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As tenants tighten belts, RE must give more.

The state of the economy, conditions in today's real estate market and the impact of technology on company operations have permanently changed the way tenants use and select office space. As tenants become far more cost conscious about real estate decisions, tenant representatives and property consultants must offer much more in the way of services.

As a result of downsizing, the trend for many employees to work outside the office, smaller computers, and reductions in the standard size of individual offices, there has been a long-term reduction in office space requirements. We are now seeing a willingness and desire among tenants to relocate to the suburbs as the availability of technology has made central business district locations Jess critical for successfully doing business.

Many companies are now choosing class B space or even flex space instead of class A offices to reduce occupancy costs, since every $1 of reduced overhead impacts the bottom line faster than increased sales.

We've found that class B space is no longer the sole domain of back-office operations. While many insurance brokerage, law, accounting and financial service firms are opting for less expensive space in renovated older office buildings, convenience, access, amenities, life safety issues, convenience to the workforce, and new concerns about women and the availability of day-care facilities also play a major role in the selection of space.

There's a pragmatic attitude on the part of many companies that are renewing their leases in older buildings instead of moving to new ones. Companies are realizing that they can look successful and smart without moving into the newest building on the block.

Another dramatic development that has had an impact on the real estate market is the emergence of the "virtual office." In order to reduce their space requirements, some companies use shared, unassigned offices, some allocating as few as 10 desks for 30 people. The virtual office has become especially prevalent in sales operations for such firms as AT&T and consulting firms such as Arthur Andersen, as portable fax machines and modems permit employees to spend the vast majority of their time outside the office.

Companies are now more cost-conscious than ever before, and they are choosing knowledgeable professionals to assist with real estate decisions rather than someone who just shows space. Though companies are increasingly concerned about the impact of real estate holdings on the bottom line, they are simultaneously putting pressure on corporate real estate executives to reduce staff and budgets, and cut the cost of managing and maintaining real estate portfolios.

To accomplish these increasing demands with ever diminishing resources, many corporate real estate executives are selecting professional service and consulting companies to act as an extension of their in-house real estate groups. As a result, today's tenant representative is not solely responsible for implementing moves, but must be able to lease, purchase, sell, manage and maintain corporate space, as well as advise and assist with the development of an overall strategic approach to real estate issues as they relate to changing business plans.

As the lingering recession reinforces management's fixation on the bottom line, the successful tenant representative must become an indispensable member of the corporate real estate team by offering a variety of valuable services and being able to rise to the occasion whenever asked.
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Title Annotation:Review & Forecast, Section IV; tenant representatives and property consultants required to offer more real estate services under current economic conditions
Author:Ugiss, Carolyn
Publication:Real Estate Weekly
Date:Jan 27, 1993
Previous Article:Marketing 'dead' building space.
Next Article:'93 may be year for legislative strides.

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