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Tag: office space

Despite changes office furniture still in demand

A Conversation With: Juan C. Vidal, managing partner of Offix Systems in Allentown

LVB: Many companies have been trying to get their employees back in the office now that the pandemic is behind us. Are you seeing an uptick in business as a result?

Vidal: Fortunately Offix Systems’ business has had a steady and sustained growth during and after the pandemic.

I believe that human beings are “social” entities that need the face to face interaction, with its peers and with its clients.

That is not to say that our industry has been shifting. In my opinion, it has, and much prior to the pandemic. I attribute it for the most part to technology at large and more sophisticated methods of communication and the main reason why people have been spending more time outside the ‘office’ environment but not the ‘workplace’ environment.

LVB: Have things changed in general since 2020?

Vidal: I believe they have ‘in general terms’ and ‘in individual terms’. A mind reset, more than anything else.

LVB: Open concept office space was a big trend before the pandemic, are offices still embracing the concept?

Vidal: The open office concept is still very much in play, and I believe it is here to stay. I understand, it is mainly due to the ‘dynamism’ technology has forged into society.

Having said, I believe the open concept will continue to transform. We are seeing it already, with the use of individual and shared privacy booths.

LVB: What kind of new and interesting office furniture products are coming onto the market now?

Vidal: The POD (Privacy on Demand) concept, is one of the most recent interesting products that brings a cool feel and look to spaces and continues to change the way we work and communicate. Our own TekBooth & TekRoom, whereby you can jump from an open area into a private setting, without the need of the use of a private office or a meeting room.

LVB: What’s your favorite?

Vidal: One of my favorite products in the industry is the architectural wall – floor to ceiling glass and demountable walls, because of the aesthetics, the transparency and flexibility it gives to any space you create.

Where do offices fit in a post COVID environment?

The commercial real estate industry has yet to see how changing attitudes surrounding virtual work will affect the midstate’s stock of office properties.  And while many offices may still close in the coming months, experts in the region think the need for physical office space will prevail.

Late last month, New York-based real estate research firm Reis Inc. released a report of U.S. office and apartment vacancy rates. The data showed that U.S. office vacancy rates rose from 17.1% in the second quarter of 2020 from 16.8% in the second quarter of 2019.

The firm said it expected vacancies to rise in the latter half of the year, particularly if the U.S. government decides not to continue its Paycheck Protection Program for small businesses, Reuters reported.

Where some employers may have been wary of the change to virtual work prior to the COVID-19 pandemic, the need to quickly pivot to working from home caused by the virus is expected to make it difficult for employers to rationalize keeping their old office space or buying new locations, now that they have seen it working.

“There seems to be a newfound confidence from employers that employees seem to be able to work at home and be productive,” said Jim Koury, a partner at Lemoyne-based RSR Realtors. “I don’t think anybody knows if this will be the new normal or a temporary phase and we will go back to more bricks and mortar.”

RSR currently has a lot of office space open for lease and is still interested in taking office assignments from clients. But where it may have taken three to five months to find a candidate interested in an office last year, Koury is warning clients that it may take more than a year.

“There is so much product out there that owners will have to be more aggressive to make their product stand out,” he said.

He expects larger corporations with presences in major cities to see the largest impact when it comes to selling their office spaces. Smaller businesses, such as small accounting or law firms, may be more likely to keep their physical location to continue relationships with clients.

Central Pennsylvania could also see fewer peaks and valleys than larger markets because of the number of government entities in the region that will still need office space, according to Koury.

Judah Hoover, vice president of business development at Harrisburg-based Slatehouse Group Property Management, said while many businesses were already moving toward hiring freelancers and contract employees, he doesn’t see remote working becoming the zeitgeist so quickly.

“Between the robust unemployment compensation and PPP loans being as robust as they are, we are not seeing the major defaults on leases as of this point,” Hoover said. “Maybe there is a recession that comes at the end of this but I don’t see the blood bath that many people think will be coming.”

Slatehouse manages approximately 4,000 units, with about 15% of that commercial. The company operates The Hive, a series of coworking spaces in Lancaster, Elizabethtown, Lebanon and Trenton, NJ. The Hive is open to any individuals, but caters particularly to real estate investors, the way other coworking spaces may cater to the art or tech world, said Hoover.

