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Entries Tagged as 'Office Space'

Survey Says 32% of Businesses in US Plan to Hire New Employees Next Year

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A little more good news on the employement front. A new survey says 36 percent of businesses worldwide plan to hire new employees in 2011.

That includes almost a third (32 percent) of U.S. businesses, according to the biannual Regus Business Tracker survey, which is based on interviews with more than 10,000 senior businesspeople in 78 countries. Employment and office occupancy go hand in hand. Without job growth Sixty-five percent of U.S. businesses expect revenue to increase during the next year.

However, 41 percent of companies still are looking for ways to cut overhead, though they don’t intend to do so by cutting employees.

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Commercial Real Estate , Office Space

Join the Emerging Trend of Office Condo Owners

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Office space is critical to operating any type of business and many small businesses simply can’t afford to purchase a building in which to operate. Renting is, of course, a great option, but there’s no equity build up in renting – except for the landlord. With an office condominium, a small business owner can purchase office space, build equity, and even sell the office space if and when desired.

The concept of commercial condos is a rather new one. It provides the owner with more power to change the interior space to make the interior setting most conducive to their particular business. They come in all sizes and classes of buildings. Because the commercial office condo is purchased, the business owner is not going to be hit by a lease change in rental rates. There are lots of benefits to the small business such as tax advantages and residual value.

Ownership to Lease Comparison

When leasing:

  • The lease renewal offers the landlord the chance to increase rents. Sure, rent could go down, but more often, it goes up and up over time unless the rental market is extremely soft.
  • At lease end, the small business owner must either accept the new lease terms or find a new location and bear the expenses involved in moving, as well as the business disruption.
  • Depending on lease language, a lease renewal might not be available if the landlord decides to sell the building.
  • Much of the interior of the business office is controlled by lease language, leaving few options for the business owner for customization.
  • Rent is a liability in the accounting process.

When buying a commercial condo:

  • If purchased on a fixed interest rate mortgage, the payments for the property will not change over time, allowing long-term budget and financial planning.
  • Some restrictions apply to use and interior change per the laws of the condominium association, but they are usually not nearly as limiting as when renting.
  • There is a fee paid for upkeep and maintenance of common areas, sometimes even including common lobby assistance.
  • The commercial condo becomes a business asset rather a liability.
  • The office condo ownership shares, in the case of partnerships, can be legally willed to the other partners so that the business can proceed without disruption.

The Condo Association

Commercial condos, like residential condos, are operated and governed by a Condominium Association made up of condominium owners. The members operate within a set of Bylaws adopted by them and which must meet certain legal requirements. If considering the purchase of a commercial condo, it is very important to read and understand the governing documents such as the associations’ Covenants, and Conditions and Restrictions (CC&Rs). These documents outline exactly what is permitted and restrict, as well as the rights and duties of the owners of the commercial condos in the buildings. They also outline what the association can be expected to be responsible for in return for the monthly condo maintenance fee paid by each office condo owner.

Conclusion

We’ll be looking at more aspects of commercial condos and how they can benefit the business owner in the next updates. This concept is a great way for business to stop paying rental fees and build equity in real property while providing workspace for their operations.

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Buying Office Space , Commercial Condo , Lease vs Buy , Office Building Sales , Office Space

The New Big Business Office Space?

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There has been talk for many years about the changing workforce and how to best provide office space to the emerging knowledge workers. Office space is usually the second biggest line item expense for businesses after salaries.  It is a big deal if a company can reduce their office space needs. Many small business are using a variety of options top cut their costs.  Theses include co-working space, virtual office space and executive suites on as as needed basis. Larger businesses are starting to get into the concept with hot desking or desk by reservation systems that allow workers to reserve a desk in an office on an as needed basis.

One of those companies doing so is IBM. They realized that on any given day the traditional office was anywhere from 40% - 60% empty with employees out doing business.

