McDonnell of Ciminelli reps New York State at NAIOP Conference

Representing all of New York State, Ciminelli Real Estate Corporation broker Robert McDonnell recently attended the NAIOP (Commercial Real Estate Development Association) National Forums Symposium in San Francisco, California from April 26-28. NAIOP is the leading organization for developers, owners and related professionals in office, industrial and mixed-use real estate. NAIOP advocates for effective legislation on behalf of their members and advances responsible, sustainable development that creates jobs and enhances communities. National commercial real estate trends and best practices were reviewed during the 3 day event, providing participants with unique insights into the marketplace on a national level, while enabling them to adjust strategies on a local level. "Aside from the anticipated adverse affects of rising inflation on lease rates and construction loans, the biggest day-to-day challenge the commercial real estate industry is facing is flight to quality by our tenants," said McDonnell. Due to a slow down in the commercial real estate market, flight to quality sees strong tenants that are currently in class B office space signing leases for class A space that they can enjoy for the same rates. McDonnell continued, "The industry has seen tenants act on right of first refusal language in their leases and take on substantial adjacent space in our buildings, based solely on the attractive rates and the possibility of growth within the next 18 to 24 months. In my 14-plus years of commercial real estate sales in Western New York, this is a practice I have rarely seen. It can make a substantial difference in how you market your space to new tenants." Aside from this aggressive approach by tenants, McDonnell also sees a marketplace that is strictly tenant driven. Lease rates in Western New York remain steady although slightly lower than a year ago. This seems to be regardless of any improvements to the space, such as fitness centers, daycare centers and eateries. "Improvements may get you the lease when other comparable spaces remain vacant, but it will not get you the premium it did in recent years," McDonnell said. "This puts building owners and developers in a challenging position to aim for short lease terms and limited but strategic improvements to buildings. Planning and strategy are more critical than ever." McDonnell was named as the sole representative from New York State to the NAIOP Trends in Real Estate Development Forum in 2009. Participants in the symposium include architects, attorneys and various professionals from real estate related fields from major metropolitan cities including Chicago, Orlando, and Washington, DC among others.