Constructed with a loan from the company’s German banker, Shorenstein Properties LLC (based in San Francisco) completed development of the 365,000-square foot office tower in the summer of 2010. Shorenstein inherited the First & Main project when it acquired the Portland office portfolio of the former Equity Office Properties Trust from the Blackstone Group in early 2007, according to the Portland Business Journal. Real estate broker Eastdil Secured is marketing First & Main on behalf of Shorenstein. The Portland Business Journal reports that the building could fetch well above $100 million based on recent institutional interest in newer buildings in Portland and elsewhere in the Northwest.

First & Main features many sustainable design elements such as an eco-roof, a vegetated roof system adding extra insulation and cooling to the building and also reducing the burden on municipal stormwater management systems, high-efficiency mechanical systems, a ground floor bike hub, stormwater harvesting, low-flow water fixtures, and an 18,000 square foot fourth-floor “eco-terrace” that features a very sizable garden. Recycled and regional materials were also used throughout the building’s construction.

A locally based team consisting of Portland-based Brightworks Sustainability Advisors, GBD Architects, Gerdling Edlen Development and Hoffman Construction Co. assisted Shorenstein with LEED improvements. As far as tenants go, the General Services Administration (GSA) leased approximately 70% of the building’s leasable space before it was completed in April 2010 in order to house federal workers displaced by the planned sustainable redevelopment of the nearby Edith Green-Wendell Wyatt federal office building. In August, Portland Energy Conservation Inc. (PECI) signed a lease for 60,000 square feet, and thereby filling the top three floors of the building.
Source: www.nreionline.com

“It’s still a tenant-friendly market. The environment from 2010 will continue into 2011. From a buyer’s side, it’s a good opportunity for users to enter the buyer’s market.”

David Lundberg, managing partner, Commercial Equity Partners:

“The volume of transactions is up, but due to companies downsizing, the size of transactions is smaller.”

Bart Pelloni, principal, Pelloni Development Corp.:

“The small office sale product will remain challenging because of financial constraints, but small office leasing I anticipate to be consistent and predictable.”

As service firm leases (which have a lot of discretionary-sized office space) expire and those businesses have the chance to build their ideal office for the world as they see it in 2011, how will those decisions shape the commercial office market?

Incremental efficiencies are a big deal. For example, the last number I saw shows roughly 160 million square feet of office space occupied in Metropolitan Atlanta. If every office space was five percent more efficient (or downsized by five percent), that would be another eight million square feet (or eight Bank of America Plazas) vacant. Now, I understand that this could not all happen at once, and that there are many offices out there that are already squeezed down to an efficient size, but you can see the order of magnitude we are dealing with here.

Grand reception lobbies? Spacious corner office? Libraries? Huge conference rooms? Uh-oh.

Please let us know if you think this will happen?

Previously occupied by the Zellerbach Paper Co, one of the Patelco buildings was completed in 1909, with the other constructed five years later. The buildings went through a two-story addition in the 1980s and both will be more or less vacant when Patelco finalizes its move at the end of Feb. 2011. The buildings will be marketed to single users in addition to smaller tenants – namely technology companies – that have dominated the landscape of office spaces along SoMa’s highly active Second Street corridor.

The buildings are adjacent to the west end of the new $4.2 billion Transbay Transit Center, which broke ground last August with planned completion in 2017. In the meantime, the development team plans to make marked improvements in an effort to help restore the historic character of the buildings.

For New Urban Properties, whose portfolio is 95% leased, this deal represents a return to an investment market in which the company was an active player in during the last economic cycle. From 1998 to 2007, New Urban Properties invested over $450 million in San Francisco and Silicon Valley.

Today, thanks to advancements in technology, cultural paradigm shifts, and the economic downturn which our country has witnessed, downsizing had become the norm, as more tenants are looking to the spatial aspects of their work environments as the key to renewed organizational efficiency. New workplace solutions are in high demand.

In the San Francisco Bay Area and the Silicon Valley, more office space tenants are tending to plan for tomorrow’s workplace. In San Francisco, younger generations of web and social/digital-media companies are searching for alternatives for their creative spaces, as a direct reflection of their culture, how they like to work and interact with their colleagues.

Especially while it’s still a buyer’s market, it is all the more imperative that today’s tenants work to leverage their advantage when negotiating with landlords and office space owners – including encouraging landlords to facilitate workplace solutions by offering tenant improvement allowances.

Ultimately, the success of workplace optimization processes depends on how well companies correlate their workplace strategies with their business plans, and of course, how well these things are carried out. One thing does remain certain: the office of tomorrow has already arrived.

The reason they are one of our favorites is their perseverance in the marketplace. Each has been around since the early days of the internet. Esuites became an official domain in September 1995 and Offices.org sprang up a month earlier.

Esuite is run by Pat Garner, an avid business center supporter who was writing about the importance of the internet to our industry way back in 1999.

Offices.org is run by Tina Bartel and is incredible mainly for the site design. Please check it out… it is so old school in its design — well, it’s just beautiful. I know that goes against my previous aesthetic value statement, but I contradict myself quite a bit. So it’s par for the course.

Here’s to Tina and Pat. Keep it up!

But all that is changing. As we mentioned in yesterday’s post, key workplace think tanks such as CoreNet are addressing and discussing alternative workplace strategies. Landlords and brokers are finding the industry to be more enticing during this downturn, and are slowly dipping their toes in the water. And of course, companies and individuals are looking for different ways to work, and at a lower cost.

And despite this change, true consolidation is a long way off. Once the industry matures — say in 20 years — we will see some significant consolidation. Until then, it’s still the Wild West. So our advice is to get on the horse, hold on tight and don’t let go!

In a study published by CoreNet Global in April of 2009, a survey conducted among corporate executives it found the single biggest obstacle to corporations implementing alternative workplace strategies (which could include executive suites as a component) is executive buy-in:

With current workforces becoming further geographically spread along
with the introduction of new technologies, alternative workplace strategies (AWS) present
opportunity that can potentially save on salary cuts and freezes. Still, the largest challenge
continues to be a lack of support from senior management, according to a recent survey of CoreNet
Global Dallas Summit registrants.

While there are pockets of the serviced office industry that are working diligently on gaining access to C-level initiatives, unless there is constant pressure from the industry, demonstrated cohesion and an innovative and solid value proposition, the industry will continue to wish, hope and pray without seeing much benefit.

Regus is doing a great job on this front, but despite their diligence Regus alone is not enough. True innovation is more likely to happen with some direct competition. We’re all still sitting… waiting anxiously for that competition. Where will it come from?

Please come back often as we will be cranking up.