Smart Commercial Leasing for Metropolitan Businesses


SMART COMMERCIAL LEASING FOR METROPOLITAN BUSINESSES - Tag - Blog Header

Leasing the perfect office space can be a very difficult and daunting task. With so many variables from parking to flooring, finding the perfect space can feel nearly impossible. Start looking internally within your own business. Really understanding your business’ needs will allow you to discern between trends, lofty dreams and reality.

Bill Himmelstein of Tenant Advisory Group offers exclusive tips for those looking to lease the right space.

Stay in Reality

Most companies are expecting to experience growth in the future, but it is not wise to lease on expectation. Lease your office space based on your current needs, then expand as your company does. It is better to have a slightly cramped space than unused space eating into your pocketbooks. Every business has plans to grow. Everybody thinks they have the next big thing and while it is important to have that aspiration, putting the cart before the horse will often end poorly.

Settling does not Need to be a Negative

Your dream office space may not be available when you need it, but do not give up on the building completely. One way to combat this issue is through a right of first refusal agreement with your landlord. If you can successfully bargain for this, then you will have the first crack at the preferred office in the building that suits your growing needs when a current lessor moves out. Small companies may find it difficult to bargain for this, however it can be extremely valuable as a way to expand your space more naturally. While the office that you currently occupy may not have all the internal aesthetic qualities that you want, it is still embedded in the same environment and neighborhood culture as your dream office.

 

Leasing Real Estate Based on the Business


LEASING REAL ESTATE BASED ON THE BUSINESS - Tag - Blog Header

Every company wants the most modern building right next to the most successful businesses in the city. While many companies believe this to be a power move to boost creativity and generate more business, it’s actually costing your business more than just rent. It’s crucial to pay attention to two important factors when preparing to lease a space for your business: function and your finances.

Bill Himmelstein, founder and CEO of Tenant Advisory Group, offers tips to refine the search for a financially stable and sustainable space to grow your business.

Lofty Expectations
Creativity isn’t born within lofted ceilings and larger than life windows. Creativity is born within the the people and culture on your company. Shift your investment strategy away from building aesthetics to the social norms and employee investment within your company to build a more lucrative business. Focusing too much on the cosmetics of your business can make customers feel like they are being overcharged to pay for your company’s lavish lifestyle.

The Value of Exposure
It’s imperative to think about the nature of your business before signing a lease. For example, street level is great for businesses with walk-up clients, such as retail. Businesses that rely heavily on referrals, such as a medical practice, should go with a more frugal space that is congruent with the type of business and its clients.

Move Against the Herd
When making such a big investment it’s better to focus on lasting effects than following a trend. Move against the herd to have the best investment on your lease. As Warren Buffett said, “Be fearful when others are greedy. Be greedy when others are fearful.”
While finding the perfect space to fit your business may seem like a daunting task, setting clear goals and defining your company’s needs drives a more precise search. By planning for future growth and preparing oneself accordingly, the need to uproot constantly will be mitigated.

 

The Chicago “Google Effect”


THE CHICAGO “GOOGLE EFFECT” - Tag - Blog Header (1)

Chicago’ Fulton Market has become the “hot-spot,” for start ups, yet there’s a hefty price tag to go with.

Last June, Google announced their new location in Chicago’ Fulton Market. Google signed a lease at 1000 W Fulton for a 200,000 square foot space built to hold 500 employees. The announcement has since caused a migration frenzy among tech companies, startups and entrepreneurs following the path of the technology giant.

Fulton Market is attracting many that want to be in on the buzz of the Midwest’s version of Silicon Valley. However, setting up camp in the shadow of such a mogul inevitably comes at a hefty price tag. Due to the rapidly changing neighborhood, there has been a concerted effort to accommodate all of the new found foot traffic.

“Given all the businesses and people moving to the area, the rental prices are skyrocketing, jumping by as much as $3-$5 (price per square foot) in just a year,” states William D. Himmelstein, Founder and CEO of Tenant Advisory Group. “As this area starts to price out the tech startups and entrepreneurs, they will look for the next hot “up-and-coming” location. An educated guess would lend toward the South Loop and surrounding areas filling that void.”

