Articles About Commercial Real Estate

One of the major misconceptions about signing a new short term lease on commercial real estate is that it’s horrible. The fact is that every Landlord who leases property these days complains about the short term leases they are having to sign with tenants. To Landlords, short term leases are inconvenient, provide no long-term leasing security and are a pain to deal with, time-and-time again. However, leasing property or office space on short term basis can actually be a great thing for Landlords; especially considering the current economy. You see, short term leases are great in this economy because you are not locked-in at a low lease rental rate when the economy rises once again, which is predicted to be around the year 2010-2011. Let us explain this:

In today’s commercial real estate market, rental rates are down (very low), but we expect they will be coming back in the next couple years. So as market rental rates recover, you can capitalize on the “upswing” of rental rates by renewing your Tenants at new, higher, rental rates. Another great advantage in this is that shorter term leasing tenants usually expect much less in Tenant Improvements, which significantly helps landlords to conserve cash they would have to spend modifying the space. For example, when a tenant moves in on a short-term lease basis, they typically won’t be as adamant as getting every nook-and-cranny specialized for them. They are usually content with the office as is if it is in good condition, because their short term lease expiration allows them the freedom and flexibility to relocate or make changes in the near future.

Another great advantage is that in short term leases, there are less rental concessions and free rent given to a Tenant. Also, short term leases also require less money being paid out by the Landlord in leasing commissions. Longer term leases always demand more in leasing commissions from a Landlord.

If you walk away with something from this blog post, make it this: long term office space leases in this market are less desirable, because it locks a landlord to commit to a lower rental rate for a longer period of time that will outlast the market’s upswing in rental rates. So, as a landlord you will want to take advantage of the higher rents in the near future. The way to do this is to be strategic, and sign short term leases that mutually benefit you, and the Tenant. Remember, you don’t want to be locked in at low rental rates when the economy rises in a-year-to-two. If you are a landlord, don’t worry about short term leases, they are often better for you than you think.

According to the San Franicisco Chronicle,  yesterday's rain storm brought an unexpected surprise for many San Franciscans: flooding.  The flooding caused problems for commuters, as well as isolated flooding of buildings.  Many business owners don't anticipate something like a flood causing a major disruption.  But flooding, which can be caused by problems with pipes or weather, can significantly affect a business and its ability to operate.  If you're interested in learning more about other common business disruptions and how to plan for them, please don't hesitate to contact us  for a free Business Continuity Planning Needs Assessment.

On October 18th, 1989, many Bay Area residents woke up and asked themselves "what now?"  Twenty years later, we should all be doing the same thing.  But this time, we're not asking ourselves what to do after a devastating disaster.  We should be asking ourselves about how to prepare for the next one.

The 20th Anniversary of Loma Prieta has come and gone, but our interest in disaster preparedness cannot fade with the last news cycle.  As business owners, we must be prepared for disasters so our businesses do not fail after a disaster. Government scientists say that there the chances of a major Bay Area earthquake during the next 30 years are definitely over 50%.  As I've written before, 25% of small businesses do not reopen after a major disaster.

In difficult economic times, it's hard for business owners to find the time to plan for an event that may or may not happen.  Working to make a disaster plan without experience can also be frustrating.  This is why I've worked with Partners In Continuity to develop Workshops and Seminars to help small businesses create disaster plans.  Our cost effective Workshops and Seminars will help you understand how to efficiently use many of the free resources that are available.  We hope that you'll consider joining us for a Business Continuity and Emergency Planning Workshop or Seminar on Wednesday, December 2nd, 2009.  You can read more about our offerings and register online at www.alexiagroup.com/workshops

As a young company that is launching or moving locations, unexpected costs are thrown at you every day. Also as a young company, every cost is monitored closely.  We wanted to profile a common cost that many businesses face as they expand or launch their business. Below are some key things to consider as you discuss having your companies’ server infrastructure within your space or outside it.

•    Some preliminary questions to ask yourself include:
o    Does your server room need to be separately cooled?
o    Would you be OK having your server in a hall closet?
o    Would you be OK having your sever in an equipment room?
o    Will you need to be adding servers over your lease period?
•    Do you have staff on hand who can deal with any issues that might arise
o    If you don’t have someone on staff all the time to manage this infrastructure, it probably makes sense to outsource the server hosting to a vendor who provides 24/7 customer support
•    Do you have 24/7 access to the building or does the building have Backup Power
o    Most building allow 24/7 access but things can go wrong if you can not access your space and server at night when an issue arises.
•    Is there a lot of remnant tech company space where server room infrastructure has been built out in the last 5 years that you can leverage?
o    Many technology-focused real estate markets have left over space from companies that have outgrown office space or gone out of business and this infrastructure is very valuable. If this can be found, there would be no need to build your own infrastructure but there is still increased electrical cost. Try and get the last companies electrical usage to get a rough figure of what it would cost to run your server or servers within the space
•    How long do you plan on being in this space
o    Are you going to be in your new space for long enough to justify installing back up power, separate cooling, or outside air
o    If you do move frequently, what type of disruption to your business will moving your server infrastructure cause?

