Verano by Workrite - Lighting you need to see...

I'm the first to admit that I don't get too excited about task lights (the lights that go under an overhead shelf or cabinet in a workstation or a private office). Having said that, I saw a demonstration in our office yesterday of the Verano light by Workrite that I believe justifies some excitement.

Aside from the fact that Verano is "cool" looking - what stunned me was the improved light quality when compared to our standard undershelf lighting. I'm a "layman" about lighting, but the Verano light quality was warmer, crisper, and clearly superior to what we were using. 

Verano contributes towards LEED credits (Energy and atmosphere 1.1 and Innovation in Design 1.1-1.4), and has a useful life of 50,000 hours (20 years), and can quickly mount to any undercabinet surface.

For more information on Verano click HERE .

More Optimism from Small Businesses

Continuing with the theme that the worst of the recession is behind us, the National Federation of Independent Businesses (NFIB) "Small Business Optimism Index" gained 2.1 points in August to 88.6 (benchmark year is 1986 at 100).

Chart Source: Small Business Green Shoots - Click HERE 

For September 2009, seven of the suvery's 10 index components showed gains or were unchanged, while three posted declines. The survey concluded that "The (optimism) gain was primarily a result of improved expectations for future business conditions and real sales volumes".

Now reality - admist all of the optimism, the survey also pointed out that capital spending reached 35 year lows, and plans for capital spending over the next few months matched a record low last seen in 1975. What does all of this mean... Things are getting better, but sloooowlly.

To view the complete survey click HERE.

LEED Certification of Existing Buildings On the Rise

A recent article in Commercial Property Executive noted an increased interest in seeking LEED certification for existing buildings. The article pointed out that many corporations now require their facilities to be housed in LEED certified buildings, so by not retrofitting an exisiting building, ownership is potentially losing a growing segment of tenants. To read the article click HERE:

Our own experience shows that local government is leading the way in requiring their staff be housed in LEED certified buildings, with many cities and counties having mandates to "go-green" within a certain time frame.

For more information related to LEED for Existing Buildings, click HERE.

Durable goods down...Office Furniture Down...

Durable goods orders "unexpectedly" dropped 2.4% in August, registering the largest decline since January of 2009 (to see the report click HERE).

Not surprisingly leading manufacturers in the Office Furniture industry announced large year over year revenue declines. Steelcase Inc. reported a 35.9% drop and Herman Miller Inc. recorded a 32.4% revenue decline for the comparable fiscal quarters. Both organizations pledged to maintain their current spending cuts, with Herman Miller commenting they "don't see changing...from an every-other-Friday-off" work schedule for at least three months.

Steelcase's President did comment that "demand levels appear to be stabilizing in advance of a potential broader ecomomic recovery..."

What does all of this mean? We are kicking along the bottom right now...If you have the means to buy furniture, this might be the best time to do it - prices are only going to go up from here.

A Budget for Furnishing a Small Office

Over the past 3 months I've received a number of requests from landlords, asking for assistance in providing furniture for the latest trend in office requirements; the "small" office (usually between 900 square feet and 3,000 square feet of office space).

The user who occupies this space is typically moving into their first formal office, and furniture is generally a requirement. Because of the small amount of square footage, providing quality furniture at an affordable Per Square Foot price can be a challenge.

In response to these requests, we have developed a typical "budget" for providing new office furniture to small users (we provide new furniture versus used, because the on-going availability of quality used office furniture is always changing).

Target budget for furnishing an 900 square foot office:

(2) Workstations, (1) Private Office, (4) Ergonomic Chairs, (1) Small Conference Room, (1) Reception Area, --

Total Price (including tax and installation) $6,400.00

Workstations: Size (6x8), (1) File pedestal + (1) open book shelf, low panels (56"T)
Per station: $1,200.00

Private Offices: Laminate "U" Desk, with upper hutch, bookcase, and task chair and (2) guest chairs: Per Office: $1,050

Ergonomic Chairs: (note, there are "cheaper" chairs available, but none that we are comfortable selling. Per Chair: $140.00

Reception area: $1,050
Laminate "L" shaped reception desk, end-table, (2) chairs

Small conference room $500
(Laminate Round table & 4 chairs)

Total (including tax & installation): $6,400.00

Falling Rents May Mean Increased Leasing Activity for Remainder of 2009 and into 2010

A recent article in GlobeSt.com highlights that the decline in Commercial Real Estate rents, hasn't kept up with the swiftly increasing commercial vacancy rate, as landlords have largely tried to avoid lowering rents by offering "other" incentives. In our own "unofficial" survey, we are seeing landlords offering everything from a couple of months of free rent, to increased TI allowances, to landlord provided furniture (sometimes existing used furniture, sometimes brand new furniture purchased specifically for the tenant) as an incentive to sign (or hold) tenants.

