Agenda - Council - 09/22/1981 - Laserfiche WebLink

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CHAPTER PRESIDENT'S - REPORT I lThC next (lay I toured the office building with a banker and his comments were similar to my own. lie caused me, however, to reflect on the nature of our real estate business and to laugh about the many conversations I have had about the success or failure of someone else's current real estate developments. In fact, Following the end of the baseball strike, I was in Chicago looking at some of our local real estate developments in that city. While there, I walked through one completed office building and asked about its leasing status. I was told the building was 70% occupied. Remembering that this building had been completed in March, 1980, I then asked why it was not fully leased and the response was that current leasing activity was good, and that the building should be fully leased by year-end which would be within the lease-up period originally an ticipated. during the 1978-80 strong leasing market, I considered a development a success [ or failure based un whe. ther the project was substantially leased within six months of completion. Many times, however, this time period bore no relationship to the projected lease-up period. Basically, our business is (and will remain so forever) a lot like a baseball game -- a horn e run is al ways possible and seems better than two or three singles, though either will produce the same number of runs scored. i " Let's look at the aforementioned building as a case-in-point: This is a 100,000 square foo~ office building with 70,000 square feet leased to ten tenants, all of whom have good credit. The average lease is 7,000 square feet. Therefore with an 18 to 24 month lease-up period, lease renewals will occur quite smoothly year after year, with lease rates increasing by $2.00 per I s quare foot to $3.00 per square foot. Put this way, the development comes off as an absolute winner! What is the moral of this story? As the "batter", I am going to try to hit a home run every time, but should not be disappointed ifI only get a single. Moreover, ImY "manager" (i.e., my banker) has no grounds to complain if I hit a single -- after all, that was the original plan. I like the analogy of baseball to real estate. We cannot predict that we'll hit a "home run" or a "single" in our leasing programs. We can be reasonably assured, however, that if we watch the supply and demand of space and build a good, competitive product, we won't "strike out". Failing to do our homework and "striking out" are justifiable grounds for us losing favor with our banker or other members of our "fan club". If, for example, we find ourselves in a slow leasing period, we should not build. In other words, don't build to keep busy -- build instead to satisfy a good leasing market. pIncidentally, your first "homework" assignment is to attend the October 27th NAIOP Breakfast Meeting, at which time we will have an "Office Market Update". -- William C. Tobin NAIOP Chapter President PROGRAM COMMITTEE , . . NEWS IThanks again to Garfield Clark, Program Moderator, andto each of our speakers for a fine presentation on the pleasures and perils of the industrial revenue bond financing on August 18. In our efforts to maintain a leadership role for the education of imembers, the Office Market Update Seminar was rescheduled from September I5 to October 27 to bring you an up-to-the-minute report on the impact of the new tax law on real estate values and the structure of future transactions. iYour Program Committee must constantly strive to provide yon with "nuts and bolts" educational programs. As your ideas are invaluable in creating future programs, we urge each of yon to discuss your suggestions for seminar topics with any of our Program Committee Members. UPCOMING NAIOP EVENTS OCTOBER 15-20 *OCTOBER 27 NOVEMBER 17 DECEMBER 15 NAIOP Annual Conference Houston, Texas "Office Market Update" Breakfast Meeting "Business Forecast for 1982" Half-Day Seminar "Land Availability" Breakfast Meeting *Please note that the October meeting is now scheduled for October 27 to avoid a conflict with the NAIOP Annual Conference.