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The article also quotes a Jones Lang LaSalle leasing agent saying that the current trend in the market is for technology, media, and entertainment tenants looking for space.  On the startup side, this is definitely the case.  We get requests from many startups looking for sublease office space in New York for startups.  Most of these startups tend to be in industries other than finance.

Getting sublease office space in New York can be a nice alternative to a traditional lease.  They often are at a discount and can be for shorter terms.  Finding one is easier said than done…especially for smaller spaces.  Both landlord and tenant brokers spend less time working on them due to their smaller sizes.  If you are fortunate enough to find one there are other issues you have to deal with.  I spoke to a restauranteur recently who found sublease space for his restaurant and had worked out an agreement with the current tenant but when it came time to close the deal, the landlord balked.

Got any stories about subleasing going well or not, leave them in the comments.

As with anything that explodes in popularity, many of the potential downsides are over-looked as developers convert traditional office spaces into co-working spaces.  At first, small businesses, entrepreneurs and contractors could not wait to sign up for the short term (read: month to month) leases carry very little risk or long term commitment. Now that the consumers (tenants) have had a chance to assess the situation, some are seeing the consequences of co-working.  These include –

• Disconnection from your superiors – which can lead to being taken advantage of and not getting credit for your work and even lower wages.
• Too much stimulation – getting too easily distracted and taking longer to get work done
• Working alongside inconsiderate people – a study even found it could affect happiness.

Co-working obviously has some pros as well, but that’s not the topic of this article!

Have you experienced any negative consequences of co-working you would like to share?

Don't lose control. It's easy to avoid making mistakes during the leasing process.

Here are the 5 big NO NO’S that every small business owner should avoid like the plague.

1.  Impulse Decisions

Renting space for your business is a huge decision, not only financially but emotionally as well.  We spend over one half of our waking lives at our work place, so it’s paramount to pick the most suitable space, building, and location.  This is not something that should be decided on over the course of an hour or even a day, so prospective tenants must leave emotion at the door when they tour spaces and avoid being “wooed” by landlord agents’ attempts to close you on the spot.

2.  Solely Relying On Listings

It’s quite common today for business owners looking for space to simply Google “office/retail/warehouse space in city X” and view several sites, which contain nothing more than available space listings.  While listings are a decent teaser and a good way to gauge the market on a high level, the information provided with each listing is not only inadequate, it’s also frequently widely inaccurate.  Landlords want nothing more than for a business owner to view a listing, go directly to the property, and give the leasing agent the opportunity do everything they can to convince him/her that they need to sign a lease TODAY in their building to get locked into a fantastic deal.

3.  Going It Alone

Lease term flexibility and lease complexity can vary depending on the size and type of space, but it’s typically never a good idea to attempt to sign a lease for anything greater than 1500 square feet without using a good tenant broker.  There are usually thousands of available space options, tons of lease clauses, and many other variables to consider that there’s no way someone without a commercial real estate background will be able to make the most informed decision possible for their business space needs.  Tenant brokers represent YOU (the tenant) and only you.  They are market experts who not only do all of the heavy lifting, but are also trained in negotiating the most favorable lease terms for their clients.  The landlord, not you, pays their fees!  With all of the other somewhat hidden costs that are present within a commercial real estate lease, having a tenant broker can typically save you up to 25% of the total value of the lease.

4.  Procrastinating

It’s typically advisable to begin searching for space no later than 6 months prior to estimated move in date, if possible.  It’s important to get a good lay of the land, see different spaces, and gauge where the market is. Like anything else in life, preparation always pays off in the end, and in this case, it can end up saving you thousands of dollars.

5.  Going At It Cold

Do some research.  Get a good idea on the fundamentals of leasing commercial space before you start looking around so you can be somewhat dangerous.  Prospective tenants need to understand who the players are, what the pitfalls can be, and how the process works before they start honing in on signing a lease.  Small business owners make uninformed decisions about leasing space every day, and it can literally crush their company.

Renting office, retail, or warehouse space is a big decision for any small business owner or operator.  Understanding all of your options and how the process works will make you an informed consumer. More often than not, having representation is a good idea too.  Make sure you take the right first steps in the process so that you won’t get burned later on.

