Lease Accounting Standards & Proposed Regulations
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MEMBER Oncor International Lease Accounting Standards & Proposed Regulations The Effects on Leasing & Buying in the Washington, D.C. Metropolitan Area Prepared by: Mr. Eric H. West, LEED AP, Principal Mr. Richard F. Siegel, Principal
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Lease Accounting Standards & Proposed Regulations. The Effects on Leasing & Buying in the Washington, D.C. Metropolitan Area. Prepared by: Mr. Eric H. West, LEED AP, Principal Mr. Richard F. Siegel , Principal. State of the Washington, D.C. Market. - PowerPoint PPT Presentation
Transcript of Lease Accounting Standards & Proposed Regulations
MEMBEROncor International
Lease Accounting Standards & Proposed RegulationsThe Effects on Leasing & Buying in the Washington, D.C. Metropolitan Area
Prepared by:Mr. Eric H. West, LEED AP, PrincipalMr. Richard F. Siegel, Principal
New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion
State of the Washington, D.C. Market
All indicators suggest that the Washington, D.C. office market is in a strong recovery phase:
• The vacancy rate peaked 12.7% in early 2009 and is currently at 9.3%
• Since 2009, the total amount of available space has declined by 3M square feet
• There is less than 2.4M square feet of space under construction
• Net absorption was 4.0M square feet in 2010, up from negative 615,000 square feet in 2009.
*All numbers reflect Class A office space.
New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion
Vacancy Rates – Washington, D.C.
New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion
Absorption – Washington, D.C.
New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion
Average Rental Rates & Average PSF Sales Prices – Washington, D.C.
New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion
Office Volume & User Purchases – Washington, D.C.
YearTotal User Sales
Avg. PPSF
PPSF Range
High Low
2010 6 $383 $658 $1462009 3 $455 $588 $3912008 6 $597 $839 $4562007 8 $550 $796 $4072006 5 $250 $644 $1712005 7 $360 $533 $1802004 5 $197 $238 $1722003 5 $270 $326 $1402002 8 $278 $425 $1142001 3 $344 $404 $282Total/Avg. 56 $368 $545 $246
User Purchases – Washington, D.C. 2001-2010Office Sales Volume ($ Billions)
62 64 65
34
16
35
New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion
Leasing vs. Buying – Washington, D.C.
New Lease Accounting Standards & Proposed Regulations Strategic Real Estate Discussion
Leasing vs. Buying – Washington, D.C.
Leasing Buying+ Organizational flexibility
- The space layout and design can evolve to meet
organization needs
- Take advantage of market downturns
- Renegotiate lease to reduce rent, occupancy, or both
+ Maintains organization’s liquidity
+ Focus on core mission, not real estate operations
+ Control & reduce long term occupancy costs
+ Potential to build equity through appreciation
+ Image & prestige
– Susceptible to rental spikes
– Long term real estate costs are higher than owning
– Lack of liquidity
– Equity not serving mission
– Asset management & risk