Coworking spaces have not been spared by the pandemic’s side effects, as people are less willing to use the spaces due to the threat of the virus. However, Hoover expects many vacant office spaces to be retooled as coworking spaces in a post-COVID landscape.

“I think that coworking spaces will be something that a lot of commercial spaces comes alive through,” he said. “It’s going to be something that there is an increased demand for and I think there will be an increased demand for it in central Pennsylvania as people leave cities like Philadelphia, Baltimore and New York.”

City Center unveiling two new buildings in Allentown

On the heels of announcing plans for the Linden Street Commons project, City Center Investment Corp. will have two more buildings before the Allentown Neighborhood Improvement Zone Authority board Wednesday night.

ANIZDA oversees and manages the development and revitalization of downtown Allentown.

The company unveiled photos and some details of the plans at a subcommittee meeting Monday night.

City Center is developing projects at 932 and 950 Hamilton Street in the city, which will have a mix of apartments, retail and office space.

The building at 932 Hamilton will be a six-story, 99,000-square-foot building with red brick and bronze accents. It will be a mixed use commercial project featuring  open concept office space.

The structure at 950 will be five stories. It is designed with red brick and a mix of vertical and horizontal siding. It will house luxury apartments and retail.

Other projects under development by the company include a project at Ninth and Hamilton Streets called Cityplace, which will include more affordable apartment units.

Most of the apartments City Center has developed in the downtown to date have been more high-end, luxury apartments.

Business owner seeks to fill work-space void in West End Allentown

Joel Krieger, a broker and owner of Krieger Real Estate of Allentown, recently bought a building in West End Allentown that he transformed into office suites and coworking space. (PHOTO/BRIAN PEDERSEN) –

After discovering a need for more office suites and co-working space in West End Allentown, a local real estate exec decided to fill the need.

Joel Krieger, a broker and owner of Krieger Real Estate of Allentown, recently bought an office building that once served a law firm at 1908 W. Allen in Allentown. He transformed the interior of the 6,000-square-foot building to create 18 offices and space for people to share desks and workplaces.

Krieger said eight of the 18 offices rented.

“We bought 1600 Hamilton last year and were able to lease that up within three months,” he said. “The first building we bought on Hamilton, I wasn’t sure what the market would be.”

He said the market is strong for small office spaces, for both small startups and established companies looking for a satellite office.

He kept getting requests for space, particularly in West End Allentown, which includes many small and independently owned businesses close to a quiet, residential community a short drive from Route 22.

The space at the 1908 W. Allen property, which Krieger is calling The Office Co., includes a combination of private spaces and co-working space, with common areas that include a kitchen, lobby and conference room.

“Some people like the co-working space and open feel, some people like the private office with a door that locks,” Krieger said.

The spaces come in different sizes, with 90 square feet renting for $450 per month and 180 to 200-square-foot spaces for $750 per month, he said.

So far, Krieger has had a number of small businesses filling up the space, including Approved Mortgage, Effrain Home Care, Drabenstott Communications Group, Krieger Real Estate, a logistics company and a few doctors.

The property had been on the market for a while when Krieger went to see it, and he was pleasantly surprised that it had all the individual suites. “We just did minor improvements,” he said.

A local firm, 4/4 Architecture of Bethlehem, served as the architect, he said.

The property includes on-site parking and offers some flexibility, he added.

Those who have a private office can rent additional desk space. Leases are one year for offices and three months for desks.

Krieger, who lives in Bethlehem, said he is looking for another property and is hoping to connect to local businesses. His office property at 1908 W. Allen could potentially accommodate 30 workers. With more people there, they could potentially patronize the smaller businesses nearby, he added.

Coworking space debuts in Easton

A multi-story building that’s been vacant for several years is now home to new coworking space in downtown Easton.

Mark Calafatello and his wife, Maryanne Russell, two former New Yorkers who live in Williams Township near Easton, completed the transformation of the six-story building at 403 Northampton St. into high-end co-working space and had a soft opening last week.

They plan to have an official ribbon cutting on March 2 and will begin their advertising campaign in mid-March.

