More and more expanding businesses, upstarts, international businesses, and even established larger businesses looking to downsize are turning to all-in-one business centres and executive offices for their company needs. And with good reason; an all-in-one business centre can save a company or business a significant amount of money on expenses every month. Read on to discover the top 10 advantages of all-in-one office space for lease.
1. Office Space Amenities Included at No Extra Charge
Many people don't realize how much money all the basic office amenities can add up to after awhile, especially if you're starting from scratch. With an all-in-one office business centre, you get a professional office that is already equipped with contemporary office furniture, modern telephone equipment, whiteboards, TVs, VCRs, DVD players, etc. This is a huge benefit right off the bat! Why spend all of your starting capital on completely outfitting an office when you can use executive offices that already contain everything you need?
2. Professional Receptionist at Your Disposal
Once again, if you're a business startup or are significantly downsizing your company, you're probably operating with a pretty minimal staff. So why spend your money on hiring a receptionist when most all-in-one business centres provide one for your use? You can have a professional receptionist answer all of your calls without paying their salary - it's a win-win situation!
3. Quick and Easy Mailing Services
If you don't work at home, you may not realize what a great benefit this is, but with an all-in-one office business centre your mail is not only delivered to your office daily, but you can arrange for packages to be picked up or signed for if you are away from the office. No more waiting around all day for that important package to arrive and no more long drives to send out shipments. This is the ultimate in convenience and will not only save you money in the gas you're currently using to drive to the post office, but will save you a huge amount of time too.
4. Fast, FAST Internet Access
With a small company of five people it may not make a lot of sense to upgrade to the fastest internet service available. It just doesn't seem to be worth the cost. But with all-in-one executive offices you don't have to choose between cost and speed. Super fast Internet access is provided for the same low cost of regular speed Internet. And if the Internet stops working for whatever reason, you don't have to worry about fixing it, it will be up again in no time.
5. Worry Free Maintenance
Speaking of broken Internet...if anything ever breaks or needs repair within your office space for lease, you're not responsible! Professional maintenance will come in for repair at no extra cost to you. This is a huge savings in time, money and also stress. No more worrying about if the plumber's going to come repair the office restroom or wondering about how you're going to pay the electrician. It's all included in your low-priced monthly rent. This includes office cleaning and janitorial services too.
6. Onsite Office Tools and Services
With network printing and copying, colour printing and copying, network scanning, fax services, conference facilities, courier services and additional office supplies available onsite for minimal extra fees, you'll have no problem projecting a big business image on a small business budget. You'll quickly wonder how you ever got along without the services provided with all-in-one office space for lease.
7. A Permanent, Prestigious Business Address
When you work from home, the last thing you want is for a big client to unexpectedly stop by. "Oh hey, I was just in the area, and...is this your house?" With a office business centre or virtual office you gain the advantage of a permanent business address in a prominent business sector of your city. You can have all your mail sent there, rent meeting rooms, conference rooms or boardrooms for use with clients, and even put it on your business card.
8. No Expensive Deposits or Long Term Contracts
Renting office space for lease generally requires no expensive deposits, capital or long term rental contracts, which allows growing businesses or upstarts to have their own business space without a prohibitive office lease that can cut off much needed funds. You can start operating from your executive offices in very little time with no down payments or red tape to climb over.
9. Unlimited Possibilities
With so many different sized office packages available from an all-in-one office business centre, a small business or upstart can start out with the bare essentials and expand into more office space and additional services as they grow, without the hassle of changing their address or telephone number. Alternatively, if a business is experiencing tough times it can easily downsize services until they get back in the black.
10. Save on Overhead
With the modern, cost-effective solution of an all-in-one office business centre there are clear charging procedures for cost control and no day-to-day office management problems. No more cleaning or maintenance bills, water bills, electric bills, phone or Internet charges - just one quick and easy invoice to pay once a month. That's it! Not additional bills, costs or concerns.
Showing posts with label Space. Show all posts
Showing posts with label Space. Show all posts
Saturday, October 13, 2012
Saturday, August 25, 2012
Leasing Retail Space - Terminating The Lease
Who Pays When Operating Expenses Increase?
