do not take something to do and stretch it into your full day project and think you have accomplished something this day.

You need to figure out where in your market place there are opportunities today. Some one’s hurt means someone else’s success. Figure out where in your marketplace you can concentrate your efforts for success. Talk to your competitors, talk to your associates try to figure out how as a group you can make money together. Someone may have a good idea but can’t figure out how to finance it. Someone else has money and is looking to take advantage of opportunities but does not know where to put it. Find both sides of these players and figure out how you can put them together and make a buck yourself in the process.

Treat this marketplace like a football game. Instead of being down by 14 points with two minutes left in the 4th quarter, think of yourself in the early minutes of the first quarter. For a number of you, you currently have no significant business at hand. The results of that will hurt and there is nothing you can do about that. It is like you are down by 14 points in the first quarter but if you “thaw out” and re-engage you have a shot to still win the game and move on the next one.

San Francisco Needs to Act Fast to Create Real Opportunities for New Small Businesses

Hans Hansson (Starboard TCN Worldwide) — Thu, 19 Feb 2009 12:56:22 -0600

As a commercial real estate broker this is my third down cycle that I have experienced. In each of the others the pattern to recovery was the same. People would lose their jobs, could not find new jobs and decided to start their own businesses to survive. The point of entry for many is to go into retail opportunities.

In November of 2007, San Francisco passed an 11-store chain rule. If a retailer has more than 11 stores anywhere in order for that retailer to be able to be allowed to go into a neighborhood they would have to go through a public review process. This is lengthy process with no assurance that the retailer will receive approval. As a result potentially successful neighborhood locations could be available for these start up retailers except for other restrictions that the city has in place that actually creates serious barriers to get through.

If a proposed retailer finds a location they cannot simply rent the place and move in. First there has to be a determination as to whether their use is considered a change of use. If it falls as a change of use then that retailer is subject to a similar lengthy review process with no guarantees of approval. In addition the retailer has to hope that the landlord will wait up to six to nine months to get approval without rent which makes the prospect of succeeding in securing a retail space even more difficult and costly.

I have a 1,200 square foot retail space for lease for a local landlord. They are anxious to lease the premises and are willing to negotiate a fair deal to get it leased. We have had numerous small business owners that have expressed serious interest to put in food type retail in this location. When they go to the building permit department we typically do not hear from them again because they immediately become discouraged at the process. We next attempted to secure an architect and an attorney that specializes in zoning issues for these potential tenants. The cost to hire them run between $6-9,000 with no assurance of success paid up front. Any retailer that starts this process is looking at 6-9 months to secure necessary approvals and building permits. Next, they have to account of construction time after receiving permits, which could take another two months. A retailer today could be a year away from opening their doors. This kills any opportunity for a small business to get started and puts further pressure on people who are only seeking a way to survive in these difficult times. This does not include the loss opportunity landlords have to secure rent. This long term will mean lower property values which means less property tax paid to the city.

San Francisco needs to create a streamlined approach to securing approvals for retailers now. The city can create a fast track system that will provide real assistance to get retailers up and running quickly. There is no reason why a small 1,200-foot retailer cannot find out whether he can occupy a space in less than 30 days. The city needs to create more jobs and real opportunity for its citizens not roadblock them. All you have to do is drive down most retail streets in our city and you can see the effect of vacant stores on the remaining businesses that are trying to make it. Lets get the city to help get these spaces filled.

The Magic Line is Back - Great Way to Secure Office Space in a Soft Market

Hans Hansson (Starboard TCN Worldwide) — Fri, 06 Feb 2009 12:22:29 -0600

When I entered the commercial real estate business back in 1984, I entered the market just as it was collapsing. My very first offer that I made for a client was at $52.00 at a time when the office vacancy rates were in the low single digits. In one year the market crashed and not only rates tumbled but large blocks of space created for large institutional users were left vacant; and, floor plates that did not work for the smaller independent firms were left to make a deal during this market cycle.

Today I will receive this typical call. "There is so much office space out there we must be seeing a major drop in office prices." Yet the reality is if you are looking for less than 5,000 square feet the opposite is true. Yes rates are dropping slightly but the vacancy rate in this sector is still in the low single digits. Where vacancies are increasing the most are in full floor plates that housed financial institutional users. In order to divide these floors to meet a smaller market it is extremely expensive and also expensive to remove when the market turns positive again and these users come back to the market.