The property, Reeds403 Co-working Lounge, has 3,000 square feet available on the first and second floors, and another 3,000 square feet on the upper floors if needed.

So far, the feedback they’ve received is positive, he said. Users have 24-hour access to the building via a key on the member’s smartphone. Members pay $100 per month to use the space.

“The range of age and industry has been great, everything from professors at Lafayette to people who are newly displaced and looking for places to work,” Calafatello said.

People are also showing interest in using the space as a gathering place, including women’s groups who want to use it for potluck dinners, he added.

The space as not just serving office workers but people in the community looking for a place with a relaxing, yet high-end vibe.

He’s seeing different types of people getting together in the space, “bridging communities with like-minded ideas.”

“For me, diversity is what keeps it exciting and interesting,” Calafatello said. “So far, all the feedback has been great.”

 

Is the rise of coworking space good for the commercial real estate market?

Coworking office space is bringing changes to the commercial real estate landscape. PHOTO/GETTY IMAGES –

There’s no doubt the concept of coworking space is a trend in commercial real estate that is growing in popularity.

Younger professionals like the flexibility and socialization they receive in such a work atmosphere and landlords with vacant space to fill find it’s a promising alternative to the traditional long-term tenant lease.

Loren Keim, owner of Century 21 Keim Real Estate in Allentown and real estate professor at Lehigh University said coworking has become a significant disrupter in the commercial office real estate market, even though it only currently controls 4% to 8% of the office space in the major markets, where you’ll find most co-working space, and is even a smaller percent of office space in the Lehigh Valley.

It’s the way such spaces are changing the dynamic of leasing office space that he said is having such an impact.

Keim describes coworking space companies like WeWork as the AirBnB of the office market.

“These users aren’t locked into a long-term 3, 5 or 10 year lease like in the past,” he said.  “They want the perks of nice space but can’t deal with the long-term lease.  They occupy space based on their variable need for space, although the cost to them is higher.”

Coworking space, of course is nothing new, but technology is making it easier to work remotely, he said.

Social and equipment needs are keeping some from wanting to work from home. That makes coworking space an increasingly attractive venture. And coworking spaces are popping up in what had been, or could have been, traditional office space.

There are coworking spaces throughout the Lehigh Valley, mainly in urban cores such as Allentown, Bethlehem and Easton.

Keim said there’s both positives and negatives to the changing office space dynamic.

“On a landlord’s side, it’s unused space that you just created a use for and you can get more tenants in quickly,” he said. “Leasers like the flexibility. They can come and go as they will.”

However, landlords often find it’s harder to get financing for space intended for coworking as compared to a traditional office with a long-term tenant.

The landlord needs to put money into a space upfront to build it out for the tenant. So a 5-year lease is generally required to justify that expense.

With a coworking space there is generally no long-term leasing contract. So, there is more risk to the landlord.

Keim said there are different viewpoints on whether or not the proliferation of coworking space, versus traditional office space, will be successful long-term. He said much is depending on if you’re a large landlord, a tenant or a lender.

From the perspective of a landlord, if they lease a large space to one tenant and that tenant disappears, the landlord will lose the entire income from that space until it’s re-rented. There is also a cost to renovate and re-lease that could be significant.

The advantage of a coworking space is that it’s a shared risk for the space by having many small tenants.

However, in many cases, the landlords of the property do the renovation for the office space for a client that then will sublet the space to much smaller firms or individuals.

A large part of risk is on the landlord who fronts the money for the renovations and doesn’t know if the sublease to the co-working company is going to be able to generate enough revenue or tenants to make the space work.

That risk makes lenders more hesitant to finance the project.

Fiscal fears don’t seem to be slowing down the growth of the coworking space concept.

“We are seeing more of this in the Lehigh Valley.  Office Quarters and Regis are examples of shared space,” Keim said.

More landlords are seeking advice in converting portions of their space to coworking, he said, and real estate professionals, such as himself, are heading the call.

“We have some team members in our commercial real estate department that we call Flexsperts.  They work with building landlords who have interest in reconfiguring their leases to create co-working space in their buildings to generate more revenue,” he said.  “Our goal is to assist clients in using their space strategically. The concept is a strong one and will likely continue to expand over the next few years.”

