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Entries Tagged as 'Office Space Negotiations'

Are Brokers Really Necessary When Negotiating a Lease Renewal?

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Some property owners of commercial real estate may not understand the reasoning behind why a tenant who has been renting a retail or industrial space for some time, perhaps 5 or 10 years, would want to include a commercial real estate broker tenant representative as an advisor when it is time to renew the lease, change the lease to include an expansion, or agree upon some other transaction with the landlord.

If you think about it, how is a renewal any different than an initial lease transaction? Does the commercial lease not need the same expertise, market and lease knowledge, and experience that can only be assured by engaging a professional advisor? Craig Trbovich, Sales and Leasing Advisor at Commercial Properties, Inc. commented in a LinkedIn Discussion Group, “Even if you have real estate and contract experience, it’s current market knowledge that will be invaluable. And being in the trenches every day is the only way to be current.”

Today, it is critical for top corporate executive to provide the company’s stakeholders with only the best financial decisions to ensure maximum profitability. Yet, a small business or corporate executive is not an expert on negotiating leases for commercial real estate. A professional advisor can help the tenant best determine the answer to questions such as:

·         How large should the leased facility be to need the tenant’s needs?

·         Exactly what configuration of space bets suits the business’s needs?

·         What interior improvements need to be performed and who will pay for these changes?

·         What is the best length of lease term is optimal for the tenant?

·         Should the tenant secure rights for expansion or consolidation?

·         What other options should be negotiated into the lease?

·         Can a period of free rent be rolled into the negotiations?

·         Is the landlord and building in good financial condition?

·         Should relocation be seriously considered?

The owner of the commercial real estate being leased would probably quite pleased if the leasing business does not want a tenant representative because negotiations will likely be very easy and the landlord will get options that benefit them rather than the business. Daniel Rudd, Executive Vice President and Office Broker at Colliers International states, “It is short sighted for a tenant not to have representation and the tenant is ceding the landlord an incredible amount of leverage.”  With a broker, the tenant can be assured they have someone fighting for their right and making sure their best interests are covered. 

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

Los Angeles Office Space Market Overview

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Los Angeles office space for lease or rent is available for every size and type of business. No matter how large or small your commercial office rental needs, you will find the perfect fit in the Los Angeles metro area. Each year, thousands of businesses take advantage of the wonderful opportunity to locate their business enterprises in this market.

The second largest U.S. city, Los Angeles is home to over 14 million people and offers a wide range of culture. With a Gross Metropolitan Product of $831 reported in 2008, LA is the third biggest economic center globally.

The past 15 quarter experienced increasing vacancy rates in commercial office space. The first quarter of 2011 has shown a drop in the vacancy rate, declining to 16%, the lowest rate since early 2006. The Greater Los Angeles area has over 214.3 million square feet (MSF) of commercial office space and the average asking rental rate is a low $2.35 per square foot.

All indicators project that Los Angeles is making a major economic comeback and while the market is still a bit soft; economic recovery is progressing slowly but steadily.  Analysts feel that the low has passed and growth can be expected in coming months.

Currently, Los Angeles has sufficient vacancies that landlords are quite flexible in working with tenants on lease negotiations. With rental rate on commercial office space at such affordable rates, this is a great time to lease Los Angeles office space. By the end of 2011, rates will likely have risen.

Unemployment in the Greater Los Angeles area continues to be quite high but is slowly falling. By mid-2012, unemployment should fall to 12% or less, according the experts. With the defense-related cuts in the aerospace market, LA will experience some impact. Current construction will add another 725,000 feet to the commercial business space.

Los Angeles with its varied culture and nearby Pacific beaches has a lot to offer workers living in this area. The weather is pleasant year round and there’s always a lot to do for fun. You can spot celebrities along the streets, visit museums, art galleries, festivals and so much more.

The residential choices for LA residents range from tiny, cozy bungalows’ to huge mansions. There are plenty of apartments and condos for lease, so people staffing your Los Angeles office will have no problem with housing.

The schools, but public and private offer great educational opportunities, and the many private  and state universities make high education easy for any of your children to find a college that suits them in the nearby areas.

Basically, with the wealth of Los Angeles commercial office space for lease, the fantastic weather, and variety of activities, LA is a great place to relocate your office, open a start up office, or expand into the area. You can find help locating the right LA office space for rent by contacting OfficeFinder, a free service to help you in your office location process.