What was created was the "magic line". Landlords and sub-leasers that were stuck with larger floor plates would rent less space to tenants with the understanding that if they crossed the magic line they would then be charged for the additional space. Often this allows smaller firms time to enjoy space on higher floors to take advantage of better views and better overall identity for their firms. It also offers flexibility to allow growth without paying for office space until you need it. It also works great for allowing a firm that needs to downsize to stay in their existing space by working with the landlord and creating a magic line to save a tenant instead of losing a tenant all together.

For more ideas regarding how you can use the "magic line" or deal with your office space in a down market call us at 415-765-6900 we would be more than happy to help.

2009 Will Be All About Perception

Hans Hansson (Starboard TCN Worldwide) — Mon, 12 Jan 2009 14:38:25 -0600

2009 Will Be All About Perception
By Hans Hansson—Principal, Starboard TCN

In 1993 then President Bush was ridiculed for suggesting that if every American bought just one pair of socks we could get out of a recession. In concept he was right, but because America was locked into a negative frame of mind battered by news media reports of job losses, store closings and overall economic despair, America could not accept that the thought that such a simple act could get our country moving again. This cost Bush the election against Bill Clinton; he was branded being out of touch with reality.

The fact is simple economic cycles both good and bad start and end with perception. Consumer spending first and foremost drives our world economy and it is the quickest way to generate a positive reaction to any economy. Business and government spending typically take much longer to provide a similar boom to an economy. If America feels good it will spend money thus helping the economy to grow. In essence it is that simple.

The problem as we enter 2009 is that America is not hearing any good news. I am sure you are as tired as I am to wake up to your television news to hear the latest in simply bad economic news. With that kind of constant negative information stream do I want to go ahead and buy a new computer or spend money on a new appliance? No, I better wait till I hear that things are getting better.

Since October our firm, like most businesses, has been looking at ways to cut expenses in the face of an uncertain future. We will cut all non-essential expenses and will also look at ways to curb essential needs as well. Our cuts will hurt the vendors we deal with. Our vendors in-turn will cut their expenses the same way. The result is a recession or worse.

Where are our leaders today to talk up a more positive outlook? Why does our media fail to find something good to report on regarding our economy and future? It truly is not all bad. In any economic cycle there are businesses that will see growth. Let’s explore those markets to see where opportunities lay and let the media and our leaders exploit these opportunities for the benefit of our country.

As we go into 2009 I could write about all of the things we should be thinking about doing and what direction I feel the commercial real estate market is heading but my thoughts are simply a stab in the dark. It really boils down to one simple fact; if our leaders and the media choose to take a negative direction we are in for a very tough year. If they choose to be positive we will have a shorter recession.

Jimmy Carter lost his election to Ronald Reagan when in the height of a severe recession he told the American public that America will never be has good as it once was. Ronald Reagan was elected President when he responded that not only was Carter wrong but that America would be greater. Immediately after that statement America saw its biggest economic boom since the end of World War II. Let’s utilize this lesson in the power of positive thinking as we enter 2009.

It Feels Like a Good End of the Year

Hans Hansson (Starboard TCN Worldwide) — Tue, 23 Dec 2008 18:52:55 -0600

With all of the bad economic news the realty is that San Francisco is holding its own as far as commercial real estate leasing is considered. Bottom line there is plenty of tenants looking for office space and there is no sign of a let up.

Starting right after Labor Day until the first week of December it is typically one of the hottest periods in commercial real estate leasing. Tenants planning a year-end move will be out in force trying to secure their deals. Retail tenants hoping to catch the holiday season will also be out in force. Industrial and warehouse tenants looking to spend money on equipment before year end will also be out in force.

So far the office retail and industrial markets have remained pretty consistent throughout the year. Overall office vacancy rates in San Francisco continue to hold around 7% the same as in January.

For our firm we have already experienced a strong June, July and August after a weak April and May. Based upon deals in the pipeline the rest of the year is very optimistic.

The beauty of our business is that we reflect the economy in general. If people are seeking commercial space, particularly new firms, that signals good economic times.