NYC developer selects Serfass Construction for Allentown Grand Plaza project

Somera Road Inc. of New York City has selected a construction firm for the renovation of Allentown’s Grand Plaza on Hamilton Street, which includes renovating the outdoor plaza. (Submitted) –

Now that Somera Road Inc. of New York City has selected a construction firm for the renovation of Allentown’s Grand Plaza on Hamilton Street, the developer is eyeing a June completion.

Basel Bataineh, vice president of Somera Road said the company chose Serfass Construction, a local firm to perform the construction and renovation work for the project, which includes creating an eight-vendor food hall within the retail space and renovating the interior floors for Class-A office space.

The project got a “thumbs up” from the Allentown Neighborhood Improvement Zone Development Authority’s project review committee on Thursday, which is step one in the process, Bataineh said. That committee will make a recommendation to the full board, he added.

The next step is for Somera to submit additional application information to the ANIZDA board. In addition, Somera will borrow $17.5 million through ANIZDA to help fund the project.

Most of the money will go toward the renovation and interior fit-outs for office spaces tenants will lease and a smaller portion will go toward renovations to the existing plaza and lobby, he said.

“The objective is to finish before the Blues Brews and Barbecue Festival,” Bataineh said.

The outdoor festival, scheduled for June 13, attracts thousands to the downtown.

“The last thing we want is a large construction site during the festival,” Bataineh said. “We’d like to be completely finished before the date of the festival.”

Aside from Serfass, Somera is working with ESa, an architectural firm based in Nashville, and Hawkins Partners Inc., a landscape architect also based in Nashville.

“They’ve worked on really high profile landscape projects,” Bataineh said. “They are going to redesign the exterior plaza.”

The building has about 240,000 square feet available. The building was in foreclosure when Somera bought it last April.

“We’ve had a lot of leasing interest in the market, both from tenants in the area and tenants outside the area,” Bataineh said.

The company invests in and redevelops properties around the country that have either been abandoned or blighted and puts them back to active reuse, he said.

“We love to take a building that was once a symbol of hope that has fallen on some tough times over the past few years and breathe some life into it and add some jobs,” Bataineh said.

Built in 2002, the building, formerly known as PPL Plaza, is in the Neighborhood Improvement Zone, a tax incentive that spurred more than $1 billion in construction and renovation in downtown Allentown.

Matthias Fenstermacher, vice president of Serfass Construction of North Whitehall Township, said the firm hopes to break ground and start construction in March.

“The current drawings call for demolition of the entire plaza and converting that back into green space, a flexible space,” Fenstermacher said.

The firm will also work on renovations to the entrance and interior fit-outs as they come up, he said.

Serfass will have about 20 to 30 employees working on the construction at any given time, he said.

In 2018, Serfass Construction completed another downtown Allentown project, 520 Lofts, a six-story building on Hamilton Street that included 68 upscale apartments.

 

 

City Center Allentown plans to add 2 office buildings downtown

City Center Allentown plans to build additional office buildings in downtown Allentown. Here is an image for one of them at 950 Hamilton St. (Courtesy of City Center Investment Corp.) –

City Center Allentown, the real estate developer involved in efforts to revitalize downtown, plans to build two office buildings on two sites in the 900 block of Hamilton Street.

“We’ve been looking at focusing upon the western part of Hamilton Street,” said Rob DiLorenzo, project manager for City Center Allentown. “Those two sites we see as an opportunity for future office development.”

The buildings would be 100,000 square feet each and stand six to seven stories high, he said.

The company wants a smaller footprint for the buildings, with floor plates at about 13,000 square feet, DiLorenzo said.

Potentially, multiple tenants would occupy each building and one tenant, such as a professional services firm, could take an entire floor, he said.

The property at 940 Hamilton St. is a clear site while the property at 950-956 Hamilton includes three buildings that have been vacant for the last five years. The company received city approval on Monday to demolish those buildings.

Demolition is scheduled for spring with construction next year, DiLorenzo said.

The project has no specific name yet, but DiLorenzo estimated the cost could be $28 million per building.

The sites are in the Neighborhood Improvement Zone, a tax incentive that has helped rejuvenate the city by spurring more than $1 billion in new construction and renovation in downtown Allentown.

