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Maximize Savings on Your Commercial Real Estate Transaction

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Currently, there is excess office space inventory available in not only the Minneapolis commercial real estate market, but throughout the US and worldwide. This bodes well for anyone involved in leasing, acquisition or lease renewal, as sellers are anxious to dispose of their property. While current economic conditions are certainly favorable for acquisitions, good preparation and research can put you in even a better position to save money on your commercial property.

Timing

Time can be your ally or quickly become your enemy if you don't plan to use it correctly. Plan ahead and start searching for space early. It is best to start the search process at least 9 months in advance to uncover your best choices. For example waiting until you only have a three month minimum time frame limits your options as your best choice might not even be in play during this period. Not only does a minimal timeframe limit your choices, it reduces your ability to conduct an effective negotiation. Potential landlords and their brokers will sense or "read' your urgency with a short window and negotiate accordingly to achieve their best terms. When you have a longer time frame you can utilize time by effectively stringing out the negotiation and extracting additional concessions as you are in no rush to make a decision while the landlord's situation may require immediate tenancy.

Also note that if you are renewing, your current landlord will try to "string you along" to try to have you run out of time and force you to renew because there is not enough time to build out your new space before lease expiration. Time is your ally when you have it and your enemy when you are racing against it.

Options

It is always best to have three options or at least a good 2nd option when it comes to space alternatives. Use one to leverage the other to extract the best terms when negotiating. Don't be afraid to say "no" and walk away. Not having a good 2nd option minimizes the aggressiveness of your negotiation and can cost your firm money. Had you been able to "play hardball" and use leverage to its fullest potential, more economically favorable terms and concessions would have been achieved.

Representation

Having a knowledgeable, experienced representative can save you significant cost. Someone who regularly negotiates commercial real estate transactions knows the best negotiation tactics for your business and can uncover issues that can be used to your advantage. An experience professional won't be emotionally swayed in the heat of the moment.

Space Productivity and Efficiency

You need to clearly define your usage, budget and location. Efficient use of space will save you money. Apply BOMA standards to usable/ rentable space to make sure you are getting all the space you are paying for and are not paying for space you don't get.

For example, have your space planner verify measurements and be creative with design.

A creative design can place your productive people on the interior of a space rather than by window. Also, wonderful things can be done to the interior to create a great working environment even if the outside of a building may not be as appealing. A good architectural firm can convert most buildings to accomplish the environment you require, i.e. an Old Victorian to an Ad Agency.

Be flexible on other issues and the transaction will fall in place. Today, Landlords are less likely to pay for lavish tenant improvements, so efficient space usage and simple, but tasteful improvements are key. For example, you can present a high image to your visitors by focusing upgrades on your reception and common areas and still save money by staying basic with the individual offices and "back" areas.

Operating Expense

With an operating expense cost-pass-through, more rent will have to be paid as building operating expenses increase over a base year and cost-pass-through's take effect. By comparing previous years increases in your analysis of alternatives, you can make sure that your starting point is appropriate. It is very typical in today's market to request and receive CAMT Breakdown's from each landlord whose property you are considering. Try to negotiate some type of cap on annual increases, as costs (ie: energy; maintenance; materials just to name a few) tend to escalate at a rapid pace each year.

Be aware of categories that are typically included in CAM charges in your particular market vs. those that are not. For example, are light bulb and ballast replacement typical CAM charges in your market? Is a particular Landlord charging tenants for general capital improvements to the building or project vs. for only those capital improvements that are designed to reduce operating costs for the building or project?

Since CAMT charges range from $7.00 - $9.00 psf in Class B office buildings and from $10.00 - $13.50 psf in class A office buildings, it is imperative that you don't get charged for items that should not be charged for.

Summary:

With the current economic situation, you should be able to find and negotiate favorable commercial real estate deals, and you can save more money with better planning and strategy.

Guest post by our OfficeFinder Local Minneapolis representative

Minneapolis Office Space , Office Relocation , Office Rental , Office Space , Office Space Negotiations

Office Relocation Done Right: Plan, Manage and Execute a Successful Office Move

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Is an office move in your future? Whether, when, and where to move your office have far-reaching consequences that impact every aspect of doing business, from customer relationships to day-to-day operations to profitability. Did you know that on average, two-thirds of employees who are given the task of managing an office move either quit or get fired within six months of that office move. Our tips and advice will help you plan, manage and execute a successful office move and keep your job!

Businesses move for all kinds of reasons. Maybe they need more office space, an updated image, or a better location. They might be launching a technology startup or moving up from a home office. Perhaps things haven’t worked well with the current landlord or property management firm and it’s time for a change.

