Real Estate Excellence in an On-Demand Economy

RISE Commercial Property Services

“The best way to predict the future is to invent it.” – Alan Kay

We are now living in an on-demand economy – patience has ceased being a virtue

We are now living in a different era

Market dominated big firms, large & long-term lease

transactions, trade unions, manufacturing workforce

Wall Street, Junk Bond explosion, Black Monday

IBM personal computer launched

Everything in excess - high end tenant finish - opulence

Market defined by mass acceptance of the Internet

Google founded

Real Estate became systematized and generic – all

space alike (cubicle farms, generic exterior office corridors,

un-inspiring common areas)

Mass outsourcing and automation of manufacturing

jobs

The Great Recession - $787 billion government bailout

Tenant’s reducing space –average space/employee begins

to decline

Market defined by on-demand services, smaller & short-term

lease transactions, flexible office space

53 million American workers employed as freelances

Internet of Things – anything available on line with all devices

interconnected

Collaborative co-working spaces

1980’s 1990’s 2000’s Today

Today’s New Era Defined

• An estimated 60% of the twelve billion SF of commercial space in the United States is vacant or under-utilized

• In the last 15 years, 52% of the Fortune 500 companies have disappeared• The average life expectancy of a Fortune 500 company has declined from 72 years to 15 years – small

businesses, entrepreneurs, mid-size companies are gaining market share annually

• In the last 20 years, the average lease term has declined from 10-years to less than 4-years

• Today’s tenants are more mobile than ever, with a company relocating to new office space an average of 3x over a 10-year period; employees are increasingly given the opportunity to work from remote locations (i.e., co-working spaces & coffee shops)

• The on-demand economy has facilitated phenomenal volatility in the size of start-ups and small businesses, with space needs changing in a matter of months

• Today’s average property manager is a glorified custodian, doing the most basic of management requirements – the new era will see a dramatic shift where property managers increasingly take on the role of asset managers and will be required to have a skill set that includes financial analysis, market analysis, valuation, smart building integration, and value-add analysis

• Encouraging the shift from one-off transactional events (i.e., leases, investment sales) to long-term, consultant style relationships between owners, tenants, property managers, and brokers

In the on-demand economy, some property owners will be winners, and some will be losers - the winners will be defined by their adoption and understanding of the following:

Winners will support:

• The separation of power between property managers and brokers will be eliminated

• Brokers will transition from transaction mongers to real estate consultants, providing guidance and support at a relationship level and not a transaction by transaction level

• Property managers will accept increased responsibility for leasing success and value creation

Winners defined:

• Owners and service providers will embrace new and innovative ways to maintain and strengthen tenant relations

• smart contracts, mobile apps, instant communication, on-demand services, flexibility, amenities

Winners defined:

• Owners will accommodate changing demand patterns that will require creative space design, lease flexibility, and innovative use for vacant and unused space

Winners will demand:

• Property managers and brokers compensation structures will be directly tied to performance – fees to brokers and service providers will be spread out over the life of a lease/contract/relationship

• Large up-front fees payable at lease signing & lease commencement will be a thing of the past

• Property management fees will be directly correlated to the performance of the property with no fixed cost pass-throughs to Owners

It’s a new way of thinking

Tenants/Property

Property Owner

Property Manager

Architect/Space Planner

Market Data & Intelligence

Smart Building Systems

Service Providers (janitorial, snow

removal, etc.)

Smart Contracts

Broker

Broker

Property Owner

Property Manager

Tenant

Tenants’ Architect/Space

PlannerTenants’ Broker

Service Providers (janitorial, snow

removal, etc.)

Owners’ Architect/Space

Planner

Market Data & Intelligence

OLD WORLD NEW WORLD

VS

The On-Demand Economy is Here - The way RISE manages properties is designed for owners and their properties to excel in the On-Demand Economy. Here’s how:

RELATIONSHIPConstant, timely communication between all parties (mobile apps deployed)

Managers are responsible minimum # of properties/tenants, allowing them to provide maximum focus and attention to each client/asset/tenant

Property manager designed broker outreach program

INNOVATIONAll managers are LEED AP certified

Strategic partnerships with market leaders in Smart Building Integration and energy saving innovations

Ongoing training/certifications in latest technological innovations for all team members

STRATEGYFee structure that aligns our performance with owners’ long term goals

Strict pre-employment screening and proprietary training program in financial modeling/analysis/value-add strategies

Rigorous income and expense analysis on a quarterly basis for each property

EXECUTIONManagers have weekly strategy sessions with RISE’s Senior Management Team

to focus on progress in meeting Owner’s goals and objectives

All managers are licensed brokers and trained to handle lease renewals (if needed)

Monthly meetings for all team members to review market news/analysis/trends

Owners’ Long-Term Goals and Objectives

The On-Demand Economy is Here – we’re prepared. Are you?

• “The urgency, drive and knowledge of the RISE Commercial Property Services team is impressive. Within only a month of becoming our property managers, RISE implemented their stringent review procedures and found $0.60/SF of Operating Expense savings that contributed directly to our bottom line. It’s clear they love what they do and we are thrilled that they helped us increase the value of our asset.”– Nathan Levy, Director of Denver Office, Diamond Ventures