Categories Narrative, Tech Industry

Coolest Technology that Could Affect Commercial Real Estate

Today, I want to share with you a company that has a wonderful idea. If they can get this commercialized, it would revolutionize parking lots and roads. Imagine solar panels as surfaces in parking lots, roads and even highways. This is a short article with just some highlights. I would love to see the day where an abundance of our power comes from roads. Roll on Solar Roadways!

Craig
602.954.3762
ccoppola@leearizona.com

P.S. We were grateful to represent Chamberlain Enterprises and Greenwood & McKenzie in their sale of Papago Arroyo, a multi-building complex in Tempe, which sold for over $40 million ($146/SF). Click here for a larger view of this one minute case study.

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Smart Solar Roadways

NAIOP

By: Nicola Davies, Ph.D.
Fall 2014

Imagine solar panels, not on rooftops, but as a surface for parking lots, driveways, roads, bike trails and, eventually, even highways. Then imagine integrating those solar panels with microprocessors and LED lights so they can be programmed to delineate driving lanes, parking spaces, crosswalks and more.

Smart Solar Roadways 1
An artist’s rendering illustrates how LED lights embedded within solar roadways could delineate driving lanes on a highway that also could recharge electric vehicles as they travel over it.
 
This innovation in technology and engineering, which also would allow all-electric vehicles to be recharged anywhere, is the brainchild of inventors Julie and Scott Brusaw. The Brusaws, founders of Sandpoint, Idaho-based Solar Roadways Inc., are on a mission to manufacture technology to power the world. This might sound futuristic, but the couple and the engineers with whom they are collaborating are now in the second phase of testing a prototype parking lot. They have been finalists for numerous awards for their design, including the 2009 EE Times Best Enabler Award for Green Engineering, the 2010 EE Times Most Promising Renewable Energy Award and the 2013 World Technology Award. They also were invited to the first-ever Maker Faire hosted by the White House in June 2014, which showcased innovators and entrepreneurs who are using cutting-edge tools to bring their ideas to life.
 
The Brusaws’ vision is to replace petroleum-based asphalt roads with pressure-sensitive solar panels manufactured from tempered glass that has been designed and tested to meet all impact loads — including 250,000-pound trucks. The panels generate and use energy they collect from sunlight, which powers elements that can heat the surface of the panels to melt snow and ice. Every panel incorporates a series of LED lights connected to the circuit boards that can be programmed to produce lane lines and other markings for roads and parking lots.

Smart Solar Roadways 2
Programmable, interlocking hexagonal solar panels manufactured from super-strong tempered glass could one day be used to pave roadways, parking lots, sidewalks, driveways and outdoor recreation surfaces.

A solar highway infrastructure could enable electric vehicles to recharge while they are being driven, via mutual induction; a vehicle fitted with a power-receiving plate would pick up energy from induction plates in the road. (While this technology already exists, there is no simple way to install those plates in asphalt roads.)

The solar panels are designed to last 20 to 30 years and are easily cleaned. Unlike regular glass, tempered glass ruptures into small, rubble-like pieces without sharp or jagged edges when broken, which protects tires from damage and pedestrians from injury. In addition, it is much quicker to replace broken panels than to repair or resurface conventional concrete and asphalt roads. Broken panels can be easily repaired and reused. 

The solar panels are also self-sufficient; each one contains a microprocessor that communicates wirelessly with neighboring panels. If a panel malfunctions and stops communicating, the other panels report the problem and the damaged panel can be replaced and a new one programmed within minutes.

The Solar Roadways prototype parking lot now under construction is being funded in part by a two-year $750,000 Small Business Innovation Research contract with the Federal Highway Administration (FHWA) to build two prototypes of solar panels to be tested under all weather and sunlight conditions. A fundraising campaign on the Indiegogo crowdfunding website also raised more than $2 million for the project.

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Inventor Scott Brusow demonstrates the panels’ ability to handle heavy loads.
 
When will commercial production of solar roadway panels begin? No date has been announced, but production is likely to begin soon after Solar Roadways issues a cost analysis report and makes other relevant information accessible to the public. While detractors may question the feasibility of solar roadways on a large scale, as well as the costs associated with a rollout, the Solar Roadways team currently is analyzing the cost of a prototype roadway. It is clear that, at least in the short to mid-term, this will be a complementary technology that will be implemented on a relatively small scale, rather than a wholesale substitute for existing roads.

According to Scott Brusaw, the city of Sandpoint, Idaho, is likely to be the first city to implement solar roadways, before they are demonstrated globally next year. Yet they already showcase an ingenious, creative solution to a common worldwide infrastructure problem.

