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Advice for Young Brokers from Bruce Springsteen

Last month, towards the end of his appearance at the Light of Day charity show in Asbury Park, benefitting Parkinson’s research, Bruce Springsteen commented on why he plays the event more often than not. He said that music, by nature of the art form, is collaboration. He enjoys it because it gives him an opportunity to get together with his friends, listen to music, play music, and collaborate on something bigger than the sum of the parts.

Time is Clearly NOT On My Side Right Now

In 1964, The Rolling Stones recorded and released, Time Is On My Side. 

Apparently, they knew something, as they are still touring fifty years later.  However, with only a few work days left in 2014, time is clearly NOT on my side.  There are still holiday gifts to buy, deals to finish, commission checks to receive, and other loose ends to tie up.  I am clearly feeling the crunch.

So why do I wait until the last minute when I know the clock is ticking? 

An Examination of What Being "Negotiable" Really Means in the CRE Market

When I logged in to The News Funnel this afternoon, I saw an article about a co-working space opening in Newark. Do you think they read my FunnelCast from last week? But, that’s a story for another day. 

Early in my career, I was annoyed when landlords used “Negotiable” as their asking rental rate. When putting together information for a client, “Negotiable” isn’t an option, so a phone call to the landlord or their broker becomes necessary. It’s not painful, but time consuming when compiling information.

Now that I also represent many landlords in the market, I have a different opinion and use that tactic often. In fact, roughly 40% of the market in Northern and Central New Jersey doesn’t report an asking rental rate. This obviously skews the statistics when looking at average asking rental rates.

In 2009, when we were in the beginning of the recession, I often told my clients that asking rents were meaningless. Landlords often provided first proposals that were several dollars lower than the asking rate and taking deals were even lower.

However, in the last few weeks, I have received three proposals that were above the quoted asking rent for the building. While you may think this is a reflection on the activity level on each building, it is also a product of the lack of available space in certain pockets of the market. One of the buildings is less than 50% leased, and while I would have been more aggressive to win this particular deal, I assume they felt bullish given the lack of competitive space in the market.

What these landlords may not realize is the way these proposals are perceived by the tenants. In each case, the tenants were disappointed, confused and turned off. They typically asked if the landlord wanted to do business with them, not because they felt the proposals were high, but more because the asking rental rate sets an expectation. 

A “Negotiable” asking rental rate allows landlords to change the numbers quickly, either up or down in response to market conditions, without the numbers being public. While I am not advocating the use of this tactic, in a rising market, it may help landlords avoid setting rent expectations and having a negative perception once a proposal is received.

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By: Jeremy Neuer

Senior Vice President | CBRE

Jeremy Neuer is a Senior Vice President with CBRE in the East Brunswick, NJ office. He specializes in office leasing throughout New Jersey and also represents several large corporations on a national basis.

Email Jeremy: jeremy.neuer@cbre.com

Follow Jeremy on Twitter: @JNeuer19

Follow CBRE NJ on Twitter: @CBRENewJersey

Read more of Jeremy's blog posts on NeuerSpace


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One Day At A Time

One of my favorite clients used to say, “If I could lease one desk at a time for one day at a time, that would be ideal.” Of course, he was taking flexibility to an extreme, but as needs and markets change, it’s a topic that seems to come up often. Flexibility used to mean a termination or contraction option in a lease. However, times have changed because of the options available.

As certain submarkets in New Jersey tighten, as well as those around the country, flexibility is becoming harder to negotiate into office deals. Since the downturn in late-2008, termination options have been standard for many corporate tenants. However, lenders treat those leases as short-term and the presence of the option impacts the level of financing the landlords are able to achieve. 

Lately, I have seen certain owners take a firm stance on termination and contraction options in well-leased buildings. While they are not often exercised, some tenants insist upon having a termination option in the lease, even at a steep cost. Recently, one of my clients leased space at their second choice building, because the first choice landlord held firm on this issue.

There’s one key factor that I think that favors small tenants in this regard, and that’s non-traditional solutions. As the workforce, specifically those in sales, become more agile and able to work remotely, the reliance on a desk with a phone and a computer will continue to diminish.

The options for those who want “touch-down” space have increased exponentially in the last few years. 

Many office suite operators offer the ability to buy a certain number of hours a month rather than lease dedicated space. In this scenario, the client I mentioned previously would have gotten his wish.

LiquidSpace, a company that matches those with excess space with those that need space on a daily or hourly basis, released news this week that the supply of hotel workspaces in their inventory has increased by 1060% in the past year and now makes up almost one-third of the available space nationwide in their inventory. Hotels aren’t just marketing unused meeting/conferencing space, but they are also converting other parts of their properties to revenue generating areas by catering to the mobile worker. 

Finally, in yet another attempt to cater to the millennial entrepreneurs and workforce, co-working space is one of the hottest trends in urban environments. While we haven’t seen a tremendous influx yet in New Jersey, WeWork, one of the leading co-working providers, has 11 locations in New York City, along with locations in six other US markets, London and Israel. Clearly, there’s a demand for this type of environment.

As landlords come to realize that they are not only competing with other office buildings, but also other non-traditional solutions, they will have to get aggressive and creative to win and maintain tenancy, almost irrespective of market conditions, when it comes to smaller spaces. There are simply more options for tenants to choose from.

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By: Jeremy Neuer

Senior Vice President | CBRE

Jeremy Neuer is a Senior Vice President with CBRE in the East Brunswick, NJ office. He specializes in office leasing throughout New Jersey and also represents several large corporations on a national basis.

Email Jeremy: jeremy.neuer@cbre.com

Follow Jeremy on Twitter: @JNeuer19

Follow CBRE NJ on Twitter: @CBRENewJersey

Read more of Jeremy's blog posts on NeuerSpace


Want real estate news on-the-go? Download our NEW mobile app today!

funnelcast, the news funnel, real estate news, real estate blogthe news funnel. real estate news, cre, commercial real estate, top real estate news

Do The Evolution

I was recently asked to participate in a pre-launch demo of a web site that hopes to change the way we do business and form relationships. Just a little ambitious, right? During the meeting, I expressed some of my reservations about the platform, mostly citing the way our business gets done, specifically on the leasing brokerage side.  One of the key investors in the site jokingly called me a technological Neanderthal.  While I consider myself quite the opposite, I realized that the commercial real estate industry may be far behind others.

Two Lessons from Bruce for Young Brokers

Bruce Springsteen has been been in the press the last few weeks, promoting his new album, High Hopes.  He has been interviewed by Rolling StoneNPR, and appeared on "Late Night with Jimmy Fallon" as both the couch and musical guest.  He even played a third song that Fallon released as an online exclusive and did a Born To Run parody that's gone viral. After the public appearances died down, and before his upcoming shows in South Africa, Bruce stopped by the Light of Day benefit concert in Asbury Park last weekend.  It wasn't completely unexpected. Bruce has played this benefit many times in the past with his friend, Joe Grushecky.

Winning Tenants - Landlord Perspective

As you can imagine, my 2014 goals are still very present in my everyday thoughts.  The first goal I discussed in my recent blog post was to increase occupancy in the buildings we represent.  I spend a lot of time thinking about how to win tenants. During last year’s CBRE conference, there was a session on Related’s Hudson Yards project. The leasing team explained the amazing development on the west side of Manhattan and the changes to the infrastructure in the neighborhood. Three tenants, L’Oreal, SAP, and Coach have committed to the first tower and just yesterday, Time Warner announced it would be moving from Columbus Circle to Hudson Yards as well.