So IBM took a drastic step. With a desk-sharing scheme, and by allowing employees to work remotely, they reduced their downtown Toronto office space by 40 per cent ­ consolidating three offices into two in a pilot program over the past few years. The company has even devised a reservation system that employees use to book desks from the office or online, and soon from their BlackBerrys.

IBM is now a workspace “evangelist,” leading other companies on office tours.

“Now people are enabled to work three days a week instead of five days,” says Brodie, who works from his Uxbridge home and goes to his Markham office only for meetings. The Markham office, IBM's Canadian headquarters, houses software development, services professionals, sales and corporate marketing, and the bulk of the employee base.

“Young talent expects to work this way. Older folks want to ‘retire' to the cottage and work from there.”


It is trend that is starting to gain momentum. Businesses end up with  happy employees and reduced overhead for office space.  What's not to like.

Resource: TheStar.com

For more information on the future of the workplace see The 21st Century Office Space

Flexible Workspace , Office Space , Office Space Design

Third Biggest Mistake Made By Tenants

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Failure to understand all the office leasing costs

There are more costs involved in leasing office space than just the rent.  Many of these costs are quoted in different fashions so it can all get quite complicated when comparing alternatives. It becomes difficult to compare proposals on an apple-to-apples basis. In fact, it can even become difficult for an inexperienced tenant representative to decipher the various costs involved in comparing different office space alternatives.

First of all, there are different lease types including full service, gross, semi-gross, net, triple net and other variations which specify which, if any, expenses the tenant pays.

How about the base year for operating expense pass throughs? This is the base year amount of operating expenses that your additional costs are based on. If you don’t pay attention or don’t know you could find yourself liable to pay for increases over a base year that could be 5 year old and cost you several dollars per square foot right off the bat. What if the building is only 25% occupied? Who will pay for the operating expenses on the vacant space? What is the norm for your market?

If your lease is a triple net lease are the expenses in line with what could be considered normal in your market or are they somehow higher due to extra landlord fees?

There are also different levels of tenant improvements which can be included in the lease. Landlords will very often offer a per square foot allowance for tenant improvements. Is this on the net rentable space or usable area or is it from shell condition or below the ceiling?

Another big one could be the load factor in calculating useable vs. rentable space measurement. It is the percentage of space on a floor that is not usable plus a pro-rata share of the building common area, expressed as a percent of Usable Area. It is also known as the Common Area Factor or the Loss Factor. A Typical load factor range is 10% to 18%. Some inefficient buildings can have load factors as high as 25% or more. Once again, what is the norm in your market?

The answers to these questions can make a significant difference in the overall cost of renting office space. Which is why making mistake number one in this series can be so damaging. Understanding all of the leasing costs and being able to communicate that information to you is an important part of what a tenant representative does. It can save you thousands of dollars in avoiding mistakes. Tenant representatives provide many more services to their clients and there is no cost to you in engaging their services. It costs you nothing, but can save you thousands.

Biggest Mistake Made By Tenants
Second Biggest Mistake Made By Tenants

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

The Second Biggest Mistake Made By Tenants

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The second biggest mistake made by tenants looking for office space is not allowing enough time for the process.  Far too often tenants will not get started early enough and have to settle for less than they could have had otherwise. This applies to tenants who are looking for conventional space and not executive suite, virtual office space, or co-working space. Typically a tenant can be in these spaces as soon as the next day or at least within the month.

Tenants looking for conventional office space under 10,000 should get started at least 6 months prior to their move in date. This will allow enough time to find some good alternatives, negotiate the best deal and have any tenant improvements completed for an on time move-in. This is true even in a soft market. In fact, even more so since there will be many more possibilities to investigate.

For office tenants over 10,000 square feet, at least 9 months should be allowed.  The larger the tenant, the more complicated the process and more time is needed.

For more information on the office leasing process and timing, visit our Office Leasing Process Schedule.

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Executive Suites , Flexible Workspace , Lease Negotiations , Office Leasing Tips , Office Rental , Office Space , Office Space Negotiations