Office Furniture Mail Order Company is Shut Down...

Topdeq USA, a high-end office furniture mail order company, was recently closed by its parent company the German based TAKKT Group. The most recent earnings release for TAKKT Group cited that Topdeq USA was closed due to "a fall in turnover (sales) of 30.8%...most pronounced in the U.S. Market".  

Not a big surprise for a couple of reasons

1. High-end anything is struggling right now, especially high-end office furniture
2. Direct mail is a dying sales channel

The closure of Topdeq USA cannot be a good sign for TAKKT's other large U.S. holding - National Business Furniture (NBF). NBF sold itself to TAKKT in 2005,  and is also a large mail order office furniture retailer (focused on low to mid-priced items). While the low to mid-range price point is a healthier niche, I still have to believe that NBF is feeling the pinch as their primary go-to market strategy (direct mail) slowly goes the way of the telegraph.

2nd Annual Report on the Market and Impact of Green Building

The 2009 Green Building Market and Impact Report, authored by Rob Watson Executive Editor of GreenerBuildings.com, and the acknowledged "Father of LEED", is now available to download a copy of report, please click (HERE).

Some highlights from the report:

• LEED certified floor area is expected to grow by 40% versus 2008, and will account for over 7 Billion square feet of space worldwide since 2000.
• Based on average materials costs, green building materials represented approximately $7 billion in cumulative spending through 2009, which is expected to reach a cumulative $230 billion by 2030.
• An average of at least 580,000 employees are currently enjoying improved indoor environments in LEED buildings at present, and the "green building workforce" is expected to approach 29 million by 2020 and almost 64 million by 2030. The productivity benefits from LEED buildings to date range from $230 to $450 million.

This trend is definetely not going anywhere...

Office Source files for Bankruptcy

Ok, the broken clock is right again... On July 15, 2009 I wrote about Office Source, an also ran in the national office furniture wholesale ranks. On that day with my posting: Office Source Sells Itself  I wrote about the then recent transaction in which Office Source sold itself to some Alaskan native investors. I took a "huge" leap of faith when I wrote:

"This "change" in control, with a new "financial" owner now in charge is most likely not a good sign regarding the viability for the Office Source concept. Candidly, There are already two National Wholesalers (United and SP Richards), so I'm not sure the world needs a third."

Well, maybe it wasn't such a huge leap... We received the "shocking" news today via emailed press release that Office Source had filed for bankruptcy protection late on Friday 11/20/2009.  The release went onto state that "As part of the bankruptcy case, upon approval of the Bankruptcy Court, United Stationers will acquire certain assets of Office Source, Inc. and hire certain employees, including key management of the company. We expect the sale proceedings to last 45 to 60 days."

And the consolidation continues...

Wells Fargo focuses serious resources (and money) on Clean industries...

Wells Fargo & Company last week announced a new commercial banking group dedicated to supporting clean tech companies. The National Cleantech group will be based in Palo Alto, and will provide customized commercial banking products and services to businesses that manufacture, marekt or develop clean technology products and services (such as; sloar and wind power, energy and water effciency, electric and low-emmisions vehicles).

Wells has already shown its true green color by providing more than $5Billion in financing (including $1.6 Billion for solar and wind projects, and $3 Billion to support LEED-certified buildings).

BIFMA revises their industry forecasts (again...)

A broken clock is right twice a day... In my 9/3/09 post (BIFMA Office Furniture Forecast - More Contraction) about the Business and Industrial Furniture Manufacturer's Association (BIFMA) forecast for 2010 office furniture production, I commented "I would assume we will see several downward revisions before we get to 2010". Hey what do you know -- I was right...

BIFMA released their most recent forecast for 2010 this week - and they have revised their forecast for office furniture shipments down by a pretty hefty 4.6%. BIFMA estimates that the industry will ship $7.43 billion in domestically produced office furniture in 2010, down from their forecast of $7.79 billion for 2009 (which is down 30% from 2008 actual shipments).

I'm going to go out on a limb and say I expect more revisions -- BUT, I actually think we may see future revisions going the other way. From the indications I am seeing - we have been scraping the bottom since early summer, and I believe conditions have improved. BIFMA's forecast is generally a "lagging" forecast (somewhat of an oxymoron) - and I believe we will see positive revisions coming.

Inflation (Price Increases)... Not in 2010...

Wholesale prices increased only slightly, and manufacturing capacity remained slack in October, indicating that inflation remains a distant threat.

Our local experience confirms this trend - We do not or see or anticipate any 2010 price increases coming from our manufacturers. Further, the discounting we are receiving for projects is the most competitive that I have seen in my career. If you have the resources to buy - buy now.

Another One Bites The Dust (again...)

Dominoes keep falling in the East Bay commercial real estate market. This time the Tri-Valley was hit (specifically Pleasanton Ca.), with the Britannia Business Center II complex falling into foreclosure. Various news outlets are reporting that the loss of key tenants Nellcor (moved out to Colorado for lower labor costs) and Chrysler (used the bankruptcy to jettison their lease obligation) strangled cash flow, forcing the foreclosure action.

Britannia II was yet another project purchased in 2005 (which was not a great year to be a buyer...)

Click HERE for the full news report...

Just the publicity the SF Bay Area needs!

