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									                      Special Advertising Supplement

                 TEXAS LAWYER ROUNDTABLE SERIES



Commercial
Real Estate



 GREG C. BIGGS       SARAH HINKLEY        MICHAEL A.    LINDSAY WILSON
                                          KRYWUCKI


                  DECEMBER 7, 2009 • VOL. 25 • NO. 36
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Sarah Hinkley | Kim Butler | 214.722.7200


Bank of America Plaza | 901 Main Street | Dallas, Texas 75202 | transwestern.net/dallas
                                                  Special Advertising Supplement
                                                                                   CommerCial real estate
                                                lawyer with Munsch Hardt Kopf & Harr,           be more efficient in their current space or


  W
             e constantly hear about            PC. I have been with Munsch Hardt for           possible how they can contract and office
             the toll the economy is            15 years and have been practicing law in        in less space. They’re working with their
             taking on homeowners               the Dallas market for a total of 19 years.      real estate teams to try to sublease space,
  and personal real estate. But how             My day as a real estate lawyer is much dif-     and we’re trying to figure out the best way
  has this economic downturn af-                ferent than it used to be since the mar-        to divide the space so they keep what they
  fected the commercial real estate             ket has turned upside down; however, we         need and leave something that’s market-
  market? And more importantly,                 continue to work with quite a few clients       able. Increasing efficiency for our clients
  what are some solutions? To ad-               on a variety of real estate and transactional   is good business for us right now.
  dress these questions, Texas Law-             matters, even in this down market. There        HINKLEY: We have experienced an
  yer’s business department talked              is a fair amount of work involving the re-      extremely slow summer with little to no
  to commercial real estate experts             negotiation of leases and loans, but the        activity. Landlords are now faced with
  on the front line of these issues.            dynamics of what people need and want           trying to keep existing tenants in an
  The following discussion has been             to address these days is dramatically dif-      extremely competitive market with high
  edited for length and style.                  ferent than what we experienced before.         vacancies along with recruiting new ten-
                                                We’re now looked to as problem solvers in       ants. It is extremely hard right now to get
HEATHER D. NEVITT, moderator,                   this market, and we’re happy to help out        a tenant to move from their current loca-
editor of Texas Lawyer Books, Dallas: I         where we can.                                   tion. It is a tenant’s market and landlords
want to welcome you all to the Commercial       NEVITT: The common-thread through               are working hard to keep their tenants
Real Estate Roundtable. Let’s start by having   the discussion this morning is going to be      and help them “right” size. In the last two
everyone introduce yourselves and share with    the economy. I would like to focus on a very    months, landlords have seen an increase
us not only your name and where you work,       large question and that is: what is the cur-    in leasing activity. The United States will
but what you do on a daily basis.               rent state of the real estate market and how    face a large wave of commercial loan
GREG C. BIGGS, executive director,              is it affecting your business?                  maturity in 2010 and no one knows how
Cushman & Wakefield of Texas, Inc.,             KRYWUCKI: It has the swine flu. I               that’s going to affect the market. Recently,
Dallas: I’m a commercial office tenant          think all of us are experiencing significant    tenants seem to feel more confident than
representation broker with 24 years of          differences. In real estate, we were fortu-     they did in October of 2008 and many
experience and have a large law firm prac-      nate for many years. We had an extremely        feel that the market has hit or is close to
tice. On a daily basis, I’m either working      good run. We had a lot of positive things       the bottom.
on transactions for clients or trying to        going on in the marketplace. Most of us         BIGGS: I agree with Sarah. Between
find new clients.                               had tons of work to do. As a matter of          October of ‘08 and May of this year, the
SARAH HINKLEY, project leasing,                 fact, you had credenzas full of work just       phones just were not ringing and nobody
Transwestern, Dallas: I am responsible          begging for your attention. Now things          was answering their phones. The big-
for the leasing and marketing of commer-        are much different. There is much trepi-        gest challenge, frankly, was that decision
cial office properties in Dallas. My focus is   dation in the industry. Businesses are con-     makers didn’t know how this downturn
representing the owners of Bank of Amer-        tracting. It really puts a lot of us to task    was going to affect their business. Most
ica Plaza at 901 Main Street. The building      in the legal industry and in the brokerage      everybody just put any kind of decision-
is the tallest in Dallas and contains 1.9       ranks. In Sarah’s case, it’s a challenge to     making on hold. But as recently as three
million square feet. I work with tenants        fill a high quality building like Bank of       or four months ago, we started to see an
and brokers like Greg that represent ten-       America, although, fortunately for her,         increase in activity. Companies that are
ants on a daily basis.                          she’s leased up most of the building. And       still in business have started to determine
LINDSAY WILSON, vice president of               in Greg’s case, he has tenants who either       their future game plan. So, we’re work-
the corporate interior practice, Corgan         need to downsize or relocate and find a         ing with them to try to right size their
Associates, Inc., Dallas: On a day-to-day       more efficient and cost effective space. In     space if that’s ultimately what they want
basis I could be trying to find new proj-       the legal world, we are being asked to be       to do. We also have some clients that are
ects or helping run projects with my team.      more efficient, cost effective and creative,    growing, so that’s really good news. But I
A lot of the work I do is up front with the     while still producing the same high qual-       think the biggest news is they’re starting
client’s real estate team, quite often start-   ity product. We’re just happy to be in Dal-     to make decisions. Sarah’s point regarding
ing early in the project process to figure      las because our friends in other parts of       building ownership is our biggest concern
out the client’s needs and insure the space     the nation are feeling it much worse.           because the last thing we want to do is put
they select is in keeping with the project      WILSON: From our perspective, the               a tenant in a building where the owner-
goals they are trying to achieve.               biggest change we’ve seen in projects is        ship is either not going to be able to take
MICHAEL A. KRYWUCKI, share-                     that about half of our current projects are     care of them during their lease or where
holder with the real estate practice            driven by clients trying to get the most out    the future ownership is in question.
group, Munsch Hardt Kopf & Harr,                of the space they already have, rather than     KRYWUCKI: To follow up on a couple
P.C., Dallas: I am a commercial real estate     relocations. We are studying how they can       points made by Sarah and Greg, there