Expense escalations are relevant when the landlord is paying a base level of expenses and when the tenant is paying expenses. With a typical gross lease, the landlord pays all expenses and the tenant pays expenses in excess of a base level. (Gross leases are atypical for retail.) The base level is typically the operating expenses for the year the lease is signed. The "expense escalations", would be expenses in excess of this base level which the tenant is responsible for paying.
Caps on Increases?
Some leases also provide a cap on increases in expenses. To provide more certainty for the tenant's cost of occupancy, the tenant may request that property tax increases do not exceed 5% in any year. Property tax increases can be enormous in some states. For example, initial property tax assessments in Texas for retail buildings have increased by 20% to 100% for many retail building owners. In many cases, these large initial assessments have been successfully reduced to a level much closer to the prior year's value.
Cap Example
However, the property tax assessment process can be arbitrary at times. If the property taxes did increase by 20% or 100%, the landlord would be responsible for the increase in excess of 5% for the example given. There are also sometimes expense escalation caps for utilities, insurance, total expenses and other items.
Co-tenancy Termination Clause
A co-tenancy clause for retail defines a tenant's right to terminate the lease if another tenant ceases operations. For example, consider a grocery anchored neighborhood shopping center. Let's assume Kroger's, a nationally known grocery retailer, is the anchor. Bob's dry cleaner store decides to lease space in the center because it believes the Kroger versus will draw all a large volume of traffic. There's an agreement to pay rent commensurate with the traffic which should be generated by Kroger. However, five years after the center is built Kroger decides to "go dark".
Can You Terminate the Lease?
In other words, it ceases operations at this location. A co-tenancy clause would provide Bob an option to terminate his lease. There will typically be a defined period for terminating the lease based upon the co-tenancy clause.
Eminent Domain
Eminent domain is the right of government to take private property. Historically, eminent domain was limited to taking private property for public purposes. However, the US Supreme Court expanded eminent domain to include taking private property for private uses. In most cases, property owners are compensated for "takings" through eminent domain.
Eminent Domain Issues
Issues related to leasing retail space include who retains compensation for a leasehold estate, what happens if eminent domain takes an amount of parking which makes operation of the Senate set retail center impractical and are there any rent abatements during construction related to a partial taking of the retail center.
Leasehold Estate
A leasehold estate is a tenant's interest in real estate obtained through a lease. A leasehold estate becomes meaningful when contract rent is substantially lower than market rent. Having the right to use retail space for a payment well below market rent has value. In the event of a complete taking up (when the government takes the entire retail center) the lease needs to address proceeds of the tenant's leasehold estate. Do they belong to the tenant or to the landlord?
Partial Taking
In any "partial taking", the government only takes a portion of the retail center. This may or may not include any portion of the building. For the sake of discussion, let's assume a retail center with 10,000 ft. and 50 parking spaces. The 50 parking spaces are in two rows of 25. One row is along the street and one row is along the front of the building. The current amount of parking is just barely adequate. The condemnation will "take" the 25 parking spaces along the street. This leaves the property with only 25 parking spaces, or about half of what is necessary. The lease needs to define the rights and responsibilities of both the tenant and the landlord in event of a partial taking.
Pay Rent During Road Construction?
Consider addressing the payment of rent during road construction related to eminent domain. Most leases are silent on this point. In many cases, the loss of business due to construction is not compensated. The landlord must pay his expenses and mortgage payment during construction. The tenant's sales often decline precipitously during construction. There is no easy answer to equitably address this issue.
The Market Research and Consulting division of O'Connor & Associates provides information necessary to make decision to commercial real estate professionals. Occupancy and Rental Data, ownership and management information are routinely gathered for four major land uses multifamily, office, retail and industrial. This information allows investors to compare competitive properties, facilitate business decisions and track market and submarket performance.
Expense escalations are relevant when the landlord is paying a base level of expenses and when the tenant is paying expenses. With a typical gross lease, the landlord pays all expenses and the tenant pays expenses in excess of a base level. (Gross leases are atypical for retail.) The base level is typically the operating expenses for the year the lease is signed. The "expense escalations", would be expenses in excess of this base level which the tenant is responsible for paying.