Let the new positive economic cycle begin. It feels like a good end of the year.

A Time of Opportunity

Hans Hansson (Starboard TCN Worldwide) — Tue, 25 Nov 2008 11:48:16 -0600

One of my cold callers was commenting on what a successful week she had. She landed six qualified appointments in one week. She said that people seemed friendlier and more willing to talk.

In any cycle there are positives and negatives to grab onto. In this current cycle of uncertainty we all need to figure out what positive elements we can use to better our financial situation in the coming year.

Today almost all businesses are at a standstill, waiting for something to happen. Most phones are not ringing at offices right now so as a cold caller all of a sudden you may not only get the decision maker on the line you may actually get to have a real conversation with them on that first call try.

Now is the time to get on the phone and talk to as many clients as you can both new and existing. New clients and your existing clients are right now looking for any fresh ideas and opportunities that can give them an edge to compete and also survive.

In a positive cycle clients really have no time except to concentrate on their business at hand, today clients are willing to look at virtually anything that can improve their business performance.

It is very easy to say, "Well there is no business out there so why bother to call".

Wrong there is more business out there just pick up the phone and call someone to find out.

The Effects of San Francisco Health Care Tax on San Francisco Businesses

Hans Hansson (Starboard TCN Worldwide) — Wed, 19 Nov 2008 15:18:13 -0600

As local politicians pat themselves on the back at solving the problem of providing health care of the non-insured they are turning deaf ears to local businesses that are near bankruptcy as a result of the measure.

San Francisco decided to throw the entire burden of providing health care on the backs of business. Since larger businesses already provide health care to their employees specifically this cost has fallen entirely on small businesses.

The impact one year later is starting to be nothing short of devastating. Large and small restaurants throughout the city are closing up all over town leaving neighborhoods and downtown districts with gapping signs of business failures and "for lease signs" in their windows. In addition numerous other restaurants are no longer profitable and are ready to fold. Even the most successful restaurateurs are now seeking new locations outside of San Francisco because they can no longer make it in the city.

Add the rising cost of food, a slow economy and rising fuel costs to this health care tax and you have small businesses facing an absolute no win situation. If they pass all of these costs to the consumer the consumer is simply unable to pay the price and will not buy.

An example is a recent dinner experience at one of our favorite restaurants. Typically taking out my family of four we usually ran a tab of $40-$50.00 now its $70-$80.00 for the same meal. The effect is starting to show. Where we typically would have to wait at least a half hour for a table now we can simply walk in.

Unfortunately our politicians, particularly the ones seeking higher office, are using this health care imitative more to give them a political gain then to truly look after the best interests of our city. If these businesses continue to go out of business more people will be out of work, less taxes will be paid and the overall effect of this health care initiative will be far more costly than it's worth. It's time for us all to voice our objection to this now before it is too late.

"Uncertain Times" Forget it - it's Opportunity Time

Hans Hansson (Starboard TCN Worldwide) — Wed, 19 Nov 2008 15:09:55 -0600

Are you tired of hearing that we are in "uncertain times"? What does it mean anyway? Aren't all times uncertain unless you have a plan?

My best year ever in commercial real estate was 1991 considered by some to have been a slight depression year not a recession year. I have never been able to match that year's production since, but I have to tell you I am really excited about 2009 because it should be a year of nothing but opportunity if you approach the year right.

You can enter 2009 one of two ways. First you can continue doing business the way you have previously been doing it or you can do business an entirely different way. Some sales training books will tell you to stick with what you do best and just keep doing it in a good market or bad, and yes that would probably work if you truly are in the front of the pack of salespeople that do what you do. The problem is if you are not in the front of the pack, and you are now competing for lesser and lesser opportunities; then, you may not be able to win enough of the business that is available in a downturn.

Another approach is to go in the opposite direction of everyone else in your market. An example would be fish swimming towards a food chain that is diminished. If the majority of the fish swim upstream because that is what they always do to find their largest share of food does that mean that down the river they did not leave behind food.

This will be my fifth down cycle. Getting older starts paying off because we truly can see what is coming and how to adjust. As an independent entrepreneurial type of business I have always gone the other way in a market cycle to pick up with is leftover.