December 7, 2009                                                                                                                          1
                                                  Special Advertising Supplement
    CommerCial real estate
has been an increase in activity the past       market and lack of capital liquidity; there     BIGGS: No doubt that solid ownership is
few months. We’re actually seeing some          is no foreseeable development in the next       going to be a preferred option for tenants.
retail tenants sign letters of intent, move     couple of years. Solid-credit tenants can       However, most tenants want to know all
forward, and pencil in first and second         take advantage of the market and strike         of their available options, then, decide
quarter 2010 as opening dates which             a great deal with a strong landlord. Texas      how to narrow the field to their preferred
is great. I believe the real estate indus-      continues to be a great place to do business    choices. Sponsorship of a building is
try has been historically anxious and           with job growth forecasted for mid 2010.        always an important piece of the narrow-
eager to do something. The patience and         KRYWUCKI: That reminds me of the                ing process.
restraint have been maddening. Lately it        growing frequency of RFPs [Request for          HINKLEY: How would you compare
seems we are seeing some positive indica-       Proposals] out there. We’re being asked as      the activity today to the activity in 2007?
tions in the market and, while we’re still      a law firm to bid on work on a more regu-       Three-fourths of the activity?
having negative job growth, the drop is         lar basis. Also, we’re seeing our clients ask   BIGGS: Absolutely.
slowing. People are also getting some           for more help in evaluating their space         HINKLEY: Two years ago, Bank of
comfort that maybe the bottom either            options. Tenants are expanding their            America Plaza received several inquiries
has been reached or is near, and we may         scope of search and asking landlords to         everyday.
be turning the corner. It’s going to be a       come back with proposals and then put           KRYWUCKI: I read that that sales trans-
slow recovery period. It’s compelling for       them through more rounds of the “best           action volume on a year-to-year basis is
our clients to make the right decision,         and final” process.                             down 95 percent. That’s incredible.
and the clients are asking more questions       HINKLEY: To Lindsay’s point, the                BIGGS: Right. Nobody knows what the
about their real estate decisions such as       decision making process has become              market is.
the integrity of their landlord or how to       extremely slow. The majority of Dallas          KRYWUCKI: And that is devastating.
consolidate their operations. It seems          CBD tenants are tied up in leases forcing       We’ve all experienced it with the eco-
like the diligence on these decisions has       some tenants to enter the market early          nomic pressures and dramatic drop in
gotten much deeper compared to what             with up to four years of remaining lease        activity. It would seem that activity is des-
it used to be. More questions are getting       obligation. When tenants come to the            tined to return relatively soon because the
asked and answered which is good.               market early, they have time to examine         patience the banks have been exercising
WILSON: The decision-making process             several options. Dallas is a market with        has been very unusual from a historical
can be so much longer now than it was a         sophisticated tenant representation bro-        perspective. You hear the phrases: “a roll-
few years ago. We have also seen clients do     kers. They know the difference between          ing loan shows no loss” and the “pretend
exhaustive searches for space. They really      local landlords and research the finan-         and extend” approach. It seems like a lot
want to understand all of their options.        cial situation of each building. I believe      of the lenders, especially if they’re not bal-
We have frequently planned four, five,          there’s disparity; the good buildings with      ance sheet lenders, and the servicers of
and six different buildings for clients who     stable ownership are seeing more activity       large loan pools, tend to be much more
are looking to relocate. They are trying        than some of the ones that aren’t. Bank         cooperative in letting borrowers hold onto
to make sure they’ve seen every option          of America Plaza has not received the           and reposition the properties because few
before they make a decision.                    amount of RFP’s and inquires that it did        of the banks want to take them back in
NEVITT: And do they have more choices?          at this time in 2007, but because of it’s       this environment. The regulatory agencies
BIGGS: Well, I think that depends. The          solid ownership, the property gets more         are trying to relieve some pressure by issu-
choices and availabilities will be sub-market   looks than buildings with troubled own-         ing more permissive guidelines, but that
specific. We began again to work on a trans-    ership. Would you agree with that, Greg?        should only delay and not prevent the
action in Dallas for a client needing a large
amount of square footage that was in the
market this same time last year and put the
project on hold. We found that there’s only
one additional facility that became avail-
able in the last 12 months that can accom-
modate them. That just goes to show that
although space has been put back on the
market, it wasn’t necessarily large blocks of
space. That’s prevalent across Texas.
HINKLEY: With all of the negativity sur-
rounding commercial real estate, now is
actually a great time for tenants to enter
the market. There is an abundance of
existing space on the market and because
of the uncertainty of the commercial debt

2                                                                                                                      December 7, 2009
                          Special Advertising Supplement
                                       CommerCial real estate
deluge of activity.                             about office sizes. When someone’s added,
NEVITT: OK. So I think we all agree that        you’re not shuffling. We’re no longer see-
the market is not doing so hot. So, what in     ing law firms giving an allowance to part-
your perspective areas are you doing to help    ners to go out and buy an antique desk or
your clients during this difficult time?          decorate their own office. Each attorney
BIGGS: I think the biggest thing we’re          has the same furniture, which increases
trying to do is truly understand what our       the ability to use the space in a flexible
client’s short, medium and long term            way. All that being said, for every law firm
goals are. By understanding these goals,        I’ve worked with in the past three years,
we can build in enough flexibility to help      I’ve done a plan to study the universal
them through the long term. But that’s          office concept. After that initial plan,
the biggest key right now.                      how far that concept goes in the process
WILSON: I think flexibility is the key          is always interesting. It’s not always about
word. Greg’s talking about it in their          the age of the managing partners, but a
real estate options. Clients also want          determining factor of how far it gets is       Greg C. Biggs, executive director
flexibility in their built environment;         the age of the leadership, how progres-        at Cushman & Wakefield of Texas,
it’s the number one thing people ask for        sive they’re thinking, and how much or
when they’re moving from one space to           who are they trying to recruit. It matters     Inc., is a 23 year veteran of tenant
another. How can we be more flexible in         if they are focused on lateral recruits or
our new space than we were in our old           top law school graduates.                      representation in the Dallas, Texas
space? Trying to help clients plan as best      KRYWUCKI: You both bring up great
                                                                                               office market. He has specialized
we can for an unclear future is something       points. Universal office size is a great
we spend a lot of our time doing. A lot of      concept. As a matter of fact, it removes       in office tenant representation since
that planning is focused on flexibility in      some of the egos out of the whole process
a company’s technology infrastructure as        which is great. Before we left Fountain        1986, completing over $1.5 billion
much as it is where offices or copy rooms       Place, when we did an expansion to add
are located.                                    two additional floors, we considered that      in transactions. His experience has
BIGGS: With law firms, it’s much differ-        pretty seriously and were close to imple-      led him to be a well respected ne-
ent now than it used to be. The law firm        menting it. Instead of three or four dif-
business has changed dramatically over          ferent sized offices, we ended up having       gotiator within the Dallas real es-
the past few years and their office space is    two. There was probably a 30 square foot
reflecting those changes.                       difference between the two of them. Then       tate community. His skills include
NEVITT: Why is that changing? The               you have the random offices that tend to
                                                                                               strategic planning and execution of
advances in technology or —                     be larger or smaller depending on where
WILSON: The universal size office in            the pillars are and what the building cor-     real estate transactions leveraging
law firms is something we’ve been talking       ner or angle is. Hats off to the leadership
about for five years in this market. We’ve      at my firm, because that was a way for us      market conditions for the benefit of
finally seen a couple of firms here in Dal-     to be much more efficient with our space.
las actually go through with it.                When we moved to Lincoln Plaza, we             his clients. Biggs has been named
NEVITT: Can you please explain to the           standardized the office sizes even more.       a Dallas Business Journal "Heavy Hit-
readers of Texas Lawyer that might not          It’s much more functional. I think with
know what a “universal size office” is?           the way you practice today, if you need        ter" and was recipient of Best Real
WILSON: A universal size office refers          space you go to a conference room.
to the planning strategy of having only         WILSON: I agree with that. Meetings            Estate Deal of the Year in 2008. He
one size private office within a law firm.      are being taken out of the private office
                                                                                               was also named a D CEO magazine
There’s not a partner size office, an associ-   and are happening in conference rooms
ate size office and the 1,000 square foot       which takes away the argument for need-        "Top Broker" in 2008. Biggs is a
corner office. There’s only one size for all    ing a 500 or 600 square foot office. In
attorneys. Typically, when a universal size     addition, conference rooms are outfitted       graduate of North Texas State Uni-
office is utilized, it’s going to be around     with a lot of technology now that is nec-
150 square feet. That is typically two          essary for meetings. The rooms are much        versity. Biggs has worked with nu-
windows wide or about 10 feet by 14 or          more supportive of the work that needs to      merous law firms such as, Fulbright
15 feet deep. This planning strategy gives      be done in the meeting than the office is.
increased flexibility to the firm to relocate   BIGGS: But it also depends on the              & Jaworski, Patton Boggs, Baker
practice groups, add attorneys, create case     building.
or project teams without having to worry        WILSON: It absolutely depends on the           Botts and Sidley Austin.

