Strategic planning even more important after WTC attacks.

In the wake of the events of Sept. 11, the concept of strategic planning as it relates to the real estate industry is coming into even greater focus. Whether it is the need to find replacement space or plan for expansions or dispositions, the commercial market is reacting quickly to this tragedy. In fulfilling these short-term needs, the need for long-term planning is becoming even more evident.

The destruction caused in lower Manhattan has resulted in the immediate loss of over 13.4 million SF of office space with another 15.1 million SF partially destroyed or damaged. As companies rush to find replacement space, the markets are quickly tightening and large blocks of space are being removed from the existing inventory of New York City, Connecticut and Northern and Central New Jersey.

The real estate community is reacting compassionately and patriotically to the events, as landlords are holding pricing levels to those prior to Sept. 11 and are making space available immediately for recovery operations.

I am very proud of the way the industry is responding, with negotiations proceeding quickly, real estate brokers offering drastically reduced fees and corporate tenants making excess space available to colleagues and competitors to help them return to business.

The results of this forced activity are starting to become clear in New Jersey. Vacancy levels are plummeting in the short term, after a period when sublease space was starting to significantly affect the market, and new construction has been accelerated. While it is certain that New York City will build and rebuild, the time-to-market for new projects is quicker on this side of the river. As developers are pushing up plans for construction, it is likely that New Jersey will see some long-term commitments from lower Manhattan companies resulting from the short-term space rush, as labor pools are relocated.

For many reasons, this may be a valuable time for tenants to refocus on strategic planning. Companies are already evaluating the risk of concentrating operations in one location. Redundant and back-up operations are again being considered. Planning for future-expansion needs to be a priority as the market tightens. Opportunities exist for disposition of excess space, a companies search new avenues to meet their occupancy requirements.

As the ramifications to the economy are still being sported out, some companies may be able to utilize their real estate to relieve s some of their bottom line pressures. Disposition of excess space through subleas or sale/leaseback, refinancing, or eve relocating to more cost effective space re all relevant strategies to consider. With many real estate decisions today often made by the chief financial officer, intense financial scrutiny is necessary to determine the effect on the company's books. Transactions must be viewed in the co text of how they will impact other facilities and employees, and decisions must take into account the overall business operations of the company.