Winning Ways in a Small World Patricia Lines Bsc MRICS SIOR James Southey Bsc MRICS SIOR 2006 SIOR Spring Convention – La Quinta, CA USA.

Winning Ways in a Small World

Patricia Lines Bsc MRICS SIORJames Southey Bsc MRICS SIOR

2006 SIOR Spring Convention – La Quinta, CA USA

Winning Ways in a small World

Doing International Business in the Real Estate Sector

Patricia Lines Bsc MRICS SIOR

James Southey Bsc MRICS SIOR

April 2006

Who are we?

Patricia Lines

Qualified Surveyor

SIOR since 2000

In Real Estate since 1986

Worked in Real Estate on a worldwide basis

Lived and worked in Germany

SIOR International Advisory Vice Chair

Keen golfer!

James Southey

Qualified surveyor

SIOR since 2000

In Real Estate since 1990

Licensed in NJ and worked in USA from 1999 through 2004

Based in London with responsibility for USA

Winning Ways in a small World

Let’s take SIOR business in the right direction and take off for success

Winning Ways in a small World

Where is this city? Image courtesy of Terry Farrell and Partners

Winning Ways in a small World

EUROPE

FRANCE

SPAIN

ITALY

GERMANY

NO

RW

AYS

WE

DE

N

FIN

LAN

D

NETHERLANDS

BELGIUM

POLAND

POR

TUG

AL

GREECE

ESTONIA

LATVIJA

LITUANIA

BULGARIA

CZECH REPUBLIC

BULGARIA

SWITZERLAND

AUSTRIA

LUXEMBOURG

UNITED KINGDOM

DENMARK

SLOVAKIA

HUNGARY

ROMANIA

SERBIA

MACEDONIA

MONTENEGRO

ALBANIA

BOSNIA

CROATIA

SLOVENIA

IRELAND

Winning Ways in a small World

Why is doing business different?

• Cultural differences

• English language v American language

• Different time zones

• Different languages

• Ways of conducting meetings

Winning Ways in a small World

Lease Structures in Germany

• Typically 5 plus 5 year leases

• Reviews linked to consumer price index

• No statutory right to renew• Structural repairs - landlord

Winning Ways in a small World

Italian Lease Structures

• 6 plus 6 year terms

• Annual indexation of rents

• Landlord responsible for structural repairs

• No full recovery of service charges

Winning Ways in a small World

American and British Lease Comparisons – A few differences

Clause UK USA

Length of lease 10 to 15 years 5 to 10 years

Rent NET GROSS

Rental payment Quarterly in advance Monthly in advance

Security of Tenure Legislative Contractual

Service Charges Reimbursement of costs

Fixed by annual escalation

Winning Ways in a small World

Fee Structures

Country Lease Fees

Belgium 15% of first years rent

Czech Republic 10 – 12% of one years rent

Denmark 15% of one years rent

France 20 – 30% of one years rent

Germany 20 – 25 % of gross annual rent

Winning Ways in a small World

Fee Structures

Country Lease Fees

Italy 1 – 2 months rent

Ireland 10 – 12% of first years rent

Netherlands 10% of first years rent

Poland 8.5 -10% of one years rent

Spain 10% of annual rent

Switzerland 15% of one years rent

UK 10% of one years rent

Winning Ways in a small World

Office Rents Comparisons

0

20

40

60

80

100

120

140

160

180

200

US$ pa

London West End

Tokyo

Paris

MidtownManhattan

Frankfurt

Washington

Barcelona

San Francisco

Chicago

Dallas

Winning Ways in a small World

Industrial Rents Comparison

0

5

10

15

20

25

30

US $ pa

London Heathrow

New York

Tokyo

Barcelona

Frankfurt

San Francisco

Dallas

Brussels

Winning Ways in a small World

International Case Study: Bristol Myers Squibb - Europe

Winning Ways in a small World

Location Rhein-Main

Winning Ways in a small World

St. Nazaire, France

• Manufacturing and R&D 63,034 ft² on 23.5 acres

• Valuation and P&M

Winning Ways in a small World

UK and Germany

• 12 ongoing instructions out of approx 120 properties in Germany

• Opposite, HQ in Offenbach, Frankfurt – Honeywell 8,000 m² office relocation strategy completed

Winning Ways in a small World

Examples of International Investment Business and pitfalls

Buying Investments in the USA with a German Fund

Winning Ways in a small World

• Meetings Culture

• Language

• Sq m/Sq ft

• Rent per annum/per month

• Definition of yields

Examples of International Investment Winning Ways in a small World

• Currency Issues

• Time Differences

• Legals

• Expectations

• Legislation/Tax

What steps should you take to do business outside North America?

1. Contact the local SIOR broker in the country or city

2. If no one listed call Patricia Lines or James Southey who will advise if their offices can help

3. The SIOR broker will explain the market differences and what needs to be done by You and Your client

4. The SIOR will know the local markets and idiosyncrasies as you would in the USA

Winning Ways in a small World

From small acorns grow large oaks

Winning Ways in a small World