NEW OFFICE SEARCH.MEASURE THRICE & CUT ONCEPREPARED FOR NEKUSTAMAIS ĪPAŠUMS UN BŪVNIECĪBA
OLGA KOZINA, MANAGING DIRECTOR, NEWSEC LATVIA
20.04.2012.
TENANTS’ MARKET. TENANTS’ HEAVEN?
23-04-212
2006-2007 2008-2010 2011 2012Domination in
LeasingLandlords' market Tenants' market Tenants' market
?
Tenants behaviorExpanding. Increasing
demandShrinking.
Optimizing costs.Relocations.
Slight expansion
Availability of space Lack of space High vacancyImproving
occupancies
Rents Growing Decreasing Stabilizing
Lease structures
Institutional. Long leases, minimum
breaks, indexation, security mechanisms
Weak.Short leases. Discounts.
Improving
Average tenants solvency
Good Deteriorating. LowSlightly
improving
REASONS TO MOVE. UNSATISFACTION?
• Location not suitable for the business profile• Accessibility insufficient for clients or employees• Obsolete premises • Absence of necessary infrastructure • Willingness to improve working environment for employees• Inappropriate costs burden• Expansion planned• New office as a motivator for a longstanding company• Current office was a temporary solution in terms of strict time
constraints• Ownership change for existing premises• Lease contract close to expiring, new lease conditions• Centralization, merge
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DECISION TO MOVE. SET, READY, GO!
• Target: 600 m²
• Who’s in charge: - Shareholder, CFO, MD, secretary?- In-house Facility Manager?- RE professional?
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• Actions:- Checking web pages.- Calling.- Visiting.
• Results: - Comparing apples with pears.
PROCESS. PROBLEMS FACED.
• Availability of space.
• Timing.
• Compliance of space to the needs.
• Compliance of costs to the budget.
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PROBLEMS FACED. AVAILABILITY OF SPACE
total office stock 0,5 mio sq m
ca 80th sq m vacant
criteria 1
criteria 2 - criteria n
1-2 options
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PROBLEMS FACED. TIMING
DESIRED – YESTERDAY
REALITY – UP TO FEW MONTHS AHEAD
Decision
Definition of
needs & prio
rities
Analysis of o
pportunities
Signing
Negotiation of lease
Selecting options
Preparation of premise
s
Move in
xx.yy.zz
xx.yy.zz
xx.yy.zz
xx.yy.zz
xx.yy.zzxx.yy.zz
xx.yy.zz
xx.yy.zz
PROBLEMS FACED. COMPLIANCE OF SPACE TO THE NEEDS
• Useful space vs paid areas (inefficient planning, corners, corridors, etc).
• Floor layout - open space vs cabinet structure (depending on the business profile)
• Size – sq m vs working stations• Availability of infrastructure (engineering and social, business
infrastructure)• Technical requirements (availability, lack of capacities, etc)• Availability of parking• Availability of public transport access• Existing/possible internal finishing• Investments coverage
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PROBLEMS FACED. BUDGET
• Accordance to financial capabilities (sales/rent)
• Not only rental costs but also property management, maintenance and utilities budget
• Maintenance costs allocation/calculations
• Clear rent review mechanisms
• Parking costs, any additional costs
• Guarantees asked by the Landlord
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Office Rent rates, Riga, EUR/sqm Turnover/rent ratio
RESULT. DO I REALLY NEED IT?!
• Wasted time
• Wasted money and resources
• Deadlock
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BACK TO BASICS. REAL ESTATE FOR OCCUPIERS
avoid wasting your resources
Identification of both current and future bbusiness needs
realistic timetable, accountable milestones, clear targets
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An integral part of the overall Company’s business strategy
1. Clear reasons to move
2. Clear definition of needs & priorities
3. Setting up the plan
should be planned thoroughly
BACK TO BASICS. DEFINITION OF NEEDS & PRIORITIES
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• Business profile – proximity to clients, resources, magistral roads, business infrastructure etc
• Number of working places / specifics of daily work – necessity for meeting areas, private and public areas, social areas, archives, server rooms, etc
• Layout - open space vs cabinet system• Necessity for infrastructure/engineering – not only availability but also
capacities• Parking and public transport accessibility• Requirements to working environment – global guidelines for international
companies, local legislation, opening windows, healthy climat (moisturising system), daylight etc
• Budget – costs & investments• Flexibility – major lease covenants • Image • Forecasted need for expansion
BACK TO BASICS. LIAISING WITH PROFESSIONALS
• Assistance in defining the needs and setting priorities (through interviews, employee surveys,
etc.)
• Assistance in understanding the market
• Ensuring the best solution (in-depth analysis of options, comparing apples with apples, incl.
planned or theoretical vacancies)
• Predicting underwater stones and assistance in mitigating risks
• Assistance in negotiations
• Saving money
• Saving time
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BACK TO BASICS. CONCLUSIONS
• No uniform solution - a tailored approach is necessary in each case
• Get well prepared – most of problems faced are not about the
Landlords or the market, but about structured approach
• Riga office market is small – any solution is a synergy of
compromises
• Change from Tenants’ to Landlords’ market might happen very fast –
same as it was vise-versa
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NEWSEC GROUP IN BRIEF
• Newsec Advice– A leading property advisor in Northern Europe with 70 professionals and access to
more information than any player– Valuation value over 50 MEUR last 12 months
• Newsec Asset Management– The leading asset manager in Northern Europe with about 400 professionals and
offices throughout the region – Manage over 1 000 properties representing over 7 million sq m
• Newsec Transactions– Transaction team of 30 professionals specializing in investment and corporate
finance – Offering tailor-made property-related financial and strategic advisory services– A leading advisor within wind power
• Lease volume of over 350 000 sq m last 12 months
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TRACK RECORD - AGENCYAgency Team, Latvia – Major letting deals 2010 - 1011
Client / project: Type: Size (sq. m):
Tieto Office 7 000
Transcom Office 1 700
Inspecta Office 900
Microsoft Office 900
Mepha Office 500
ERGO Office 2000
Karcher Retail 550
Selected reference projects, Latvia
Agency Team, Latvia – Major clients 2010 - 1011
Microsoft
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OLGA KOZINAMANAGING DIRECTOR, LATVIA
Direct + 371 675 08405, Cell + 371 296 [email protected]
NEWSEC LatviaZaļā iela 1Rīga, LV-1010Tel: +371 6750 8400Fax: +371 6750 8401