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									                                                                                                                    Issue     XIX

A Quarterly Publication For ITRA Realty Group

  or Not?
       he issue of rebuilding after a
       disaster is often charged with
       enough emotional sentiment
to cloud more pragmatic fiscal assess-
ments—whether it’s New York’s
“Freedom Tower,” or rebuilding New
Orleans, which will soon face the
next hurricane season.
   New York Mayor Bloomberg has            Can Corporate Real Estate Meet the
publicly questioned whether rebuild-
ing commercial space around the site       Challenge of the New Work Place?
of the former World Trade Center is                               B Y    B A R R Y     B E S W I C K
necessary. No prisoner of sentiment,                           DIRECTOR, CORPORATE REAL ESTATE/CAPITAL ONE
the Mayor is looking at the realities of

                                                   HE CORNER OFFICE HASN’T QUITE GIVEN WAY TO THE CORNER
a real estate market where condos
command top dollar while Lower
                                                   I-POD YET, BUT THE FUTURE OF WORK AS MOST OF US KNOW IT
Manhattan has little need for addi-                IS ABOUT TO CHANGE.
tional office space.                          Based on a study of its own workforce,     executive ranks, will seek early badges of
   Louisiana officials estimate 75% of     Capital One found some interesting            personal success such as status confer-
                                           changes in the needs of workers when          ring services and amenities. Their priori-
New Orleans’ 213,000 homes may
                                           segmented by generation.                      ties include child care and elder care.
have to be razed due to flood and
                                              Baby boomers, who now dominate the            Gen X places a priority on having such
mold damage.While rebuilding would         work force, will be the last generation to    tools of information and technology in
be a happy ending for the Big Easy, it     work in a traditional office environment.     the workplace as high-speed Internet
may be more realistic to fairly com-       Companies already are creating 21st cen-      and fast computers with the latest soft-
pensate displaced homeowners. To           tury work environments that mean less         ware apps and strong peripheral sup-
put people in the path of storms           commercial real estate space per worker                             Continued on page 5
stronger than Category 3 (i.e.,            and arrangements which address
Katrina), before building a better         advances in information and technology.
levee system is irresponsible.                We envision that the future of work          The design of this issue is sponsored
   For New York’s Freedom Tower, the       will adapt to the needs and values of the X     by AsiaPac International, Inc.
same common sense reasoning                and Y Generations of workers, which we
                                                                                           The global partnership of ITRA
applies. Many in the city’s real estate    found breaks with tradition in many areas.
                                              For instance, the current baby boom          Realty Group and AsiaPac Inter-
community doubt that companies                                                             national offers complete tenant
                                           generation dominated workforce puts a
will occupy this building because it                                                       representation and turnkey real
                                           high value on such material signs of
may be a terrorist target. The alterna-    achievement as a dedicated office, close        estate services throughout Asia,
tive building occupants are govern-        parking space and administrative support.       India, Australia and Latin America.
ment agencies—as if that lessens its       Boomers want health care and support in
appeal as a target.                        their “second (post-retirement) life.”          Call today to receive unbiased
   Perhaps a better starting point for        But as boomers exit the workforce,           real estate strategies and solu-
both cities is to rebuild without giv-     their replacements from Generation X,           tions to resolve your global needs.
ing in to the emotion of the moment.       who are starting to work their way up the

Issue XIX                                                                                                   Real EstateStrategies   1
          Long Leases: A Lawyer’s Reflections
                                               B   Y     S   C O T T      H .     M   I L L E R

