By Ken Ashley
WASHINGTON, D.C. (May 20, 2010)
TREP (Tenant Representative) is a conference of some of the highest producing brokers with Cushman & Wakefield in the US. The conference consists of 65 brokers from the Firm and senior C&W Management including Americas CEO John Santora, Client Solutions head Bruce Ficke and Mid-Atlantic Region head Jim Underhill.
Here are a few highlights heard during the first day of the conference:
- Big volume of continued outsourcing to brokerage houses by corporate directors of real estate. Corporations are increasing the amount of what they outsource and actively reevaluating their service providers.
- Federal Government expected to lease 12 million square feet in DC and Northern Virginia in the next year. A stunning stat that is indicative of how fast our government is growing.
- DC is hot, hot, hot. Like it or not, according to local DC brokers, for many reasons corporate America is coming to this City.
- Tenant leasing activity is way up and concessions are the best in memory.
- The verticals of technology and biotech are especially hot and seem to be growing.
- An amazing comp from a large law firm in New York: 400,000 s.f. rates starting out at less than $80 per foot and escalating every 5 years ending up at $102 per foot. 11 months free and $65 million in TI ($160 PSF) with a $35 million ($87 PSF) payment in lease pick up. This is in a relatively new building hoping to achieve rates of $130-150 PSF 2 years ago.
- New York is on fire as well. Hearing about some very large assignments that our brokers have in the City. Corporate America is clearly recognizing the opportunity that is available in the market today.
Jeff DeBoer, President and CEO, Real Estate Roundtable
- Our industry is at war; we need to get our act together. We need to act as an cohesively as an industry or Congress will pick us apart. Now is the time to up the ante and participate.
- Call Members of Congress and let them know how you feel. They are very isolated now, and spend their days huddled with staff or voting. They have very long days. At night, they see lobbyist. Very little engagement with US Citizens; they need to hear about real life and real issues with the real estate industry.
- Member of Congress DO call Jeff and ask how they can help real estate. Many are very concerned including Bob Menendez from NJ, Kent Conrad from North Dakota, and John Kerry from Massachusetts.
- Since real estate is everywhere, we are no where. There is no “senator from real estate” like many other industries.
- The “carried interest” bill will double the takes on certain gains in real estate. Today the rate is 15%. If the bill passes, the rate goes to 32% and then to 38% plus a 3.8% Medicaid tax.
- We are at war as an industry. There is a continuing battle to increase the taxes on capital gains in real estate. Risk takers and capitalists are being penalized with more and more taxes.
- Values are down 30-50% from their highs nationwide.
- In order to get the system going again, we need substantial amounts of equity. We are facing a liquidity crisis. There is a lot of equity ready to “play” but it does not equal the $1.2 Trillion in CRE debt that is in the process of maturing.
- Security: The Roundtable is assembling a list of all major US Assets and their true owners and managers. This well help with Federal Government make contact with ownership in times of crisis. Also, Roundtable is actively advising owners about security best practices.
That’s it for now. More to come…..