Caps on Increases?
Some leases also provide a cap on increases in expenses. To provide more certainty for the tenant's cost of occupancy, the tenant may request that property tax increases do not exceed 5% in any year. Property tax increases can be enormous in some states. For example, initial property tax assessments in Texas for retail buildings have increased by 20% to 100% for many retail building owners. In many cases, these large initial assessments have been successfully reduced to a level much closer to the prior year's value.
Cap Example
However, the property tax assessment process can be arbitrary at times. If the property taxes did increase by 20% or 100%, the landlord would be responsible for the increase in excess of 5% for the example given. There are also sometimes expense escalation caps for utilities, insurance, total expenses and other items.
Co-tenancy Termination Clause
A co-tenancy clause for retail defines a tenant's right to terminate the lease if another tenant ceases operations. For example, consider a grocery anchored neighborhood shopping center. Let's assume Kroger's, a nationally known grocery retailer, is the anchor. Bob's dry cleaner store decides to lease space in the center because it believes the Kroger versus will draw all a large volume of traffic. There's an agreement to pay rent commensurate with the traffic which should be generated by Kroger. However, five years after the center is built Kroger decides to "go dark".
Can You Terminate the Lease?
In other words, it ceases operations at this location. A co-tenancy clause would provide Bob an option to terminate his lease. There will typically be a defined period for terminating the lease based upon the co-tenancy clause.
Eminent Domain
Eminent domain is the right of government to take private property. Historically, eminent domain was limited to taking private property for public purposes. However, the US Supreme Court expanded eminent domain to include taking private property for private uses. In most cases, property owners are compensated for "takings" through eminent domain.
Eminent Domain Issues
Issues related to leasing retail space include who retains compensation for a leasehold estate, what happens if eminent domain takes an amount of parking which makes operation of the Senate set retail center impractical and are there any rent abatements during construction related to a partial taking of the retail center.
Leasehold Estate
A leasehold estate is a tenant's interest in real estate obtained through a lease. A leasehold estate becomes meaningful when contract rent is substantially lower than market rent. Having the right to use retail space for a payment well below market rent has value. In the event of a complete taking up (when the government takes the entire retail center) the lease needs to address proceeds of the tenant's leasehold estate. Do they belong to the tenant or to the landlord?
Partial Taking
In any "partial taking", the government only takes a portion of the retail center. This may or may not include any portion of the building. For the sake of discussion, let's assume a retail center with 10,000 ft. and 50 parking spaces. The 50 parking spaces are in two rows of 25. One row is along the street and one row is along the front of the building. The current amount of parking is just barely adequate. The condemnation will "take" the 25 parking spaces along the street. This leaves the property with only 25 parking spaces, or about half of what is necessary. The lease needs to define the rights and responsibilities of both the tenant and the landlord in event of a partial taking.
Pay Rent During Road Construction?
Consider addressing the payment of rent during road construction related to eminent domain. Most leases are silent on this point. In many cases, the loss of business due to construction is not compensated. The landlord must pay his expenses and mortgage payment during construction. The tenant's sales often decline precipitously during construction. There is no easy answer to equitably address this issue.
The Market Research and Consulting division of O'Connor & Associates provides information necessary to make decision to commercial real estate professionals. Occupancy and Rental Data, ownership and management information are routinely gathered for four major land uses multifamily, office, retail and industrial. This information allows investors to compare competitive properties, facilitate business decisions and track market and submarket performance.
Tuesday, June 26, 2012
Leasing Retail Space - Foreclosures And Lease Cancellations
In Event of Foreclosure
Foreclosure of a mortgage typically extinguishes all claims to the property. In other words, if you've negotiated a lease and started a business, your right to use the retail space is terminated by foreclosure unless there is a separate agreement.
Will Lender Cancel?
In many cases, the lender has a defined period of time to reject leases or they are assumed to remain intact. Further, lenders often want to retain the leases and tenants to make the property more salable. However, if the rental rate for a lease is well below market rent, and the tenant is clearly successful, the lender would likely terminate the lease and require the tenant to negotiate a new lease at market rent.
