Commercial Investment Real Estate March/April 2018 | Page 29

Seller’s Market
The biggest challenge in secondary and tertiary mar-
kets is finding deals at scale. Most institutional buyers
want to write $30 million to $40 million equity checks,
which translates to an $80 million to $100 million
deal, and there just aren’t that many deals of that size
in smaller markets such as Raleigh-Durham.
“That is probably one of the most frustrating aspects
of this market for institutional buyers,” Lyons says.
Another challenge is that some owners are reluc-
tant to sell in a market where it is more difficult to find
replacement assets. “We have the tale of two worlds here
in our market in southern Nevada,” Jones Walker says.
On one side, the REITs are looking for properties to
buy in Las Vegas, and the handful of institutional assets
in the market have been trading at lower and lower cap
rates. “From an investment-grade standpoint, we are
on everybody’s radar as they march across the country
looking at areas such as Phoenix and Salt Lake City,”
Jones Walker says. “But there is a constraint of that type
of product here. The velocity is not there.”
The flip side of the office investment market in Las
Vegas is one dominated by smaller buildings and local
tenants that smaller investment groups pursue. There
is much more activity on subinvestment-grade office
properties.
“We have a lot of Class B here, because the land is
more affordable,” Jones Walker says. Those buyers are
looking for a little higher cap rates, but sellers are in a
quandary because they don’t know what the tax conse-
quences might be in the wake of tax reform, and they
don’t know where they would put that money, she adds.
Smart Building Technology Emerges
by Beth Mattson-Teig
Consumers are creating a smart home experience with gadgets, which allow them to do tasks ranging from turning off
appliances and lights to activating security cameras and door alarms — all from their smart phones. Office workers now
can use those same technologies to create a more comfortable workplace.
“You see a lot of technological innovation happening in homes and other areas of our lives, and we’re bringing those
technologies into the workplace,” says Lindsay Baker, president at Comfy, a software company that provides workplace
tech solutions for large occupiers, including the likes of WeWork, Intel, and Cisco.
Commercial smart building technology has been focused on creating efficiencies behind the scenes with automated
systems that control everything from lighting to elevators. Now, more of that tech is being pushed to the forefront with
tools that can enhance the experience for tenants and their employees.
For example, five years ago Comfy first launched an app that helps occupants in large buildings manage the tempera-
ture in the workplace more effectively. Now, the company is expanding its product offering to help control lighting, book
rooms or desks, and navigate around large corporate campuses.
Technology allows people to customize their own space, such as changing the lighting from cooler tones to warmer
tones. Other examples of new tech tools include electrochromic windows that create changeable glazing that allows
occupants to adjust the light transmittance or transparency of windows.
The increased automation in buildings makes people feel like they have a lack of control, Baker notes. For example,
people no longer have the option to open a window or even turn down a thermostat when they are too hot.
The emerging new technology enhances the workplace and gives some of that control back to workers. “Everybody
is talking about wanting to improve the employee experience, and one of the ways to do that is by empowering people,”
she says.
Employers are recognizing that technology apps aimed at improving the workplace experience can help improve
engagement with workers and potentially improve employee retention and productivity. At the same time, landlords are
recognizing that workplace apps create an added amenity that can help to attract and retain tenants.
The big fallacy about automation in buildings is that it assumes that everyone wants the same thing all the time, and that
is simply not true, according to Baker. Some people thrive on being able to look out a window and enjoy the view, while
to others that same view might be a distraction. Being able to change that view easily with a simple app gives occupants
more control over their environment and allows people to personalize space to suit their own preferences.
“During the past couple of years, landlords and corporate real estate teams are realizing that they need to take a
more active role in introducing new workplace technologies, and they also are putting that tech directly in the hands
of office workers,” Baker says. “Occupants are demanding more control over the physical infrastructure of their work-
places, preferably from their smartphones and personal devices. Forward-thinking building owners are recognizing
and meeting that challenge.”
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