You pay for warehouse space by the square foot and use it by the cubic foot. Spalding Sports is the largest producer of basketballs in the world. They sought our help when they ran out of warehouse space in their Reno west coast distribution center. At the time, Spalding had 157,000 SQFT of space and […]
If your business is industrial distribution, Amazon is either your biggest customer or your biggest competitor. If it’s the former, congratulations on having a great year in 2020. If it’s the latter, you might feel like you’re playing hide and seek in the jungle with Navy Seal Team 6 using live ammo. You could survive, […]
Companies often tell us that their space use is 180/SQFT (or similar) per person. Well it almost certainly is not. And it was not before Covid, either, but their Space Utilization Metric is broken. They may have laid out their space at 180/SQFT per seat, but their staff level is very likely something less than […]
In three separate incidents that I’ve witnessed, move out condition has become an important and major financial negotiation. Two of the cases involved clients moving out of a property and debate over the “reasonable wear and tear” condition of the premises on vacating. The other issue was over a proposed new lease with a rider […]
We located a building that had four vacant floors of about 25,000 SQFT each and made the landlord the following offer: The landlord would agree to have an entire floor painted and carpeted, and my client would lease just 5,000 SQFT with an option to take additional space at the same rent and a first right of refusal if the landlord found another user for the balance. Further, rather than put up a demising wall
Office market demand has fallen by more than half over this time just one year ago, and rates have remained somewhat flat. Look at this chart comparing Office Market Rent to Occupancy: Source: CoStar Group www.costar.com There has developed a significant spread between “bid” and “ask”. Unfortunately for many corporate office tenants, understanding the true […]
Are you delaying making decisions on an approaching lease expiration? Many firms are, especially if they have a plan to simply renew in place. This can be a mistake. That decision delay is fine as long as you protect your negotiation leverage. How? Delay the renew/relocate decision, but not the renew/relocate actions. The chart below […]
“We’ve proven we can operate with no footprint. That tells you an enormous amount about where people need to be physically.” – James Gorman, CEO, Morgan Stanley ——————- So your firm has realized that it can work differently than in the past. What’s the right process to reduce your footprint? Here’s a plan to follow. […]
Nearly every office worker worldwide has taken part in a forced remote work exercise. Incredibly and perhaps surprisingly, we’ve passed with flying colors and demonstrated our ability to adapt to a non-office environment. The experiment is not over. We’ve learned some things, but not everything. We’re finding a significant portion of companies are wrestling with […]
There are many hurdles for getting staff back to work. Here’s our LeasingBetter C19 Workplace Checklist of best practices to help simplify your process. Feel free to download and/or print it out if you find it useful. Also be sure to keep checking the CDC Employer Information for Office Buildings for the most recent updates.