I was in the food business for ten years and built that business up to be one of the largest independent food operators in Northern California by watching my larger national competitors give up account after account that they no longer deemed profitable in a downturn economy. We in turn picked up those accounts, grew our business and when the market adjusted upward we were able to keep these accounts and grow even more.

Here are things to consider:

Are you a tenant rep broker, then maybe it's time to add listings to your business?

Do you concentrate in one area of your market, then maybe you need to spread your territory out?

Are you staying in touch with your old clients regularly? If not now, is it the time to do so? If you are, what are you discussing with them? It is time to learn where your clients are right now in terms of their business and their real estate needs. And, it is time to figure out plans of actions that you can present to them to deal with their current financial situation.

Are you paying attention to what your competition is doing? What are they doing? Learn and then think about looking at areas they are no longer concentrating in.

A client of mine that is in the secondary mortgage business taught me an important lesson recently. I assumed he must be near out of business and ready to "shoot himself". No he was actually doing quite well in this market. First he does not read the newspaper. He keeps anything negative away from him mindset. Next, he knows that his business still exists and simply keeps working it. He may have to make more calls then he used to but he keeps working it. Finally he said he is thinking of ways to expand his business because the best time to expand is when everyone else is not.

Our "Me" Generation

Hans Hansson (Starboard TCN Worldwide) — Wed, 08 Oct 2008 15:05:10 -0500

Back in the 1980's the buzz term to describe that generation was known as the "Me" generation. It was about how can I personally benefit, grow and gain wealth for my greater good. The term was of course given with a negative context. However by the 1980's we had fundamentally changed as a society from the "Hippie" days of needing less to enjoy life to the 1980's "Me" generation which was about enjoying the economic prosperity that the country was enjoying at the time.

Materialistic things became more important to us as the new age of electronics began. We as individuals simply had more things that we wanted to buy and incorporate in our lives.

But what also the "Me" generation did was fundamentally change the way we serviced our clients as well. Since it was about "Me" first, our clients and their needs became secondary to our own. As a result as a society we went away from true customer service and more to solving problems by pressing button one for this and press button two for that.

It used to be that you could talk to your branch manager at the bank and they truly were interested in solving your problems and had the decision-making ability to give you true solutions.

As a commercial real estate salesperson of over 25 years I still hold the belief that you service your client above anything else. There have been many deals that I have been involved in where I had spent so much time and effort that if I was only concerned with what I would have earned it would not have been worth the effort, but I continued to work on those deals because my clients needed the service.

In the long run I believe in the old belief that if you service your clients they will reward you not only with future business and referrals but also something even more important with a good word about you. That good word from a client develops your repetition that if you can keep at its highest possible level will reward you handsomely for many years to come.

New Subleases Will Not Necessarily Drop Rental Rates

Hans Hansson (Starboard TCN Worldwide) — Tue, 09 Sep 2008 14:06:47 -0500

The San Francisco Business Times headline, "500 Thousand Square Feet of Office Space Will Be Dumped Into the Marketplace". All of the major financial institutions are shredding office space as they immediately attempt to cut costs. Sounds good for office tenants that will be in the market this year right? Well not necessarily.

So far at the end of the 2nd quarter of 2008, office vacancy rates have remained stable throughout the Bay Area. San Francisco started the year at 7% vacancy and it remains at 7% vacancy. Subleases are not considered in the vacancy rate because landlords are receiving rent from a tenant and therefore it is considered a lease in calculating vacancy rates. If this were the case, then a dump of new sublease spaces would suggest that the real opportunity for tenants is the sublease market rather than try to compete for direct space.

In the last quarter, we have been receiving more calls asking about sublease opportunities then we have had in years. Unfortunately the types of sublease spaces do not necessarily fill the need of the tenants currently in the market.

Our average deal size in San Francisco is 3,200 square feet or an office of 10-15 people. Most of the large financial institutional spaces range from 10,000 square feet on up and can mostly be found in our best class office buildings. It is difficult for a sublessor to try to meet the market by dividing their spaces. This could involve extensive tenant improvement costs to divide full floor spaces and most landlords may object to dividing floors because they want to see these floors remain full floors to attract larger upscale tenants in the future.