The good news is that San Francisco's commercial real estate market was prominently mentioned in last week's Business Week cover story: Why This Real Estate Bust Is Different - the bad news is that the feature was about how bad things are.

333 Bush Street - Courtesy of Business Week

In the story, Business Week highlighted the 2007 purchase of 333 Bush Street by Hines Development and another New York based investment fund. At the time, Hines paid the equivalent of $518 a square foot for the property. This was of course before the implosion and eventual bankruptcy of Heller Ehrman, the buildings primary tenant. According to the story, "the building's owners did not make a recent loan payment, and the lender is expected to begin foreclosure proceedings." Ouch...

Green building = 8 Million jobs

Green building practices will support 7.9 million U.S. jobs and inject $554 Billion into the U.S. economy over the next 4 years according to a recently released study from the U.S. Green Building Council and consulting firm Booz Allen Hamilton.

The study took into account the total value of green buildings and the results include workers from the architects who design them, to the workers who build them, recognizing how extensive the impact of green building is.

To read the complete report click HERE.

3 Months To Go - and things will look better...

Batten down the hatches and get through the next 3 months, and you might just make it through to the other side... So says The Co-Star Group a commercial real estate research company.

An article today published on the Co-Star website noted that due to a large number of recently announced mass-layoffs, the short-term outlook is negative. However, the report went onto say, "looking beyond the short term, business owners are beginning to demonstrate some optimism."

Noting a recent survey conducted by Guardian Life Insurance Company of America, "92% of small business owners expressed optimism about their enterprises, with 54% expecting to maintain business as usual and 38% confidently looking forward to expanding their businesses over the next 12 to 24 months."

To read the entire article click HERE...

What 99 pennies will buy you today...

Think the bargains are all gone - think again. How about "Class A" fully furnished space for .99 a square foot. Hard enough to sell furniture in this market, even more difficult when we have to battle people giving it away...

For anyone interested in this deal of the century - link HERE for more information (the quicker it leases - the quicker it is off the market)...

Workstation Ergonomics - Read this to be comfortable at work...

On a Friday - something to make everyone a bit more comfortable in their workstation (regardless of whether it is a private office or cubicle). Full disclosure, I am a rabid convert after I set my own work area up (see HERE for the post about what I won't give up in my office).

The below guidelines are courtesy of Workrite Ergonomics  click HERE for a link to the complete ergonomics page, including a video on setting up an ergonomic work area:

Slouching, slumping or bending forward at the waist in a chair can lead to discomfort, fatigue and backache. Follow these guidelines to help prevent problems from occurring when sitting at your workstation.

A.Adjust seat height, thighs should be approximately parallel to the floor. Seat pan short enough (front to back) for knee clearance and with a waterfall front edge.

B.Adjustable back rest to accommodate the normal curve of the lower spine.

C.Articulating monitor arm supporting flat panel display. Top one-third of the screen at or below eye level; distance from operator a minimum of 18", typically at arm's length.

D.Elbow relaxed. Lower arm open at least 90°-100° to upper arm with keyboard platform set at 0°-6° negative tilt.

E.Wrists should be a natural extension of the forearm, not angled up or down.

F.Keyboard flat at elbow level with palm rest to support hands during rest.

G.Feet resting firmly on the floor; footrest needed if feet are not supported by the floor.

H.Document holder in line with front of monitor. Height and angle adjusted for the comfort of the user.

The End (of the recession) Is Near...

I am the first to admit that my company is still treading water, however I think it is becoming clearer and clearer that the U.S. is climbing out of the deepest recession any of us currently working have experienced.

Headlines from CNBC.com today: 

Productivity Jumps Higher as Job Losses Show Drop

and the article states that "U.S. business productivity in the third quarter grew at the fastest pace in six years and new claims for jobless aid fell to a 10-month low..."

I also have to admit that we are starting to look at (shh...) adding staff to deal with existing projects and future projects... THE END IS NEAR...

Some "Positivity" for the Office Furniture Industry...

A recent survey from office furniture analyst Michael Dunlap indicates that the fortunes of the office furniture industry might finally be turning positive.

Dunlap's October survey average was 51.45 (with 50 being neutral) - the best reading since July of 2008. In an interview with industry newsletter The Monday Morning Quarterback, Dunlap said, "A few sectors, though improved, are still below 50...More than 42 percent reported they are optimistic about the future. It was only 25 percent in April..."

This technical result ties in nicely with what we have been seeing "on the ground", with consistent increases in floor traffic and sales activity from our retail (small business) showroom, as well as increased project activity from our contract (corporate accounts) division.

Another one bites the dust...

The banking crisis scored a direct hit on the San Francisco Bay Area on Saturday, with the Federal Deposit Insurance Corporation (FDIC) closing all 17 branches of San Francisco based Pacific National Bank. The FDIC seized all PNB branches, and in turn sold them to Minneapolis based US Bank, which now assumes control of all former Pacific National Bank locations and operations.

Pacific National Bank was hit particularly hard when the real estate development company Hines, defaulted on a $152 million loan tied to the Watergate Office Project in Emeryville. In addition to Watergate Towers, PNB was also involved in financing a number of other high profile projects (including the 137Ksqft lease for gaming company Zynga in San Francisco), and their recent challenges (and now closure) leaves a big question mark regarding how and when those projects will move forward.

To read more, see the stories in the Contra Costa Times or the San Francisco Business Times.