There was a time when some people believed that it was physically impossible to run a mile in less than four minutes. Not just difficult, impossible. After Roger Bannister did it, within a year, three runners broke the four-minute barrier in a single race. Since then, more than a thousand runners have conquered a […]
It’s only when the tide goes out that you learn who has been swimming naked. – Warren Buffett As I write this, COVID-19 has about 80,800 confirmed cases worldwide and 1,323 in the US. The operative word there is “confirmed” since by reason there will be many thousands that are unconfirmed and undetected. The virus […]
Your company signed a lease for office or perhaps warehouse space a few years ago and you’re now somewhere in the middle of the term. You can relax for a few more years, right? Wrong. Not if you want to make sure that you are staying ahead of the game. Here are three things […]
The City of London realized, shortly after WWII that they would need a new airport, now known as Heathrow. The job of determining the location was entrusted to Alfred Critchley, a successful businessman. Consider the many criteria that must be considered when choosing the location for a major airport: Transportation access, proximity to […]
It is a great time to be a tenant, and here is another example. Because almost all options are written with the assumption that rates will climb forever upwards, we’re seeing some interesting effects as rental rates tumble. Some options are literally not worth the paper they we’re written on. However, declining markets have made some usually unattractive renewal options have new value. Here’s why:
One of the great embarrassments to the FL Economic Development folks, who try to lure businesses to relocate to sunny Florida, is that we are the only state to apply sales tax to commercial real estate leases. (Note that some other states have excise or gross receipts tax that may count revenue from […]
If you expect to get a fair and competitive rental rate and terms on your renewal, you need to start early and have a process. Your Landlord is a professional. They probably have also hired an expensive real estate leasing company and have a $500/hour commercial real estate attorney. This is serious business. Even […]
If your lease is silent on the subject, most States provide that a landlord can charge double rent during a holdover period. Many commercial leases address this issue and specify some increased rent penalty from between 125% (if you negotiated it up front) to 200%. In addition, since rent is paid monthly, you are obligated to pay for the entire month
Your company has multiple leases for office or industrial space. You’re represented by a Big 5 Landlord Rep firm, and it’s not working out so well. You’re under pressure to improve it, along with a hundred other things that need improved. So you plan to create an RFP for RE services. I […]
I took this photo of Mick Jagger when I was a photojournalism major at the University of South Florida. It made the cover of a small time music magazine, and I had visions of eventually getting my work on the cover of Rolling Stone. Just like the song. Around the same time, I […]
Let’s consider the corporate headquarters of a fast growth service business. Suppose that 1) they have a preference for keeping everyone together in one contiguous space, 2) they desire to strategically minimize cost and risk, and 3) growth rate is a variable based on many factors. What is the smart way to scale facilities?
If you have a growing service business, you probably used to shop for office space by comparing rental rates. The lowest cost space, of comparable class alternatives, was often the best choice. That’s no longer the case. The cost of labor, including attracting, hiring, compensating and retaining staff is typically between 8 and 12 times […]
With the exponential rise in online sales over the past few years, and an expected additional increase of 54% by 2020 according to Forrester, retailers as a category are hurting. A June 2017 article in the L.A. Times predicted that up to 25% of U.S. malls will close in the next five years. It is not that […]
On many CFO and financial executive’s Urgent Issues or Focus List, real estate often doesn’t make the top ten. Why? I think in part it is because the impact of a real estate decision is spread over many categories of the Profit & Loss Statement. (I won’t get into FASB ASC 842 even […]
Acquisitions often focus on just a handful of items: synergy, talent, perhaps geographic coverage and/or technology, and revenue of course. The investment bankers and attorneys that orchestrate the deal generally do a great job of ferreting out the business issues that need resolved. Except for the real estate.
When choosing professional services, there exists an old adage that the largest providers are the safe bets. “Nobody ever got fired for hiring IBM” was the well known saying implying that a large company offered at least the reasonable perception of reduced risk over smaller firms. In regards to technology consulting, those advantages may have been real or simply perceived. When choosing commercial real estate advisors however, often the risk increases significantly as the size of the provider firm increases.
Most commercial office leases contain a provision that requires the tenant to promptly return an estopple upon request. What exactly does this bit of legal jargon mean? It’s actually pretty simple: an estoppel is a common legal document that serves to 1) confirm various aspects of a lease agreement and to ensure that important documents […]
It seems like every accounting, real estate, and asset tracking software firm has published an article on the new FASB Lease Accounting Standards. I’ve noticed that they all tend to talk in generalities about the actual mechanics, and none that I’ve found seem to offer suggestions from a corporate user perspective aside from “Get ready!”.
When companies acquire or merge with other competing or complementary firms, real estate is, as a part of the transaction, generally a small overall concern. However, we frequently see major risk being absorbed by the acquiring firm with potential for a very negative surprise down the road.
Here’s the error: Due diligence of the real estate is often relegated to their investment advisory firm and/or an M&A legal team to simply provide a cursory review of the legal terms of leased real estate without much attention to the business terms.
