Lund Financial Corporation

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So, if They Say a Building Is a Real Hellhole, Go for It

WEDNESDAY, MARCH 4, 1998 -- Real estate has become a shell game in Silicon Valley. As commercial vacancy rates in the high-tech hub have hit record lows, a new nomenclature has emerged: Terms like "cold shell" and "warm shell" -- along with the more extreme "artic shell" and "tropical shell" -- now refer to the types of buildings that landlords are offering. The basic rule is this: The hotter the market, the more frigid-sounding the building you're likely to find available. Although there are no strict definitions, "cold shells" are generally facilities where tenants may have to install bathrooms, elevators and air conditioning. But that's not as bad as an "arctic shell," which doesn't have much more than a roof and exterior walls. A "warm shell" at least has bathrooms and elevators. "Tropical shells" offer amenities beyond that. And what's the valley's current temperature? "Somewhere in between" cold and warm, says Bill Hvidt of Cushman & Wakefield Inc.'s San Jose office. He notes that several companies, including Netscape Communications Corp., recently announced layoffs and have excess office space they're looking to sublease. But Craig Lund, a San Jose real-estate consultant, thinks the trend could be temporary. "You'd better keep that parka around," he warns. --Sheila Muto

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