Categories Narrative

A Timeline of Lease Accounting

For the past couple years, we have been tracking the proposed law change that will reclassify the way businesses account for their commercial leases. Since 1977, a company’s office lease has been treated as an operating expense. Businesses may soon be forced to record it on their balance sheet under new accounting rules. If this new “right-of-use” accounting standard holds, it could have a serious impact on businesses and the commercial real estate sector.  
 
The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (ISAB) have been tossing around the idea of this accounting change since 2006, due to promoting transparency in the wake of the Enron scandal. Here is a link to an article that gives a basic history and overview of the issue. I’ve highlighted the most important parts. Feel free to call us with any questions on it, or just on leasing in general.

Andrew
602.954.3769
acheney@leearizona.com


 

Click here to see the article larger.

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Categories Narrative

WeWork: Now a $5 Billion Co-Working Startup

Over the years, I have leased space to several executive suite operators. These “tenants” lease a large amount of space, then re-lease it to small tenants sharing conference rooms, administration services, etc. During the last recession, most of them closed down leaving a specialized kind of operator – small, local and personal. Regus is the only international company that made it through a bankruptcy and has survived.

Below is an article about WeWork, a Regus-type company, that is trying to get startups and other companies that want all the cool features of the new office space design we talk about frequently in this narrative. They are creating cool spaces, BUT……

They raised $355 MILLION dollars putting their valuation at $5 BILLION. Unreal. This company is a total longshot. When the tech startup market crashes – and it will – this company will be looking to find others to fill its space and that is not going to happen. Here are reasons why this company is not one I would invest in:

–Startups fail at a rate of over 90%. This is the market they are targeting.
–Startups have no money. 
–Monthly lease payments come each and every month. They are an unrelenting master and not cyclical.
–Regus can take some of its current space and reconfigure to meet this demand.
–The executive suite business is very tough to compete in. Knowing how to make money is learned.
–The markets in which they are opening are the only markets in the US that have enough of this kind of tenant to lease their space. Rolling out across the US is problematic.
 
Let’s all watch this company and when the first cracks in the tech market appear and it starts to slow down we will see what happens. Just my opinion.

And speaking of opinions, if you want our opinion on the market or your lease, just reply or call me.

Craig
602.954.3762
ccoppola@leearizona.com


 

WeWork: Now a $5 Billion Co-Working Startup

Rich Price for Four-Year-Old Office-Sharing Company With Big Ambitions


WSJ

By: Lindsay Gellman and Eliot Brown
Date: December 15, 2014

WeWork 1
WeWork customers in the lobby of its Fulton Street offices in New York.
The startup’s backers liken it to sharing-economy firms rather than co-working space competitors
like Regus and RocketSpace. 

CASSANDRA GIRALDO FOR THE WALL STREET JOURNAL

WeWork Companies Inc., a provider of shared office space, believes it can be as transformational to its industry as upstarts like Airbnb Inc. and Uber Technologies Inc. are in travel and transportation.

The four-year-old company, which divvies up rented office space and sublets largely to startups, said on Monday it closed a $355 million funding round. The deal values the company at about $5 billion, said people close to the matter.

The valuation puts the small New York-based company in the same league as social bookmarking site operator Pinterest Incand media and Internet company IAC/InterActiveCorp.

Adam Neumann, WeWork’s 35-year-old co-founder, hopes to make the company a hothouse for new business formation—by bringing together entrepreneurs who share space, office services and, potentially, ideas.

WeWork 2
Thirty-five-year-old Adam Neumann co-founded WeWork, which is now valued at about $5 billion.
CASSANDRA GIRALDO FOR THE WALL STREET JOURNAL

“We happen to need buildings just like Uber happens to need cars, just like Airbnb happens to need apartments,” Mr. Neumann said in an interview.

The latest financing was co-led by funds and accounts managed by T. Rowe Price Associates Inc., clients of Wellington Management, and Goldman Sachs Group, according to WeWork. Investors from prior rounds including J.P. Morgan Chase & Co., Harvard Management Co. and Benchmark also participated, according to WeWork.

“If I showed you their cash-flow statement, you would not compare it to a real-estate company,” said Henry Ellenbogen, a portfolio manager at T. Rowe Price. “You’d compare it to a brand or tech company—maybe Chipotle or Uber.”

Unlike its closest competitors, WeWork has a new-era sheen, its own mobile app, and deliberately chose to place properties in hot areas like Washington, D.C.’s Shaw neighborhood.

Viewed as a traditional real estate venture, WeWork’s valuation wouldn’t be nearly as rich, Mr. Neumann acknowledges.

Still, WeWork’s investors are “really not looking at the real estate,” he said. They see it as a force for upending small-business office rentals with a new model providing sleek furnishings and plenty of collaboration.

