Office Tenants Hooked on Bay Views--and a Lot More
A few San Diego office-space deals are downright eyebrow-raising.
“Some people are being offered the sun, moon and stars--along with a bay view--and are getting all of that,” said Ira Waldman, a Los Angeles attorney who helps tenants negotiate leases.
Some tenants have convinced landlords to include the cost of office furnishings in their lease arrangement--a hefty bonus, given the cost of office furniture.
“Of course, there’s everything from the $1.98 desk to the $10,000 executive desk,” said one downtown office designer.
“But to design a middle-level executive’s office you’d have to allow about $5,000. What does that buy? A wood desk and swivel chair, a credenza, two guest chairs, some book cabinets and a piece of art for the wall.”
There are other items that landlords might consider during negotiations.
Roy L. Carlson, a landlord and publisher of Trends, a bimonthly review of the San Diego office and commercial real estate market, said some landlords are picking up a prospective tenant’s current lease, freeing them to make a move, while other landlords are paying a tenant’s moving costs.
A spokesman for Trammell Crow--which built a health club in its Imperial Bank Building--said its leasing agents “can do things with the health club” to attract the right tenants. Trammell Crow leasing agent Matt Spathas admitted that “rightly or wrongly, the piano player in the building’s atrium actually got us one tenant.”
The law firm of Gray, Cary, Ames & Frye negotiated itself a 25% equity position at the First Interstate Building.
“The prime tenant is in a situation of substantial leverage in some cases,” Josiah Neeper, managing partner at Gray Cary, which is receiving “benefits as both owner and tenant. “That’s what makes it work.”
Vacancy rates around the city combined with the space in buildings still on the drawing boards suggest that tenant deals could be around for several years.
First Interstate Bank Building is 35% leased, San Diego National Bank Building is 48% leased, and the Executive Hotel Building is 42% leased.
That apparent surplus of office space is relative, however.
After making some quick calculations during a business meeting in New York City’s World Trade Center, one local real estate professional was stunned to discover that there is more space available in that Manhattan complex’s two 110-story buildings than in all of San Diego’s new high-rises.