    The deal was as simple as they come.           Ownership of Real Estate is Often
And yet the landlord’s lease documenta-            Complex. The ownership structure for
tion was hefty enough to measure in                larger office buildings has become more
pounds. The caller wanted to know:                 layered and complex. Real estate com-
Could I help?                                      petes with other businesses for invest-
    That’s a great question and I still            ment dollars, creating greater stress for
don’t really know the answer. The nego-            leases to produce ascertainable returns.
tiating leverage of the tenant was zero,           The lease is expected to act like a bond
so there was not much I could do at the            with a fixed return and all contingent risks
bargaining table. I could read the docu-           and expenses pushed onto the tenant.
ments and explain to my client, who                                                               got to the point quickly when drafting a
                                                   Decision-Making Can Be Difficult.
knew little about leases, as much as he                                                           document. By contrast, word processing
                                                   When ownership of real estate is simple,
could tolerate about what he was in for.                                                          encourages increasing amounts of boil-
                                                   the owner can more easily decide how
And charge him for that crash course in                                                           erplate, because it does not require a
                                                   long and one-sided to make the lease
onerous lease documents. Not very sat-                                                            decision to accept a risk.
                                                   form and make quicker decisions during
isfying, though my malpractice carrier
                                                   lease negotiations. In a more institutional    Job Mobility. People are more mobile
might approve.
                                                   ownership structure, it tends to be more       and stay in their jobs for a shorter peri-
    Does the lease need to be that long?
                                                   difficult to obtain clear-cut decisions that   od of time. Since a lease is a relationship
Why are leases so much longer now than
                                                   deviate from a very risk-averse approach.      over years, everyone now has to assume
they were years ago? Why are leases gen-
                                                                                                  that the same people will not be around
erally so one-sided? After almost twenty-          The Pace of Business Has Accelerated.
                                                                                                  to settle the inevitable issues and the
five years as a lawyer, most of them in            Service businesses,specifically those that
                                                                                                  document is asked to address more.
commercial real estate, I know that it is          tend to use office space, have grown
fairly easy to write a comprehensive               enormously. Also, the pace of business         The Defensive Practice of Law. Law,
lease that few tenants with significant            transactions has increased. Businesses         like medicine, is practiced more defen-
assets will sign without protracted nego-          also expand, merge, contract, or die at a      sively these days. Remember all those
tiation. Here are a few reflections on the         greater rate than in the past.Tenants are      expensive tests for your headache? Well,
rapidly evolving world of increasingly             driven to have flexibility in their long-      how about all those expensive docu-
complicated office leases.                         term space commitments and to quanti-          ments with literally hundreds of issues
    There are many forces at work in               fy their total monetary lease obligations      and sub-issues? Only the lawyers under-
commercial leasing that contribute to              to facilitate planning and budgeting.          stand them comprehensively. If only the
long one-sided documents and the                                                                  lawyers thoroughly understand the doc-
                                                   Real Estate Has Its Own Pace. Real
resulting negotiations and legal bills.                                                           uments, and they (the lawyers and docu-
                                                   estate tends not to move as fast as the
The lease is the meeting ground for                                                               ments) are too downside-oriented to
                                                   internet. Owners and tenants have to
today’s rapid pace of business and a                                                              begin with, it is difficult to break the log-
                                                   try and project years in advance when
landlord/tenant relationship that will                                                            jam? The above factors do not preclude
                                                   they commit to a lease. The flexibility
last for years. No landlords or tenants                                                           briefer leases or efficient negotiations.
                                                   and certainty sought by each party can
want long documents or protracted                                                                 Current business environment puts a
                                                   result in the negotiation many issues.
negotiations, but very few will readily                                                           premium on the importance of (1) pay-
give up what they perceive they need.              Inherent Unknowns. Commercial                  ing attention to the fit between the ten-
In the case of tenants, the need often             real estate has inherent unknowns. It is       ant and the landlord, and not just the ten-
includes better information to assess the          extremely sensitive to the economy, and        ant and the premises, (2) owners making
likelihood of future maintenance, capital          an expanding list of legal requirements        clear strategic decisions when preparing
improvement, operation and tax increas-            (ADA, asbestos, seismic, sprinklering)         their lease forms, and (3) tenant attor-
es due to building transfers.                      and it is often hard to predict what will      neys understanding the lease deal and
                                                   be next. A lease is about a future rela-       their client’s business so they can pro-
Real Estate is a Big Business. Many
                                                   tionship. No matter how many contin-           vide quality risk/benefit analysis with
years ago there were not that many large
                                                   gencies one tries to anticipate, the           respect to various lease issues.
buildings and real estate was not as big
                                                   future tends to provide others.
of a business. Real estate ownership                                                              Scott Miller is a San Francisco-based
tended to be simpler. Now real estate              Technology. Technology plays a role            real estate attorney. His e-mail is:
has a place in all institutional portfolios.       too. When carbon paper was king, you 
2   Real EstateStrategies                                                                                                       Issue XIX
      North American Office Market Survey—Second Quarter 2006
                                                          TOTAL                                                               AVAILABLE                       AVERAGE
                       CITY                                                                VA C A N C Y
                                                        SQUARE FEET                                                             SPACE                           RENT