December 7, 2009                                                                                                                       3
                                                  Special Advertising Supplement
    CommerCial real estate
building. Some buildings lend themselves        also has a positive benefit there as well.      as to what clients are looking for with
better to universal office planning. Newer      HINKLEY: It’s interesting that almost           respect to their business, where they want
product is usually set up for it perfectly.     every law firm performs a test fit with uni-    to take their business, how the business
Older buildings have varying floor plates       versal sized offices, but more often than       has changed and how they need us to help
and they have to be studied on an indi-         not when you get each attorney’s opinion        them with the transition period. And
vidual basis. The key to the early involve-     they like offices that vary in size. Many       we’ve been happy to be included as part
ment of a design firm in a project is insur-    law firms profit share; and if you’re a rain-   of that team. We also are really fortunate
ing that the building selected supports the     maker, you want a big office. At Bank of        because it gives us a chance to be proac-
goal of the project. If it’s universal office   America Plaza, law firms can have sixteen       tive by offering some creative and insight-
planning and flexibility — the building         corner offices per floor.                       ful suggestions. The more we learn about
needs to support that efficiently.              WILSON: The two office sizes in Dallas          where their business is heading, the bet-
KRYWUCKI: I would add that one of               and Fort Worth have absolutely become           ter we can help the client. I will say that
the things we looked for in searching for       the norm. If a firm can’t push them-            clients also look to the lawyers for more
new space was whether we could central-         selves to one size, they will go with two.      than just legal work these days, which I
ize a lot of services. Instead of having four   That’s the comfort level they can get to,       think is a fair request. We’ve been fortu-
or five satellite libraries throughout the      and it absolutely serves to increase effi-      nate enough to have quite a few entre-
law firm, we have a centralized library         ciency and flexibility. There’s a partner       preneurial lawyers and if you’re paying
now. Also, you have a single floor serve as     size office, often around 225 square feet       your lawyer to do certain legal tasks, you
your hub that provides the primary caf-         and an associate size office at 150 square      should expect and command some busi-
eteria area and the larger meeting rooms.       feet. There are some progressive firms that     ness input along the way to see what the
The meeting space has been very func-           have utilized the universal office plan-        market is doing on similar transactions. A
tional and versatile. We use it for a variety   ning. Haynes and Boone is probably the          client should expect and get that in this
of functions and have even had in-town          most notable here in Dallas that has used       market. Plus, that’s a little more fun for
firm retreats there.                            the concept in their new offices.               us too and encourages us think about the
WILSON: Concentrating all of those              NEVITT: Sarah, what concessions are             bigger picture and not just the immediate
central services together and the client        landlords giving law firms to help with these   task at hand. We like to help clients shape
facing spaces together is a norm in law         hard times?                                     and grow their business in the most opti-
firm planning today. It can also be a cost      HINKLEY: Concessions packages vary by           mal manner possible. I think that bonds
saving measure. When you centralize the         buildings and landlords. Tenants mainly         the client relationship a little better and it
client facing spaces onto one floor, the        ask for free rent and high tenant improve-      helps us address their needs more.
design team can really focus on commu-          ment packages. Bank of America Plaza            NEVITT: We touched on this a little, but
nicating the firm’s identity in that space.     can offer above market concessions and          let’s talk a little bit more about negotiating
This area usually has higher end finishes,      possibly relieve a tenant of their remain-      and underwriting leases and purchases and
furniture, and materials than the balance       ing lease obligation. Landlords who are at      what new trends are out there.
of the space — not that the rest of the         risk because of their debt situation or who     BIGGS: One of the latest trends we’ve
office space isn’t nice — but you are able      are in financial trouble tend to offer free     seen is that a number of the international
to control the level of finish and make the     rent due to their lack of capital. Buildings    law firms are trying to insure that their
dollars go further.                             with different amenities such as covered        offices have the capability to operate 24
KRYWUCKI: That’s another reason we              parking, fitness clubs, and signage oppor-      hours a day. It’s something you really have
went with a singular lobby concept too.         tunities can offer different concession         to pay attention to because for a landlord
We’ve tried to keep the space pretty effi-      packages. There are several ways to struc-      to provide that, it can add up to $4 per
cient. Again, my kudos to our leadership        ture concessions in a lease. Concessions        square foot to the bottom line. They’re
in that. We’ve always kept a pretty lean        depend on the financial strength of the         trading work back and forth between
shop in making sure that staffing levels        tenant and the size of the deal.                India, China, certainly Europe and the
are appropriate to the client and firm          NEVITT: Mike, how has the practice of           United States, and so they want that flex-
needs and the same applies to our space         law changed?                                    ibility to be able to come in at 2 o’clock
needs and use of space. We now have a           KRYWUCKI: The practice of law has               in the morning to work on a project with-
single place where clients and custom-          changed dramatically. I want to touch           out the need to first call somebody to
ers are received at the firm. They come         on a point that Greg made regarding the         have the air-conditioning or heat turned
to a single floor where they are greeted        need to understand the immediate, mid           on. Building security has become even
by our receptionist and wait in a lobby         range and long term goals of your client.       more significant than it used to be. We
area that’s user friendly. This was a very      I believe now that we’re not in the fast        had a terrorist incident in Dallas recently
efficient consolidation from when we had        and furious real estate market frenzy that      that shocked a lot of people. Previously,
a receptionist and lobby area on each of        we had enjoyed for so long, it’s enabled us     everyone thought something like that
the floors. In today’s environment where        to learn more about our clients. There’s        wouldn’t happen in Texas. But when you
everyone is concerned about security, it        been much more of an open dialogue              have a terrorist attack on a major office

