Entries for month: July 2013
The effects of the financial crisis of 2008-2009 rippled throughout the U.S. economy like a pebble hitting a still lake. The commercial real estate market was hit hard, of course, and unemployment soared, especially in industries tied to real estate.
Credit to finance commercial real estate all but vanished. While the credit markets are finally starting to thaw, it can still be difficult for business owners to secure the financing they need to purchase or renovate commercial property.
Small Business Administration (or SBA) loans are one option that can help many business owners who are struggling to obtain financing. SBA loans are made through regular banks, but the SBA guarantees repayment of a portion of the loan, which helps reduce the bank’s risk.
There are several different types of SBA loans — including the SBA 504 loan, which is often used to finance commercial real estate. SBA 504 loans are available to for-profit small businesses for the acquisition and improvement of owner-occupied commercial property. They offer fixed-rate, long-term financing with 90 percent loan-to-value and a 10- or 20-year amortization schedule.
Here’s how 504 loans work: The bank provides 50 percent of the financing and the SBA 40 percent, while the business owner kicks in the remaining 10 percent. This can provide a huge cash flow advantage compared to a traditional commercial mortgage, which might require a down payment of 20 to 30 percent or more.
For example, with a $500,000 piece of commercial property, the down payment on a 504 loan would be just $50,000, compared to $150,000 or more with a traditional commercial mortgage.
Some changes were made to the SBA loan program by the Small Business Jobs and Credit Act that make it even more attractive. The Act increased the SBA 504 loan limit to $5 million and it expanded the definition of a small business for the purpose of applying for an SBA loan. Any business with a tangible net worth of under $15 million and average net income over the past two years of under $5 million can now apply for an SBA 504 loan.
There’s a wide range of latitude when it comes to how the proceeds from a 504 loan can be used. These include: finance the purchase of land and existing owner-occupied buildings, construction of new facilities, grading, street improvements, utilities, parking lots, and landscaping, as well as modernizing, renovating or converting existing facilities. Soft costs like architectural and legal fees, environmental studies, appraisals, interest and fees can also be rolled into the 504 loan.
Keep in mind that not all banks are created equally when it comes to SBA lending. Be sure to look for a bank that is designated as an “SBA Preferred Lender.” These banks follow a streamlined method of underwriting SBA loans, which usually enables them to process SBA loan applications faster than banks that aren’t SBA Preferred Lenders.
Also, just because a loan is “SBA-guaranteed” doesn’t mean the bank will be any less diligent in its loan underwriting process. You’ll need to prepare the same kind of thorough loan application package for an SBA 504 loan as you would for a traditional commercial mortgage.
SBA 504 loans aren’t a panacea that cures all the ills of the commercial real estate credit crunch. But in the right circumstances, they could help you get the financing you need for a commercial real estate project.
Guest Article by our Atlana OfficeFinder Specialist
More about Financing Office Space
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Atlanta Office Space , Buying Office Space , Financing Office Space , Office Building Sales
Whether you are relocating your business or are moving into your first office, finding the right office for rent can make a big difference to your company’s productivity. While the look and feel of the building, its landscaping and its location determine the reaction of clients, customers and suppliers, the setup of the interior may put you behind the eight ball when compared to your competitors. The easiest way to avoid this pitfall is by staying on top of current trends and implementing them as much as possible.
Avoid the Cubicle Setup
Invented in the 1960s by a savvy office furniture manufacturer, the cubicle has long been hailed as the most conducive setting for the office worker. In a wireless world that no longer needs a lot of the office machines and accompanying furniture that used to be the norm, the cubicle can now actually be a damper on your staff’s productivity. Business Insider notes a survey of 7,000 professionals in a global setting, which had 19 percent decree that the cubicle is a thing of the past.
There is no Need for Offices with Doors
With the exception of doctors and lawyers, the same survey found that 16 percent of respondents noted the disappearance of individual offices with doors. This is particularly true for managers and other executives. Rather than working behind closed doors, 21 percent of survey respondents noted that these professionals are joining the staff in an open workspace environment.
Become Part of the Trend
Commercial real estate brokers have been examining these trends. It has become clear that today’s company thrives in an office space that meets three distinct criteria.
