Paying attention in today's office market - New York - Annual Review and Forecast

In Arthur Miller's classic "Death Of A Salesman," the wife of protagonist Willy Loman is bemoaning her husband's increasingly depressed state of mind. "Attention must be paid" to this man, she urges a couple of times.

Eventually, not enough attention was paid to Willy, who at the conclusion of the play has taken his own life. And while the theater in which all of us play - New York real estate - isn't quite the same as Willy's milieu, the same lesson applies: Attention must be paid.

In 1995 we leased over 300,000-square feet at our flagship building, 666 Fifth Avenue. Eighty percent of this space went to new tenants. Although the market has been gradually improving, it would he inaccurate to say that our success stemmed primarily from the general tightening of conditions.

Certainly, that helped. But I am convinced the main reason we did so well is that attention had to be paid - and we paid it. In this regard, let me make several points.

Obviously, you must be aware of what's happening in the real estate market generally. But you must also be able to discern trends in the overall business climate. For example, you need to know the health of any prospective tenant's industry, what his/her competitors are doing, what kinds of buildings they are involved with, etc.

That's on a "macro" level. But "attention must also be paid" on the "micro" level as well. For starters, you need to know your building's strengths and weaknesses. Bragging about a property's pluses is easy, but attention must also be paid to addressing a building's deficiencies, and making sure they are corrected or compensated for.

Then, of course, you need to pay attention to your prospective tenant. For example, is his main objective to save money and get maximum efficiency from his space? Then stop trying to tell him how wonderful the views are, and instead work at accommodating his budget. In that way, he is more likely to feel in synch with you, which can lead to his comfort in structuring a deal.

Right from the initial call we get about someone's interest in space, we try to learn as much as we possibly can about what's actually going through the tenant's mind. Our concern for the tenant's real needs continues through the lease negotiation - and afterwards, which is also important in pleasing him.

Sometimes the macro and micro intertwine. Let me give an example. Years ago office buildings were pretty much 9-to-5 affairs. But today more and more people are working very early, very late, or on weekends - or all three. Accordingly, many tenants around the city are increasingly concerned about such matters as the availability of heat and air-conditioning, as well as how they can get deliveries at odd hours. That's on the macro level.

On the micro level, we're encountering just this issue at our building, particularly because some of our tenants are service firms that are working harder than ever for clients. It's become obvious to us that the question of 24-hour services is a legitimate one; the trick is to accommodate that concern without charging the tenant so much that he will have to look elsewhere for space. At 666 Fifth, we're addressing this issue.

COPYRIGHT 1996 Hagedorn Publication
COPYRIGHT 2004 Gale Group