4                                                                                                                      December 7, 2009
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building in your backyard, it’s an awak-        that there is not unintended access to files   practice. Each firm seems to have a differ-
ening. Those are some of the newest con-        and materials. So the controlled and con-      ent idea of collaboration.
cerns that we’ve seen that law firms are        venient setup at the office helps us meet      KRYWUCKI: I agree. It’s very practice
really focused on. It’s not just a rent and     that obligation as well.                       specific. We’ve done some functional
lease term structure that we look at. It’s a    NEVITT: We hear about the term “col-           placement of lawyers throughout the firm
myriad of things that are of interest and       laboration” in industries. Is collaboration    by section, by sub-practice groups and
of importance to our clients.                   increasing in law firm environments?           teams within each. We do encourage a
HINKLEY: Some buildings are not                 WILSON: I hear law firms saying, “Yes,         lot of free exchange of ideas. As a mat-
equipped for a law firm to operate twenty-      we want to collaborate more.” Then we          ter of fact, that’s one of the opportunities
four hours a day. Twenty-four-seven secu-       immediately get into how much real estate      in this wonderful economy since we now
rity and maintenance staff is a huge perk       they want to dedicate to collaborative         have more time on our hands to actu-
of leasing space in a large, iconic building.   spaces. Many other industries are giving       ally figure out how to refine the practice
At Bank of America Plaza, police officers       up the private office and moving toward        of law and help our clients. We are also
are available to escort our tenants up to a     more open environments, and that’s the         exchanging ideas among different prac-
three block radius at all times. The own-       square footage we’re re-allocating for col-    tice groups to see how we can help each
ership of a large building wants to ensure      laborative spaces. It’s not that the overall   other. One of the opportunities that is
its tenants are content and safe.               space they’re taking is downsizing, but the    frequently ignored, is that an incredible
WILSON: On the planning side of the             space allocated to an individual is down-      source of business comes from the expan-
business, we used to put the copy centers       sizing and more square footage is being        sion of relationships with existing clients.
in the core of the building which was           put into collaborative areas. Law firms        If you take advantage of that opportunity,
in the middle of the space every time.          aren’t giving up that personal space yet.      it could be a huge benefit to your client
There’s such a high volume of couriers,         It’s a challenge to find a balance of cre-     because of the efficiencies of the knowl-
FedEx and UPS employees in and out of           ating the right space for lawyers to col-      edge and team work that are captive
law firms, which can be a security con-         laborate, while keeping the firm efficient     within one firm. Since it involves an exist-
cern. In an effort to increase security and     in overall space usage. One of the solu-       ing relationship, the trust is established at
utility, we are now seeing firms put their      tions that seems to work for some firms        some level. So that’s helped us a little bit. I
copy centers, word processing, even their       is a large lounge that’s the break room        think in the legal world collaboration also
accounting group on another floor. From         and a meeting room. However, these             has some other connotations, especially
there, firm are responsible for distributing    spaces have been given so many duties to       in family law where collaborative law
packages and mail throughout the rest of        perform that unless they’re planned just       firms are basically trained as an alternative
the facility, minimized the number of           perfectly, they’re not meeting those goals.    to the “put the gloves on and go in the
people in and out of the space.                 Collaboration in law firms in a work in        ring and beat the heck out of each other”
KRYWUCKI: That’s yet another reason             progress, but we’ve got lots of great ideas    approach. You’re trying to look for more
why we went to a single reception area for      and I feel that law firms will continue to     solution-based results to help the parties.
the multiple floors we have. Not only to        draw inspiration from other types of busi-     But I think for smaller law firms or where
centrally receive clients and guests, but       ness in this area.                             you have what I’ll call “office sharing
also to serve as a connector to our office      HINKLEY: Collaboration in a law firm           arrangements,” collaboration is probably
services department, where couriers are         environment really depends on the law          a great feature for them to be able to send
directed to deliver their packages. As law-     firm and what areas of law are their spe-      work to each other, rely upon each other,
yers, we also have an ethical mandate to        cialty. For corporate litigators, war rooms    and act at times almost like a cohesive law
preserve client confidences and protect         and large conference rooms are important       firm, but not necessarily be legally mar-
their work product, so we have an inde-         because clients visit their space. It can be   ried to each other such that you’re sharing
pendent but parallel duty to make sure          very different depending on the type of        profits, losses and responsibilities.