Despite the big move being scheduled for 2015, there have already been major adjustments to the size with an increase of 157,000 square footage of the space. As the ever-expanding company continues to rapidly increase its workforce, it seems to be only a matter of time before Google outgrows the new space and will eventually have to relocate again.

For Google’ size, their continuous relocation and expansion is inevitable. However, smaller startups and tech companies have to think long and hard before packing up and following the latest trend. Being in on the “buzz,” comes with a price. The necessary allocation of resources required to move locations would be much more wisely spent on finding an area that has not reached the height of its price hike.

Chicago Business Image of what’s cooking on the near west side.

By William Himmelstein

5 Things to Examine In your Lease Agreement


 

So you finally found the space you were dreaming of. Now it is time to work out the details beyond the first year’s rent. Each particular aspect of the lease has its own importance and to ensure the security of the great new spot you are locking down, do not just skim over all the nuances.

Tenant Advisory Group is your advocate when a landlord may be out of bounds with your lease agreement. Bill Himmelstein, founder and CEO of Tenant Advisory Group offers these five topics as ways to protect yourself before you sign on the dotted line.

1) Free Rent
The amount of months that the space is occupied and no rent is paid. Rent is the most obvious factor of the lease and a broker who understands the market is able to maneuver several months of free rent for you. The market standard for long term leases is to receive one month free per each year of the lease. So, if you sign a 6 year lease, then you should be expecting to get 6 free months.

2) Tenant Improvement Allowance
For the tenant who is looking to build out the available space, ensuring that the lease allows you to make those improvements and have them paid for by the landlord is critical. There can be a cash allowance which will go toward hiring a contractor. The amount that is allocated will depend on your financial stability as well as the terms and duration of the lease.

3) Escalation
As landlords are in a constant effort to get the most bang for their buck, you need to be sure that there are clauses protecting you from unreasonable rent increases. Having a yearly increase over the course of the lease or a specific percentage by which rent can rise keeps you from losing control of your budget.

4) Securitization (security deposit)
All landlords will seek some sort of securitization on their leases. When a landlord knows the tenant well or believes that the tenant does not carry much risk, the security deposit becomes reduced. However, if you hold greater risk to your leased space, then it will be important to the landlord to securitize a portion of their out of pocket expenses to ensure that the landlord is protected and comfortable if there are any major issues. This deposit will allow for money to be refunded back or credited towards your rent as long as the tenant is not in default.

5) Termination Option:
The termination option is an extremely valuable piece of the negotiation. Your landlord will not offer this unsolicited. For leases that are longer than five years, it is critical to have termination rights. By negotiating this into the lease, if the rates dip below market value, then you will be able to exercise the right to terminate and move or use it as leverage to reduce your rate. Likewise, if rates have risen above your current levels, a right to terminate can be used to ensure you maintain below market rates.

 

By William Himmelstein

Negotiating A Higher Tenant Improvement Allowance


NEGOTIATING A HIGHER TENANT IMPROVEMENT ALLOWANCE - Tag - Blog Header

A space may be absolutely perfect, but need substantial work to become the perfect space for you. For this, a Tenant Improvement Allowance, number of dollars the landlord is willing to offer per square foot of rentable space, is extremely beneficial.

 

In many of our blogs we’ve discussed the power and necessity of negotiation. You have the power to acquire what you want and more importantly what you need.

 

In big cities there are a plethora of options available. As leverage in attracting potential tenants, landlords may use a Tenant Improvement Allowance. However enticing this may seem, often landlords will not provide the amount of money necessary for a proper build-out.

 

Why would (s)he do this? What can be done to remedy this? Let’ look at a few possibilities.