The article forecasts a decline in asking rents over the remainder of 2009 and into 2010, as Landlords bring rents into alignment with the current market conditions. As rents fall, leasing activity should increase as tenants look for better deals.

The "downstream" impact of this scenario is an increase in opportunities for furniture dealers, architects, and other related goods & service providers, as more businesses change locations.

Sam Clar Office Furniture, #2 in the East Bay

The San Francisco Business Times has posted their annual list of The Largest Office Furniture Suppliers in the East Bay, and Sam Clar Office Furniture is ranked #2.

The list covers 2008 revenues, and marks Sam Clar's highest ranking to date. As we wind through what is arguably the most difficult year many of us have ever faced, I wanted to take a moment to recognize and thank my entire team, who worked hard last year, and are working doubly hard (for less) this year.

More Optimism for Business Owners...

The City Business Journal Network conducted a survey that found Small and Medium Size Business (SMB) owners are more optimistic about the future and their businesses then earlier in the year. The survey found that 52% of the owners polled believed that business will be "a little" or "a lot" better in the next 12 months. This compares to a level of 35% of the owners polled five months prior. The survey is featured in an article available via The San Francisco Business Times (click HERE).

These poll results tie into what we have been seeing locally, which is a small (but steady) increase in activity over the past 30 days.

Gunlocke Silea; furniture to aspire to...

Enough with the "value-priced" (read cheap) imported laminate furniture that has been all the rage during this recession (read depression). I wanted to use this post to remind everyone that high quality, American made, well designed furniture does still exist:

Click on image above for link

The Silea product line of executive wood office furniture from the Gunlocke Company represents everything good about office furniture today. Silea is flexible enough to scale for any office size, sustainable (available with FSC certified products and LEED IEQ 4.5 compliant finishes), and produced in upper New York.

For a cool video on Silea click HERE -

Update on San Francisco's East Bay Economy

The most recent economic data on the East Bay indicates that times are still tough over here on the "Sunny" side of San Francisco. Unemployment in the East Bay rose slightly from 11.1% in June 2009 to 11.3% in July 2009,

East Bay Economic Development Alliance (click chart for link)

Commercial Construction permits again fell dramatically; -52.7% in the East Bay and -72.1% in San Francisco. (comparisons are for the two year period 8/07 to 8/08 against 8/08 to 8/09).

East Bay Economic Development Alliance (click chart for link)

So where is the brighter future... The Contra Costa Times ran an article in today's edition headlined: "East Bay to lead recovery". The article points out that the East Bay lead California into the recession by 4 months, and therefore most likely will lead California out by the end of 2010. OK not a lot of great news - but we will take what we can get!

Inflation... Not this year

I just returned from two days of meetings with leading National and Western Regional office furniture manufacturers. These vendors run the spectrum from Billion dollar companies with established national distribution, to medium and small West Coast based distributors, who are importing from China. Their collective message:

No 2010 price increases in the forecast -(and in some cases, prices are being rolled back).

This "anecdotal" forecast plays directly into the headlines on CNBC.com this morning: Inflation Still Tame Despite Jump in Gasoline Prices. My take from all of this information is that interest rates will not start rising until the middle of 2010.

Not All "Green" Is Created Equal

Lots of information and mis-information out there about "Green" products. Much like the bandied about "Organic Food" label, it turns out not all "Green" products are created equal.



The International Interior Design Association (IIDA), has a great article that clearly separates the "Green-washing" products from the truly green. Click (HERE) for a link to the article.

Holding Onto That LEED Certification Just Got Tougher

Tenants moving into a LEED Certified building assume that they are doing their part for the environment by moving into a building that has been certified to consume less energy and leave a reduced carbon footprint.

2100 Franklin Street, Oakland Ca. Certified LEED CS Gold

The United States Green Building Council (USGBC), the organization in charge of awarding LEED Certification, wants to make sure this expectation is met, and is in the process of implementing a system to monitor on-going energy and material consumption as a requirement to maintain LEED Certification.

According to the USGBC press release, The Building Performance Initiative will "develop a comprehensive data collection and analysis methodology - based on all buildings that have achieved Leadership in Energy and Environmental Design (LEED) certification - that will be shared with LEED building owners and project teams to close performance prediction gaps."

To see the USGBC press release click (HERE), or to read an article on this subject from the New York Times click (HERE).

Where Are We In The Recession

Courtesy of Fortune.com

Labor day is officially over, so let the "Fall" selling season begin! Short and sweet today, Fortune.com has a very easy to understand "Recession Index", which continually evaluates 7 metrics to determine where we are in the recession cycle.

