The following article is part of our Hedge Fund Insiders Article Series and was contributed by CBRE Group, Inc. Read more articles from the Series HERE.
As a team focused exclusively on advising hedge funds on their strategic real estate planning, we have observed several trends continuing to proliferate in the market. Below are three real estate-related issues relevant to all hedge funds.
Increasing Construction Costs
Construction costs for office interiors throughout New York City are rapidly increasing and firms that built space 5–10 years ago will find that overall expenditures for the same quality installation have increased 30–40% based on benchmark construction cost data across NYC. Although benchmarking numbers are not available specifically for hedge fund construction, high-end design details like custom millwork and architectural metal and glass are often a significant part of the design and are seeing the most rapid appreciation in cost, driving even more significant increases specific to hedge funds. Additionally, these premium and other critical trades such as HVAC and electrical are in high demand and can cause scheduling delays, pushing associated costs higher than ever.
It is crucial for hedge funds to have an owner’s rep / project manager advisor involved to ensure projects are appropriately budgeted from the initial due diligence phase, assessed on a project-by-project basis throughout the site selection process, and effectively implemented during the design and construction of the selected space.
Happy New Year, all!
As we embark on the New Year, there is no better time to reflect on 2014 and set new goals for the future, both personal and professional. We’ve asked a few of our employees at Eze Castle Integration what their aspirations are for 2015. Check out what some of their responses were below.
"Eat out less and cook at home more often." - Jim Bove, Systems Engineer
"To learn more about technology. You can never learn enough!" - Tim Macdonald, Product Manager
"To travel more." - Elizabeth Martin, Resource Coordinator
The following article is part of our Emerging Managers Insight Article Series and was contributed by CFS Group. Read more articles from the Series HERE.
There are many layers to creating a successful launch of a hedge fund, and often one that is overlooked is implementing the right furniture, while keeping in mind budget, timeline and dimensional restraints for your new office space. For someone starting a fund, and relying on your own capital, creating an office space within a budget is essential. In order to do so, you must partner with a furniture dealership that understands the marketplace and has the creativity to provide a solution that is light on the wallet but has the feel of stability and success.
As you would expect, just like many other businesses, the commercial furniture industry is a very competitive, relationship-driven sale, and unfortunately the client is usually on the raw end of the stick. Let’s give an example:
Hedge fund A has six traders, and in their mind “we need a trading desk.” But the fund's users only have one PC and two monitors each, which equates to a minimal technology requirement. The fact is that a full-blown trading desk can range from $2,000 to $5,000 (for height adjustable product) per user.
Here is what the fund manager needs to know. There are other options that will adequately handle your technology, save you up to 60-70% and give you the look and feel of a trading desk solution - savings of $10,000 just by having the proper relationship and information.
What comes to mind when you think of Miami, Florida?
Beaches and sun, exciting nightlife, a popular Will Smith song. These are typical associations with Miami. How about finance? This might not be the first thought that comes to mind, but the city of Miami is hoping that will change. Miami is a major financial hub and growing, and according to the president of the Miami Finance Forum, it’s the second most concentrated financial hub behind New York City.
Currently home to over 60 international banks and 100 alternative investment companies, Miami and its busy Brickell Avenue has emerged as “Wall Street South,” and according to Forbes is luring many financial firms away from more traditional hubs such as New York and Greenwich, CT.
Just like a car, a hedge fund’s network needs some tender loving care (i.e. maintenance) to keep it operating like a well-oiled machine. So, here is our healthy, happy network maintenance guide that our network experts use:
Step 1: Give those network devices some support
This includes TACACS configuration monitoring to ensure only authorized personnel have access to your network devices as well as staying on top of changes and incident resolution needs related to support for network devices including switches, routers, firewalls, WAN accelerators, VPN concentrators, and Wireless Access Points.
And don’t forgot to include some proactive network maintenance in addition to incident troubleshooting and configuration changes for all your network devices.
We were recently asked by a COOConnect member about the best sources for information about the strengths/weaknesses of the various hedge fund applications including front, middle and back office. Since we know many folks have this same question, today we are going to expand on the answer given by our expert, Mark Coriaty.
Now the way a hedge fund uses an application will vary based on its investment strategy, and therefore the perceived strengths and weaknesses may vary as well. However, there are multiple ways to establish a baseline of strengths and weaknesses.
Service Provider Reports: Balancing Bias with Value
First up are free reports from hedge fund service providers such as Eze Castle Integration. Each year we publish a benchmark study that outlines top applications used in select front, middle and back office categories by hedge funds. This report will provide a baseline of the top three application vendors used in each category, but doesn’t dive into specific feature sets. The report can be downloaded HERE.
Vendor reports can be helpful in getting an initial understanding of the most frequently used applications and top features used by firms. You should always consider the source, as some vendor reports or whitepapers will be biased.
Are you thinking of launching a new hedge fund? Considering relocating your existing fund to a new office? Is it time to undertake significant enhancements or renovations to your existing office space? Or – if your firm is growing rapidly – are you thinking of building out another office to expand into a new geographic location?
If you answered “yes” to any of these questions, a major technology project is likely in your near future. If your firm is currently working with a reputable IT partner, they should be able to assist you with this project. If your technology is being managed in-house, or if you’re a new shop that’s just starting out, you may want to seek the guidance of a third-party project and technology management consultant to ensure the project is completed correctly and in a timely manner.
From technology infrastructure concept development, to construction administration, to telecommunications and market circuit procurement and systems installation/implementation management, there are many crucial aspects of an IT build-out, relocation or expansion project.
Here at Hedge IT, we often discuss the variety of services and solutions that a third party technology provider can offer hedge funds and investment firms. However, one important area that is often overlooked is the process a firm must undertake in partnership with the provider in order to ensure a smooth transition to their new IT environment. In an industry that cannot afford downtime, seamless transition management is of the highest importance.
To aide in this transition, look for a provider that has deep experience working with clients to manage all implementations and other projects.
Taking a page from the Cloud Forum (quite literally), today we look at the top three winning reasons hedge funds are gravitating towards the cloud. Not surprisingly, these reasons center around increased efficiencies, improved technology environment and cost savings.
Scalable, Flexible and Available
The cloud offers firms the option of scalability without the serious financial commitments required for infrastructure purchase and maintenance. With cloud services there is no vendor lock-in or implied commitment beyond duration so firms have the flexibility to easily evolve their IT environment.
Another benefit is the ability to seamlessly add more users and/or computing resources to match the firm’s requirements. A hedge fund private cloud can deliver the infrastructure, bandwidth and network resiliency to accommodate business requirements for high speed access, storage and applications.
Before making the decision to move your IT infrastructure to a data center or colocation facility, there are a number of important criteria to evaluate. Let's review some of the most important.
Tiers – Data centers can occupy one room, one or more floors, or entire buildings. They are classified in terms of Tier Levels from Tier I to Tier IV, with Tier IV being the most advanced in terms of redundancy, security and availability.
Energy costs – As the cost of energy increases, analysts predict IT energy costs today are but a fraction of what future costs will be at current growth rates. Additionally, current trends indicate that server operating costs have the potential to equal their capital costs within three to five years.
Design innovation – Data center design is becoming increasingly important for improving operational efficiency. The foundation of data center design philosophy contains five core values: simplicity, flexibility, scalability, modularity and sanity.