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.
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.
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.
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
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.
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 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.
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