The 3D Explosion

The 3D wave is coming. It’s hitting theaters, televisions, games, cell phones, and even event tickets. My client base has seen a dramatic shift into this space as well... I’m now working with multiple companies doing 3D animation, 3D production, and 3D post-productions, including Render Farms. Here’s what I’m seeing from my commercial realtor (and general consumer) standpoint:

Film. 3D is the place to be. The Wall Street Journal just published an article about RealD, the leading manufacturer of 3D theater projection systems. Here are a few statistics from the article, which you can find in its entirety here:

• There are currently around 6,000 3D-enabled screens in North America. Extrapolation using RealD’s market share and analyst predictions for their growth indicates that this count will rise to over 45,000 within 5 years.
• DreamWorks Animation SKG now produces all of its movies in 3D
• 11% of box office revenues in 2009 were for 3D viewings… up from 2% in 2008.
• As of this August, eleven 3D films have been released in theaters YTD.

Television. 3D TV is available now and it looks great. I was recently in an electronics store and sat down to try out the new 3D TV with active glasses. It was an amazing picture and I highly encourage you to check it out. I myself am not an early enough adapter to fork over the $3,000 he quoted for the TV and disc player, nor the ~$175 per pair for electronic glasses.

Cell Phones. I have personally viewed the “glassless” 3D display (stereoscopic is the technical term) that was deployed on a cell phone in Japan in 2009… it’s impressive but wasn’t ready for prime time at launch (Click here for a write up). And Sharp claims that they’ll begin producing their own more advanced version in 2010 (info here). I’m told that these stereoscopic displays can also be deployed in  a wall-sized versions as well.

Gaming. I spoke informally with an MMO gaming client yesterday about their predictions for the 3D world in gaming and was told that it’s absolutely expected that people will one day play online and console games on 3D monitors. In fact, Nintendo has already issued a press release (click here) stating that it will release a portable 3D DS system in the 1st quarter of 2011. And guess what? It will use the glassless screen that I mention above!

Event Tickets.  My next door neighbor is a principal in the company that prints the athletic event tickets for a collegiate sports team here in Atlanta.  He recently showed me this year's game tickets... in all their 3D glory! 

Government Applications. The Military and NASA are already using 3D technologies for reconnaissance (and more, I’m sure).

A Concern. There's a concern I personally wonder about, and I have to admit that it may be isolated because no else has raised it to me.  Is technology about to bump up (again) with what our bodies can handle? My wife gets motion sick in minutes when watching 3D in theaters and on television.
 
I’m not implying that the world will ever go 100% 3D, but I do have to wonder if this will be a widespread issue and what affect it may have on adoption rates.
 
What does all this mean to the technology world?  In a word, everything for those who adopt.  To elaborate, theaters need new projection systems, homes need new TV's, producers need new cameras, post-producers need more powerful render farms, and on and on it goes...
 
Here's to your continued success! 

 

John
404.547.2009
John@LynxRE.com

 

Five Biggest Leasing Mistakes

Choosing and negotiating location is one of the most vital decisions most businesses will make. If you elect to go through the process without an agent representing your interests, there are a few "gotcha's" you'll want to beware of.  Note that these are mistakes I see folks make when they go it alone, not when they involve a tenant or buyer's representative.

First, let's agree on the decision's importance.  The space in which you conduct business significantly impacts your expenses, your image, your workflow and collaboration, your employee safety, your future options, and more. Pick wrong and you may be trapped paying too much AND find yourself tied up and unable to pursue a better option. Pick right and you can bring immediate positive results to all of the tangible and intangibles that drive your success.

Mistake #1: Not checking all options
I occasionally come across business owners who see something of interest, make a phone call, and proceed with a [negotiated] lease.  Their approach generally works out OK, but it fails to investigate the possibility that there's an undiscovered better option, nor does truly pressure a landlord to put his/her most aggressive offer on the table.  For such a crucial decision, this approach strikes me as short-sighted.

Mistake #2: Procrastinating
Done right, space selection and/or lease renegotation takes longer than you'd expect.  For a relocation, 6 months is the minimal time needed.  12 months even better.  I'll spare you the details, but you're welcome to contact me for a leasing timeline supporting this fact.

On a related note, some landlords intentionally wait until 90 days or less before expiration to contact tenants about renewals so that the tenants are faced with holdover rent (150%-200% of contract rent) and inadequate time to orchestrate a search and relocation.  By doing so, they minimize the tenant's key leverage threat - a relocation.

Mistake #3: Not knowing the market
Is $22.50 per SF a good rate for Class A office in midtown Atlanta?  What if the landlord tells you you're getting a great deal and that the last lease they did in the building was at $26.00 per SF ?  Sounds pretty good, huh?  But what if that lease they're referring to included $250,000 in space improvements that the landlord funded and then amortized into the rent rate?  And what if the deal before that one was at $21.00 per SF?  Market knowledge is critical to getting the best deal, whether it's Class A office or a light industrial space in the suburbs.

Mistake #4: Overlooked costs
What's a better deal, a $12.00 NNN space or a $16.00 FSG space?  Business owners have called me before telling me that they found a great deal on a space and wanted me to help them with it.  On my first call, though, I've sometimes learned that the great rate they were quoted was a NNN rate, meaning that the tenant would be paying 3 categories of operating expenses on top of that rate.  A few of the other items to consider are moving costs, space improvements, ongoing repair responsibilities, utilities, janitorial, and even area incentives (see my incentive article here).

Mistake #5: Asking for too little
Highly related to mistake number 1, this mistake manifests when an owner doesn't consider all of the moving parts in a transaction. It's a balancing act, but a few examples are free rent, repair stops, tenant improvements, rate reductions or abatement, escalation reductions, signage, after-hour AC, parking spaces... and on and on.

Bonus Mistake: Not being fully prepared
This one is not universal, but warrants inclusion for a select group.  I'm working with several early stage companies right now and have helped pre-revenue companies over the years as well.  Know that landlords typically will not allow you to occupy their space until you have the funds in hand or the revenue history to prove an ability to fulfill your lease obligation. Advance research is necessary for your business case, but a more efficient way to get the same information is to call someone who knows the market.  You'll lose credibility if you get a landlord excited about a possibility and then tell them you just need to get your funding wrapped up now.

By the way, I need to give credit where credit is due.  My firm, Lynx Real Estate, has two industry-specific specialty divisions - Technology and Healthcare. Todd Perman heads Healthcare Real Estate Advisors and I head Technology Real Estate Advisors.  Todd was recently interviewed for an article on this topic in the Medical Office Today publication, and his medical-specific insights in the article pretty well summed up our collective philosophy.  To read the MOT article, click here.  You'll note that his list is slightly different than mine because of the medical focus.