Whatever the reason, it had better be compelling because an office move is a complex process. And, according to Karen Warner, author of Move Your Office, the cost of leasing office space is one of a company’s biggest expenses; second only to salaries and wages. Because the decision about whether—and when—to move your office is so critical, it pays to plan carefully and ask the right questions before getting started.

Is an office relocation necessary? What’s making you consider an office move, and are there options for resolving those issues without moving? If you have outgrown your existing space or you need to downsize, your current landlord might be able to accommodate your new requirements. Or perhaps your existing office space could be renovated or reconfigured to be more efficient.

If you need to enhance your office’s image, would a facelift work at your current address? Investigate options for remodeling, updated signage, or even redecorating your current office space with upscale colors and furnishings.

Would a new office location be better for business? A better location in your metropolitan area could bring you closer to your customer base or even attract new business. First impressions count, and the neighborhood makes an impression on every visitor before they even see your office. Even if the location doesn’t impact your type of business, it can impact your bottom line—office space rental rates can vary widely in different parts of town. Also, the right location with the right amenities can help attract and retain key employees.

11 Tips for a Successful Office Move

1. If an office relocation is in your company’s best interest, follow these 10 steps for a successful office move.

2. Work with a pro. Always engage a commercial real estate broker to represent you in your search for office space and to help you manage the entire office relocation. Enlisting the services of the right commercial real estate professional can save time and money throughout and even long after the office relocation process. A broker can provide invaluable information about the local market and help negotiate the most favorable lease terms. Seasoned real estate professionals will also be aware of opportunities not advertised to the public.

3. Give it time. Most businesses spend six months to a year to find the right location, negotiate the lease terms, set up the office relocation logistics, and get moved in.

4. Nominate a moving committee. Form a team of employees at the outset to coordinate the office relocation process and help keep track of all the details.

5. Select a panel of experts. Establishing an advisory team of external consultants and specialists is a critical step. They’ll help you find the right location at the best terms and ensure that your new office space is well-designed and appropriate for your business. Your advisory team could include a commercial real estate broker, a real estate attorney, an architect or office space planner, a furniture consultant, and an IT/communications consultant.

6. Determine your specific needs. With the help of your advisory team, define the requirements for your ideal office space, from the amount of space you need, to the type of building that would be the best fit, to the preferred location.

7. Identify potential properties. Have your commercial real estate broker prepare a detailed list of available office properties that fit your needs profile, including a photo of each building, the size and cost of each available space, and a map with directions to each location.

8. Take a property tour. Your real estate broker will schedule a tour and guide you through visits to each property on your list. Compare notes and determine which three or four locations are the most promising.

9. Conduct a competitive leasing analysis. Once you’ve got that short list of prospective properties, your commercial real estate broker will provide an analysis of the economics of each space and coordinate any preliminary space planning needed, helping you assess how the various potential layouts will suit your business needs. Your broker will also prepare written proposals for each landlord, addressing issues such as rental rate, lease term, building expenses, renewal and expansion options, signage availability, and parking.

10. Select your new building or space. Your broker will compile landlord responses into a spreadsheet giving a side-by-side comparison of each of the properties to help you make the most informed decision about which space is the best fit for your business.

11. Negotiate the lease terms. Next, your new landlord will issue a lease, which must be reviewed by the principal(s) from your company, your real estate broker, and an attorney to ensure that all terms are understood and agreed upon.

The decisions about whether, when, and where to move your office have far-reaching consequences that impact every aspect of doing business, from customer relationships to day-to-day operations to profitability. Considering all the variables, it makes a lot of sense to get professional support and follow a clear plan that helps you make the right move—and make the move right.

Visit www.moveyouroffice.com for detailed information on managing your next office relocation.

Karen Warner is the author of Move Your Office, the best-selling office leasing and relocation guide. Move Your Office is available at www.moveyouroffice.com. Karen’ skill and experience as a commercial real estate broker has helped many businesses manage a smooth transition to their new location. Her extensive knowledge of the commercial relocation process and unique talent as a tenant representative allows her to expertly assist clients in finding and negotiating office space. Karen’s status as the author of three best-selling commercial relocation books gives her the tools and savvy to formulate effective office relocation strategies.

