Core Values: Why American Companies are Moving Downtown Over the past five years, hundreds of companies across the United States have moved to and invested in walkable downtowns. Why did companies choose these places? And what features did they look for when picking a new location? Core Values: Why American Companies are Moving Downtown is brand new research released today from Smart Growth America in partnership with Cushman & Wakefield and the George Washington University School of Business’ Center for Real Estate and Urban Analysis. Their report surveys nearly 500 companies that moved to or expanded in walkable downtowns between 2010 and 2015, and includes interviews with more than 40 senior-level staff at those companies. The results provide an overview of why these companies chose a walkable downtown and what they looked for when considering a new location. The report also provides ideas for cities about how they can create the kinds of places these companies seek. Of particular interest to us Houstonians, fourteen companies either opening a new business or relocating to Downtown Houston were studied.

All of the places that the relocating businesses chose to move had dramatically increased walking and transit scores, meaning they were more walkable and more easily reachable by transit. Almost all of them had better bike scores as well. Houston’s businesses are following a national trend of preferring locations that are less remote and easier to access by sustainable means. They want walkable neighborhoods, cleaner and safer streets, and convenient access by many transportation options. Download the report here. Find a link to the list of companies involved here. – VISIT CONFERENCE WEBSITE Houston region growth patterns have significantly shifted to City Mayor Turner’s Paradigm Shift includes regional BRT, TOD, flexible funding Memo to the next Houston Tomorrow Executive Director Mayor Turner tells TTC we need a paradigm shift No More Road Only Bonds Texas Mayors push back on state proposals Core Values: Why American Companies are Moving Downtown

Will Boston be first car-free city in US? Study: sprawl costs US $1 trillion annually > Cresa in the News > Calgary downtown vacancy rate moving towards 25% Cresa in the News Cresa's Scott Maxwell Elected to the Board of UMOM Underhill Says Cresa's Growth Will Continue In 2017 Cresa Boston Adds Two Associates to Suburban Market Team Calgary downtown vacancy rate moving towards 25%Laptop Cooling Pad That Plugs Into Wall But there are upsides as charities and non-profits may have better access to marketGold Beaded String Curtain The state of Calgary's downtown office vacancy rate appears to be getting more grim by the day, pushing towards 25 per cent, a level not seen since the economic downturn in the 1980s, according to a new report from a company that represents office tenants.Best Washing Machine And Dryer In India

There are currently eight million square feet of vacant office space available in downtown Calgary, which translates into a 15-year supply, according to the first-quarter report by Cresa. Add to that three million more square feet currently under construction and that puts the vacancy rate near 20 per cent. But an additional two million square feet of "ghost vacancies" — unoccupied offices still being leased by companies — and the vacancy rate gets pushed to near 25 per cent. "A lot of those companies are stronger integrated energy companies or companies that are not bleeding quite as bad as some out there, so they can afford to sit on their space," said Adam Hayes, a principal and broker with Cresa and author of the report. In the first three months of 2016 alone, nearly 800,000 square feet of office space was vacated, Hayes said. "Just the pure amount of available space given the inventory has grown so dramatically over the last decade," said Hayes.I would say no particular landlord or sub-landlord is immune to vacancy in their complex."

Hayes singled out Bow Valley Square as one complex particularly hard hit, where many larger tenants moved out over the past couple of years. "Vacancy, anything more than 30 per cent in a particular portfolio or asset is becoming a reasonably large concern," he said. "We just ran some numbers this morning. There's actually 18 buildings in downtown Calgary with vacancy over 30 per cent as it stands today." Upsides to all that empty space Amid the startling numbers, Hayes says there are a couple of upsides. In his career, he's never seen a better opportunity for new tenants to negotiate a lease. As well, non-profits and charities could also benefit from the vacant spaces. "Some of our clients and some companies downtown are looking at potentially donating office space to non-profits and charities," said Hayes. "Whether or not there are tax benefits to doing that, I think it's more important for these companies to create that PR and goodwill and help out companies that couldn't previously get into the downtown market because prices were just too high."

As for a prediction about when things might improve, Hayes says it might get worse before it gets better and it's going to take another couple of years to get back to normal. "If you look at the market like a clock and you say six o'clock is the absolute rock bottom, I would say right now we're probably between four and six o'clock on the downturn right now." "It's going to take a long time to get back to really low vacancies that Calgary has seen traditionally," said Hayes.Slumping oil prices are starting to reduce sales and office space rentals in North America’s biggest energy hubs. In Houston, the center of the U.S. oil and gas industry, Shorenstein Properties last month took its 28-story Five Post Oak Park office tower off the market after receiving bids, said Olivia Hennessey, a spokeswoman for the broker, HFF Inc. In Calgary, Alberta, more companies are seeking to sublet space they no longer need as Canada’s energy capital loses jobs and projects get canceled, according to CBRE Group Inc.

These are early signs that demand is weakening for commercial properties in cities that depend on the energy industry after crude oil prices fell below $50 a barrel, the lowest in five-and-a-half years, from more than $100 in June. Oil companies looking to reduce costs are cutting jobs and choosing to stay put rather than buy or lease new space, said Ross Moore, director of Canada research for CBRE. “Calgary and Houston would feel the impact of low oil most,” Moore said. “Tenants are looking at their premises and saying, ‘we were planning for expansion but that project has been put on ice so we don’t need that floor or that suite.’” Houston was a favorite of property investors as oil prices were rising. As recently as October, a survey by PricewaterhouseCoopers and the Urban Land Institute named the city and Austin, Texas, the most attractive U.S. markets for buying and developing real estate in 2015. More than 50 office buildings with 17.1 million square feet (1.6 million square meters) are being built in Houston, more than twice the total of the second-busiest area, San Jose, California, according to CBRE Econometric Advisors.