As we navigate through the bottom of this recession, I think it is important to keep looking ahead for those signs that we have entered the recovery -- simple tools like this one can help keep that focus.

Plan Enough Time For Office Furniture

Delayed decision making has impacted everything from hiring, to office lease negotiations, to move-in dates. As a "down-stream" participant in the office leasing process, our part (furniture planning, procurement, and execution) increasingly gets compressed. I thought I would use this posting to outline a "reasonable" time-line to allot for furniture.

This timeline assumes an office of 25 employees, with 20 cubicles and 5 private offices, and assumes that the building CAD plan is supplied. It should be noted that this is a "guideline". If your schedule doesn't afford this much time, notify your provider at the outset, and accommodations (typically in the furniture lead-times) need to be made.

Time Required*: 40 Business Days

Required Steps in Furniture Process:

1. Programming: Programming involves determining the actual required office furniture (i.e, required sizes, required filing, worksurface, panel heights). This is an on-site meeting typically held with a designer and client representative. - 1 day
2. Drawing Time: After the programming is completed, the information is compiled and entered into the Computer Aided Design (CAD) software. This step is required to produce the scaled drawings that will be used by other trades (electricians, data/cablers), as well as to produce the Bill of Materials used by the furniture dealer to cost the project. - 3 Days
3. Client Review: A full scale drawing is provided to the client to review the initial design. A meeting is held to gather and record client feedback - 4 Days
4. Design Revisions (Drawing Time): Revisions are entered into the CAD software, and the revised plan is re-issued to the client for final review and approval - 3 Days
5. Order Entry: After the client approves the plan and proposal, the order is electronically entered and transmitted to the manufacturer. The manufacturer confirms receipt of the order and provides a firm shipping date - 3 days
6. Manufacturing Time*: This is dependent on the product selected, however on average furniture lead-times run approximately 5 weeks (including transportation) - 25 days
7. Installation: For a project of 20 workstations and 5 private offices allot - 4 days

*The variable in any timeline is manufacturing time. There are many products available that ship within 10 days, AND there are products (higher-end) that take up to 12 weeks. Your furniture provider should be aware of your schedule, and provide product accordingly.

BIFMA Office Furniture Forecast - More Contraction

Not surprising, BIFMA (Business and Institutional Furniture Manufacturer's Association), has issued a forecast of $8.9 Billion for total office furniture consumption in 2010 (click HERE for the forecast). This is down 1% from the forecast of $9.0 Billion for 2009, and down a whooping 31% from the $12.9 Billion of 2008.

Click on the Chart above for link to the source document

It should be noted that BIFMA historically has not had the most accurate forecasts, and I would assume we will see several downward revisions before we get to 2010.

This contraction is consistent with what we are seeing in the market place. A general note on the state of the office furniture industry - It appears that all the major factories are well positioned to weather this storm. All of them have taken significant capacity off-line (by closing factories and laying off workers). Pricing is extremely competitive (the most competitive I have seen it in my 18 years in the industry). From all discussions I have had with dealers and manufacturers across the country, I believe we are at the bottom right now and I don't believe we will see pricing go appreciably deeper than the current levels.

Commercial Real Estate...The Shoe is Dropping

Listen close and you can hear the drumbeat...

"Commercial Real Estate is the next shoe to drop..."

This message has been playing in the background for at least the past three quarters, but all of a sudden it sounds like the volume is getting pumped up.

On several news sites this evening were articles about the pending tsunami in Commercial Real Estate (a phrase coined by a close friend and East Bay Commercial Real Estate expert).

From Commercial Property Executive: Economy Watch - CRE Default Rate More Than Doubles Since Last Year - points out that loans in default for the 2nd Quarter of 2009 are at 2.88%, up from 1.18% for the same quarter in 2008. They further forecast default rates climbing to 4.1% by the end of 2009.

From the New York Times: For Commercial Real Estate, Hard Times Have Just Begun - states that we are early in the process, and quotes an expert forecasting that, "As many as 65 percent of commercial mortgages maturing over the next few years are unlikely to qualify for refinancing because of the drop in values and new stricter underwriting standards..."

Finally, a different (more positive) spin on the same subject, from GlobeSt.com: Experts: Cleansing Period Ahead, Bottom Near - puts a positive spin (as we did), on the fact that a lot of properties will be "forced" to change hands over the next two years as investors default.

What does all of this mean... Look for a sharp increase in the number of headline making spectacular Commercial Property defaults, followed by some equally spectacular purchases as the properties change hands. In the end, resetting property values to the current market valuation is painful in the short run, but necessary for all of us to prosper in the long run.