Los Angeles Office Space Market Information

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Los Angeles Office Space , Office Space Negotiations

Coworking Office Space User Costs

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Coworking office spaceAccording to a recent article in coworking space costs less for a user than using a coffee shop if you take into account the cost of buying drinks and snacks.  According to the study quoted, the average monthly cost of using the facility by way of a flexible desk is only $152 / month. A 24 hr / 7 days per week plan would run around $207.00 / month and a permanent 24/7 desk would be $387.00 / month.

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Coworking office space , Flexible Workspace , Office Rental , Office Space Negotiations , Sublease Office Space

Video: 3 Biggest Mistakes Office Tenants Make When Looking for Office Space

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Check out our newest video presentation of the 3 biggest mistakes tenants make when looking for office space.

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Miami Office Space , Office Leasing Tips , Office Space Negotiations , Tenant Representation , Video

What is Your Landlord Hiding in the Fine Print?

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When you are considering leasing an office warehouse space or any space for that matter, you want to go in to it with eyes wide open.  The following will help you understand what to consider and hopefully help make your experience with leasing space a better one!

 Students of history recall the stories of the landlord abuse that occurred in the late 1800’s/early 1900’s when tenant farming, mining towns and tenant exploitation were common.  Fortunately, these situations have been largely extinguished in the US, but adversarial feelings between landlord and tenant remain.  Is landlord abuse prevalent today when leasing space? Are they truly ogres? Or does the modern media sensationalize a few occurrences to feed this perception?

 In our experience, most landlords are reasonable and fair. However, since they know the tools of the trade, often they get the upper hand in the lease agreement and structure contracts to their advantage.  Many tenants, surprised by requirements of their lease after they move in, develop an “us vs. them” attitude.

 Tenants can level the playing field by taking a few minutes to unravel the “legalese” of the lease agreement before signing.  Often a 20+ page document, however, makes this a daunting task– unless you know what to look for.  Here are 4 costs that some landlords quietly shift to tenants and what tenants can do to protect themselves:

  1. NNN Expenses: Check the lease for the term “base rent.” If you find it, the lease you are about to sign is a “triple-net lease” or NNN Lease.  This type of lease requires the tenant to pay for all of the expenses to run the property (such as property tax, insurance, exterior painting, etc.). If any of these expenses increase, it’s the tenant that pays more, not the landlord.  If the building is painted or the asphalt is replaced, once again, the tenant pays the bill. And the worst part? The tenant doesn’t get to vote.  It’s not a HOA. 

    Tenant Protection: Sign a “gross lease” vs. a NNN lease.  Gross leases require the landlord to pay the property operating expenses.  If a gross lease is not available, negotiate limits to NNN expenses into your lease agreement.
  2. Interior Maintenance Costs: [Skip this section if your lease says “Full Service Lease.” Full Service Leases are typical of office buildings.]  Most leases require tenants to maintain everything inside of their space at their own cost. Maintenance can include bath fixtures, light fixtures, carpet, drywall, etc.

    Tenant Protection: The easiest way to avoid these costs is to lease space at newer properties.  Prior to move-in, request a walk-through with the property manager to document any defects in writing and with photos.

  3. Utility Costs: Responsibility for utility costs varies from landlord to landlord. Ask questions to determine who pays for what. The cost for electricity/garbage/water may be included in the rent at one property but not at another.

    Tenant Protection: A good understanding of the utility costs is required to get a true “apples to apples” comparison of the cost to lease different spaces.  It also prevents an unwelcome surprise after you move in.  No one wants an unexpected $300/mo. utility bill!

  4. HVAC Costs: Heating and cooling systems are big ticket items. Once again, treatment of HVAC costs varies. Find out who is responsible for maintenance and major repairs/replacements. Maintenance may be only a few hundred dollars per year, but a replacement can cost over $5,000.

    Tenant Protection: Negotiate a limit on contributions to HVAC repairs - $500 per year for example.  Check replacement language – it isn’t uncommon for tenants to receive a $3,000 bill for a replacing a 15 year old system when they’ve only occupied the space for two years.

 Again, most landlords are fair.  If you are billed for an unexpected expense, contact your landlord.  Compromise may be possible.  Often, they aren’t the ogres they are reported to be.

Guest Post by: Barry Raber
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Office Leasing Tips , Office Space Negotiations