Subleases, too, offer some risk. If you sublease from a financial institution that ultimately goes bankrupt or your sublessor fails to make rent payment to his landlord, your sublease could become null and void. If you are able to secure a sublease and well below market rate and this occurs, the landlord may not be interested in continuing your lease certainly not a rate well below market rate.

Remember that rental rates overall will not be reduced unless the overall vacancy rate does go up and landlords feel the necessity to lower rates to compete for fewer tenants in the market. Landlords, often times, have provisions that do not allow discounted subleases to take effect because a number of leases actually call for sublease rates to never fall below market rates in the building.

An experienced commercial real estate broker is your first call to determine how viable a sublease really is against leasing space direct in these uncertain times.

Three Things in Life you can count On

Hans Hansson (Starboard TCN Worldwide) — Tue, 02 Sep 2008 13:07:26 -0500

Yes, there are three things in life you can count on "Death", "Taxes" and a "Lease coming up". The beauty of a career in commercial real estate is that regardless of where the economy is we have the potential to make a deal. In the leasing business if the economy is going good, businesses will need to expand so we have a deal. If the economy is going bad, businesses will scale back their office needs and take smaller spaces or close their office so we have a deal.

Unlike our residential broker counterparts they do feel the ups and downs of an economy as well as the uncertainty of actually being able to do a deal because of the financial markets. Those of us that specialize in leasing are not impacting nearly as drastically.

So if you are a leasing broker today and are not doing well, what is the problem? First question to ask is what market am I concentrating on right now? Am I working the market sector where deals can be made in this market cycle?

If you are a working tenant rep financial institution business, clearly you need to refocus your attention on another market sector. If you are a tenant representative, you might want to refocus your attention on the sublease market. If you are a landlord representative, this might be a good time to take on more listings so that if there are fewer deals being made you have more of an opportunity to secure one of those fewer deals.

Let me end by saying, I have been in this business now twenty five years and there never has been a year that I did not have business and had a decent financial year to prove it. I did it by adjusting my business practices to meet the market. If you do not take time to reassess your role in a market cycle yes you can get hurt. But, successful salespeople all find a way to make money.

The Art of an Office Deal in 2008

Hans Hansson (Starboard TCN Worldwide) — Thu, 28 Aug 2008 15:19:31 -0500

2008 is a challenging year for business, but in San Francisco you would not know it in terms of the office space market. Rents are still at a seven-year high and although landlords are starting to lower rental rates, tenants are still in for sticker shock as their own business is suffering a downturn.

Today the overall rental rate for San Francisco stands at $35.50 per square foot. In 2001 at the end of the dot com bust the average stood at $25.00. But before we scream “filthy landlords” we have to put today’s rental rates in prospective. In 1984 for instance, the average rental rate in San Francisco stood at $36.00 per square foot. Yes higher than today! Office space like gas has been a cheap commodity for a while now. Unfortunately, costs to run buildings and tenant improvement costs have indeed increased. In 1984 you could build out a new office from shell for $35.00 per square foot. Today you need $70.00 to build out the same space. Operating expenses for Class A office space in 1984 was running about $9.00 per square foot today its $18.00. Yes, landlords are actually earning far less per square foot today than 1984 so today’s rents are truly a bargain.

Unfortunately, like gas we got used to a good thing. We have incorporated those office rent savings over the years to improve our bottom line, but this bottom line gift did not come from our business performing better it came from our business enjoying lower rental rates.

So how do we create a new office deal to meet today’s market? First we have to review true space needs. The common rule of thumb is 200 square feet person. Is your business taking space that is more than that? Next, if your firm decides to move how will the new efficiencies that you will build into your new space make your production increase? Yes, a new phone system, new wiring, new Internet services, new copiers will improve your efficiencies and make you more competitive. Case in point our firm moved just two years ago. At the time securing a t-1 line was considered the top end standard to create connectivity in an office. Just two years later speeds as high as 100 times a t-1 is available for almost the same cost. New IP phones can lower costs over a hard wire phone lowering your phone bill. A new copier can save you money on each copy while also offering new color printing at a reduced cost.