  1                 Atlanta                                126.4M                               19.2%                            26.5M                         $20.20
  2                 Austin                                   34M                                15.7%                             5.3M                         $21.20
  3              Baltimore                                  79.1M                               13.0%                            10.3M                         $21.75
  4                 Boston                                  208M                                14.3%                            29.8M                         $27.40
  5                Calgary                                  42.4M                                1.8%                            14.5M                         $44.00
  6               Charlotte                                 33.9M                               19.8%                             6.7M                         $28.95
  7                Chicago                                  277M                                19.0%                            52.5M                         $24.00
  8                 Dallas                                 178.2M                               21.7%                            41.5M                         $18.04
  9          Denver/Boulder                                138.7M                               15.0%                            20.7M                         $17.70
 10        Fairfield/Westchester                            108M                                14.0%                            15.1M                         $15.87
 11            Ft. Lauderdale                               53.1M                                9.0%                             4.8M                         $23.90
 12               Houston                                   183M                                15.3%                             28M                          $18.07
 13               Las Vegas                                 38.1M                                8.4%                             3.2M                         $26.04
 14             Long Island                                  84M                                10.0%                             8.4M                         $25.81
 15             Los Angeles                                 305M                                 9.7%                            37.4M                         $25.38
 16              Manhattan                                 500.1M                               9.6%                             48.5M                         $44.50
 17                 Miami                                    54M                                 8.4%                             4.5M                         $25.06
 18               Nashville                                 27.4M                               10.7%                             2.9M                         $16.67
 19              New Jersey                                298.1M                               13.1%                            39.0M                         $25.10
 20                Norfolk                                  19.8M                                8.9%                             1.8M                         $18.22
 21                Orlando                                   68M                                 8.5%                             5.8M                         $25.13
 22             Palm Beach                                   32M                                 9.9%                            31.7M                         $25.88
 23             Philadelphia                                87.0M                               15.0%                            13.0M                         $24.34
 24                Phoenix                                  92.4M                               13.0%                            11.9M                         $23.37
 25              Pittsburgh                                 84.2M                               16.2%                            15.3M                         $18.59
 26               Portland                                  53.7M                               12.0%                             6.5M                         $18.74
 27            Salt Lake City                                26M                                 8.9%                             2.3M                         $18.22
 28              San Diego                                   67M                                 9.8%                             6.6M                         $30.15
 29            San Francisco                                77.4M                               11.7%                             9.0M                         $29.41
 30                 Seattle                                 118M                                11.3%                            13.3M                         $23.01
 31            Silicon Valley                               77.7M                               15.9%                            12.4M                         $19.67
 32                St. Louis                                 73M                                11.9%                             8.7M                         $18.68
 33                 Tampa                                   37.2M                                9.8%                             3.6M                         $19.68
 34                 Tucson                                  11.9M                               12.0%                             1.4M                         $17.95
 35      Washington, D.C. Metro                            395.7M                               9.2%                              36M                     D.C.: $42.36
                                                                                                                                                          Metro: $31.13

                  London Office Market Survey—Second Quarter 2006
                     DISTRICTS                             TAKE UP                           VACANCY                     TOTAL EST. STOCK                    PRIME RENT

 36          London (WE) CBD                                 775K                              4.2%                              105M                       82.5 GBP
 37           City/Docklands                                 1.5M                           9.3% / 9.4%                          108M                    52.5 / 37.5 GBP

Definitions for London
“Take Up”—Space absorbed in the previous quarter | “Supply”—Available Space | “GBP”—British Pounds
Disclaimer:This survey contains information from sources deemed to be reliable and accurate. However, we make no representation, warranty, or guaranty of its accuracy.

Issue XIX                                                                                                                                        Real EstateStrategies     3
      Asia/Pacific Rim Office Market Survey—Second Quarter 2006
                                                             TOTAL                                                            AVAILABLE                       AVERAGE
            CITY/COUNTRY                                                               VA C A N C Y I N %
                                                        SQUARE FEET                                                              SPACE                           RENT

38             Bangalore, India                          13,000,000                             4.90%                           637,000                         $14.30
39            Hyderabad, India                            5,100,000                             5.00%                           255,000                         $8.04
40              Chennai, India                            5,000,000                             6.00%                           300,000                         $11.40
41                 Pune, India                            6,750,000                             6.00%                           405,000                         $12.40
42                Delhi, India                            7,863,000                             4.00%                           314,520                         $34.02
43              Mumbai, India                             8,866,000                             5.00%                           443,300                         $43.99
44              Beijing, China                           39,043,000                            20.60%                         8,042,858                         $27.35
45           Hong Kong, China                            62,417,143                             5.71%                         3,564,019                         $59.00
46             Shanghai, China                           35,646,000                             5.00%                         1,782,300                         $32.60
47               Tokyo, Japan                           646,525,000                             5.00%                        32,326,250                         $86.00
48              Seoul, S. Korea                         210,000,000                             0.95%                         1,995,000                         $62.15
49                  Singapore                            45,779,000                            12.70%                         5,813,933                         $27.04
50             Hanoi, Vietnam                             2,263,850                             4.00%                           90,554                          $35.00
51     Ho Chi Minh City, Vietnam                          1,968,565                             5.25%                           103,350                         $30.10
52           Brisbane, Australia                         18,300,000                             1.10%                           201,300                         $28.12
53         Melbourne, Australia                          37,221,000                             7.50%                         2,791,575                         $19.07
54            Sydney, Australia                          49,061,000                            10.10%                         4,955,161                         $32.70