At Rofo, we moved to different subleases 3 times over our first 24 months in operation and chose to outsource our server hosting. As we continue to grow and increase our server load and maintenance needs, we will continue to analyze our decision.

If you do decide to host your website elsewhere we can recommend Softlayer who’s pricing and support has been first class. For a free quote, please contact the Softlayer sales team below:
http://www.rofo.com/user/Softlayer

To find subleases with existing server room infrastructure, please search the Rofo system below:
http://www.rofo.com/
 

I often talk to people whom are in charge of their companies voice & data services that are interested in better service and saving money during these tuff times. One of the biggest problems they have is finding out what they currently have and how much they are paying for it, they look over a really confusing bill or two or three and either give up or call their existing provider to explain it to them which most of the time you end up more confused than before. There are people out there that can and will do it at no charge(contact me if you want to learn more).

 If you have had your current service for over 2 years or are moving this is the time to take a fresh look at what you have, how much you are paying. Even if you think that you are out of your original agreement be careful, many telecom companies have evergreen clauses in their agreements that renew after the original term if you do not contact the provider- always ask for this clause to be removed with any telecom agreement you sign.

Since the price of voice & data services drop each year I often see the ability to double the bandwidth at the same cost you are paying now or migrate to a IP Flex solution that combines voice & data over the same circuit (VOIP) for 25 to 40% less than what  you are currently paying.

Also make sure to demand on  2 or 3 year commitment's all the install charges are waived!

The main things to look at today with your current or future telecom provider is- How are they financially, do they own their own network & if you will have a single point of contact when you need help.

Thanks

Mark Chartier

Evaluate infrastructure at new office.

• Data
• Phone
• Power

 In our current economic downturn, it makes more sense than ever to intelligently explore used and refurbished furniture options for your office. Given the high cost of brand new modular furniture (i.e. cubicles), used or refurbished furniture represents one of the best opportunities to save a bundle when you set up your new office. Not only can you save a significant amount of money (up to 90% off of manufacturer’s list prices), but the green aspect of utilizing components that might normally end up in a landfill can’t be denied.

In most cases furniture remanufacturers tear off the original panel fabric and replace it with new fabric. Typically all of the trim surfaces such as top-caps, side-rails and base-plates are stripped and refinished as well. Fully remanufactured furniture usually appears brand new, but at a huge savings. 

For even more savings consider purchasing “as-is” furniture, where typically the fabric is not replaced but rather steam cleaned to freshen it up. Most of the larger manufacturers (i.e. Haworth, Steelcase, Herman Miller) build a solid product that is very robust. Fabric can be replaced, trim can be painted, but the basic core of most panels and laminate work surfaces usually lasts a very long time.

These days you’ll see lots of postings for inexpensive or free cubicles on web sites like Craiglist . If the cubes are being sold by an end-user, one of the most important things to be aware of is that the layout or space plan for their cubes needs to be very similar to your desired layout. Otherwise, you may end up having to find and buy lots of parts and pieces to make those cubes work in your particular space. These components can be difficult to source and may be expensive, so consider the value of your time before jumping at an offer for free or cheap cubes from any source other than a qualified remanufacturer. Unless you’re an experienced facilities person, most people don’t understand the process involved in buying used or refurbished cubes, and it can be a downright frustrating experience if you haven’t thought about some of the basic details your furniture vendor may need. Towards that end, the following checklist will go a long way towards saving you time and money before you engage a used or refurbished furniture vendor. 

Key Questions to Ask Yourself:

1. Approximately what is my budget?
2. Do I have a layout & design completed yet, or do I need help with this?
3. Are their specific colors of fabric & laminate that I must have, or can I be flexible in this area, which might possibly save some money?
4. Do I know specifically what components I need in each of the cubes (i.e. shelves, flipper doors, pedestal files, tack boards, task lights, etc.), or do I need help with this?
5. If I find an inventory for sale directly from another end-user (i.e. on Craigslist), do I have the time, knowledge and patience to make their furniture work in my new location?
6. What is my critical date to have the product installed and therefore, when do I need to make the decision on a vendor?
7. Am I the only decision maker on this purchase, or do I need to involve others in the process before making a final decision?