“We see Hamilton Street as being our premier destination for organizations to be located in the Lehigh Valley,” DiLorenzo said. “When we look at office development, it’s really in most cases situated on Hamilton Street.”

 

 

 

New co-working space set to open in South Bethlehem

Venture X will open co-working space in South Bethlehem in March. (Submitted) –

Venture X, a membership-based co-working space, plans to open its first location in Pennsylvania in South Bethlehem this March.

Quadratus Construction is building out the space inside the Gateway at Greenway Park building, said Nancy Black, community director of Venture X.

Venture X is a co-working franchise that began in Naples, Florida and spread to other states, including New York, Boston, California and Texas.

Black said Venture X will occupy 13,000 square feet on the first floor and part of the second floor. She plans to have the space mostly finished by February in time for a mid-March opening. Spillman Farmer Architects of Bethlehem is the designer.

“It’s a very high-end co-working shared space,” Black said. “The building is very new and will fit the culture of Venture X. It’s also a central location in the valley.”

The office space Venture X is renting offers companies and individuals shared desks and a number of private offices, she said.

Black said she has been involved in real estate in New York City for the past six and half years and wanted to offer quality co-working office space that would include networking events.

She said she already has a few small companies and individuals interested in the space.

Terry Wallace, an executive who led a global human resources Fortune 100 company and a startup sees a strong demand for co-working space in the Lehigh Valley.

“I see an absolute need here in the Lehigh Valley,” Wallace said. “The industry is just blowing up as a service option.”

Wallace is the CEO of Alynus Inc., a company focused on business and consulting and an investor in Venture X Lehigh Valley. He’s lived in the Lehigh Valley for about 15 years and has worked in New York City all those years and felt it was time to simplify his life.

He wanted to find a solution to the challenging commutes many workers face who live in the valley but work in New York City or Philadelphia.

“The knowledge-based workforce that anchor between where you live and the impact on your work is gone,” Wallace said. “The only reason that people have to travel is because their management acumen insist they be seen. I know how difficult that type of career can be for people.”

Wallace said he knows many executives who have to travel deep into New York, New Jersey and Philadelphia for their careers because that’s how their companies work.

However, he plans to change that with Venture X.

“Where you live and where you work can be one and the same,” Wallace said. “I want us to be an offering to businesses and individuals so that no matter where you live you are about 10 minutes from one of our locations.”

He plans to invest in more potential sites in Easton and Allentown and chose Bethlehem because he views the South Side as being on a trajectory of growth.

Wallace said the leases will be quarterly and he will offer three levels of membership with different pricing. Shared desks will be $200 per month, dedicated desks will be $400 and private office suites start at $800. He will also offer community memberships, which provide access to the common space but he does not have a rental cost determined yet.

Tenants who buy co-working space will have access to other amenities on-site, including payroll services, notary services, a café, and a conference room.

The site is at 306 S. New St. and attached to a parking garage.

Construction continues on new office space for Hearst Magazines

Mohawk Contracting & Development are continuing construction on the Heritage Riverview project in Easton, which will include office space for Hearst Magazines when it opens this summer. (Photos By Brian Pedersen) –

The site once served as a bowling alley and a car dealership in downtown Easton, now it’s being transformed into new office space.

With Hearst Magazines planning to move in this summer, officials hope the property across from the Easton Intermodal Center and City Hall on South Third Street, will be an example of what’s now known as an innovative adaptive reuse.

Hearst will bring about 180 employees to the space, many of whom are temporarily in offices in Center Valley, said Allison Keane, spokesperson for Hearst Magazines, in a statement.

Hearst is renting more than 35,000 square feet, she said.

Hearst, which bought Rodale in 2018, is a major magazine publisher headquartered in New York City.

“We chose Easton as the home for our Enthusiast Group — Runner’s World, Bicycling and Popular Mechanics — because it has a thriving, diverse downtown scene with easy and safe access to trails, paths, and outdoor adventures,” said Troy Young, president of Hearst Magazines, in a statement.

Once complete, the two-story structure, called Heritage Riverview, will offer views of the confluence of the Delaware and Lehigh rivers, in addition to a portion of the Delaware and Lehigh trail.