6                                                                                                                     December 7, 2009
                          Special Advertising Supplement
                                   CommerCial real estate
BIGGS: From a national and interna-             office user is the amount of money it costs
tional firm capability, I think collabora-      to build out their space. That’s something
tion has taken on a whole new business          obviously you can address. But our job is
model that firms are implementing.              try to do is to get the landlord to take on as
Because revenues are down, law firms are        much of that build-out cost as possible.
looking at ways to increase their business      NEVITT: It’s custom-made space.
within their existing portfolio of clients      BIGGS: Absolutely.
while working as efficiently as possible for    WILSON: It’s also heavily built out, versus
their clients.                                  other industries. Sixty to seventy percent
NEVITT: This is a question for Sarah. So        of a corporate tenant may be open office,
how do landlords consider credit of a part-     and the furniture rarely comes out of the
nership versus credit of a corporation?         TI allowance that the landlord is provid-
HINKLEY: Credit is a big issue, espe-           ing. So in the open area you’re providing
cially now. Landlords are having a hard         the ceiling, the mechanical systems, the
time evaluating credit. Two years ago,          lights and the carpet. That allows more          Sarah Hinkley, project leas-
most landlords would have been eager to         dollars to be allocated to the 30 percent
lease space to well known corporations          of the space that’s heavily built out. For a     ing for Transwestern, specializes
and national law firms without a security       law firm that is primarily private office, it
deposit or credit enhancement. Because of       costs more to construct. On top of that,         in project leasing. She currently
the current economic climate and the way        there are often higher end finishes in a law
law firms are set up, evaluating the credit     firm to create the firm’s brand and image.
                                                                                                 leases Bank of America Plaza, a 1.9
of a law firm has become challenging. If        These factors can quickly double and tri-
a firm partakes in profit sharing, there are    ple or quadruple what a typical building
generally no assets to be held as collateral.   standard space might be.                         million square foot building, and
If something were to happen to a law firm,      KRYWUCKI: This is a great topic for
a Landlord could end up with vacant space       everyone because law firms, in the early         the tallest and largest in Dallas.
and zero return on the investment. Right        80s, or pre-mid-’80s crash, were built out
now, landlords are more willing to invest       over-the-top. You walked in and it was like      Before entering into project leas-
in a deal backed by corporate America.          a palace. It seemed to be an ego driven idea
Law firms should be willing to show the         that clients love to work with law firms that
last three years of their audited financials    had amazingly extravagant space.                 ing, Hinkley worked with tenants
when negotiating a lease.                       NEVITT: It was a sign of success.
BIGGS: Well, I don’t know that that’s           WILSON: As much surface as you could             in their search for office, retail and
just necessarily law firm specific. All         cover with wood paneling and trim, the
landlords that are viable and have a            better, right?                                   industrial space. Hinkley is very
long term ownership strategy are being          BIGGS: Don’t forget the opulent
very guarded about how much financial           stairwells.
                                                                                                 active in downtown Dallas where
investment they provide a tenant because        KRYWUCKI: Yes, very much so, the inte-
that’s exactly what it is. And they want        rior stairwell which was always so nice.
a return on their investment. That’s why        HINKLEY: But the belief was that you’ll          she is a Board Member. Hinkley
they’re in the business.                        get more clients with all that.
HINKLEY: You need to understand                 KRYWUCKI: Exactly, the appearance                was Transwestern’s national rising
from a landlord’s perspective, the capital      of being successful was attractive. We
invested upfront in a lease is seen as a loan   purposely went for a nice, functional but        star in 2008 and is a member of
and can be a big expense. It is hard to find    understated decor. Our lobby is nice, and
a way to evaluate credit in these uncer-        we have a few fancy features that are very
tain times. As a landlord representative, I     functional. At the same time, however, we        TREC, NTCAR, and ICSC. In her
need to be the eyes and ears of the Dallas      were very conservative not only for cost
market because the landlord may not be          containment, but we were being conscious         spare time, Sarah volunteers for Big
located here. Unlike public corporations,       and aware of the message it conveyed.
law firm’s financial statements are private.    That’s just a mindset that has driven a lot      Brothers Big Sisters and Goodwill.
Everything a landlord hears about a firm        of our decisions. And that’s a similar mind
is from me, their broker or from what           set of our clients too. They’re just not out-
                                                                                                 Hinkley graduated from Miami
they read in the newspaper.                     landish and over-the-top. Granted, they’re
BIGGS: One of the major differentiating         not misers; but they tend to be very cost
factors between a law firm and traditional      aware. They don’t want to be sitting in          University in Oxford, OH.

December 7, 2009                                                                                                                         7
                                                 Special Advertising Supplement
    CommerCial real estate
some ridiculous modern contemporary            The ownership addresses
chair that cost $2,000. The client is going    capital improvements and
to look and say, “I’m paying for this.” I      keep the tenants happy.
want to touch on one point that Greg           We have over a million
made earlier and Sarah addressed as well.      square feet of tenants that
It’s regarding the legitimate concerns land-   have been in the building
lords have in investing in a tenant’s space.   since the building was
I think Greg and I have experienced in         built. Not many build-
this market that tenants now have a simi-      ings can say that. I think
lar concern about a landlord’s ability to      that law firms need to
actually fund their finish-out. One of the     look at the next 10 years
diligence items we do, and I’m sure you        of their work environ-
do too, Greg, is to explore the credit wor-    ment instead of just the
thiness of your landlord, given the pres-      economics of the deal.
sures that a lot of the landlords are facing   BIGGS: Like you said,
from their lenders. In light of some of the    there are so many things
lender mandates on what is required of a       that go into a decision,
tenant to take down space, the funding         especially when a law
and availability of TI dollars are not safe    firm decides to move.
assumptions anymore. So, that’s another        There are rarely opportu-
aspect of diligence that we’ve had to go       nities when you’re work-
through on behalf of our tenant clients in     ing with a law firm that
this challenging economy.                      the existing building is
HINKLEY: That leads into the ques-             not somehow some way
tion of what is the difference of working      going to try to keep that law firm from         practice doing nothing but work-outs and
with a financially stable ownership versus     moving.                                         foreclosures, you get a pretty eye opening
a highly leveraged ownership. There are        HINKLEY: Right. And it’s usually from           perspective. Personally, I think it’s very
so many issues law firms consider when         an economic position.                           good training to see a deal gone bad, to
evaluating a building: its amenities, ten-     BIGGS: Sometimes, but there are other           help you learn how a deal should be done
ant improvement dollars, location, etc.        reasons why law firms move too. If their        properly. It gave me a great amount of
The list goes on and on of what a law          space is obsolete and it needs to be remod-     exposure to arguments that could be made
firm looks for. Dealing with a financially     eled. If they decide to stay in place but       and positions that could be taken. It really
stable owner versus a highly leveraged         the space needs significant construction,       influences how tight your drafting is and
owner should be an enormous factor             you’ve got to do something with those           different requests and negotiating points
when determining the right building for        people during that construction period.         you make. Since we’ve had a little more
a law firm. Signing a ten year lease means     Typically you’ve got to find swing space        time on our hands the past 12 months,
that you are entering into a ten year rela-    for them. Swing space requires a lawyer         I have been able to attend more industry
tionship with your landlord. When sign-        to move twice. Moving once is painful;          conferences and networking events and
ing a lease with a highly leveraged owner,     moving twice is doubly painful. So there        meet with seasoned industry professionals
a law firm does know if the landlord           are those types of considerations that go       who are in a position to give you market
that signed the lease will be the landlord     into decisions about whether a law firm is      input and feedback.
throughout the lease term. A firm should       going to move or not. Law firms are always      HINKLEY: Like Texas Lawyer roundtables.
not have to worry about how clean the          very interested in what the economic deci-      KRYWUCKI: Exactly, like participating
restrooms are. Does your trash get taken       sion is, but then all these other important     in roundtables with esteemed panelists.
out every day? Do you feel secure? These       factors come into play as well. I think part-   We’re in an environment where you’re
are the kinds of things that financially       nership meetings, when it comes down to         seeing lenders do things that they didn’t
stable owners take care of that affect a       making a decision on whether to actually        do before. As a matter of fact, Bill Cawley
law firm’s employees on a daily basis. If a    move or not, are always so interesting. You     recently said that he was able to buy notes
firm is evaluating two different buildings     never know what is going to happen.             on two properties that he owned at a dis-
and Building A has great ownership, and        NEVITT: How does this current real estate       count. And he was the borrower. In the
Building B is $4 less per square foot with     crisis differ from the one that occurred in     late ‘80s, early ‘90s, that couldn’t happen.
a highly leveraged ownership is it worth       the mid-80’s?                                   The RTC and FDIC limitations would
the savings to be in a building that is not    KRYWUCKI: I started practicing law              prohibit a borrower from getting a dis-
as well maintained? Fortunately, I work        when the real estate market was still mired     count on their own loan. So that dynamic
for a very financially stable ownership        in the malaise from the mid-to-late ‘80s        has changed. You’re also seeing buyers
with an outstanding management team.           real estate crash. When you start your          being able to buy their own property at

