The American Architect
Wednesday, July 17, 1918
Number 2221 The Investment Problem in Office
Buildings
By Edward A. Renwick, of Holabird & Roche, Architects and Engineers
In the apove title “investment” is understood to Be air adequate financial return upon the capital invested in an enterprise. It is not always possible to foresee all the elements which may make an office building successful, but with proper study by experienced persons the result may be predicted with considerable accuracy.
An analysis of the failures show as principal contributing- causes the following items: Improper location, initial underestimate of cost, faulty or insufficient financing, wasteful or thoughtless planning, unstudied returns, extravagant construction or finish, low grade of workmanship or materials, inflated land value, lack of individuality or attractiveness of exterior.
In the case of many such failures, if the owner had consulted someone thoroughly experienced in such matters before purchasing the property or entering upon a long-time lease, or before erecting the building upon property already acquired, better results would have been attained or the property developed with a building for other purposes.
A person with broad experience in the construction and renting of office buildings will, in seeking for the best solution of the problem for each site, consider thoughtfully and consistently the following questions: Will the site be developed to its highest and most permanent use by an office building? Will the returns justify the cost of an office building that will remain a good investment ? How many stories high may the building be constructed without danger of excessive vacancies ? Will the store rentals bfc adequate to meet their proportion of the expense of interest, taxes and insurance? What character of building will be required to meet best the demand for space and at the same time not be outclassed by newer office buildings ?
*An address delivered before the convent:on of the National Association of Building Owners and Managers.
The first step, after it is considered advisable to build an- office building, is to make a thorough and careful study of the local requirements of tenants. It will be found that these requirements are subject to considerable variation in different cities, due to some degree to the various methods of conducting business; the seclusion, or the converse, of heads of corporations or firms; the volume of business conducted by the individual tenants; customs as to size of office units, etc. Prevailing winds of the cities that have high temperatures in summer should be given consideration in the selection of sites, placing of courts and arrangement of windows. Generally it is not advisable to attempt to modify local preferences but rather adapt the plan to meet the problems.
One should study the existing rentals in the locality of the site to determine the probable success of the proposed building. In many cases these rentals may seem inadequate. An examination of the premises may show that the store fronts are not as well designed as they should be, that the office plans or the finish and equipment of the building are unsatisfactory, but that in a proper building higher rentals could be obtained. If the proposed building is . located in a district occupied by low-grade tenants, such tenants will be a serious handicap to the stores in the new building and might cause the project to become a failure. By advising the owners of property in the district to form an association and terminate such leases, remodel store fronts, increase the street lighting and generally improve the character of the district, inducing high-grade tenants to locate in the remodeled buildings even if the rental for the first few years is not adequate, the value of the land will, in a few years, be enhanced and a better class of tenants attracted to the office floors. High office rentals cannot be expected or obtained where the
Copyright, 1918, The Architectural & Building Press (Inc.)
Wednesday, July 17, 1918
Number 2221 The Investment Problem in Office
Buildings
By Edward A. Renwick, of Holabird & Roche, Architects and Engineers
In the apove title “investment” is understood to Be air adequate financial return upon the capital invested in an enterprise. It is not always possible to foresee all the elements which may make an office building successful, but with proper study by experienced persons the result may be predicted with considerable accuracy.
An analysis of the failures show as principal contributing- causes the following items: Improper location, initial underestimate of cost, faulty or insufficient financing, wasteful or thoughtless planning, unstudied returns, extravagant construction or finish, low grade of workmanship or materials, inflated land value, lack of individuality or attractiveness of exterior.
In the case of many such failures, if the owner had consulted someone thoroughly experienced in such matters before purchasing the property or entering upon a long-time lease, or before erecting the building upon property already acquired, better results would have been attained or the property developed with a building for other purposes.
A person with broad experience in the construction and renting of office buildings will, in seeking for the best solution of the problem for each site, consider thoughtfully and consistently the following questions: Will the site be developed to its highest and most permanent use by an office building? Will the returns justify the cost of an office building that will remain a good investment ? How many stories high may the building be constructed without danger of excessive vacancies ? Will the store rentals bfc adequate to meet their proportion of the expense of interest, taxes and insurance? What character of building will be required to meet best the demand for space and at the same time not be outclassed by newer office buildings ?
*An address delivered before the convent:on of the National Association of Building Owners and Managers.
The first step, after it is considered advisable to build an- office building, is to make a thorough and careful study of the local requirements of tenants. It will be found that these requirements are subject to considerable variation in different cities, due to some degree to the various methods of conducting business; the seclusion, or the converse, of heads of corporations or firms; the volume of business conducted by the individual tenants; customs as to size of office units, etc. Prevailing winds of the cities that have high temperatures in summer should be given consideration in the selection of sites, placing of courts and arrangement of windows. Generally it is not advisable to attempt to modify local preferences but rather adapt the plan to meet the problems.
One should study the existing rentals in the locality of the site to determine the probable success of the proposed building. In many cases these rentals may seem inadequate. An examination of the premises may show that the store fronts are not as well designed as they should be, that the office plans or the finish and equipment of the building are unsatisfactory, but that in a proper building higher rentals could be obtained. If the proposed building is . located in a district occupied by low-grade tenants, such tenants will be a serious handicap to the stores in the new building and might cause the project to become a failure. By advising the owners of property in the district to form an association and terminate such leases, remodel store fronts, increase the street lighting and generally improve the character of the district, inducing high-grade tenants to locate in the remodeled buildings even if the rental for the first few years is not adequate, the value of the land will, in a few years, be enhanced and a better class of tenants attracted to the office floors. High office rentals cannot be expected or obtained where the
Copyright, 1918, The Architectural & Building Press (Inc.)