    Central-Latin American Office Market Survey—Second Quarter 2006
                                                             TOTAL                                                            AVAILABLE                       AVERAGE
            CITY/COUNTRY                                                               VA C A N C Y I N %
                                                        SQUARE FEET                                                              SPACE                           RENT

55       Buenos Aires, Argentina                          8,802,241                             7.60%                           668,970                         $14.00
56           Caracas, Venezuela                            5,920,000                           16.00%                           947,200                         $15.45
57                 Lima, Peru                              3,500,000                           14.00%                           490,000                         $11.05
58          Mexico City, Mexico                          109,260,000                           15.85%                        17,317,710                         $25.25
59           Monterrey, Mexico                             8,107,000                           11.20%                           907,984                         $17.87
60            Sao Paulo, Brazil                           53,657,017                           16.00%                         8,585,123                         $30.25
61              Curitiba, Brazil                          18,380,000                           17.00%                         3,124,600                         $22.50
62         San Juan, Puerto Rico                           9,200,000                           18.47%                         1,699,240                         $27.50
63 Santo Domingo, Dom. Rep.                                3,200,000                            3.70%                           118,400                         $22.00

Disclaimer: This survey contains information from sources deemed to be reliable and accurate. However, we make no representation, warranty, or guaranty of its accuracy.