Negotiating From a Position of Weakness
The tenants negotiating position is much weaker than it was when he first negotiated the lease. The tenant has a successful business at this location. Changing the location of the business may damage or destroy the business. The tenant's ability to bargain and negotiate lease terms is a weak.
Nondisturbance Clause
Tenants can avoid this dilemma by obtaining an agreement that the lease will not be terminated by foreclosure. This is termed a nondisturbance clause. Landlords are reluctant to grant this concession due to the limitation it imposes on the landlord when obtaining financing.
Maintenance Standards
The definition of maintenance standards is often vague. A typical clause may read that "the landlord will maintain the property in a manner consistent with local practice and a prudent owner".
Personal Guarantees
Landlords love personal guarantees since they substantially limit the tenant's ability to abandon operations at the retail space. Personal guarantees should be avoided by tenants whenever possible. It is reasonable that the tenant repay the unamortized portion of any tenant improvements and leasing commissions if the lease is terminated early. Further, it is reasonable for a tenant to guarantee a minimal level of performance on a building built to its specifications.
Different Rules for Second Generation Space?
However, for second-generation lease space, it is reasonable to request that the tenant not be personally or corporately responsible beyond paying the unamortized portion of tenant improvements and leasing commissions. Although this is reasonable, it may not be possible. The strength of the local rental market and local practice will dictate whether landlords can extract personal guarantees from tenants.
Purchase Option
For single tenant retail buildings, tenants often want a right to purchase the building at a predetermined price. Landlords prefer to avoid this. A compromise is providing the tenant a first right of refusal.
Sublease Issues
Landlords want the tenant to make rental payments throughout the lease term, but don't want the tenant to profit from subleasing the retail space. In some cases, the tenant has the right to sublease the space subject to the landlord's approval. There's often a clause that the landlord's approval shall not be withheld unreasonably. There's also often a clause limiting the types of businesses which can sublease from the tenant. Sublease payments in excess of payments on the primary lease can be an intensely negotiated item.
Minimum Hours of Operation
Some retail centers require fixed hours of operations for each tenant. The concept is great. If a shopper visits the mall, they know each store will be open from 9 a.m. until 9 p.m. (or whatever the hours of operation). However, assume you expect to get 90% of your business between 12 p.m. and 5 p.m. In some cases, the minimal hours of operations are nonnegotiable. You may need to consider the excess hours of operations part of your occupancy cost.
Dedicated Parking
Dedicated parking is another issue where interests almost always diverge. Tenants love to have parking dedicated to their customers and landlords hate having parking dedicated to any one store. Peak traffic for a store may occur in a short period of time. However, the parking spaces are typically dedicated 24 hours per day. A compromise is the right to put portable signs in front of parking spaces several hours per day consistent with the tenant's peak hours of business.
Expansion Options and First Right of Refusal
Expansion rights and first rights of refusal are less typical for retail than for office. However, assume you are opening a small restaurant in a highly vacant shopping center. You're initially taking 1000 square feet of space but hope to expand the restaurant to five or 10,000 square feet of space. Having the right to take additional space at a previously agreed-upon rental rate and to claim additional space through a first right of refusal can be invaluable. Once the restaurant is successful, negotiating rental rates at a favorable level will be difficult.
Example
For example, assume your restaurant has been operating successfully for two years and you expect to expand the restaurant during the next 12 months. Unfortunately, your landlord tells you he just leased the spaces on either side of you. A first right of refusal for additional space can allow you to avoid this problem. Consider whether the rental rate for the first right of refusal is the rate agreed upon by the landlord and the new tenant or a predetermined rate.
The Market Research and Consulting division of O'Connor & Associates provides information necessary to make decision to commercial real estate professionals. Occupancy and Rental Data, ownership and management information are routinely gathered for four major land uses multifamily, office, retail and industrial. This information allows investors to compare competitive properties, facilitate business decisions and track market and submarket performance.
Foreclosure of a mortgage typically extinguishes all claims to the property. In other words, if you've negotiated a lease and started a business, your right to use the retail space is terminated by foreclosure unless there is a separate agreement.
Will Lender Cancel?
