Traditionally, the last five percent of many commercial real estate portfolios is difficult to lease, leading to vacant space that landlords often do not actively promote. To fill this void, JLL has developed a new leasing platform, HiRise.com, which aims to connect tenants and landlords directly to transact office leases, eliminating the broker.
At first glance, a large broker creating a broker-eliminating tool may seem counter-intuitive but the firm will make money when rents are paid. There is no cost to post a space on HiRise but if a space is leased, HiRise will receive a 10% fee of each dollar of rent that is paid, when it’s paid.
HiRise, which launches today in Washington, D.C., allowds tenants and landlords to connect and complete their entire real estate transaction online. The platform opens a leasing arena that was not previously available to small tenants occupying less than 5,000 square feet.
“Our platform is poised to profoundly change the commercial real estate market,” said Andy O’Brien, HiRise co-founder and Senior Vice President at JLL. “A huge block of tenants is being underserved. Long leases, large square footage requirements and strict terms are prohibitive and resource-intensive for small- to mid-sized businesses, especially high growth startups. JLL has found a way to ease the pain and anxiety felt by these businesses by providing a marketplace where they can find more transparency, flexibility and choice for their real estate decisions.”
According to JLL, more than 500,000 U.S. businesses occupy office spaces that are less than 5,000 square feet. In the Washington, D.C. metro area, these users outnumber large tenants three to one, and the average transaction size has dropped 35 percent since 2010. The number of office leases larger than 10,000 square feet have been reduced by half in that timeframe, with the average lease size falling to 4,100 square feet.
HiRise, which was named by InformationWeek as one of “20 Great Ideas To Steal In 2015,” simplifies the user experience for both tenants and landlords. Tenants can secure flexible options – by seat or suite – while landlords can monetize vacant space in a more strategic way.
HiRise simplifies the leasing process by providing potential tenants with ease and flexibility to search, inquire and transact directly with landlords online for office searches based on size, length term, price and location. The platform allows businesses like nimble, high-growth startups to focus on the evolution of their product or idea instead of the uncertainty of their long-term real estate needs.
“HiRise is a brilliant platform,” said Main Street Genome CEO Scott Case, who was a founding CEO of Startup America and founding CTO of Priceline.com. “I’ve traveled around the country engaging with startups in dozens of cities and meeting with growing young companies. A consistent need for these firms is space for their teams to work and collaborate, but the state of the leasing market is a terrible experience for them. HiRise delivers flexible space for startups while leveraging the expertise of JLL’s corporate real estate infrastructure.”
Chris Mundy, Senior Vice President of Investments at Oxford Properties Group, believes that HiRise is an ideal catalyst for his portfolio value strategy. “It creates a unique opportunity to digitally market our spaces and create a steady pipeline of tenants. With this marketplace, we can reduce downtime and potentially monetize all of our vacant space. It’s exactly the solution we need in today’s market,” said Mundy.
Washington, D.C. was selected as the platform’s first market due to the city’s evolving transaction size and vibrant mix of startups, small businesses and government contractors.
“The D.C. technology community really needs this tool,” said Geoff Orazem, Managing Partner of Eastern Foundry, a government technology and innovation incubator. “Our ecosystem at Eastern Foundry is built on breaking down barriers for tech startups and government contractors so that they can spend more time working on their business, and that’s exactly what HiRise will do for them. Choosing an office is difficult for a growing business, but HiRise has made that process simple and easy so that our clients can spend time on their business strategy.”