4    Real EstateStrategies                                                                                                                                    Issue XIX
 New Work Place Challenge
                                                     Internet users                              telecommuters, almost as much as it is a
 Continued from page 1
                                                   • 36% have high speed Internet access         central corporate center. Capital One
port. To many from this group, cutting             • 87% of Federal workers are interest-        projects that in the future, 40% of knowl-
edge technology may trump the corner                 ed in telework                              edge workers will telecommute.
office or more personal space when                 • Average time spent in traffic queues           Already a growing group of compa-
making career decisions.                             commuting per week:                         nies are carrying out economies by mov-
    Even less concerned about the old              • Los Angeles - 11.25 hours                   ing to the distributed work model. Sun,
material issues of space and private               • Washington - 7.25 hours                     BP, Blue Cross-Blue Shield Association,
offices is Generation Y, a group that will         • Minneapolis - 6.6 hours                     Boeing and Cisco Systems implemented
enter the workforce en mass in the                   The Capital One study results, based        huge productivity increases ranging
next decade.                                      on a two-week observation period, show         from 9% to 54%. AT&T reported $135
    Anyone who has observed a college             that more than 40% of all office seats         million in productivity savings by sup-
class will not be surprised by Y group’s          were vacant every day, while an addi-          porting distributed work.
need for warp speed technology. Forget            tional 30% of all seats were unoccupied           Distributed work meets the needs of
e-mails. It is hard to tell if a single soul is   during the day. Thus 74% of our workers        knowledge workers, who are happier
actually listening to the professor as a          practiced work mobility before we put          with the new found connectivity offered
roomful of tomorrow’s executives is tap-          any workspace initiatives.                     by technology and the flexibility that
ping into notebooks—arranging social                 The greater demands of family, longer       allows them greater control and greater
dates, commenting on the professor’s              working hours combined with increas-           time over their personal lives.
hair, or playing high speed games using           ingly longer times spent going to work            Consider that we face a looming tal-
wireless connections or the university’s          are putting new pressures on the average       ent shortage:
intranet, if they are not text messaging          knowledge worker who is finding that            • 15% of 25-44 age workforce exiting
with cell phones. This Y generation               they have dramatically less time for              in the next 15 years
multi-tasks from the cradle, and has              themselves. For example, the length of          • 10 million workers needed by 2008
quickly evolving tastes, a strong sense of        the work week rose from 42 to 47 hours          • 2 workers exiting workforce for
community and individual expression.              between 1977 and 2002.                            every one entering; demand for
    The conclusions of this research                 With the demand for more knowledge             skilled talent expected to grow annu-
leave little doubt that the company               workers to enter the workforce expect-            ally through 2020
office will be undergoing the most his-           ed to be at a premium for the next 15             By understanding and leveraging the
toric changes since the PC was intro-             years, the forces of societal pressures,       changing needs of different generations
duced 25 years ago.                               high-speed technology and information          in the workforce, companies can adapt,
    We also found some interesting                processing and corporate cost structures       making it easier to attract and keep tal-
trends in how individuals use their               are coming together to create a 21st cen-      ent, while creating a cutting-edge work
offices to perform work. For example,             tury office prototype. We will be seeing       environment that meets the needs of
some people may spend almost as much              an office that will be a central nexus for     the X and Y Generation workers.
time sitting in rush hour traffic getting
to the office in some cities as they actu-
ally spend sitting at their own desks.             ITRA Grows in Florida and Texas
    Driven by the forces of technology                    R. RONALD POLLINA, CHAIRMAN, ITRA REALTY GROUP, ANNOUNCED THREE NEW
which are mobilizing the nature of                        US OFFICES.“WE ARE PLEASED THAT ITRA’S PRESENCE IN TWO LARGE AND FAST-
knowledge work, the competitive need                      GROWING STATES IN AMERICA HAS EXPANDED, EVEN AS WE CONTINUE TO GROW
                                                  ACROSS THE GLOBE.” THE NEW OFFICES ARE:
to increase productivity and raise com-
mercial real estate utilization, Capital          • ITRA/Cooke, Swaney & Cooke will serve          newspaper, CVS Pharmacy, Consolidated
                                                    the Dallas/Ft.Worth market. Headed by          Container and American Hotel Register.
One has developed a Future of Work
                                                    Lissa Cooke, President, who holds both         The firm is located at: 2180 N. Park
Strategy (FOW) to better understand
                                                    CCIM and CPM professional designations,        Avenue, Suite 220, Winter Park, FL USA
and leverage the changing realities of
                                                    the firm has provided exclusive tenant         32789, telephone: 1.407.622.2558,
the new workplace.                                                                                 e-mail:
                                                    representation to such companies as GHA
    The centerpiece of this FOW strategy                                                         • ITRA/Stagman Commercial Real Estate
                                                    Architects, UPS, Union Drilling, Weitz &
is the concept of distributed work, mean-                                                          Advisors of Fort Lauderdale, FL has
                                                    Luxenberg, P   .C., Hostnet, and Henslee,
ing that work is more tied to information,          Fowler, Hepworth & Schwartz. The firm          joined ITRA under the leadership of
which, like the Internet is not tied to a           is located at 6024 Palo Pinto Avenue,Suite     Jason Stagman, CCIM, President.Tenants
specific physical location. Thus flexible           100, Dallas,Texas, USA 75206, telephone,       represented include: John Casablancas
arrangements such as telecommuting,                 1+214.521.3772, e-mail:                        Modeling and Career Center, Indepen-
which do not tie a worker to an office                         dence Community Bank, Bankers Life &
will redefine the traditional workplace           • ITRA/York Property Company has                 Casualty Co., and Tax Automation Inc.
while greatly increasing productivity.              served the Orlando market/Central              The firm is located at: 6401 Congress
    Here are some facts about the US                Florida for 22 years. Headed by Jeffrey        Avenue, Suite 140, Boca Raton, Florida,
working population in 2005:                         York, President, the firm represents           USA 33487, 1+800.489.7710, e-mail:
 • 68.5% of the population are                      such clients as the Orlando Sentinel 

Issue XIX                                                                                                          Real EstateStrategies     5
  Board of Directors                                                  Committee Chairs
  Ronald R.Pollina, PhD, ITRA Chicago, Chairman                       Ross Selinger, ITRA Long Island, ITRA Newsletter Committee Chair
  Ross Selinger, ITRA Long Island, Vice Chairman                      Will Gary, ITRA Denver, Web Site Committee Chair
  Debra Stracke Anderson, CCIM, SIOR, ITRA Washington DC, Secretary   Carrie Holstead, ITRA Pittsburgh, Business Development Committee Chair
  Anna Rosen, ITRA San Francisco, Treasurer                           Norm DeHart, ITRA Boulder, Conference Committee Chair
  Stuart Holcombe, CCIM, ITRA Atlanta, Membership Advisory            Larry Dickstein, ITRA New Jersey, Membership Committee Chair

                                                                                                                               Issue      XIX

A Quarterly Publication For ITRA Realty Group
Chicago-O’Hare Building
401 Devon Avenue
Park Ridge, IL USA 60068
phone +1 (706) 654-3201
US and Canada +1 (888) 925-4872

ITRA Realty Group provides corporate
real estate services for tenants and
buyers throughout the world.

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