Office Relocation , Office Rental , Office Space

Opportunity for Deep Office Space Rental Discounts May be Closing Soon

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The opportunity for tenants to renegotiate their office space leases at favorable rates may be ending as the recession comes to a close. In most markets landlords of office space for lease have seen their office renal rates decline by 20 – 30%. With a light at the end of the tunnel, many landlords would rather see office space sit vacant than get tied up in long term leases at reduced rates. The current general belief is that the commercial real estate market will start to see an upswing by early 2011. For tenants in the position to either renegotiate or relocate, the window may be closing on deep discounted rental rates.

Achieving the best possible lease terms is not a simple task.  Landlords are sophisticated and know how to mitigate demands.  The best bet for a tenant looking for office space for lease or rent is to engage the services of an office tenant representative to level the playing field.  For landlords, this is their business and they are very good at it. An office space tenant only negotiates a new lease every few years. If you go it alone, it is not a level playing field. To top it off, a tenant representative service is typically free. Most landlords have a listing agent who is required to share their fees with tenant reps.  The fee is already built in. If the tenant does not have an office tenant representative, the listing agent keeps the entire fee.  It only makes sense that tenants looking to lease office space take advantage of getting a professional on their side.

We are very proud of our network of local office space tenant representatives. We cover over 550 markets with high quality representatives. The average time in the business of our reps is 12 years and many have achieved advanced designations that demonstrate their outstanding level of achievement and knowledge. If you are looking to renew or relocate your office space, let us help. Just fill out a short form letting us know what you need and we will put you in contact with one of our local licensed office space experts. We have been doing this online successfully since 1995. Give us a try. There is no obligation.

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Commercial Real Estate , Lease Negotiations , Office Relocation , Office Rental , Office Space , Office Space Negotiations , Tenant Representation

New OfficeFinder Video - Why Use OfficeFinder?

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Office Leasing Tips , Office Relocation , Office Rental , Office Space , Office Space Negotiations , Tenant Representation

Is it Better to Lease or Buy Your Business Space?

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Your business location should be tailor-made to fit with your company budget, spacing requirements and ease of operation. For some business owners, leasing affords a sense of freedom and relieves the financial burden of a down payment, yet may be too restrictive for some kinds of operations. The decision to buy a piece of commercial property offers its own set of risks and rewards, and should be considered carefully before entering into a mortgage contract.

Leasing Commercial Space

1. Cost Effective

Leasing a commercial space will usually require a one to two month move-in deposit, making the rental space a cost efficient way to do business. New business owners may be strapped for cash, and by leasing, rather than purchasing, your storefront or office is cost effective to set up shop with minimal funding.

2. Flexibility

Leasing a commercial space gives the entrepreneur plenty of room to grow, downsize or change locations. Although once you sign a lease, you are locked into a fixed amount of time to make the lease payments, the terms may be only a matter of months to be released and start over in another location.

3. Freedom

Setting up shop without the burden of a mortgage to pay allows a sense of financial freedom. Albeit, a purchased piece of commercial property could be leased or sold to another, there could be months before the owner receives any income from the property. A hefty mortgage may also interfere with business profits and may demand downsizing of personnel.

4. Maintenance

A leased office or shop has a landlord to lean on, taking away tedious responsibilities with the plumbing, electricity and security. In a leasing situation, any repairs or legal liabilities are left in the hands of the building management team.

5. Subletting

In some situations, you may sublet your leased office space to another. However, this must be cleared in writing from the management office, and careful attention given to their rules and regulations for renting out the space.

Buying Commercial Space

1. Secured Location

Buying a piece of commercial property adds assurance that the space is secured and cannot be given to someone else. In a leasing situation, when the lease expires, the renewal process may not have the same initial terms, thus proving unfavorable to renew. However, when you purchase, your prime location is secured.

2. Equity

As with a residential piece of property, a commercial owner may take out cash against the mortgage. In an emergency financial crisis, having a mortgage to borrow from lends a sense of security and provision of funds. Most commercial purchases will require 20 to 25 percent down on the purchase price, giving instant equity to the business owner.

3. Remodeling

When you have bought a property, it is your to do with as you wish. Remolding, expansion and reconfiguration are yours for the taking. The ownership allows the business structure to be molded around the enterprise for a perfect fit and usage of space.

4. Tax Deductions

The interest on a commercial loan is tax deductible, with allowances for deducting any depreciation.

5. Lease Your Excess Space

If you own the property, you may lease your excess space without any restrictions from a third party over your head.

Article Source: Is it Better To Buy Or Lease Commercial Space For My Business

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For a more detailed analysis see Lease vs Buy office space on OfficeFinder.com

Buying Office Space , Lease Negotiations , Lease vs Buy , Office Building Sales , Office Relocation , Office Space