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June 2018 Commercial Newsletter

Volume 6, Issue 6

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Featured Articles

What Does Your Negotiating Style Reveal About You?

Everyone has their own negotiating style, but  what does your own style of negotiating really reveal about you?

In addition, what can someone else's negotiating style reveal to you about them, too, and can their style give you some clues as to whether or not you'd even want to do business with them? 

Ideally, you want to be someone who is both firm and fair in your negotiating style. But if you really wanted to, you could be someone who communicates that they really want to get every single dime out of the other person, without any care or respect for them. But is this really the message that you want to be sending out to other people about you? With this in mind, we've all encountered people like this, and they normally don't leave a very good taste within us. In fact, they oftentimes make us feel like we never, ever, want to do business with them again

In addition, you don't want to be someone who reneges on your word during your negotiations either. When you agree to do something, stick with it, because it's the honorable thing to do. When you're in negotiations, and then the other person changes their mind about what they already told you was acceptable to them, this again will give you a bad feeling about the person. So just know that if you choose to do this yourself when you're negotiating, people will be feeling the exact same way about you. 

Bring integrity into your negotiations, because if this is what you truly stand for, you'll be communicating this to your people, and they'll respect you for it. In addition, they'll be telling others about these fine qualities that you've been exuding towards them, too. 

Then when you're looking out for your own best interests when you're negotiating, you ideally want to be flexible, and understand the areas that you can give and take within between both you and the specific individual who you're negotiating with. With this in mind, sometimes negotiating can feel like it's two bulls circling around each other, looking to find the opportunity, and when you can both give and take, you then create the best opportunity for the two of you to feel that you've both gotten what you really wanted out of the negotiations. Because when you play hardball and you're not willing to give anything to the other side, people will oftentimes just walk away. 

So stand for what you believe in, and look for the areas that you can be flexible in when you're negotiating with people.
When you do this, not only will people respect you for how you're treating them, but you'll be far more likely to close a greater number of transactions when you're negotiating with people, too

For Industrial, There's Only One Way Left to Build: Up

JUNE 01, 2018|JACQUELYN RYAN

Building Heights Have Grown 50 Percent Since 1960

Industrial buildings are getting taller. A lot taller.

Over the last 60 years, industrial buildings in California's Orange County have grown nearly 50 percent taller, to an average clear height of 31.4 feet, according to a new study by JLL.

Meanwhile, industrial vacancy continues to drop to new historic lows, now around 2.4 percent, according to CoStar data. Land in the built-out Orange County market in particular is becoming scarce 

 "We have no choice but to go up," said Zach Niles, managing director of industrial real estate in JLL’s Irvine, CA office.

When industrial buildings were being developed in the 1960s, space needs were smaller and building technologies were limited. Buildings tended to be longer and only averaged about 21 feet in clear heights, the report said.

As the years moved on, the market moved from being manufacturing-focused, largely led by aerospace companies, to more warehouse-focused, which required more storage. The ability to build higher, and to reach those heights with newer technologies and tools such as skylifts, grew with it.

Today’s space demands, led largely by the growing e-commerce industry, are compelling developers to build even taller.

"Industrial has experienced a true paradigm shift in the past four-to-five years," Niles said. "It’s e-commerce as consumers move toward online retail, which will continue to happen even through a recession." 

Instead of sitting on shelves in stores, those goods are all stocked in warehouses in industrial markets awaiting a quick two-day hipping trip to someone's front door. With no space left to build out sideways, they're building taller.

The trend is happening everywhere, said Davis, not just in Orange County. 

In some cases, developers are experimenting with creating multi-story industrial buildings. Logistics developer ProLogis Inc. is underway on a three-story industrial building in Seattle, and two different development groups are planning similar multi-story buildings in the New York City metro.

Multi-story building hasn’t happened yet in Southern California’s industrial market, but there’s every indication that developers continue to build taller single-story ones here. Niles expects buildings that are about 20 feet tall will get torn down and rebuilt even taller to meet the growing demands of the industrial market, even as many observers suspect the market is toward the end of its growth cycle.   

"It would be foolish not to agree there will be a recession," he said. "I think industrial will be the darling that rides through that."

What Will It Take To Solve L.A.'s Affordable Housing Crisis?

MAY 31, 2018 KAREN JORDAN

Many agree more affordable housing is needed in Los Angeles, but there's been little consensus on how to address the problem.

There are a host of challenges experts said at Thursday’s "Democracy and Challenges to Building Affordable Housing in L.A." event co-sponsored by UCLA’s Ziman Center for Real Estate and Mercy Housing.

The housing dilemma is both "a political and an economic problem," argued Michael Woo, dean of the College of Environmental Design at Cal Poly Pomona.

"Why don’t they have more power in the political system?" Woo said, referring to people who are in need of affordable housing.

In Los Angeles County, statistics show 568,255 new rental units are needed to serve the needs of low-income renters, and 567,000 low-income renters who cannot access government assistance are at risk of becoming homeless, according to Woo. He said 3.5 million new homes are needed by 2025 to address the demand and account for projected population growth.  

In order for Los Angeles to keep up with the housing demand, about 5,300 units are needed a year, but only 1,100 units are being built per year in L.A. now, according to Woo.

What is needed is "a crusade, a campaign, a mobilization" to build more housing, Woo said.

Some panelists cited California State Senator Scott Wiener’s Senate Bill 827 as a possible help. It sought to address the housing crisis statewide by removing height, size, design and parking regulations for all new housing construction built near major transit stops. The bill was defeated in April.

That and other bills are premised on the notion that "the process of getting projects approved is a major cause of the affordability crisis," Doug Shoemaker, president of Mercy Housing California, said during one of the panels at the event.

To help solve the affordable housing issue, Woo recommends building more density around transit, developing vacant land that already exists in the county, employing the use of accessory apartments, also known as granny flats, and the California Environmental Quality Act, or CEQA, reform to prevent nuisance lawsuits against affordable housing projects.

Brad Cox, senior managing director at Trammell Crow Company, offered his own solution to help offset CEQA challenges.

"It’s never going to go away, so what needs to happen is to set up a post-approval process for a review of any CEQA challenges," Cox said. "We need to have an expedited review process."

He suggests establishing "a special court jurisdiction, a number of specialized judges to deal with these CEQA issues and to review them in a 60- to 90-day process."

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ABOUT CIBA REAL ESTATE

CIBA Real Estate is a commercial real estate firm in Monrovia. Our extensive experience with not only clients but also our own properties provides us unique insight about all aspects of real estate transactions.

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