 

  1. Return on Investment
    • The landlord’ main concern will always be to increase the return on the original investment. Frequently, this value is determined by rental rates in the current market. When a landlord suggests a certain dollar amount it is not arbitrary, but rather based upon the market.
  2. Return of Investment–probability of repayment
    • The landlord may be hesitant if repayment contains any element of uncertainty. Factors affecting this could be inconsistency of business, financial history (credit history), and length of lease.
  3. Tenant History
    • As a tenant, if your operating history is minimal the landlord may be reluctant to increase your improvement allowance. This is due to the high cost of capital had by the landlord, or perhaps no capital at all.
    • If the term you are willing to commit to is too short this deal presents a higher risk by amortizing the costs over a shorter period of time.
  4. Cash resources
    • The landlord can only offer up capital (s)he has access to. To determine this amount, most times, this will be based on an educated guess. The best way to have success is to research the landlord and understand his/her financial wherewithal.

 

Awareness of these concerns will give you the upper hand and ability to remedy the problematic variables. But, how can this be done?

 

  1. Offer to amortize a portion of the allowance
    • This functions as a structured method to formally repay the allowance, thereby increasing the return of and return on investment. One factor to consider is that, as a tenant, this will increase the occupancy cost. However, it offers a reduction of the cost upfront.
  2. Sign a long-term lease
    • The longer your lease is the more your landlord is likely to offer. A long-term lease offers consistency and more-or-less secures the return of investment.
  3. Evaluate various credit enhancement options
    • Lease guarantee–the more backing you have the more confident the landlord will feel about doling out the upfront cash.
    • Letter of credit–this is a document pledged by the bank or other financial institution, that should the tenant fail to pay they will assume the cost owed. Consider, however, that should you request this backing the financial institution may require you to maintain a minimum balance for the amount they are backing.
  4. Free Rent
    • The tenant can offer to receive TI in the form of free rent. (S)he can ask her/his broker to accept the commission at a later date.
  5. Financial Proof
    • Providing financial information is a definite plus. Additionally, an SBA 7a loan from a bank can assist in subsidizing the tenant improvements.

 

These are just a few items to considering before requesting a tenant improvement allowance. For more information on improvement allowance and securing a lease, check out our blog:The Definitive Guide to Finding Your Perfect Office Lease.

The Body Language Basics For Successful Business


BODY LANGUAGE BASICS FOR SUCCESSFUL BUSINESS - Tag - Blog Header

Is your body language impacting your success? Absolutely. Here are the Body Language Basics.

A good portion of interpretation of what has been said is based on tone of voice and largely body language. Albert Mehrabin, Guru of nonverbal communication, said ” 55% impact of our message is body language, 38% is tone, and 7% is delivered by words”. Do not let your body betray you.

The government uses a variety of lie detection techniques including voice diagnostics, blinking rapidity, and body positioning (aka body language) to determine truthfulness. While your clients, business contacts, and colleagues are unlikely to come equipped with this machinery, the way you conduct yourself physically is very important.

 

First and foremost consider your face and hands.

 

Face

A genuine smile starts at the eyes and continues down to the mouth. If you don’t have a thousand watt smile or are not keen on a big grin try out a variation on the smising (smiling with your eyes) technique coined by Tyra Banks. Think of something that makes you happy and flash those pearly whites. Now close your mouth and you’ve completed the smise.

Remember to relax your jaw. A flexed jaw is a primary indicator of tension.

Hands

Relaxation comes from a feeling of groundedness. Why are drinks always provided at business meetings and networking events? People feel a sense of security when they have something to hold onto. Notice that even after a drink has been consumed frequently the glass will not be relinquished.

Keep your hands loosely by your sides. Closed fists or fidgety hands are an abrupt indicator of anxiety and tension. If you feel unable to relax your hands, hold onto a pen or a drink. Do not clasp your hands above your belt. While this may have been taught as a serious pose it comes off as insecure or untrustworthy.

Confidence

If you are standing, maintain proper posture with shoulders back and drawn in. This denotes confidence and also relaxation. Paired with a smile (smise or otherwise), this formula is powerful.

