Ryan Jones

As a person who cares deeply about business ethics, sometimes real estate can be a challenging industry to be associated with. People have done a double take at me when they find out that I have spent my entire educational career studying theology, philosophy, and ethics. "How can you be a real estate broker and still keep your integrity?" people ask. It's true that real estate professionals rate somewhere near used car salesman in terms of public trust. But is that the way it has to be? What if brokers were more known for talking people out of deals than for trying to coerce people into deals that would not be good for them? What if when a broker said, "I'll call you on Wednesday," he or she actually called on Wednesday? This doesn't sound like a whole lot to ask if you are asking me. I have publicly stated that I want to build a business based on a foundation of integrity. The temptation to secure a little extra $$ from a commission is sometimes strong (especially when business is slow). However, it is a foolish business practice in the short and long term. People discover that they have been coerced or lied to. Will they ever refer me business if this is how I treated them? Of course not. Operating with integrity just plain makes sense. I can sleep well at night and my businees will prosper.

If you are looking for a two-room (office + waiting area) suite, I have a great recommendation for you: a suite on the 5th floor at 500 Sutter Street (San Francisco). You would be close to Union Square in a building that has a lot of medical / professional type tenants. The building just spent 6-7 million on improving the common areas. The rent is reasonable (under $1000) and the energy is positive. Let me know if you are interested: rsjones@tricommercial.com (also see: www.officespaceSF.com)

Is this market a trick or treat? It depends upon which side of the equation you are on. There are tons of great opportunities (treats) but some people just feel like they have been too tricked over the last couple of years to enjoy the treats.

With all of the recent bank failures (Lehman Brothers, WaMu, Merrill Lynch, Wachovia, etc.) and the dissolution of several major Bay Area law firms (Heller Ehrman LLP and Thelen LLP) along with the other economic woes there is going to be somewhere in the range of 1 million square feet of sublease space coming on the market over the next few months.

This may sound like a lot of space, and it is. But vacancy rates have come way down from where they were a few years back. Even with all of this sublease space, it will only bump up the effective vacancy rate by a percentage or two. A couple of percentage increase in vacancy rate will only affect price to a small degree. What is having a much more major impact on pricing is the lack of confidence in the economy and the "glass half empty" mindset prevailing in the market. I have watched as certain spaces have dropped their asking rates by as much as 25-30%. This is great news for tenants. However, many tenants are too cautious to jump into these great opportunities. It seems counterintuitive, but the next few months may be the best time to secure great space. Yes, the economic news will be bleak for the next 18 months, but if you wait for the news to change you have waited too long.

For more information, www.OfficeSpaceSF.com

In the beginning of 2009, I am predicting that there will be a surge of companies / businesses trying to get space that appears to be at bargain prices. It would be wise for a tenant to get in the market now when things are relatively dead. Nail down a deal now, so you won't have to worry about it later. I see bargain deals every day. A co-worker of mine had an incredible view space in a top-tier building drop in price from low $60's per square foot per year to down in the low $40's per square foot per year in the course of the last 3-4 months. This is a significant decrease. Take advantage!

Today was a great turn around for the Dow - surging 936 points. In the light of recent events, we are still nowhere near where we were a couple of months ago. Things are still tough and look to continue to be tough for the next year or two. The talk around town right now is that there is somewhere around one million square feet of sublease space hitting the market in the near future from the banks and institutions that are going under. This is going to push rental rates down a bit. This is good news for tenants looking to get a good deal, but bad news for landlords hoping to see their properties perform at the pro forma level they had hoped for. Overall, vacancy rates are definitely creeping up (even without the sublease space being counted). Let's hope that the economy can stabilize soon. My suggestion to tenants in the market: make the most of this opportunity. When the market stabilizes rates will definitely go up again.