In Houston, Shorenstein had been marketing the 567,000 square foot (52,700-square-meter) Five Post Oak for about $185 million, said Hennessey, confirming a Jan. 14 report in Real Estate Alert. Andrew Neilly, a spokesman for San Francisco-based Shorenstein, declined to comment. Also last month, Chicago-based LaSalle Investment Management scrapped plans to buy 1000 Main St. in Houston, prompting seller Invesco Real Estate to turn to the runner-up bidder, Metzler Real Estate of Seattle, Real Estate Alert reported on Jan. 14. LaSalle had agreed to pay about $450 million for the 837,000-square-foot building, according to the newsletter. “It’s harder for people to underwrite a piece of commercial real estate today in a Houston metroplex, just not knowing what the future looks like for the price of oil,” said Darin Turner, a portfolio manager for Invesco Real Estate in Dallas. “People have been going back and re-looking at their assumptions for market rents and occupancy levels.”

Stefanie Murphy, a spokeswoman for LaSalle, declined to comment, as did Zeb Bradford, Metzler’s chief investment officer, and Bill Hensel, an Invesco spokesman. It’s too early to assess the impact of cheaper oil on real estate markets, said Mitchell Roschelle, the U.S. head of PricewaterhouseCoopers’s real estate advisory practice. Oil prices could rebound if supply gets disrupted, he said. If prices stay low, the extra income for consumers by way of lower gasoline prices could stimulate the housing market, which tends to react more quickly than commercial property, he said. “In commercial real estate, because of the length of the leases, the amount of time it takes to aggregate capital for an investment decision, the metaphor would be a big freighter in the open ocean,” Roschelle said. “It takes five miles to stop a freighter when it’s moving. I think you’ll see an impact in Houston, but it won’t be immediate.” Houston was third in the U.S. for office-rent growth in the fourth quarter of 2014, with a 5.1 percent increase from a year earlier, according to Reis Inc.

The technology hubs of San Jose and San Francisco were first and second. Office vacancies averaged 14.4 percent in Houston last quarter, compared with 16.7 percent for the country, according to Reis. Houston submarkets such as Energy Corridor, Westchase and the Woodlands are most likely to be affected by a prolonged drop in oil prices, Invesco’s Turner said in a telephone interview. Energy-related companies account for between 60 percent and 80 percent of office leases in those areas, Turner said. One Westchase tenant, Denmark’s A.P. Moeller-Maersk A/S, will cut costs in its oil unit and may scrap projects after crude prices tumbled, Chief Executive Officer Nils Smedegaard Andersen said in a Jan. 21 interview in Davos, Switzerland. The Copenhagen-based company since last August cut 54 jobs in Houston, or 26 percent of its work force there, as it scaled back exploration in the Gulf of Mexico, said Daniel Canty, a company spokesman. More than half of the total office square footage under construction in Houston already is pre-leased to energy-related tenants, said Invesco’s Turner.

“The market will try to understand what is the demand for the remaining square footage and at what market rents,” he said. Exxon Mobil Corp., the world’s largest publicly traded oil producer, is scheduled to take occupancy this year of a new campus near the Woodlands that can house 10,000 employees. The company will remain headquartered in the Dallas suburb of Irving. A representative for Exxon Mobil didn’t respond to requests for comment. In Calgary, lower oil prices are prompting energy companies to rent out office space they no longer use, said Moore, CBRE’s research director. In the first few weeks of this year, subleased office space increased by about 300,000 square feet, the same as in all of 2014, according to data compiled by CBRE. Calgary office vacancies, which rose 0.3 percentage point to 6.6 percent in the fourth quarter from a year earlier, are forecast to climb an additional three percentage points in 2015, according to Cushman & Wakefield Inc.

“The sharp decline of crude oil prices will most certainly contribute to a short-term reset of Calgary’s economy,” Bob MacDougall, senior managing director at the brokerage, said in a fourth-quarter report. “The office market will be affected as weakened tenant demand from the energy sector will drive up vacancy.” Suncor Energy Inc., Canada’s largest oil company, said this month it will cut 1,000 jobs, reduce its 2015 capital budget by about 13 percent and delay projects to withstand collapsing oil prices. The company is the lead tenant of Suncor Energy Centre, the red-tinged two-tower complex with about 2 million square feet of office and retail space. The west tower, clad in granite imported from Finland, is one of the tallest structures in western Canada, at 52 floors. Andrew Willis, a spokesman for the landlord’s parent company, Brookfield Asset Management Inc., declined to comment. Sneh Seetal, a spokeswoman for Suncor in Calgary, said she hadn’t heard of any plans to reduce office space.

The company is still working through its cost-cutting program, she said. “Energy companies are looking to cut their capital expenditure and they’re looking at their real estate,” Joe Binfet, a managing director at Colliers International, said by phone from Calgary. “It’s showing in the lack of activity on the investment front. There’s some caution from vendors and purchasers: purchasers are looking for a bottom to oil. And if you’re a seller, then you’re wondering whether or not to sell into a declining market.” Commercial real estate tends to lag the broader economy by 12 to 18 months, so any potential slowdown would take time to materialize, Invesco’s Turner said. If the oil price stays below the threshold of marginal profitability for U.S. producers for a prolonged period of 18 months or longer, the impact could be severe. While estimates of that threshold vary, Invesco puts it between $70 and $75 a barrel. “The buzz that we hear when we talk to market participants in Houston is there’s a lot of wait and see,” said Roschelle of PricewaterhouseCoopers.