About Us
International Real Estate situation
Thai Real Estate Situation
Costs of Constructions
Contact Us

2000 Real Estate Situation : BOMA

(VAT News 1/2000 page 15)

Mr. Richard D. Baier
President, BOMA Int'l (Building Owners & Managers Assoc.

2000 Global Real Estate Industry
    Looking ahead, 2000 will be a strong year for the commercial real estate market in the U.S. Vacancy rates, rental rates, supply and demand are the tightest they have been since the mid-1980s. And if you combine total downtown and suburban properties built in the U.S. in 1998, we're only building half of what was built in those peak mid-1980 years.
    Future development will remain in check for most markets because only well-planned, competitive projects are securing construction loans and heavily congested states like New Jersey are introducing open space initiatives and sprawl controls. In some markets, local governments are also buying up undeveloped land and setting growth boundaries. Developers no longer have the pick of the best sites.
    Consolidations and industry alliances will continue, as well as international expansion by many firms. In 1998 alone, there were 10,401 mergers and acquisitions, totaling $1.3 trillion worth of real estate! Who you work for today may very well not be who you work for tomorrow… So plan for it! Make sure that your skills are up to date, and that your know-ledge base is as broad as possible. Executive level education has never been so important; pursue every opportunity out there to ensure that your skill set and credentials can meet what tomorrow's employer will demand.
    Internationally, keep your eye on the opportunities that exist for our industry. But a note of caution… the ability to retain a local flavor is what will separate great global firms from mediocre ones. Communicate locally, and dig deep to understand the intricacies and differences between marketplaces and tenant types. International owners and tenants are crying out for Western ingenuity, high quality, technical system operations and consistency. Still, understanding the local flavor is crucial. Expect culture shock. And remember that you're really buying human assets - not bricks and mortar. Before bursting onto the international scene, successful global organiza-tions do a lot of listening to determine what a region needs and what employees expect.

Real estate market trend in 2000:
    An increased focus on customer service (in our industry's case, the tenant), will continue to be a major industry trend in 2000. It's easier and more cost effective to keep a tenant than attract a new one, so it seems obvious that knowing what tenants want is the key to retention. But until recently, no one was really paying much attention. That has started to change, as consumers have become more savvy and, in turn, more demanding.
    Through a survey conducted by BOMA and the Urban Land Institute, we found that in alternative office strategies, for example, only three out of ten respondents have imple-mented any type of alternative office strategy.
    Overall, telecommuting - or working at home - is most popular, with one out of four companies allowing it. This may be fine for our tenants, but for us, it makes it difficult to build teams, and as owners and managers, we need to keep that in mind.
    Virtual officing - the ability to work in non-traditional settings - comes next, with one out of five respondents using it. Only seven percent use hoteling - reserving desk space at a central office for multiple people - probably because employees like to feel as though they have a territory that they can call their own, that they can personalize and that reminds them they're an important part of a team.
    Very few tenants report that using alternative office strategies change the total amount of space they need, because most companies need more shared or non-dedicated space for group activities like meetings or brainstorming sessions. And, because creating a sense of offering amenities, is crucial for retaining employees.
    The survey also showed that "smart buildings" really aren't taking over the industry. Only half of the respondents were in "smart buildings" with any intelligent building systems. But of those with such features, HVAC systems ranked first among top rated intelligent building systems, pointing out tenants' strong desire for comfortable temperatures and the ability to control their comfort. Rounding out the list were: wiring for the Internet and for high - speed networks; local-area and wide-area network connectivity; filer optics capability; and conduits for power, data and voice cabling.
    In the area of features, amenities and services, 90 percent or more of tenants give the following features a rating of very important:
• Comfortable temperature
• Indoor air quality
• Excellent maintenance work quality
• Prompt management responsiveness
• Management's ability to meet tenants' needs
• Excellent acoustics and noise control
    Virtually all of these top rated amenities suggest that all tenants really want is control. Control over their temperature, control over how quickly and how well building management responds, and control over their personal office environment.
    The most important amenities are all convenience related, with food service, proximity to convenience and retail stores, and availability of banking and ATMs. We live in a time strapped world, and anything we can do to make our tenants lives easier is clearly appreciated.
    BOMA has also noted several other important trends, including:

Team Environments with flexible, interchangeable work areas designed to support the work of groups whose composition changes over time.
More conference areas for impromptu meetings and "quiet time" instead of one big boardroom.
More natural light available to office workers.
Building for technology; wiring each employee's work station with the maximum amount of power and technology available.
Plug & play infrastructures are another exam-ple, as data, voice and electrical wiring are set in the floor so a person can move their workspace by simply unplugging utilities and replugging them in a new location, taking their phone number, data system and electrical access with them. Modular furniture cabling, installed in cubicle panels, can also be used to connect work area equipment to the telecomm closet and makes adding new employees or reconfiguring the office much easier.

Innovations in Real Estate
    The Internet, and e-commerce, will play an enormous role in the future of the industry. Property management firms are able to provide "virtual tours" of their listed properties; software is being developed every day to assist brokers in promoting space; office furniture stores have developed online "stores"; BOMA International has made many of its valuable research publications available for download on www.boma.org; and the trend toward e-commerce has changed warehousing and distribution methods. We must be aware of the technologies available, and ensure that our firms are utilizing them to their maximum potential.

Cautions for Valuers
    Following up and settling any issues remaining from the Year 2000 "millennium bug" issue. Property managers must continue to communicate with their tenants about how their building systems fared during the December 31/January 1 clock change-over, and reassure them that things will continue to run smoothly in 2000, particularly during dates such as February 29, the leap year date. It will be important for property managers to continue to develop contingency plans to prepare for any disruption in service throughout the year.

@area 5/15, Nonsi Road, Chongnonsi, Yannawa, Bangkok 10120
Tel: 66-2295-3171 Fax: 66-2295-1154 Email: info@thaiappraisal.org  VISIT US: Location Map