WeWork 3
WeWork members socialize in the lobby of the office-sharing company’s New York headquarters this week.
CASSANDRA GIRALDO FOR THE WALL STREET JOURNAL

Mr. Neumann said the company’s app, which serves as an internal directory and allows WeWork customers to communicate idea and applicants, also provides information on events like regular happy hours—touchstones of the work community it aims to foster.

WeWork said its December revenue puts it on an about $150 million annual revenue run rate. It also said the month’s annualized operating income puts its valuation at roughly 100 times income. It expects to grow significantly in years ahead, which would lower that ratio. Landlords typically trade between 18 times and 20 times earnings, according to Jed Reagan, an analyst at real estate consultants Green Street Advisors.

Regus PLC, the shared office space company that offers more traditional office space than WeWork, has a market capitalization of about $2.8 billion and 2013 operating profit of about $150 million. Regus went public in 2000, and its market value today is about half its dotcom-era peak at more than 360 pence a share.

WeWork said it has leased about 1.6 million square feet in New York, making it the fastest expanding company by footprint in the city since 2010. In all, it expects to have about 3.5 million square-feet globally by the end of 2015, total space larger than the Empire State Building. Also in the works is living space, akin to a high-end dorm for 20-something workers, people briefed on the company’s plans said.

Dozens of firms offer space to those willing to pay a premium for a desk or office nestled among startups and some mature companies.

Price depends on location. In the company’s Financial District headquarters, it charges $400 a month for a desk and $1,400 a month for a small two-person office, well above the area’s rate for such space.

News Corp , which owns The Wall Street Journal, is a customer.

Israeli-born Mr. Neumann looks more like one of his startup tenants than a traditional landlord. He has shoulder-length wavy hair, shuns a tie and keeps the top two buttons of his shirt undone.

His office, in a WeWork hub in New York City’s financial district, stocks an array of liquor, and he sometimes implores guests to do tequila shots, visitors to his office say. Unlike Airbnb and Uber, WeWork has a large fixed expense— rent paid to building owners— and the company may be as vulnerable in a downturn as any other co-working firm, said skeptics.

The business is a risky one in which its costs, fees paid to landlords, are fixed, but its revenues from startups and established businesses can fall quickly when the economy slows.

“The small-to-medium-size businesses, they get particularly impacted in a recession,” said Jon Halpern, who ran shared office space firm HQ Global Workplaces in the early 2000s.

HQ grew rapidly in the run-up to the dot-com bust. But in the recession that followed, its value plummeted. It ultimately sold itself to Regus.

As for his company’s next steps, Mr. Neumann said he is focused on growing the business. He plans to expand WeWork from its current 23 locations to 60 in the next year.

Landlords who have discussed the matter with WeWork executives say they have said it is planning an initial public offering sometime in the next two or three years.

Categories Design, Narrative

Buildings That Move???

Dynamic Architecture is designing a whole new way to build buildings AND each floor moves independently while rotating. Pretty cool, huh? 
 
Here are some highlights:
1—Each floor rotates 360 degrees, independently or in a concerted manner. Much like the fancy restaurant at the top of a building we have all been to, but in these buildings every floor rotates.
2—In between floors, there are wind turbines that collect energy creating a building that is green.
3—Other than the core, the building is built off-site at a warehouse and modules are brought in.
 
The first of these buildings is a planned 68-story tower in Dubai. The building will be constantly changing shape with each floor able to rotate in 90 minutes. Here is the link to the video: http://www.flixxy.com/dubai-dynamic-architecture.htm
 
If you want more, here is the link to the architect’s website: http://www.dynamicarchitecture.net/. This could be a game changer in design and construction.  

Craig
602.954.3762
ccoppola@leearizona.com


 

Moving Building 3

Categories Design, Narrative

Functional Office Space Basics

While we represent office tenants and landlords each and every day, we are always looking to give our clients basic, simple advice. Below is an article that does this for creating functional office space.

When we work with our tenant clients, we focus on the basics like:
1—Determine how much space the company will need (I told you this was basic).
2—Analyze the company’s work style. This is a big discussion. All sides of this conversation have been discussed at length in this narrative. There is a nice pro and con summary below of open office space.
3—Consider what is driving workplace change. Now more than ever before, change is happening at a lightning pace. Planning the future is paramount.
4—Design for flexibility—different than just change, this looks at different directions in which the business could travel.
 
Here is a suggestion: If you are not thinking about office space at this time, file this email for future reference. I send myself emails in the future by using the “Options”, “Delayed Delivery” feature. OR you can just hire us now and we will take care of the rest.

Craig
602.954.3762
ccoppola@leearizona.com


 

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