Office Tenants Face Stepped-Up Security at Higher Cost

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Security is expected to take a much higher profile in Los Angeles lease negotiations in wake of the U.S. terrorist attacks. But the added safety measures, which could be a new marketing tool for landlords, would come at a price to tenants.

“This definitely changes the way we do business,” said Brian Jennings, Insignia/ESG Inc.’s managing director of client services for the Western Region.

As soon as the planes hit the World Trade Center in Manhattan, property management companies immediately stepped up security measures, ranging from additional guards to tighter restrictions on entering buildings.

“What you’re starting to see is some projects where you had a concierge during the day and a guard at night now considering going to a 24-hour guard,” said David Thurman, a senior vice president at Grubb & Ellis Co. “I think you’re going to see (landlords) use security as a marketing tool and they’re really going to push that.”

In the end, though, everyone agrees landlords won’t accept the liability that accompanies security.

“When they agree to supply security they always make it very clear it’s building security, not tenant security,” said Hunt Barnett, senior managing director at Insignia/ESG.

Some property managers are looking to security consultants who can educate tenants on how to secure their own space, according to Cindi Langendoen, associate director at Cushman & Wakefield Inc.

Langendoen said some tenants in downtown L.A.’s Bunker Hill neighborhood and in Century City have retained their own security. At $7 or $8 an hour, she said the cost adds up to thousands of dollars a month.

While they’re not guaranteeing anything, officials at Arden Realty Inc., Los Angeles’ biggest landlord, said they are taking the initiative to put their tenants at ease.

Victor Coleman, chief operating officer and president of Arden Realty, said additional guards at a handful of properties is part of a permanent upgrade of building safety.

Increased protection, of course, is not a complimentary benefit.

“Any incremental cost is potentially passed through to tenants,” Coleman said, but didn’t elaborate on what that cost could be.

Langendoen said the ultimate cost is not that great because the high-profile properties already are pretty secure and the lower-profile buildings don’t need the most advanced surveillance technology.

Thurman said the cost of increasing security, if passed on to tenants, is likely to manifest itself in a more subtle way in L.A.’s soft office market.

“In the near future, it’s not going to allow (landlords) to raise rents, but it’s going to allow them to not drop rates,” he said.

Coleman said Arden has responded to last week’s terrorist attack by increasing by 30 percent the number of security personnel at nine L.A. buildings. An emergency response book that Arden uses will be updated to reflect new threats. The book was last updated in anticipation of Y2K issues. Before that, it was modified following the Northridge earthquake in 1994.

While no one is criticizing property managers for lax security, most expect permanent changes are in order for security and peace of mind.

“We are a lot more critical and aware of what moves in and out of our buildings,” Coleman said. “Particularly the profile buildings.”


Higher profile

“Security was a line item everyone talked about, but more times than not it was glossed over,” Thurman said. “I think now tenants and brokers are going to start asking, ‘What kind or security do you have? How much?”

Coleman doubted whether security would be used as leverage in lease negotiations.

“It doesn’t take a disaster for Arden to implement good security at our buildings, and we don’t expect to use security as a heightened marketing tool in coming months,” he said. “Effective security measures are good business at all times to protect our tenants, our employees and our assets.”

Where will this renewed attention to security end?

“Are you going to see armed guards in the lobby?” Thurman said. “I wouldn’t be surprised.”

Jennings isn’t ready to take it that far. He said he has a handful of preventive measures that would protect tenants from security threats.

For starters, security staff could be increased and evacuation practice procedures could be stepped up to require complete evacuation during drills. Current county regulations require that office building tenants only descend three stories.

Mostly, though, landlords believe that the tenants need to take responsibility for their own safety.

“I truly believe the tenants have to take a proactive role,” Jennings said. “The holidays come and go every year, and laptops tend to walk out of offices, purses and wallets, too.”

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