Our First Portland OfficeSpace Showcase…Distinctly Portland!

Over the past few months, with the help of some wonderful photographers, we have been hard at work capturing the architecture and beauty of downtown Portland, the Pearl, the Central Eastside and many of the other Portland neighborhoods. Some of this could only be done with the cooperation of our friends in the Portland brokerage community, the rest we did by simply walking the streets and shooting buildings.

Most of the pictures can be found on the site, but here are a few of our favorites.

The Blagen Block:

The Blagen Building, located in Old Town, was built in 1889 and is a gorgeous example of Italianate architecture, which was at the height of its popularity in the second half of the 19th century.

Its location on NW 1st is absolutely picturesque. Pure Portland.

Blagen Block

The Spalding Building:

These pieces are located in the Spalding Building’s lobby. Made out of old vaults, their contrast to the clean and beautiful lobby is quite striking.

Spalding Building

A closer view.

Spalding Building

The Spalding Building was built in 1911 and was added to the National Registry of Historic Places in 1982, one of over 500 in Portland.

The Postal Building:

Pardon the photography on this one; this was before we realized it was best to take the camera out of my hands.  The Postal Building, built in 1901, was added to the National Registry of Historic Places in 1978. I found the highlight of this building to be the beautiful atrium. (Wish my picture did it justice)

Postal Building

The Barber Block:

Most people familiar with Portland will recognize the historic Barber Block. Built in 1890, this building is another example of Italianate architecture but with a unique flair of Richardsonian Romanesque architecture as well.  Known as an east Portland landmark, it was added to the Registry of Historic Places in 1977.

Barber Block

Barber Block

Barber Block

That’s all for now but there are countless incredibly beautiful buildings in Portland, we’ll be back with more soon. Let us know if you have some buildings that you would like to see in our showcase!

Rates Don’t Improve, but Vacancy Rates Show Good Growth in Seattle Office Space Market

The year ended on a high note for the Seattle office space market in 2011.  Net absorption for 2011 ended just over 1.6 MM sq.ft, almost double the net absorption for 2010.  2011 also marked the best year since a high of 2006 that ended in a little over 3 MM sq. ft of net absorption.

While the overall vacancy rate for the Seattle market didn’t change dramatically over 2010, there is a good story once you dive into the details.  We ended Q4 2011 with 14.8% vacancy in the Seattle office market compared to 15.3% in Q4, 2010.  And while the changes don’t appear significant, there’s a story going on in the Downtown submarket.  Last quarter, several significant leases were closed with Amazon taking 386,000 sq. ft. and a total of over 800,000 sq. ft.  The impact of these leases definitely showed up when we looked at the Downtown area vacancy rates which dropped to 12.9% this last quarter compared to 15.1% in Q4 2010.

Average rental rates remained fairly steady for all of 2011 ending the year at $25.80 per sq. ft slightly lower than the $25.89 in 2010.  However, as the supply and demand paradigms shift due to lower office space availability, particularly of larger spaces in the Downtown area, we would anticipate this to have a positive impact on rental rates.

Half of Our Tenants Think They Have to Pay a Broker Hourly, Like an Attorney

Tenants use OfficeSpace.com to do their own space searches and learn about the commercial real estate market.  These are typically business owners and entrepreneurs.  We talk to them regularly and one thing that always amazes us is that about half of our tenants looking for space believe that their broker will charge them an hourly rate, like an attorney.

When we hear this, we explain to them that actually, there’s no out of pocket expenses and that the landlords pay out a commission once a lease has been signed.  However, since we know what the downfalls are with respect to skewed incentives because the landlord is paying commissions to your broker, the question arises, why don’t we make a change and properly align clients interests with broker incentives?

What would happen if this were the norm?  Would deals get done faster because the tire kickers would go away and we’d work with only the serious and motivated?  Would tenants pay less in rent, receive better terms or get a bigger TI budget because the landlords wouldn’t have to pay the tenant brokers commission?

Would this reduce a lot of frustration that brokers have when a tenant just goes silent.  We’ve experienced or heard of the horror stories of the broker who is left at the alter.  In the real estate world, this means that the broker diligently worked on a deal for the tenant:  the tours are done, negotiations concluded and a deal is reached.  And just when the lease is supposed to be signed, the tenant disappears, just goes silent.  At least in this scenario, the broker would get compensated for their work which seems fair.

What do you think?  Why isn’t the industry moving this way, especially since some tenants already think this is the way the industry works.