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Medical Office Space in High Demand in Slow Office Market

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Everyone may be talking about the weak office market but there are areas in which the demand for office space remains strong and is even growing. The services of health care providers are required, regardless of the economy or real estate values and many realty professionals are making the most if this opportunity.

With the coming implementation of the Affordable Health Care Act, signed by President Obama on March 23, 2010, it is nearly certain that the high demand for medical and health care-related office space will continue.  As the American public gains access to affordable medical, dental, and other forms of health care, more and more facilities and practitioners will be required to care for those who, in the past, have not sought or have severely limited use of health care services.

In some areas the overall office vacancy rate is as high as 25%, yet, the medical office space made up over 26% of the total leasing of office space in those same areas. According to David Scherer, manager of one-half million square feet of medical office space in Nevada, “Medical office space is recession resistant due to the fact that people need medical procedures through good and bad economic times. There wasn't as much speculative building with medical office space during the real estate boom, since it typically needs to be located next to a hospital, which makes it naturally supply constrained.”

Because medical offices are seeking new, more convenient locations to better provide services to their patients, the demand for medical office space is no longer constrained by the need to locate near a hospital. As health care becomes more available to American, medical offices are spreading into suburban areas, shopping centers, and other non-traditional medical office locations, driving the demand for medical office leasing even higher.
The average rents for medical office space has also dropped significantly during the past year, allowing health care providers to expand their office space as well as add additional locations to their practices. In addition, some medical practitioners are concerned about the implications of the health care act, has resulted in medical professionals choosing to lease office space rather than purchase existing facilities or building new structures.

With the health care legislation providing drive for the future of many medical practices, healthcare professionals are taking advantage of the tenant’s market. Incentives are often available with office space leases, such as tenant improvements, waived maintenance fees, or even free rent for a period of time, it only makes sense that businesses such as health care providers will benefit from the slow office market.

Due to slow reimbursements from government-provided health care, such as Medicare and Medicaid, as well as many private insurance providers, combined with the desire to reduce overhead costs, some practitioners have consolidated their practices in order to gain more negotiating power, resulting in the need for larger facilities and additional medical office space.   Locating the right medical offices for these larger practices, combined with other factors, has worked together to keep the medical office space market robust even during slow times for the overall office space market.

Leasing Medical Office Space - Part 1
Leasing Medical Office Space - Part 2

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Medical Office Space , Office Vacancy Rate

Leasing Medical Office Space - Part 2

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Lease Negotiations , Medical Office Space , Office Leasing Tips , Office Space Negotiations

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

Office Relocation - Phone Service Timing

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When moving your business to a new location, it is very important to include and inform your telecom provider early in the process.  Your provider needs time to research your new address for the proper facilities; order and have the service operational before you move in.

Remember that it can take anywhere from two to six weeks to complete the order.  We recomend that you have an overlap of service at both locations for at least a week in case your new location needs additional or unexpected work.

National ComTel has the ability to assist with the new location research and confirmation of proper facilities, order the equipment, coordinate the move, and work with any required vendors.  All this so that you have peace of mind and know that your telecommunication needs are met.

Businesses should remember that in most cases National ComTel can consolidate your local, long distance, internet and other telecom requirements quickly and at a very good price.

National ComTel offers tailor-made, business telecommunications solutions with more options and choices at the lowest possible rates and the highest quality customer service in the industry. Since we work with the major telecom providers, we have the ability to choose the best services at the best rates for the customer’s specific location – with one consolidated monthly bill and one number to call for 24/7 customer service.

Telecom Services:  Local, Long Distance, Toll Free, International, Internet, DSL, T-1, VoIP, MPLS, DyIA, Calling Cards, Conference Calling, Phone Equipment.

Office Leasing Tips , Office Relocation

Negative Results in First Half 2010 for Regus

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Regus, the world's largest provider of executive suites, realesed its half year results today for the six months ended June 30, 2010.

Highlights compared with same period in 2009:

  • Revenue down by 7.5%
  • Earning per share down by 76% (prior to exceptional charges)
  • A before tax loss of £6.1 million (H1 2009: Profit £69.0 million) After exceptional UK restructuring charge of £15.8 million
  • Workstation increase of 1.8% to 176,760
  • 44 new centers opened
  • Businessworld - increase of 111% to 475,896 members ( 127% increase in revenues from 2009)
  • Cash generated from operations (before exceptional items) £47.1m* (H1 2009: £62.2m)
  • Net cash at £224.2m (H1 2009: £229.5m)
  • Interim dividend up 6% to 0.85p per share (H1 2009: 0.8p)

Commenting on today's announcement Mark Dixon, Chief Executive Officer of Regus plc, said:


"Despite the challenging trading environment I am pleased that we continue to generate cash, deliver cost savings and open new centres on attractive deals. While the market remains difficult to predict, we remain committed to our strategy of  restoring our margins by both driving up our revenues and progressively reducing cost while continuing  to maximise growth opportunities as changes in how and where we work evolve."

The good news for Regus is that they have cash, £224.2m, to continue their expansion plans which are to "open a centre per day over the remainder of the year." According tot he report Regus is focused on reducing risk through variable rent arrangements that combine operational flexibility for both landlords and for Regus - minimizing risks inherent with longer, more conventional leases.

The really bad news is that their stock prices have plummeted:

The bottom line is that Regus is suffering along with the rest of the worldwide commercial real estate market.

Executive Suites , Flexible Workspace