- Support of ad hoc team work. When wireless technology is the norm, there is no need for workers to stay at their desks. When a project calls for collaboration, team members occupy the same work space for the duration of the job. Creative office designers have experimented with huddle rooms and smaller conference rooms with movable wall panels.
- Layout is king. There no longer is a need for the big office that supports plenty of individual workspace. Rather, go for a smaller space as long as it has the open floor plan that lets you set up work spaces based on projects and current business needs.
- Embrace the coffee shop concept. It may seem at odds with everything that you learned in business school, but there is a strong trend toward renting a space that is kept large by adding a wide variety of seating options versus formalized work stations. Remember, wireless technology makes it possible to take the laptop or tablet anywhere your workers need to be.
The professionals at OfficeFinder, LLC know that it can be a difficult task to find just the right space. Contact us today to discuss the current trend in office rentals and to find out how we can help you get set up.
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By: James Osgood
Office Space , Office Rental , Office Space Design , Office Leasing Tips
Perhaps you have heard the term Office Space Hoteling or read an article somewhere in a business journal. This rapidly expanding trend is allowing offices to save space and maximize productivity? It is part of a new office space trend, the Agile Workplace.
Why Join the Trend of Office Hoteling?
If you have a traditional office, walk through the space at any given time and look at all the empty desks. Some people may be telecommuting that day. Other people are out at meetings, visiting clients, department meeting, making sales pitches, and all the other tasks required to make your business a success. Other workers are away on travel to take care of business for your company or gone on a well-earned vacation or away on necessary medical leave. What a lot of wasted square footage you are paying for every month. when you pay rent. Office hoteling can save you tons of money by reducing all this empty space.
What Makes Office Hoteling Work?
Work is no longer just a place, but an activity. However, everyone needs the support of an office with a copy machine, may be support staff, fax machines and a workspace or conference room as needed. And you probably realize a few spots simply won’t work as an agile workspace. For example, the support staff and maybe a high level executive. Those employees need to have dedicated workspaces.
To ensure a worker has a space when needed, a office hoteling reservation system should be in place. When a worker klnows they will need to be in the office, they check into the reservation system with their unique login. They choose an available work space of the kind they need and provide the amount of time they expect to use the space. It is pretty simple and relatively easy to executeon a company wide basis. Different systems allow various means for checking on available space, but the office hoteling reservation system you put in place should be easy to identify vacant spaces and input their reservation.
The worker then goes to their selected workspace and gets right to work. The workspace should have an up to date computer, legal pads, pens, and other handy tools.
Once the employee has performed all the necessary tasks, they neaten the workspace for the next person and go log out of the office hoteling reservation system. It’s as simple as that. Once an employee logs out of the desk space, another employee can log in and choose that space is they wish or any other available location.
Promote An Agile Workplace and Save Money
Not only will employees feel free to work where they need to work, but as the business owner, you will benefit in a big way. Studies have shown that 40% to 70% of employees work away from their desks in many industries.
Rent is calculated on square footage. If you are paying for even 30% too much square footage, you are throwing dollars to your landlord for nothing. By downsizing the office and changing to a non-traditional setup for all workspaces that make sense not to be dedicated to just one employee, you can reduce your overhead in a very noticeable way. One surpirse you may receive is that employees will be happier and more productive, knowing they can work from where ever they feel they can be more productive.
Up next: Creating an Agile Workplace Using an Office Space Hoteling Reservation System
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By: James Osgood
Office Space , Office Rental , Office Space Design , Agile Workplace , Office Hoteling
Renting office space can be exciting and overwhelming all at the same time. In some of those anxious moments, it can easy to get caught up in all the excitement and sign a lease agreement that has unfavorable terms. Since the success of your business largely depends on the right rental terms, you’ll want to check out a few important details whenever you are considering office space for lease.
The type of lease that’s being offered can make or break your business, as some could result in your paying large additional charges you weren’t prepared for. The common types of commercial leases are:
- Percentage lease, which involves you paying a base rent in addition to a percentage of your monthly sales (retail leases)
- Net lease that includes base rent and a nominal charge for taxes and insurance
- Double net lease that requires you to pay rent in addition to the entire cost of taxes and insurance
- Triple net lease which mandates that you pay rent, taxes, insurance and maintenance fees
- Fully serviced lease or gross lease in which the landlord pays for additional expenses and then passes them on as a “load factor and increased from a base year.”
