Businesses who need to strategically reconsider their office space needs could find an accommodating market in Tucson, Arizona.
Tucson has more than 2 million square feet of vacant office space, including nearly 72,000 square feet of attractive vacant sublease space, according to the mid-year 2008 CoStar Office Report for the Tucson market.
At $20.58 a square foot, quoted rental rates are stagnant overall and decreasing in some segments, the report said.
While many businesses have responded to the credit crunch and slowing economy by choosing to remain in their current office space, a wiser strategy is to respond intelligently to changing conditions, said one of our top local reps.
“Even in this bleak economic environment, business owners still need to look for ways to maximize their real estate situation, whether it’s to relocate, downsize or renegotiate leases,” OfficeFinder’s local rep, whose company represents corporate tenants and buyers.
“In reality, no matter what’s happening, businesses still face the need to run their businesses,” said OfficeFinder’s Tucson rep.
We offer and up-to-date profile on the local market on our website.
“We want to provide an accurate picture of what’s happening in office real estate,” OfficeFinder’s local rep said, “so that tenants can make smart decisions.”
OfficeFinder of Tucson assists corporate tenants and buyers in locating, negotiating and leasing or buying business space in the Tucson metropolitan area.General , Office Space , Tucson Office Space
The 11-county Minneapolis/Saint Paul region consistently ranks among the best places to do business in the United States. Three things set it apart: a robust, diverse econonomy, a highly educated workforce and outstanding quality of life. Anchored by the cities of Minneapolis, St Paul, and Bloomington this thriving metro area includes some of the fastest-growing counties and one of the strongest economies in Minnesota.
3rd Quarter 2008 Office Vacancy
The steady rise in vacancy rates – up to 14.1% metro average so far in 2008 -- has already placed downward pressure on rents in most markets. Sublease space returns have increased in the Southwest market and more space can be expected to become available as the financial crisis and slumping consumer confidence weakens economic growth and forces employers to further slash payrolls
Although the city ranks in the top 15 of US cities for Professional and Business services and in the top 10 for Financial Services jobs we will see a contraction in the financial services sector similar to other parts of the country and slow to no growth in the other sectors of the economy as the recession continues. Also state government budget deficits will decrease government funding and related jobs.
Our 2009 outlook for the Minneapolis / St Paul office market is moving towards short term softness in corporate growth, increase in vacancies of 5-10% and pricing contraction of 15-20% with net rates for class A in the $14-$16.00 net range. This market will experience some painful restructuring, followed by stability and moderate growth over the long term.
In these trying times many companies are trying to get out of long term leases. One way to do so its to sub-lease your space. This 10 step article was provided to us by our Toronto Rep, one of our best among our network of over 700 top local pros in over 550 markets. These are the steps he suggest to successfully sub-lease your office space:
1. Discuss in detail with your agent the market comparables, competing sublets, recent transactions, market trends, and recent developments in the building to help determine an Asking Rate and expectations on a % recovery. Consider the following:
Generally, the shorter the remaining length of term, the less marketable the premises and the lower the rate that can be achieved.
In order to remain competitive it is worthwhile to offer incentives to prospects (or their agents) on “short-term” or “hard to lease” subleases.
Is there any contiguous space next door or competing space available for lease in the building?
Is the building in high demand?
2. Your agent will review your Lease, in particular the section pertaining to Assignment, Subletting and Transfers, and any restrictions on such.
Items to pay attention to are as follows:
Can you sublease your premises for more than what you are currently paying (i.e. can you profit?).
Can you recuperate any out-of-pocket expenses such as legal fees and painting the premises?
Is there a provision in the lease that prevents you from subleasing your premises for less than what you are currently paying?
Are there any restrictions on subleasing to an existing tenant in the building, or to a tenant in another building owned by the same landlord?
Does the landlord have the right to terminate your lease, and if so, on what terms and what are the notice periods? (30 days, 90 days, 120 days?).
Are you permitted to “advertise” a rate?
What will you be charged by the landlord for their “consent” to the sublease?
Are you required to “make good” or “restore” your premises at the end of your term?
3. Your broker/agent will draft a Sub-lease Listing Agreement outlining the main terms and conditions to list and market your premises.