On a tour of the construction site Wednesday, Nikolas Naidu, owner of Mohawk Contracting & Development of Upper Macungie Township, said the building will include a below-ground parking lot, have about 22,000 square feet per floor, and offer 44,000 square feet of office space.

Workers are installing concrete slabs for the garage area and recently completed masonry on the staircase and elevator shaft.

“Right now, we are starting to prepare for steel to start going up the middle of this month,” Naidu said.

The side facing Third Street will have a multiple story glass wall, while the second story will have extensive windows to capitalize on the views and daylight, Naidu said. The firm also plans to build a courtyard between the new building and the existing Monarch Furniture retailer next door.

An older building in an urban area, the construction process for Heritage Riverview has not been without challenges.

“It’s a historic building, [there’s] tight logistics,” Naidu said. “There were quite a few stone foundations that we had to deal with, quite a bit of inadequate foundations for today’s standards. We had to keep the perimeter walls for historic requirements.”

The firm also had minimal requirements for fabricating new steel tying into the existing structure, he added.

As is often the case with historic buildings, workers come across new discoveries and encounter considerable difficulties.

“There were places where you would assume there were columns, and then there were none,” Naidu said. “We had to take off the existing roof, which was in extreme disrepair. We had to use extreme care. We had to bring in a lot of third-party safety groups.”

The other challenge will come when it’s time to erect the steel so close to the existing buildings, he added.

Still, the firm expects to finish construction by June, in time for the anchor tenant’s move.

Mohawk Contracting will also complete the interior fit-out for the project.

Alloy5 Architecture of Bethlehem is the firm designing it and Ashley Development of Bethlehem is the developer, under the name Heritage Riverview LLC.

Manufacturing group eyes growth with new location, more space

Manufacturers Resource Center hosted an open house for its new office at 7200A Windsor Drive in Upper Macungie Township. Photo/Brian Pedersen –

For more than 30 years a local nonprofit has helped companies train employees, increase productivity and open the doors by introducing students to the career possibilities in manufacturing. Now, it is looking to capitalize on that growth and offer more services and education to its clients.

Manufacturers Resource Center recently moved from its office in Hanover Township, Lehigh County, where it shared space in an office building on Marcon Boulevard with several other tenants, to a new location on Windsor Drive in Upper Macungie Township.

And members of the organization, which serves about 2,000 clients in its five-county region, offered an open house Tuesday morning to show off its new, larger space and training equipment.

About 150 people turned out to learn about what MRC does and how it’s using the new space, said Richard Hobbs, president and CEO of MRC.

“The challenge is to look ahead to 2020 and beyond,” Hobbs told an audience of professionals who gathered to hear a few presentations on what MRC offers. “Think about how we can help.”

MRC helps its clients learn new techniques, which can include organizing a shop floor for better production, using new coaching strategies, or devising better communicating methods to provide effective leadership.

“The goal is to do the projects and train the people at the companies so they can do them when you leave,” Hobbs said.

The new office offers about 10,000 square feet on one floor, almost double what the previous space offered, he said.

The old space had one conference room, the new one has three, he said. The extra space allows for multiple uses at the same time.

It also has a dedicated room for a lean workshop, complete with manufacturing training equipment that can remain in the room. In the old location, equipment had to be put away after a session to the room could be used for something else.

“We’ve got a lot more flexibility with space and training facilities all on one floor,” Hobbs said. “It’s a little more centrally located.”

Being farther west in the valley puts the new office closer to its Berks County clients, but farther from those in the Easton area, he acknowledged.

However, the wider rooms and single-floor layout appear to be serving the organization well.

At the open house, several instructors offered brief presentations about programs and services of use to manufacturers.

These included information about:

  • The PA Dream Team, a career awareness program that spotlights young adults in STEM (science, technology, engineering, and math) careers at advanced manufacturing companies;
  • Industry 4.0, a program that explores new technologies and the digitization of manufacturing;
  • Coaching and Improvement Kata, which deals with patterns of scientific thinking designed to strengthen problem-solving skills and reflections on how to improve.
  • The Lean Master Certification, a program designed to help manufacturers minimize waste and develop a lean culture, learn lean management systems and obtain structured problem-solving skills, among other topics.

 

 

 

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