If you are in a situation where you are sitting take up space. Psychologically speaking if you make yourself smaller you could be insecure. Taking up space (legs slightly spread apart) shows confidence. Rest your hands lightly on your thighs.

Interest

To indicate interest, point your feet towards the person to whom you are speaking. Additionally, imitating the body language of this person will make them feel comfortable. For instance, if the person you’re speaking with pushes their hair back or tucks it behind an ear occasionally, try imitating the motion nonchalantly.

The phrase “actions speak louder than words” is especially true when it comes to body language. Being articulate is important, but be sure your body is articulating the same message.

For more information or how to apply this to networking, check out our Networking Tips and Tricks post.

Back-End Loading Your Next Negotiation


 

Negotiation is an integral part of initially securing your lease. Imagine this: Your broker did a great job negotiating your lease. The space comes with all the amenities you could imagine AND you saved a great deal of money a few years prior when you signed. Your company loves this space, but this year has been a little slow and goals weren’t quite reached.

 

Before you uproot your entire company and move everyone to a space you deem sub-par, consider renegotiation in the form of back-end loading.

 

In commercial real estate, this would entail negotiating a reduced rate for a certain period of time. For instance, you could negotiate an elimination of $5 per square foot for a year and then add that $5 back in the lease the following year.

 

More often than not, a landlord will not want downtime on their space. The money the landlord would lose (during this reduced year) would likely be much less than the money he or she would spend searching for a new tenant should the existing tenant vacate or go out of business.

Networking Tips and Tricks


 

Social media and virtual advertising is an almost mandatory facet for businesses today. Small businesses differ slightly in that they heavily rely on their stock customers: regulars if you will. While small business continues to ease itself into the cyber sphere, word-of-mouth marketing remains a prominent factor in success and maintenance. Instead of going door-to-door, a great way to strengthen connections and create new ones is through networking events. Though networking is the purpose of attending a networking event, the first conversation can be rather daunting. Preparation, positivity, and confidence are all integral parts of the equation for a successful evening.

What can you do to be well prepared?
Bring a small notepad and a pen for any information you find significant. DO NOT take notes on your iPhone. You will lose eye contact and this will disconnect you from the person. Put together 3 to 4 questions that leave room for explanation. This is a great conversational catalyst. For instance:

  1. How did you get into your field?
  2. What in [name of field] are you most passionate about?
  3. What’s next?

These questions will brush the surface of the person you’re speaking with. After 2-3 minutes you’ll have procured a sufficient amount of information. You will use this to decide whether to delve into more detail or move on to the next person. Whichever you chose, remember not to remain with any one person for too long. If the conversation becomes drawn out, thank the person for their time and politely excuse yourself.

How can you remain positive?
Try to enter these events with the perspective that each one will be a learning experience. If you go in like a shark, potential connections and clients will sense that and avoid you. Smile and mention only non-confrontational topics that are not surrounded by conflict. For example, avoid politics and religion.

Many people will not follow up or respond to your follow up messages and that is all right. Try to speak with at least 10 people during the evening. Quality trumps quantity, but keep in mind the more opportunities you give yourself the more possibilities you will have to create connections. With time these connections will hopefully develop into strong, lasting relationships.

How can you approach these situations with confidence?
If at any point during the evening you begin to feel anxious or unsure, find solace in the fact that people will generally return the energy you emit. If you approach any conversation with a warm, connected tone the person will likely become relaxed and available for a more candid conversation.

Amy Cuddy gives an amazing TED talk on the importance of body language. She says that it has a huge effect on how others see us and it can even change the way we see ourselves. Check out her video here and listen to her talk about the Power Pose.

Another tactic you may choose to employ is to exchange business cards at the beginning of the conversation. This way you can be sure to remember the name of the person you are speaking with and will have ample time to commit their face to memory. Later, when you review the card (in conjunction with your notes), you will be able to pair a name with a face. Try to include one of these points in your follow up email.

If you feel that you had a strong connection with someone you met, add them on LinkedIn. Keep in mind that LinkedIn will not create the connection, but rather facilitate it.