If your lease is up you need to not only look at your possible rent increase you need to look more at how much square footage you really need, how much will I save by introducing new technology to my new space, how much can I save in square footage by better planning the layout of my new office. Today to make the best deal for your firm you cannot just look at rent you have to look at the overall cost of your move and what you can build into your new space that will make your firm far more productive.

Planning Now to Revitalizing Retail in our Neighborhoods

Hans Hansson (Starboard TCN Worldwide) — Tue, 26 Aug 2008 14:32:46 -0500

San Francisco neighborhood retail is facing enormous challenges that need immediate attention not only for its long-term survivability but also to continue to support its residents with services close to home. To understand neighborhood retail and its challenges you first need to understand its beginnings.

Neighborhood retail started well before regional shopping centers were built and far earlier then when online retail began to flourish. It was developed to support neighborhoods with grocery stores, barbershops, restaurants and bars and other support services that kept its residents close to home. Retail merchants lived in their neighborhoods where their shops were and had relationships with their customers that were personal and long term.

When regional shopping centers started being built, the foundation of neighborhood retail began to change. I grew up in the Sunset District and my first job was working at GEM Foods on 32nd and Taraval. At the time there were three grocery stores within a two-block radius of this store,. as well as two liquor stores that also sold groceries. In the middle 1970’s Safeway opened a large grocery store on 14th and Taraval. Although Safeway was quite a distance from 32nd Avenue, within five years all of the grocery stores but one closed. Further up the street at least five more grocery stores also closed. Over time the same thing happened to the local drug store when Walgreen’s expanded and then to the local bakeries when Safeway added bakeries within their stores. Bars disappeared as television and new larger scale restaurants combined with bars became the entertainment after work.

Now streets such as Taraval, Noriega, Balboa, Outer Geary and now even Clement Street have seen clear signs of decline.

San Francisco’s response was to pass a chain store ordinance that requires chains with eleven stores or more go through a public review process. Although understandably given the impact that large stores have on smaller neighborhood retailers this is not the answer.

The answer is to bring neighborhood retailers into the 21st century.

New creative central planning needs to happen on these streets to revitalize interest. Taraval for instance needs to enhance its appeal as a street. This could include the removal of power poles and replaced with underground wiring to take away the eye sore of wires spread across the street. A more appealing landscaping plan along with upgrades in signage is critical. More parking alternatives that allow more convenience to shop in neighborhoods. How many times have we wanted to eat on Geary Street or Clement only to be turned off because you cannot find a parking space there?

Retailers in turn also have to modernize their stores within. So how can all this be done? Back in the 1970’s San Francisco developed a bold plan to revitalize the Duboce Triangle area. It created a mandatory upgrade program called RAP. It forced owners to upgrade their properties inside and out as well as upgrade outside electrical services and planting. In exchange property owners were offered low interest loans as well as tax relief to pay for it. This was a great example of a successful revitalization program involving government as well as private sector support.

Government by nature tends to take a reactive approach to developing and maintaining its city but without a proactive approach neighborhood retail could quickly disappear leaving empty stores that will eventually lead to blight. San Francisco is so used to raising property values that the idea that blight could occur in its core neighborhoods seem far-fetched. If you don’t believe it could occur go down Taraval Street and see the condition of its retailers or go down Clement Street and see how many vacant stores are starting to pop up and the condition of the stores that are open. You will quickly see that this is a serious problem that needs to be addressed NOW.

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

Hans Hansson (Starboard TCN Worldwide) — Mon, 07 Jul 2008 10:40:39 -0500

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

Hans Hansson (Starboard TCN Worldwide) — Fri, 06 Jun 2008 15:32:07 -0500

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

Hans Hansson (Starboard TCN Worldwide) — Tue, 13 May 2008 03:10:11 -0500

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

Hans Hansson (Starboard TCN Worldwide) — Mon, 12 May 2008 15:46:57 -0500

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

Hans Hansson (Starboard TCN Worldwide) — Tue, 22 Apr 2008 15:30:57 -0500

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

Hans Hansson (Starboard TCN Worldwide) — Wed, 09 Apr 2008 16:20:03 -0500

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

Hans Hansson (Starboard TCN Worldwide) — Mon, 07 Apr 2008 04:37:54 -0500

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 .