Year-End Summary of Commercial Real Estate Opportunities Seized by Sharp Tenants
with Specific Examples by Veteran Austin Tenant Representative Broker.
Commercial real estate tenants in Austin, Texas, found opportunities to greatly lower real estate costs in 2010 while the office space market in the capital city continued its slow rebound, according to a year-end look at 2010 activity.
Tenant representative Don Cox, principal of Don Cox Company, has seen benefits for both sides of the Austin office space transactions he’s brokered this year. His experience mirrors what office space tenants saw in a national commercial real estate market that still suffers from the recent deep recession.
“Gradually chipping away at the sublease market, Austin tenants have reduced the vacant 1.3 million square feet from a year ago to 872,000 square feet now,” says Cox. “That’s good news for sublessors, since they need to stop the bleeding.” The vacancy rate in direct space has also lessened, down to 20.7%.
On the other side, tenants, whom Cox exclusively represents in commercial real estate transactions, have seen significantly lower real estate costs. He cites two major transactions as examples.
Long-term Subleases
STRATFOR (Strategic Forecasting) had to scramble when a lease agreement for more space with the business intelligence company’s landlord fell through after the building’s sale.
Looking for a bigger space in four months sounded tough, says STRATFOR Chairman Don Kuykendall. It turned out that Cox found sublease space in what Kuykendall considers his dream building: downtown Austin’s Chase Tower. “If I had one building that I want to be in, it would be here. I never thought it was possible. This is always leased up,” he says.
STRATFOR moved into its 16,300-square-foot headquarters in August for a seven-year sublease that included all new furniture.
The James Street Group, structured settlement specialists, needed to expand from 5,200 square feet to 10,800 square feet. It decided to make a move to take advantage of the soft office space market, says Chief Financial Officer Bill Hall. “Our initial approach was to buy something,” Hall says. “Don Cox Company found us something that we felt was a better economic deal than purchasing.” The company’s six-year deal to sublease space at III Barton Skyway (1221 S. MoPac) also included more than $200,000 in furniture and a monthly rental amount that actually went down.
Cost-Saving Opportunities Abound
Austin’s office real estate market wasn’t affected by the recession as drastically as other parts of the country, says Cox, but opportunities to lower real estate costs still exist.
For instance, accounting firm PMB Helin Donovan had four years left on its lease. Cox renegotiated terms that allowed it to consolidate to the top floor of Bridgepoint Plaza while extending its commitment and locking in low rates for six more years. Some of his clients received as many as eight months of gross free rent and turnkey buildout by the landlord.
“Clearly it’s a great time to be a tenant,” says partner Chris Oddo. Cox can see these successful cost-reduction lease moves continuing into the new year. “Tenants with upcoming lease expirations or current leases on office or industrial space, whether in central Texas or nationwide, can find great situational opportunities in 2011,” he says.
About Don Cox Company
The Don Cox Company specializes in Austin commercial real estate, finding and negotiating Austin office space and industrial/warehouse space for tenants and buyers. It exclusively represents tenants and buyers and provides services at no cost. It is the Austin office of ITRA Global, the International Tenant Representative Alliance.
Cox’s boutique firm of five brokers averaged more than a lease per week during 2010. And in this loan-challenged market, they negotiated numerous sales, including the recent acquisition of a 15,269-square-foot office building for a high tech client.
For more information, contact Don Cox, 512.478.1711, or e-mail, don(at)doncox(dot)com.
http://www.doncox.com/