When choosing a fully serviced lease, it’s important to understand what the load factor and base year means. It is essentially a way to calculate the total monthly rent when a tenant has usable square footage in addition to common areas. For example, a business could occupy space in a building where stairways, restrooms and entryways are common space. In this instance, the load factor covers the expense associated with maintaining these areas, spreading them evenly among all who use them. The base year is the year in which you must pay for any excess expenses over the amount for that lease year. You have to be careful that the base year is current or in the future when signing a lease.
Although you may be offered a deal for signing an extended lease, if you’re a startup or growing business, you should be leery about doing so. That’s because you just might find the needs of your business change a great deal over the first couple of years. For this reason, you should consider a short-term lease that’s between one and two years if you are a brand new company.
It’s also a good idea to ask about initial improvement allowances, remodeling or redecorating when signing a lease. Most long term leases will include a tenant improvement allowance. Make sure you know if that is on a rentable or useable square footage bases. It can make a difference of 15% or more. You may choose to build cubicles, add new carpeting or paint the walls once you settle in, so you need to know if this is something that’s allowed. Many times, minor modifications are allowed as long as the structural integrity of the building is not altered in any way.
When it comes to choosing the right office space, the terms of a lease are every bit as important as the location. Your best bet is to have an Office Tenant Representative on your side. There is no additional cost to you, so it is a no lose situation. You will save money and avoid costly mistakes. To find office space with exactly the right terms for you, contact us today.
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By: James Osgood
Office Leasing Tips , Office Relocation , Office Rental , Office Space , Office Space Negotiations , Tenant Representation
There used to be a time when renting an office was an exercise in visiting virtually identical office space locations in various buildings. Cubicles dominated the seating arrangements for the workers while enclosed office spaces denoted the domains of company executives. Recent trends in commercial office space rentals are showing this setup to quickly become antiquated.
Companies that wish to portray an image of being in step with the times, and perhaps even thought leaders in their fields, will do well to take a cue from this trend that now favors the more unconventional office setup. If you are in charge of organizing your business’ next office accommodations, what should you look for?
Top Floor Spaces are Hot Properties
In the past, spacious top floors were reserved for large law firms and investment companies. Starting in New York, commercial landlords discovered that breaking up these large spaces would attract a bevy of companies that either dealt with an artistic or exclusive clientele.
The draw here was the use of a second elevator, which clients interpreted as a private access, or a private staircase that only clients were permitted to use. Artistically-minded clients appreciated high ceilings, skylights and breathtaking views. One supermarket chain discovered that top floor offices with some of these unique features impressed their visitors, particular if they came from Europe.
Modifications to the Open-plan Design
If a top floor property is not to your liking, choose an open-plan design instead and then modify it. Writing for the International Review of Industrial and Organizational Psychology, researchers note that there is an ongoing move toward an evolving office. It is largely based on the open-plan design but takes into account the importance of collaboration between workers.
Strategically placed hubs of interaction combine functionality with the opportunity for unscheduled collaboration. Researchers also determine that a departure from a layout of strictly individual work spaces actually result in cost savings. The experts greatly encourage the setup of hot desks, which allow workers to collaborate in pairs or small groups as needed. The desks are set up for phone, light and computer connectivity.
Creature Comforts save Money and Increase Productivity
Reviewing the work spaces of trendy companies that are taking their fields by storm as well as those that are established as industry leaders, the Harvard Business Review discovered that their offices spaces supported productivity by cutting down on unwanted interruptions.
When you have the ability to control the office space and make changes, you can head off likely interruptions to your workers’ productivity before they occur. For example, an attractive screen in front of the delivery entrance makes the appearance of the delivery driver less disruptive for workers who are not in charge of receiving deliveries. Add natural light, energy-efficient appliances as well as green office space considerations, and you know that you will save money even as you increase productivity.
OfficeFinder is committed to put its tenant representatives to work on your behalf. We will work tirelessly to find you the type of office space that is exactly right for your company. Contact us today to discover how you can enhance your brand with the right space.
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By: James Osgood
Office Relocation , Office Rental , Office Space , Office Space Design