In many cases, the lender has a defined period of time to reject leases or they are assumed to remain intact. Further, lenders often want to retain the leases and tenants to make the property more salable. However, if the rental rate for a lease is well below market rent, and the tenant is clearly successful, the lender would likely terminate the lease and require the tenant to negotiate a new lease at market rent.
Negotiating From a Position of Weakness
The tenants negotiating position is much weaker than it was when he first negotiated the lease. The tenant has a successful business at this location. Changing the location of the business may damage or destroy the business. The tenant's ability to bargain and negotiate lease terms is a weak.
Nondisturbance Clause
Tenants can avoid this dilemma by obtaining an agreement that the lease will not be terminated by foreclosure. This is termed a nondisturbance clause. Landlords are reluctant to grant this concession due to the limitation it imposes on the landlord when obtaining financing.
Maintenance Standards
The definition of maintenance standards is often vague. A typical clause may read that "the landlord will maintain the property in a manner consistent with local practice and a prudent owner".
Personal Guarantees
Landlords love personal guarantees since they substantially limit the tenant's ability to abandon operations at the retail space. Personal guarantees should be avoided by tenants whenever possible. It is reasonable that the tenant repay the unamortized portion of any tenant improvements and leasing commissions if the lease is terminated early. Further, it is reasonable for a tenant to guarantee a minimal level of performance on a building built to its specifications.
Different Rules for Second Generation Space?
However, for second-generation lease space, it is reasonable to request that the tenant not be personally or corporately responsible beyond paying the unamortized portion of tenant improvements and leasing commissions. Although this is reasonable, it may not be possible. The strength of the local rental market and local practice will dictate whether landlords can extract personal guarantees from tenants.
Purchase Option
For single tenant retail buildings, tenants often want a right to purchase the building at a predetermined price. Landlords prefer to avoid this. A compromise is providing the tenant a first right of refusal.
Sublease Issues
Landlords want the tenant to make rental payments throughout the lease term, but don't want the tenant to profit from subleasing the retail space. In some cases, the tenant has the right to sublease the space subject to the landlord's approval. There's often a clause that the landlord's approval shall not be withheld unreasonably. There's also often a clause limiting the types of businesses which can sublease from the tenant. Sublease payments in excess of payments on the primary lease can be an intensely negotiated item.
Minimum Hours of Operation
Some retail centers require fixed hours of operations for each tenant. The concept is great. If a shopper visits the mall, they know each store will be open from 9 a.m. until 9 p.m. (or whatever the hours of operation). However, assume you expect to get 90% of your business between 12 p.m. and 5 p.m. In some cases, the minimal hours of operations are nonnegotiable. You may need to consider the excess hours of operations part of your occupancy cost.
Dedicated Parking
Dedicated parking is another issue where interests almost always diverge. Tenants love to have parking dedicated to their customers and landlords hate having parking dedicated to any one store. Peak traffic for a store may occur in a short period of time. However, the parking spaces are typically dedicated 24 hours per day. A compromise is the right to put portable signs in front of parking spaces several hours per day consistent with the tenant's peak hours of business.
Expansion Options and First Right of Refusal
Expansion rights and first rights of refusal are less typical for retail than for office. However, assume you are opening a small restaurant in a highly vacant shopping center. You're initially taking 1000 square feet of space but hope to expand the restaurant to five or 10,000 square feet of space. Having the right to take additional space at a previously agreed-upon rental rate and to claim additional space through a first right of refusal can be invaluable. Once the restaurant is successful, negotiating rental rates at a favorable level will be difficult.
Example
For example, assume your restaurant has been operating successfully for two years and you expect to expand the restaurant during the next 12 months. Unfortunately, your landlord tells you he just leased the spaces on either side of you. A first right of refusal for additional space can allow you to avoid this problem. Consider whether the rental rate for the first right of refusal is the rate agreed upon by the landlord and the new tenant or a predetermined rate.
The Market Research and Consulting division of O'Connor & Associates provides information necessary to make decision to commercial real estate professionals. Occupancy and Rental Data, ownership and management information are routinely gathered for four major land uses multifamily, office, retail and industrial. This information allows investors to compare competitive properties, facilitate business decisions and track market and submarket performance.
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