Some of these events can be absolutely enormous. It is important to follow up the very next day–a maximum of 24 hours. If you do not receive a response follow up again in 7 business days and 7 more business days thereafter. If additional time passes and you have still not connected, assume you will not be hearing from that person.

The recipe for a successful night of networking is preparation, positivity, and confidence. The most important concept out of all of these ideas is to listen more than you speak. People may admire a great speaker, a wordsmith, and a charmer; but people will revere a good listener. A good listener creates calm and allows people to feel a sense of trust. If you can create trust in a short amount of time, this person is very likely to refer you to his or her connections/clients and perhaps even become a client!

For more information, questions, or comments contact Bill Himmelstein at bill@tenantadgrp.com.

Determining Commercial Building Class Types


The difference between commercial building class types - Tag - Blog Header

In commercial real estate building class is an important factor to consider when determining which sort of office will be most suitable for your company. While one building may seem comparable to another, upon closer analysis, frequently they will be quite different.

Office buildings are classified into three categories (A, B, and C). While standard of class qualification is largely subjective, there are some general guidelines to determine class. The class can be determined by age, amenities, technology capabilities, quality of HVAC systems, landscaping and how well the building has been maintained.

Class A: These buildings are considered the highest quality available and state of the art. This is due to their modern architecture, sound infrastructure, well functioning HVAC system, professional management, tighter security and altogether well manicured appearance. Generally, these buildings will be under 10 years old. Thus, a Class A building or office space will be the most expensive.

Class B: These buildings are still high quality, but may be a little out-dated. The average age will be between 10 and 20 years. Even in this case many tenants and/or landlords find these buildings to be a good investment. The technology capabilities may not be best in class, but typically will suffice. Security may or may not be on staff and typically it is not required to check in, in order to reach the space. While the amenities of Class B spaces rank average, with some façade work, a bit of interior redesign, along with an upgrade in management these buildings and spaces have the potential to be converted to a Class A status.

Class C: This class varies depending upon location (city, suburb, town, etc). These buildings are generally 20 years old at minimum. Some may be well kept, however, normally these buildings will lack many modern amenities. Technology will be lower quality and the HVAC system may not function well. In addition, this could include old elevators and mechanical systems, moderately run-down parking lots, and out-of-date furnishings. These buildings will not have security staff or food available on the premises.

For more information on building class or leasing contact Bill Himmelstein: bill@tenantadgrp.com

Tenant Qualification


TENANT QUALIFICATION - Tag - Blog Header

As a tenant broker we are the proverbial parent and our clients, the tenants, are our children. We want to ensure that they’re safe, warm, and well protected with a strong roof over their heads and an even stronger lease. Just like a student applying to a college that will check their credentials and qualifications, we must qualify our clients as well.
This allows us to get to know them better and to better understand their financial situation. The most important thing in qualifying a new client will be the financials.

Very simply, a landlord should be viewed similarly to a bank. The landlord is going to invest significant funds into a transaction. Like a bank, the landlord wants to know that they are lending (in the form of tenant improvement dollars, free rent and leasing commissions) to a financially stable company able to pay the rent. Many people are under the impression that leasing commercial space is like leasing an apartment- as long as they have good credit they will be in good shape. The main difference is that that rent for an apartment is typically far less expensive than the rent for office space. The landlord cares far more about whether they have growing revenue streams, a strong balance sheet, or have been a stable business for a long time. Having good credit provides no guarantee to a landlord that the tenant can pay the rent every month and on time.

Landlords, like banks, want to see income, profitability, cash flow, or at a minimum, financial backing. Without an operating history, without positive cash flow and/or a strong balance sheet, or without a large cash balance in a bank account, a landlord will be reluctant to enter into a lease with that business.

Another important qualification question is: does the potential client have an accountant, an attorney and an existing banking relationship? Having these relationships signifies a robust company where others have invested their time.

For more information on client qualification, contact Bill Himmelstein by email at Bill@tenantadgrp.com

1 17 18 19 20 21 22