]]> http://www.thesquarefoot.com/houston/5-mistakes-businesses-make-when-leasing-space/feed/ 0 http://www.thesquarefoot.com/2012/01/26/planning-office-move-practical-tips-successful-office-relocation/ http://www.thesquarefoot.com/2012/01/26/planning-office-move-practical-tips-successful-office-relocation/#comments Fri, 27 Jan 2012 04:50:56 +0000 Justin Lee http://www.thesquarefoot.com/?p=5075 Continue reading →]]> Guest Post Provided by HelpMovingOffice.com

As 2012 gets under way, and businesses prepare for the future, an office relocation is proving to be a highly effective strategy for companies to get into cheaper and more appropriate office space.

With the correct amount of planning, budgeting and management, relocating can enable companies to raise their corporate profile, grow their customer base, improve operational efficiency and attract & retain talented employees.

Value for money should be a key part of all business decisions – and most certainly true when it comes to an office relocation. The end result for most businesses will be to end up in the right office space, on the right terms, with the right deal, with the right office design and layout, with the right furniture in the right places, with everything working on that first morning in the new office. Oh, and all this having happened on time, to budget and with the minimum hassle and disruption to the business. Easy when you say it quickly!

Achieving a smooth and hassle-free office relocation is possible (surely it’s what every business expects from its office move!) – but, in order for this to happen, there needs to be a relentless focus on planning and preparation.

While planning and preparation are vital, there is also an additional key success factor in successful office relocations. That’s for Tenants to have a strong commitment to engage the expertise of external professional advisors to help with each key stage of the move. However, there is often reluctance for businesses that are moving office to seek professional advice. This is a big “No-No” as there are, sadly, just too many examples of where companies have paid the penalty (and price) for trying to cut corners and “go it alone”. This is usually driven by a desire to “save money”. While the sentiment of trying to achieve best value is understandable, the result is often the opposite.

Best practice (and experience) clearly shows that companies that don’t engage external professional expertise waste unnecessary time and money. Conversely, businesses that do work with office relocation professionals (brokers, attorneys, office interiors specialists, IT relocation companies and office movers) avoid mistakes, save time and get better value for their money.

Office Relocation Pitfalls And How To Avoid Them

Companies moving office all too often make the same mistakes. Find out about these common mistakes and get practical guidance on how to avoid them.

1) Underestimating What Is Involved With An Office Relocation

An office relocation is a process – and, like any process, can be broken down into a series of simple checks and tasks. The intelligent use of project planning documents, spreadsheets and office move checklists will not only help with the planning of the office move, but also act as the road map to carry out the many tasks involved with the project. They should include all of the tasks that need to be completed (and the steps leading up to them), the individuals, teams and companies responsible for completing each task.

2) Not Starting The Process Early Enough

It’s impossible to plan too far ahead. All things being equal, best practice says that tenants should start reviewing their options 12-18 months prior to lease expiration or break option, regardless of whether they are considering renewing, renegotiation or relocating. It is vital to allow enough lead-time to increase the amount of leverage and competition between the various options. Doing so can result in substantial savings.

3) Not Engaging Professional Help

This is a false economy and, as a result, many office moves end up being a time-consuming and stressful job fraught with difficulty and expensive mistakes that could have been avoided. In today’s environment – now more than ever – companies should be looking to extract every ounce of value they can from everything they do. For an office relocation, there is no question that this is best achieved through businesses combining their understanding of their own priorities with the expert advice and market knowledge of office move professionals. This not only ensures that they don’t make any critical mistakes but also saves them money over the term of the lease.

For more information and guidance on how to plan, manage and execute a successful office relocation go to HelpMovingOffice.com.

You might ask what these changes mean for Starbucks as a commercial tenant in various strip centers.  A few questions could arise, like will other tenants with liquor licenses in the same center as one with a Starbucks adopting the sale of beer and wine have a problem with it?  Seems like it could be a concern, but most bars and restaurants typically don’t have a restriction against other tenants in the center selling liquor.  There’s also the issue of the Starbuck’s tenant obtaining his/her liquor license and how the sale of wine and beer comes into play in a commercial lease.  Generally, the landlord’s lease language simply specifies that should a tenant choose to obtain a liquor license, he/she will abide by T.A.B.C.’s rules and regulations.  The lease will also likely state that the landlord isn’t liable should anything negative alcohol-related occur. Hypothetically, would a prospective retail tenant such as a restaurant or bar looking for space be concerned if a possible location housed a Starbucks with its liquor license?  I certainly would be, and as the Culture Map article states, local cafe’s should DEFINITELY be concerned with their locations in relation to Starbucks with the proposed food and beverage roll-outs in the coffee giant’s plans.