4. Your agent will prepare all necessary marketing materials. They will usually photograph your premises and will require an up-to-date floor plan.
Issues to consider are as follows:
When are the premises available for occupancy? Is it contingent on your acquiring new premises?
Is any furniture available? Will it be part of the deal or separated out? Furniture depreciates very quickly and will typically only command $0.10 to $0.50 on the dollar.
Are the following items available: phone system, handsets, server racks, computer cabling, built-in audio-visual equipment, and supplemental cooling units?
If your suite has an unusual layout, or requires work, will you offer to pay for improvements or alterations for a prospective subtenant?
Will you cover the cost of a space plan for a prospective subtenant (similar to what most landlords will do)?
5. Your agent will inform the Head Landlord that your premises are going to be marketed for sublease.
If required as per the lease, your agent will forward the marketing materials to the Head Landlord for their approval.
Your agent will initiate discussions for a potential termination of your lease, and maintain on-going communications with the landlord pertaining to this.
Your agent will explore any potential prospects that the landlord may have within the building.
6. You will need to make arrangements for your agent to access the premises for showings.
During regular business hours?
Will someone always be in the office?
Will you need to provide a key or access card to your agent?
Are there any restricted areas?
Your agent will get some calls from prospects wishing to tour the premises “5 minutes from now”. Can you give your agent the flexibility to do this?
7. Your agent will present any Offers and perform any necessary financial analysis.
How quickly can you respond? A very slow response time will often result in the prospect moving on to another option.
Once an offer has been Conditionally Accepted we will send the credit information from the Subtenant to a credit check company. The cost of the credit review is a cost of the Sub-landlord.
8. Once the Offer terms are negotiated, your agent will formally request the Landlord’s Consent.
The landlord’s consent is usually a 2 to 5-page document (the “Consent Agreement”) outlining the terms of the consent and the obligations of all 3 parties (subtenant, sub-landlord and head landlord). The Consent Agreement will need to be signed by all 3 parties. If there is a lot of “back and forth” on the Consent Agreement, the landlord’s legal fees will be higher, and this cost ultimately gets passed on to you.
9. Your lawyer will need to draft a formal Sublease which incorporates the terms and conditions of the Offer. Sometimes the landlord will want the Sublease document to be fully executed prior to providing their consent.
10. You’re done! Your Agent should deliver a signed and sealed original to all parties.
If you need assistance, our team of professional reps would be please to discuss your needs. Let us know by filling out our Request Form.Office Space
So what’s happening in the Office Space Market throughout the US? As we have all been reading and many of us experiencing first hand, there is negative absorption in virtually every major market. And not just in the United States. You can look at almost any major market in the world and see that office vacancy rates are increasing. With my nearly 30 years in the office brokerage business, there has never been a comparable downward shift in the office market that has even come close to what we are experiencing now. We will likely see a 30% increase in the vacancy rate in the US this year; from around 13% to 17%. And 2009 does not look terribly promising following up this most recent decline.
So much of the loss of jobs that is occurring has been in the white collar arena, the people that use office space. Market trends follow employment. As manufacturing was being transferred overseas we got used to seeing blue collar jobs go by the wayside, but the white collar jobs have never suffered to anywhere near the same degree. Now as the financial institutions take big hits, we are seeing a larger percentage of white collars jobs disappear, leaving massive blocks of office space with no near term potential to fill.
It is a pretty dim outlook on the near term future of the office market. The bright side is that those companies who are in the market looking for office space will be able to drive exceptionally hard bargains. It is definitely a Tenant’s market. In fact, I have not seen a market so primed for tenants who are ready to take on space. Many landlords are still in shock and disbelief from such a fast transition from landlord’s to tenant’s market that they are not being as aggressive now as they will need to be in the coming year… if they expect to close any new deals.
On the other hand, we have found that over the past couple of months activity in the very small office markets for companies with 1 – 5 people has remained very solid. Part of this may be that those white collar workers being laid off are looking at ways to earn a living. Many could be deciding to hang their own shingle. When doing so, many decide to rent either a small office or sign on with an executive suite operator. While they are not going to eat up a lot of office space, at least there is activity.