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					                                                                      Board Brief 2007-20
                                                                 Office Relocation Update
Memo to:       Board of Directors

From:          Neal J. Couture, CPCM, Executive Director

Date:          September 27, 2006

Subject:       Office Relocation Update

On August 31, 2006, the Executive Committee met by teleconference to review the
business case for relocation of the national office. Based on the existing delegation of
authority from the Board of Directors to oversee the execution and implementation of the
office relocation, the Executive Committee made the following decisions:

   1. keep the national office in the metro Washington, DC area.
   2. purchase office space in Sterling, Virginia, with move-in as soon as feasible.
   3. sub-lease the 8260 Greensboro Drive office suite.

Staying in the Area
While the original business case for office relocation contemplated a move outside of the
local area (to Greenville, South Carolina), several important conditions have changed
since that time (June 2005) causing the committee to decide to keep the national office in
the DC area. Specifically, most of the key staff (Executive Director, Chief Financial
Officer, Chief Knowledge Officer, Director of Communications) experienced significant
personal changes in the past two years that now prevent them from relocating outside the
DC area. The almost complete replacement of the staff management team would create a
level of risk that the committee felt could not be absorbed in the interest of cost
reductions.

Secondly, since the original business case presentation, NCMA’s advocacy efforts and
plans have matured to some degree, providing greater insight into the need to remain near
the primary customers and stakeholders in the DC area. While our advocacy efforts could
be effectively managed from outside the area, the committee concluded that serving this
key strategic initiative could best be managed from the local DC area. Additionally, key
members of the Board of Advisors, after contemplating our relocation plans for some
time, have increasingly been advising NCMA to remain in the area, principally to be
better positioned to implement the advocacy program.

Purchase Office Space in Sterling, Virginia
NCMA’s commercial real estate representative, Susan Sonley, Vice President, Grubb &
Ellis, conducted a survey of the Northern Virginia commercial market, including
Alexandria city, Arlington city and county, Fairfax County, Loudoun County, and
Fauquier County. The survey included prime lease, sublease, and purchase opportunities.

The search was limited to this area due to staff residential distribution: with only 2
exceptions, all current staff reside in these markets. Selecting a Maryland or DC site
would result in loss of more than 50% of staff, including several key managers. Staff
                                                                      Board Brief 2007-20
                                                                 Office Relocation Update
telecommuting options were considered, but due to the nature of most of these positions,
would not work on a full-time basis.

The lease market in the metro DC area has continued to intensify, with per square foot
prices continuing to escalate as predicted in our original business case. The market survey
found numerous lease opportunities available in the target market areas, but at prices no
less than $24 psf. Given that NCMA is presently paying $21.99 psf, this would represent
a cost increase to us of approximately $13,000 annually.

The sublease market in the metro DC area has all but dried up…in the survey, we found
only a few suitable spaces available, none with more than 24 months remaining on the
lease and less than $24 psf. This is consistent with what has been reported in the
Washington Post in recent months.

The purchase market in the metro DC area remains very limited. There are virtually no
“small properties” available (<14,000 sf), and only a few “office condo” developments
available, most priced beyond our price range. However, our search found two mixed use
developments in Beaumeade Business Park, in the Ashburn area of Sterling, with suite
space available.

Upon review of the facility by the staff directors, it was determined the facility would
meet current office space needs, and be located in an area that was convenient for a
majority of the staff. A lease versus purchase analysis was done for the less expensive of
the two properties - 21740 Beaumeade Circle – demonstrating that there was a small
(~$13,000 over 5 years) advantage to purchasing versus leasing.

The cost to lease 21740 Beaumeade Circle were also compared to other available lease
properties; in this case, there was a significant advantage (~$120,000 over 5 years) to
leasing 21740 Beaumeade Circle versus other properties.

In summary, purchasing the 21740 Beaumeade Circle property is the best expense
mitigation option for office space at this time.

Timing
As has been mentioned at various times to the Board over the past year, the current office
space at 8260 Greensboro Drive has become problematic because the traffic congestion
in the local area creates extraordinary delays when entering or exiting the parking garage
or lots. While this condition has existed to some degree since move-in in 2003, the
problem has become extreme over the past year due to commercial growth in the Tysons
Corner area – exacerbated by a major expansion to the Tysons II mall. It is not
uncommon for staff members to wait 20 minutes just to exit the parking garage, where
once they reach the local streets they have another 20 minute wait to travel two blocks to
the major highways, where they likely face a third lengthy delay in their commute home.
This is now the number one source of employee dissatisfaction by far.
                                                                     Board Brief 2007-20
                                                                Office Relocation Update
As stated above, the purchase market remains tight, with very few tenable properties
available, and no new opportunities in sight, according to our agent. The 21740
Beaumeade Circle is nearly sold out, meaning this opportunity will not be available for
long – certainly not until our current lease term expires next September.

The total cost to sublease our current space beginning February 1, 2007 would be
~$10,000, including real estate commissions, meaning purchasing the 21740 Beaumeade
Circle property now and subleasing our existing space for the balance of the lease term
remains a viable expense mitigation option for office space. February 1st is the soonest
we could occupy the Beaumeade property due to acquisition and construction lead-times.

Summary
Details regarding the lease versus purchase analysis, and purchase price for the
Beaumeade property, and other financial details are contained in the attached powerpoint
file. The Executive Committee determined that it was in NCMA’s best interest to
purchase the Beaumeade property now, sub-lease the Greensboro Drive property, and
occupy the new space at soonest opportunity, which would be around February 15, 2007.
Waiting until the current lease neared expiration in September 2007 would likely result in
increased facility expenses as the lease market continues to grow more expensive, and the
purchase market continues to grow more expensive and scarce.

				
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