Key Questions to Ask Potential Vendors:

1. How long have you been in business?
2. I have a critical date to meet for completion of this job, what kind of control do you have over the entire process to ensure you’ll be able to hit my date?
3. Are you a broker who simply searches for used inventory and makes arrangements to have it torn down, transported and installed at my location, or do you have this product in your warehouse, now, waiting to be installed?
4. Does your company do the installation itself, or do you hire that service out?
5. If I need space planning services, can you do that for me? If so, how much will it cost?
6. Do you sell “as-is” products only, or can you refurbish the product with a different color fabric, trim color or laminate before delivering it to me? Do you do the refurbishing yourself, or do you hire that service out?
7. If I buy an “as-is” product from you, in what kind of condition can I expect this product to really be in? Will you clean & paint it first as needed, or will it simply be transported from someone else’s office to mine?
8. Can you break down your quote into separate line items for each of the individual components, including installation and labor fees, so I can make an apples-to-apples comparison with other vendors, or remove certain items if my budget changes?
9. If I need to add more cubicles at a later date, is the fabric you’re going to sell me likely to be available at that time?
10. If I need additional components like shelves, flipper doors, task lights, etc., at a later date, will you have components in stock in the colors I need to match what I already purchased?
11. Can you show me photos of recent jobs, or can I go out and see some of the jobs you’ve done, so I can get a sense of what my job might look like when completed?
12. Can you put me in touch with any of your recent customers, so I can determine their satisfaction level and overall experience?

Does your new office lease require a clause for General Liability Insurance or Commercial Property Insurance?  Sometimes referred to as a BOP or Business Owner Policy, these policies are comprehensive providing coverage for Liability--Bodily Injury to persons, property coverage, employee coverage.

Know what you are buying, not all BOP Policies are the same:

There are two commercial general liability coverage forms, the occurrence form and the claims-made form. The difference between them lies in the way claims are handled under the two forms. While the occurrence form covers bodily injury or property damage claims that occur during the policy term, the claims-made policy form only covers claims made against the insured during the policy term.

Deductible: We write many policies for new small business owners for as low as $350 to $500 year, if a lap top is missing with critical information, you can receive replacement cost/new laptop with a low deductible.  As the deductible goes up, the rate or premium will go down, compare rates and be informed on how much you are prepared to pay out of pocket or "self-insure" for a loss.  Don't let a loss put you out of business.

Liability coverage is provided for injury or damages arising out of goods or products made or sold by you, the insured, if you are in a consulting type business or a service business you may need specific Errors and Omission Insurance or Officers and Directors Liability Insurance.  Do not assume that the "general liability clause" in the policy will cover everything you do in the course of your business.

 When a company moves, there are a lot of things to think about: moving furniture and files, transferring the phones and internet, letting your customers know where you are, updating your Emergency Action Plan, making sure your mail is forwarded, updating the stationary...

All of the things listed above are important.  But only one of them can cause serious regulatory trouble if it's not addressed: your Emergency Action Plan.  OSHA regulations require most businesses to have an Emergency Action Plan and provide training to their employees.  If you don't update your emergency action plan and train your employees when you move, you could face penalties and other sanctions.

So, don't forget to update your emergency plans as part of your move.  If you need help, The Alexia Group provides free consultations and can develop a plan customized to your fit your organization's needs.

Designing effective office spaces can bring a company a competitive advantage, particularly if those spaces are created based on understanding people' individual work styles. A study called the Steelcase Workways Survey (conducted by Steelcase) revealed six work styles that help categorize how people manage their day.

The six worker types identified in the Steelcase Workways survey™ are:
1) The Concierge
2) The Keeper
3) The Processor
4) The Broker
5) The Player
6) The Specialist

The Concierge has a wide variety of tasks including making sure that the department runs smoothly. They are typically tasked with logistics and have a high degree of interaction with co-workers.

Support Concierge with:
- Space for multiple, thin stacks of info
- Supply large active and archived zones
- Space for informal exchange
- Space for “reminders” and “planners”

The Keeper is responsible for maintaining and accessing key documents and records. Their focus tends to be contextual and is logistics or protocol oriented. Keepers tend to keep information collections hidden and stored vertically.

Support Keepers with:
- Staging areas for dense stacks of files/boxes
- Easily accessible archive storage
- Space for informal exchange
- Labeling and cataloging capabilities

See the 4 other worker types here