8                                                                                                                    December 7, 2009
                           Special Advertising Supplement
                                    CommerCial real estate
a foreclosure sale because of their ability      goal is to recruit the best and the brightest
to come to the table with a better offer.        from top law schools, firms recognize that
Because they’re familiar with the asset          these kids are very visual. They’ve been
and could offer a higher price and non-          bombarded with images since the day
refundable deposits at the outset, they          they were born. They are all very media
are in a better bargaining position com-         and technologically savvy. They make
pared to someone who knows much less             decisions and form opinions quickly. That
about it and is not in position to com-          can happen upon crossing the threshold
mit hard money from the start or pay a           of that law firm and seeing the wood pan-
higher price. So we’ve seen some changes.        eled walls and ornate furniture — the
In this market, there is a bunch of capi-        supposition being that this must be an
tal out there. It’s just that the banks aren’t   old school place. Many firms are telling
lending because of their regulations and         us they want that first impression to be
fear that any loan they make these days          that they are forward thinking. They are
is a bad loan destined for default. There’s      an international firm. That’s something         Michael A. Krywucki is a
still such a price delta between what sell-      associates coming out of college are look-      shareholder in the Real Estate Prac-
ers believe their properties are worth           ing for. They want those global opportu-        tice Group of Munsch Hardt Kopf
and what buyers are willing to pay. The          nities. Firms want to brand themselves
brokers probably see a bit of that in the        internationally, an office in New York and      & Harr, P.C. Krywucki's real estate
disparity of lease rates asked and offered.      in Dallas and in Beijing may not be iden-       experience includes development,
And, Lindsay, I’m sure that drives some          tical, but they have the same feel. Tech-       acquisition/disposition,         leasing
of the cost decisions on what users were         nology — we hear it again and again and
used to paying for interior design work          in all the information and studies that         (landlord/tenant), financing, and
compared to today.                               are done about what these young attor-          joint ventures and spans all major
WILSON: Absolutely. The competition              neys are looking for. They’re not looking       types of real estate such as office,
is fierce for the work that is out there and     for their own secretary. They’re not even
that continues to drive down fees.               necessarily looking for their own office.       industrial, retail, multifamily, con-
BIGGS: Real estate is cyclical, and our          They’re more interested in how techno-          dominiums (office and residential),
economy is cyclical as well. Real estate         logically advanced is the firm and what         hospitality and medical facilities
typically trails the economy by a period         technology is going to be at their finger-
of months, sometimes as much as 18               tips to do their work.                          (specialty hospitals, ambulatory
months. The downturn in the ‘80s                 KRYWUCKI: I would say that recruiting           surgery centers and medical office
seemed to be United States centric. What         has dramatically changed as well because,       buildings). Krywucki has received
we’re experiencing today is an interna-          again, it’s an investment in the future of
tional recession. Most companies and law         a law firm. I know several firms have had       several honors during his legal ca-
firms are really trying to focus on what         to make the challenging decision to either      reer, including: AV® Peer Rating,
the future of their business is going to         cancel or suspend their recruiting pro-         Martindale-Hubbell; Leaders in
be. When we have these great runs in             grams. Being a mid size firm, I think we
the economy that lasts for seven, eight or       have some pretty decent name recognition        Their Field, Chambers USA, 2009;
nine years, people get bullish and believe       out there, but we strategically elected to      Rising Stars, Key Professional Me-
that it’s going to last forever, but it never    continue our recruiting program because         dia, Inc., 2004; and is the recipient
does. I believe this downturn’s going to         we want to continue our brand and
                                                                                                 of several Service Awards for Pro-
last a little longer than the traditional two    awareness at the different schools and in
or three or four year downturn which is          the market place. It’s amazing how there’s      viding Pro Bono Legal Assistance.
going to cause law firms and companies           a direct correlation with the economy           Outside the office, Krywucki is very
to run lean and mean for a long time. Law        and willingness of students to adjust their
                                                                                                 active in several industry and chari-
firm clients are asking them how they can        expectations and expand their job hori-
be more efficient and do more work for           zons. The market is tough enough that a         table organizations, including The
lower fees. The firms in turn are running        lot of students coming out of law school,       Real Estate Council (Board Mem-
their businesses that way. Hopefully we’re       unless they are the top students from the
                                                                                                 ber), ICSC, NAIOP, Dallas-Area
all going to learn from this downturn.           best schools, are just happy to land a job.
NEVITT: Lindsay, how can office space be           There are some rounding errors that really      Habitat for Humanity and Animal
used as a recruiting tool to try to get attor-   help you when you’re competing against          Rescue of Texas. Krywucki lives in
neys into the space?                             other comparable firms. We’re fortu-
                                                                                                 Dallas with his wife Summer and
WILSON: That dove tails with our dis-            nate enough to have a lot of high caliber
cussion of how firms used to look. If the        recruits from good schools and lateral          their five pets (all rescues!).