As everyone who lives and breathes commercial real estate in Houston knows, this is a massive deal (and the second recent big win for North Houston after the Exxon deal). However, for small business owners who are learning about the basics for their search and/or lease, we thought we would break it down into some digestible numbers.

Based on an average annual rental rate of $25 a square foot for office space in Houston and assuming a 10 year lease – that’s over $124 million for the life of the lease / $12.4 million a year or over a $1 million a month! (This is just broad strokes; we imagine this was a rather complicated transaction with lots of lease concessions—which would bring down the effective monthly payment–given the updates being made to the building mentioned in the article).

Grubb and Ellis represented Noble in the transaction and we would bet they earned their commission. Just think about the dozens of lease clauses, lease concessions, and the build out package that needed to be negotiated. In addition, Kirksey Architecture is re-designing the space for a new modern look. Think about all the vendors now involved – furniture, IT, contractors, etc. – usually a broker helps their tenant manage all these decisions and timing (it’s important that certain vendors are included before the lease is executed).

Although this is a massive transaction, these are issues that smaller tenants face as well and that highlight the importance of using a tenant broker, based upon what type of office space you may be looking for. If it is fairly commoditized (short lease, no build out, pre-existing set up, etc.), it is possible to do much of it yourself.  But, once you get outside of those narrow parameters a broker can be of the utmost importance.

We recently read an article, The Cult Of Amazon Prime, which details how Amazon could silently take over the world and affect commercial real estate. For anyone not privy to Amazon Prime, it is a yearly membership ($79) that allows you to get free 2 day shipping for anything bought on Amazon. Apparently there over 5 million worldwide subscribers and this number doubles every 18 months. According to forecasts, Prime will reach 30M-40M of the 120M households in the United States in the next four years (with ~20M accounts).

The point of the article is that once you can receive any product on earth within 2 days and never worry about shipping costs, customers will no longer go to physical stores to purchase items. Just think, instead of running to the drug store every week, you can just schedule your mouthwash, toothpaste, etc to arrive on the first of every month, without even having to think about it! This extends across just about every retail experience you can think about. According to the article, the downsides of Amazon Prime include -

Now, the only downside to Prime’s ascendancy is that it’s going to wipe out tens of thousands of retail jobs that are currently filled by the least employable of our workforce. And I think Amazon’s massive growth will actually crater the real estate business as malls and main streets are faced with unfillable retail spaces. What do we do with the malls, turn them into office and loft spaces? university space?

Now the writer of this article goes to the extreme, but I am not sure they are totally off-base. What happens as the workforce becomes more and more mobile and space continues to come online either through new buildings or converted properties? We believe people will still need commercial space, but the percentage of 10,000 foot and above spaces (currently around 50%) will continue to dwindle as Dallas and Houston landlords will be forced to cut these spaces up into smaller, say four 2,500 square foot spaces.

Thoughts?

Anyway, one particular section jumped out at me in light of all the thinking we do about office space around here at TheSquareFoot about New York office space for lease and it’s something that anyone planning the layout of their next office should without a doubt take into consideration…

Office Space

I always love visiting companies because you can tell so much about the character of the company by spending time in their offices. You get a feel for the company “vibe.” Do they all get along? Do they have a strong sense of culture? Do they seem to have fun?

Having a great work environment is tremendously important in attracting & retaining great employees and in getting teams to work well together. Teams that hang out together work more productively in difficult situations.

You find some offices where the CEO or senior team have cordoned themselves off. It’s an obvious temptation. As a founder you end up having to deal with a lot of sensitive information & discussions. You probably also value the concentration you can get from a bit more quiet and solitude. Cordon yourself off and you get dragged into a lot fewer problem-solving sessions for other people.

But doing so has many drawbacks. And I usually recommend against it.

One of my big disappointments at GRP has been our office space in Los Angeles. When you walk in it feels like a lawyer’s office.  Like we take ourselves a bit too seriously. I can’t really change it because we had a super long lease. But that expires soon and I hope to get back to the right side of the Haimish line. We’ll see.”

One of the best examples of this that I have seen recently was actually the layout of Mayor Bloomberg’s office space in city hall where he sits in the middle of a large room with his deputies right next to him.

What do you think about the Haimish line and office space for lease in New York?  Any particularly striking examples that you have seen?