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Commercial development: Building for tomorrow

Economic realities, market trends & new technology shape developers’ designs

Limited financing, escalating regulatory and raw material costs, and still-low property valuations make penciling out a project difficult. And yet, workforce trends and emerging technologies demand designs that look to the future.

Build to the budget

According to Ron Frederiksen, president of RSV Building Solutions, the list of commercial developer woes is long – lease rates are down, few buildings are for sale and even less land is available. Additionally, he said, appraisals are low, and construction costs have escalated due to regulatory requirements and increases in raw material costs. However, he added, the right business model can empower commercial development even in this challenging environment.

“Design to the appraised value then look at upgrades that can be added later in a building’s life,” advised Frederiksen.

RSV’s approach, he explained, is to realistically look at the appraisals and rental rates; financing cost; and costs for land, permits, design and construction. These define a hard-and-fast number at which the project will work.

“Then we design a project to meet our client’s need with that budget in mind,” said Frederiksen. “Green buildings and technology are neat, but you have to design to the cost/value point that is financeable and affordable to the client.”

RSV is currently using that approach to move Evergreen Plastic Container Inc. (a manufacturer of plastic containers for food and beverages) from their 60,000 square-foot facility in Portland to a site in Vancouver.

Frederiksen added that it is important to the success of a project to “work variables with a holistic approach.” He likes to “get everyone involved” — site location specialist, building owner, developer or contractor, attorneys, architects and engineers – so that there are “no silos” and “every dollar and dime” is accounted for.

Build for the future

Dealing with the realities of today, however, is not enough. Commercial developers also realize that they must create a product that has market appeal – and that means keeping pace with workforce trends and technological advances.

Noel Johnson, vice president at Killian Pacific, said that as the region’s high tech and software sector grows, the question becomes, “how do we as developers foster that emerging part of our economy?” In part, he said the answer lies in creating “healthy, collaborative, fun spaces.”

“You can’t just build the same old office environment, because that’s not what 20 to 30 year-olds want,” said Johnson.

Adam Taylor, owners’ representative for Lone Wolf Development in Washougal, said that his firm tracks national trends and applies “what we see as innovative principles to design and construction in a smaller city in Clark County.”

For example, Lone Wolf’s 1887 Main Street building in Washougal features mixed-use, increased density, and opportunities for interaction amongst small businesses, professionals and tenants. Taylor said that retail spaces (first floor) and offices (second floor) tend to be small (400 to 1,000 square feet) with big windows. Parking is intentionally located behind the building so the focus is on businesses and the building’s front is “very walkable.”

Taylor said that the building is designed to encourage “a culture of engagement and interaction.” In addition, said Taylor, Lone Wolf endeavors to equip buildings with technology so they are “not obsolete the day they open from a capacity and data standpoint.”

Shared Wi-Fi and high-speed fiber optic Internet are two examples of such technology, said Taylor. Lone Wolf is not alone in putting emphasis on integrating the latest networking technology into their buildings. For example, Prestige Development’s Prestige Plaza in downtown Vancouver offers 1GB Internet service; on the east side of town, Investment Development Management’s (IDM) The Reserve at Columbia Tech Center also offers “fiber to the unit.”

“We’ve worked in different markets, and have discovered that a lot more people are working from home,” said Jody Brents, IDM vice president and regional manager. “They need the high-end speed to utilize their time in the best possible way – and they will pay for the services because this is what they’re looking for.”

Jack Burkman, Vancouver city council member, stated in an online comment that “this is great news for Vancouver. The more of this infrastructure [that is] installed in new buildings, the more we will attract new digital economy businesses and their employees.”

Mind shift

Ebin Barnett, business development manager at CenturyLink, said developers need to change the way they’re building to accommodate these new services.

“There needs to be a strong partnership between [the fiber optic provider] and engineering, the project superintendent and electricians,” said Barnett, adding that this team approach enables the developer to understand the necessary space and power requirements, jacks, smart panels, distribution modules, structured wiring cabinets, universal power supplies and other components of the system.

Brents mentioned additional considerations, such as where to locate docking stations and even electrical outlets.

Beyond stereotypical Internet access for PCs and smartphones, Barnett sees the “Internet of Things” “coming at us like never before.” The 2014 Consumer Electronics Show (CES), for example, featured fridges, microwaves, washing machines and other appliances connected to the cloud for better energy management.

Scott Conley, president of Essential Building Technologies, said that smart systems for building-wide temperature control and energy management are increasingly cloud-based. For example, a building manager might receive an email or text message alert about a fan failure or a high temperature alarm.

“Developers and builders need to make sure they know what’s new and coming and how to stay competitive,” said Brents.

Martin Flynn, CenturyLink senior marketing manager put it a little more strongly.
“Prestige Plaza and the Reserve – this is the future,” he said. “The landscape is changing dramatically and quickly. If [developers] spend more time on cabinet colors than on the network, they’re going to be left out.”

Technology in demand

The following statistics illustrate the increasing role technology can play in the success of multi-family dwellings, commercial buildings and the community at large:

According to a recent National Multifamily Housing Council of 550,000 community units, the most highly rated apartment amenity was high-speed Internet access.

The average person owns two connected devices today. That number is predicted to rise to 9, or 20, or 50 by 2020 – depending on who you talk to.

The “Internet of Things” is driving sustained and exponential bandwidth growth. Projections place global Internet traffic at nearly 1.3 zettabytes – that’s equivalent to 38 million DVDs per hour.

Fiber-to-the-home can raise home values by 2.1 percent.

Fiber can potentially increase community revenue on average of $500,000 million and create 25 new jobs per 1,000 homes passed.

Sources: National Multi Housing Council; PC Magazine; iBid; Cisco; Broadband Communities

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