December 7, 2009                                                                                                                            9
                                                                   Special Advertising Supplement
                                           CommerCial real estate
                                         hires that come from either national or         WILSON: That renovation resulted in
                                         international law firms. We need to be          increased occupancy in that building. That’s
                                         competitive and we’ve stayed that way,          a segment of work that we think is grow-
                                         and a lot of that is through technol-           ing in this economy. The value of an older
                                         ogy. Everyone expects your office to be         building with updated amenities is some-
                                         designed where it’s fully functional. You       thing that law firms definitely look at.
                                         have immediate access to things, in some        KRYWUCKI: That’s an interesting point
                                         cases entirely from your desk, including        because when we moved into the build-
                                         printers in your own office, where you          ing, it was a nice building, good ameni-
                                         don’t have to walk down the hall to per-        ties, but the lobby area was kind of dark
                                         form a task. You want to be able to have a      and a little drab. It had a little carry-over
                                         virtual office from anywhere, whether it’s      from previous design references. And now
                                         via laptop or PDA, since the practice of        it is much brighter. In this current world
                                         law is a 24/7 job. The expectations now,        of negative news and a dour economy, it’s
 Heather D. Nevitt is the                more than ever, are that we need to be          nice to walk in to a bright, well-lit space
                                         available at any time of day regardless of      that is not a downer.
 Acquisitions Book Editor for            where we are, and I think that’s the right      WILSON: Lincoln Plaza also has a great
                                         thing to do because most of our clients         green initiative. They just recently received
 Texas Lawyer. For three years she       aren’t 9:00 to 5:00, the whistle blows and      their LEED certification for the way the
                                         they leave. When they’re thinking and           building is operated and maintained.
                                         they’re working, they expect you to be          LEED and sustainability is another part of
 has been in charge of the legal
                                         paying attention too. Technology enables        the repositioning effort that we’re seeing;
                                         us to do that. One other thing about the        not only attracting law firm tenants, but
 book department, which consists         office space as a recruiting tool is practice   attracting all types of corporate tenants.
                                         specific. Obviously, when we were looking       HINKLEY: A law firms’ location and
 of 12 titles that publish annually.     to make a move four years ago, we had to        space is a reflection of the firm. If a firm
                                         factor in the other practice groups within      is recruiting a 25-year-old right out of
 She handles all aspects of a book’s     the firm since we were fortunate enough         law school, the space should make him or
                                         to have a very balanced firm of transac-        hearsay, “I want to work here.” You made
                                         tional and controversy lawyers. The con-        a good point with Downtown. The demo-
 creation: from acquisition, to edit-    troversy group, litigators and bankruptcy       graphics of Downtown in Dallas are pri-
                                         lawyers, need to be close to the court-         marily 25-40 year-olds. If a firm is recruit-
 ing, to layout, design and produc-      houses, so that is a compelling reason for      ing from premiere schools in and outside
                                         us to be close to Downtown. It’s also a         of Texas, young lawyers want to work
 tion. She was also an editor for        compelling reason for us to be close to         Downtown where the action is, where
                                         the feeder roads and access points in and       they can go downstairs to grab a bite to
                                         out of Downtown. Those are big selling          eat, go walk across the street to work out
 the Texas Lawyer newspaper and
                                         points for us. And also getting in and out      at a gym, and walk to their urban apart-
                                         of your garage very easily and not having       ment or house. A Downtown location is a
 an editor for The Journal of Medicine   to walk blocks to go to your garage. All        big selling point for young attorneys.
                                         those things make the day-to-day practice       KRYWUCKI: Plus your building is
 and Law at Michigan State Col-          of law a lot less high-maintenance.             incredibly convenient to the courthouse.
                                         WILSON: The image of the building that          HINKLEY: All three are within a block.
 lege of Law. Before her position        their space is in is also an important issue.   BIGGS: Michael said is that recruiting
                                         Repositioning existing assets is something      out of school has slowed down dramati-
                                         we’re doing more and more of and talking        cally and I agree. But I think firms are still
 with Texas Lawyer she practiced         to landlords about quite frequently. We         trying to recruit lateral hires that can bring
                                         said earlier that there won’t be a lot more     in proven revenue. Like Sarah said, their
 law with a focus on class action        new development, but there will be repo-        space is a reflection of the firm and lateral
                                         sitioning of older buildings. For example,      hires pay attention to that just as much as
 litigation. She received her J.D.       the building that Munsch Hardt is in, Lin-      young recruits do. So I think it’s important
                                         coln Plaza, my firm did an extensive reno-      for the firm to have an image that reflects
                                         vation of all their common areas, includ-       their vision and their culture.
 from Michigan State University
                                         ing their lobby and cafeteria space.            BIGGS: From a real estate perspective, a
                                         KRYWUCKI: Nice job by the way. It               buildings age and its technical capacity are
 College of Law in 1999.                 looks great.                                    critical to a law firm’s ability to advance

10                                                                                                              December 7, 2009
                           Special Advertising Supplement
                                    CommerCial real estate
as technology advances. Technology has           Now we’re seeing an influx of bring-
now become one of the top three costs            ing them back in the firm’s space. Bank
in a law firm’s annual budget. Earlier, we       of America Plaza has an on-site telecom
talked about the fact that it cost so much       consultant and existing data centers.
more to build out a law firm space than          WILSON: I think that’s driven by the
traditional office space. Well, in today’s       law firm size too. Many national and
world, law firms are typically not spend-        global firms will have a separate data cen-
ing as much on their offices, but rather on      ter site, rather than having it all within
their conference centers, their reception        their space.
areas and their technology. Redundancy           KRYWUCKI: Depending on the number
is a key factor for a lot of firms as well.      of locations a firm has, you may have sepa-
They want to have the ability to continue        rate — we’re Dallas, Houston and Austin
to operate if the power in the building          — facilities as backup for each of those.
goes down.                                       But technology has really changed the way
HINKLEY: Again, that depends on the              people practice law, though, because of         Lindsay Wilson is a vice presi-
landlord’s interest in keeping the building      the off-site storage, electronic storage, and   dent with Corgan Associates, Inc.,
up-to-date. Because of financing issues,         scanning capabilities. We can document
we will not see skyscrapers built in any         and close transactions without ever hav-        and a registered Interior Designer.
market for several years, or possibly ever.      ing to leave the office or meet in person.
The infrastructure of an iconic building         The ability to have the video conferencing      A graduate of the University of Ar-
like Bank of America Plaza will not be           has caused quite a few people to earn fewer     kansas with a Bachelor degree in
duplicated. The building has every major         Southwest Rapid Reward points. We’re
fiber provider building. The 72nd floor is       able to have client presentations or confer-    Interior Design, Lindsay functions
dedicated to telecommunications. Newer           ences in our office where we can have our
                                                                                                 not only as a designer for her cli-
buildings are built to spec depending on         other two offices participate as if they were
the tenant’s needs.                              in the same room. It kind of makes the          ents, but also as their business part-
WILSON: Sometimes the need for a                 world flat like Thomas Friedman said.
technology upgrade will actually be the          WILSON: The systems are also getting            ner. By working with clients early
driver that makes the decision to relocate.      easier to use. If somebody had an older
                                                                                                 in the process to assist in the evalu-
If it’s extensive, the cost, and pain, to stay   generation video conferencing system,
in place and go through that renovation,         the first part of the discussion is always:     ation of their real estate options,
can be the tipping point to ultimately           “We’re not doing it again unless we can
decide on relocation.                            actually work it because there’s only one       she is able to affirm the proposed
HINKLEY: There is a lot of savings that          guy in IT and we have to call him to get        space is in agreement with the cli-
could be passed through. On-site data cen-       everything set up.” They really are getting
ters can be a huge benefit to law firms.         more user friendly. The economy is also         ent’s corporate vision and culture.
WILSON: That part of the budget is               resulting in travel being limited and video
something we’re talking to all of our cli-       conferencing being utilized more.               During her career as an interior de-
ents about, not just for cabling and new         NEVITT: Do you find that with all the           signer she has been instrumental in
phones, but for the complete technology          development of user-friendly technology that
package. A conference room isn’t a confer-       companies/firms are centralizing their work     the design and execution of well
ence room anymore unless it is set up with       into the main office and closing their sub-
adequate technology. We are seeing a lot         urban or regional offices? Or are firms still     over 3 million square feet of inte-
of video conferencing, flat panel monitors       keeping their smaller regional locations?       riors projects with legal, financial,
on the walls, wireless connectivity and the      WILSON: Seems to depend on the firm.
ever present conference phone. Without           KRYWUCKI: Right. It’s actually client           corporate, advertising and media
proper technology a room just won’t get          driven more often than not. There were
                                                                                                 companies. Corgan Associates, Inc.
used. Putting a sign on a room that says         some firms in town that had heavy tech-
conference room doesn’t mean anything to         nology practices where they wanted to           is a full service architecture and in-
anyone if it doesn’t serve the needs of the      locate within the telecom corridor and
meeting. No one goes in there. It becomes        they’d open up a satellite office there.        teriors firm, founded in Dallas in
a storage room every time.                       And with conventional law firm adap-
                                                                                                 1938. Today, Corgan has offices
HINKLEY: I agree. Law firms started              tation to a new location, if you’re going
putting their data centers, and servers at a     to go ahead and set up shop somewhere,          around the world and employees
different location for many different rea-       you normally like to have some cultural
sons such as flood risks or security issues.     anchors in that new location. They are          300 professionals worldwide.

