BOMA video conference hosted by ESG's Siegel.

"These are truly dynamic times for the commercial real rotate industry. In fact, this is the most hospitable environment for real estate that I can remember in 30 years or more." These were the opening remarks of Stephen B. Siegel, president of the Edward S. Gordon Company, Inc., and one of the keynote speakers at the first BOMA Real Estate Summit held on December 11.

Siegel discussed the challenges and opportunities facing Central Business District (CBD) building owners. BOMA members in New York, Chicago and Los Angeles attended the first ever video teleconference. As the real estate industry continues to recover from its downturn, Siegel foresees a trend towards a landlord's market in many major cities, bringing building owners considerable opportunities, but also significant challenges.

Siegel highlighted a number of these challenges confronting owners in the read estate market today, ringing from energy deregulation issues to the status of antiquated older office buildings in this age of advanced technology.

Siegel began with his outlook on the deregulation of electric utilities, recalling the break-up of the telephone monopoly and the subsequent major changes that swept through the industry. He speculated that those changes will be mild in comparison to those unchained by the break-up of the local electric utilities.

Along the lines of energy and conservation, building owners also have to consider the environment in making policy. "Today, environmental responsibility is being widely embraced as good policy for worker's health and productivity," said Siegel. "Tenants are increasingly demanding environment-friendly work spaces. Buildings that can deliver this will have a distinct marketing edge."

As an example, he cited Midtown's first new office building in five years, the Durst Organization's 4 Times Square, which was designed with significant environmentally responsible features including sensors to monitor and regulate lighting, increased use of natural light, use of fresh air circulation, the avoidance of materials that release toxins into the air and increased recycling efforts. Siegel noted that these measures will result in energy costs 30 percent below those of the typical building.

The dawning of a new and advanced technological era has posed another obstacle that many owners need to address, especially in older buildings lacking the appropriate technological upgrades. Siegel noted that technological infrastructure is one of the top reasons why tenants choose to relocate. Not only do tenants require basic capabilities to handle these systems, but also the back-up power sources and services to ensure proper system management.

Related to this technology factor is the issue of the obsolescence of a growing number of office buildings, especially in Downtown Manhattan. "There are many variables that can make a building obsolete," said Siegel. "Technological shortcomings, of course. But in many cases, these can be cured through retrofits and upgrades. Other shortcomings calmer be so easily addressed, such as floorplates."

Siegel noted that half of the available space in Downtown is on floors with less than 20,000 square feet. Larger tenants in need of more floor space shy away from these spaces. Rather than leaving these buildings perpetually empty, one solution has developers converting them into residential properties.

In addition to technology, energy, and environment challenges, building owners must now deal with the financial difficulty facing government at all levels. According to Siegel, this lack of funds him affected the number of municipal services offered, and now the private sector has had to pick up the slack.

While there are many challenges that face today's building owners, there are also many opportunities that can arise from the conquering of these challenges, Siegel said. He views the future of the real estate market with optimism as long as the obstacles are properly overcome.