December 7, 2009                                                                                                                      11
                                                   Special Advertising Supplement
  CommerCial real estate
                                                 HINKLEY: Looking five years ahead,               include the types of space they have. There
                                                 I think we have another year of tenants          always will be a market for high quality
                                                 likely staying in place, short term renew-       space, great landlords, and great loca-
                                                 als and overall uncertainty. Without             tions. People don’t want to work in a box
                                                 development of new product and job               because it’s psychologically daunting. It
                                                 creation, existing buildings will continue       stunts your ability to be a progressive, cre-
                                                 to do everything possible to keep tenants        ative thinker. At the same time, however,
                                                 in place and recruit new ones. I believe         you may not need all that extra space. As
                                                 we will see significant increase in leasing      far as the economy goes, we’ve got a ways
                                                 activity mid-2010. We are fortunate to           to go. We’re feeling our way through the
                                                 be in Texas. Downtown Dallas has gained          dark. We’re going to bump into a lot of
                                                 great momentum with the addition of the          furniture and a lot of other things along
lawyers who have been with the firm for          Arts District, Woodall Rodgers Deck Park         the way. I will say this about the real
a long time who can basically set the tone       and the convention center hotel. Tenants         estate industry, I’ve been very impressed
for the office and continue the culture of       will continue to return to the urban core.       in how real estate professionals have come
the firm. We’ve had lawyers spend signifi-       WILSON: I think we anticipate seeing             together and decided to be more collab-
cant time with clients where it ends up          that whether law firms relocate or stay in       orative — to use the term Lindsey used
almost serving as a satellite office. We’ve      place the number one goal is going to be         earlier — in working together in trying
also had satellite offices at different places   to make their space as flexible as possible.     to come up with solutions and opportu-
around the country over the years because        Greg talked about being lean and mean as         nities. Even though it is a tenant market
it was practice driven or client driven at       a firm, making their space lean and mean         right now, we’re also seeing quite a few
that time. As for the three primary mar-         will better support their business model         tenants, aside from asking for a rental
kets in Texas, we’re happy to be in each         and the way they’re practicing law today.        reduction, become open-minded when
of the three. Each of our three offices is a     In addition to being flexible, maintaining       a landlord comes back and says, “I need
good anchor in their market.                     the firm’s brand, culture, and image will        something to trade for that. What kind
NEVITT: To wrap up our discussion, what          also remain important. Communicating             of concessions can I get to reward me for
trends do you see happening in the next five     stability is more important now that ever.       this additional investment in you for the
years? Where you do you see this all going?      KRYWUCKI: I believe that there will              same space?” Because that landlord’s cost
Or do you think it will take even longer         be permanent changes to the way a lot of         will remain the same, if not increase. So
than five years to get over this hump? Where     people do business. The dramatic drop in         I’ve been really impressed with the pre-
do you see things going from here?               the economy and activity coupled with            dominant desire to work together. I think
BIGGS: I think you’re going to see a repo-       the immediate pressures so many are fac-         in the law firm arena, lawyers and clients
sitioning of many millions of square feet of     ing in the face of declining revenue and         are trying to be more cooperative with
real estate. Ownership changes are going         either constant or increasing costs will         each other and the other side. You have
to be dramatic. There will be opportuni-         cause a lot of people — and we use this          the occasional instance where some take
ties that purchasers will take advantage of      term a lot today — to become lean and            advantage of the situation and they feel
and hopefully they’ll be a terrific landlord     mean. We are fortunate enough to live            it’s time to go in for the kill. You’ll always
and recognize how important the tenants          by that mantra all along, although, we’ve        have that. But, we’re seeing parties be
are to their properties. One of the biggest      even looked at additional ways to tighten        much more motivated to cooperate and
challenges we’ve had is that a number of         the belt a little bit more and figure out        work together. We’ve also seen that in doc-
landlords bought assets in hopes of ever         how to do things even more efficiently.          ument negotiation. While negotiations
increasing rents. But that obviously didn’t      But that also means, as I think Greg men-        may take longer, you often end up with a
happen. Landlords need to recognize the          tioned earlier, clients are looking to us for    slightly more even-handed document.
importance of taking care of the tenants         more cost effective ways to do the same
that they have, and making sure they             thing. How can we be innovative? How
keep them. We often hear from law firms          can we streamline the team such that the              For more information on
that they don’t feel that their landlords        client is getting as good, if not better, ser-
care about them or their business. And           vice? Standards continue to increase while               upcoming events and
when you hear that comment, you know             there is pressure to maintain the level of
that it’s going to be hard for a landlord to     cost or even lower it.
overcome those perceptions. The hope is          NEVITT: More bang for the buck.                      sponsorship opportunities,
that the organizations that buy assets after     KRYWUCKI: Exactly. I think there’s
all the dust has settled understand how          been a real assessment of what are luxu-                contact Deni Ruddy at
important it is to run a building with the       ries and what are needs. Consumers and
service and quality that reflect what ten-       professionals will evaluate every aspect of          800-456-5484, ext. 766.
ants deserve and expect.                         their businesses and lives, and that will

12                                                                                                                       December 7, 2009
Innovative Design Solutions

                               ARCHITECTURE
                          INTERIOR DESIGN
                                 214 748 2000
                              www.corgan.com

								
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