There are times when flexibility is critical to an organization - entering a new market, acquiring or merging with other companies, launching a new product or service, or growing dramatically in the short term. 
 
So here are four options that you should consider to solve your need for flexibility.
 
1.      Executive Suites
 
While this option will almost certainly be the highest cost on a per square foot basis, it offers the greatest flexibility, speed and features.  The executive suite operator can often arrange for secretarial services, high-speed internet, fax, phones, copier, printer, receptionist, voice mail, and furniture rental, all in the matter of a few days.  Some of these services are included in the base rent and others cost extra.  You also get to enjoy shared amenities including a kitchen, conference room and video conferencing in some cases. 
 
Rents in executive suites often start around $600-$700 per month for a standard size, interior office.  The nicer the building, the higher the price, of course, the higher the price.  A big corner office in a class A high-rise can easily be $1,500 or more. 
 
2.      Sublease
 
When companies vacate their space prior to the lease expiration they will often offer it for sublease to reduce their remaining lease obligation.  The rent is usually discounted from the landlord's asking rent anywhere from 20% to 50% depending on the amount of time left on the lease and whether any furniture is available.  For example, a sublease in a building where the landlord is asking $24.00 may go for $18.00 - $20.00.  The shorter the remaining lease term, the lower the price usually.
 
If you need a longer term than what is left on the lease, you can often negotiate a wrap lease with the landlord.  That is a direct deal which commences upon the expiration of the sublease.  It allows you to enjoy the lower cost of the sublease and the certainty that you can stay in the space for a longer term.
 
Subleasing comes with certain risks, however.  If the prime tenant is not financially stable and the landlord doesn't get the rent, you could be evicted even though you were paying the subrent to the prime tenant.  Subleases usually are leased in an as-is condition so any changes needed to the space could be your cost.  Finally, the landlord must approve the sublease before you move in.  If the business you are in does not mesh with the landlord's desired tenant mix or another existing tenant would be your direct competitor, you may be denied.
 
3.      Space Sharing
 
Sharing space with another firm can provide flexibility as well.  It's sort of a hybrid between an executive suite and a sublease.  Like an executive suite, you may share services like a kitchen, conference room, copier, etc.  Because this is technically a sublease it comes with the same risks as mentioned above, but with one additional issue - getting along with and trusting your roommate.  You must trust the people in the other company and have compatible business styles.  You wouldn't want to have a law firm share with a dot com, or a credit restoration company share with a high-end financial planning firm.  All these companies are office users, but they use space very differently.
 
4.      Direct Lease
 
Don't overlook the opportunity to lease space directly from a landlord.  While they typically prefer a 3-5 year lease, they can get very flexible when a prospective tenant explains the business reason behind the request or when the market is tough.  For example, one of clients had to move quickly, but the company was for sale so they couldn't commit beyond a one-year lease.  We were able to find a few landlords who were willing to do that while the business was marketed for sale.  We even got a 5-year renewal option at a pre-determined rental rate so a new buyer would know exactly what the lease terms would be if they kept the space.
 
In the final analysis, business owners and managers will always have to evaluate the trade-off between their desire for flexibility and the risks and costs of actually having it.

To assist in evaluating the options and to save time and money, you might want to consider the services of a corporate real estate advisor or tenant rep - Reata Commercial Realty, for example.  These professionals can guide you through the process of finding and analyzing the options.  Tenant reps work for you, but they are usually paid by the landlord, so they are effectively a free service.

To learn more, please visit www.TexasTenantRep.com.

 

 

                                   

                                       

 

 

 

 

Bob Gibbons

972-679-1142

 

  

 

 

 

 

 

 

 

Jan Gibbons

972-998-3305

                                       

 

 

 

 

 

 

 

 

 

 

                                   

 

 

 

 

 

 

While at a party for tenant rep brokers thrown by a large office and industrial property owner last week, the CEO of the owner said that he thinks things in the commercial real estate business are about to be worse than they were in the late 80's & early 90's. He's a smart guy so I don't discount his opinion, but we're still nowhere near those days....at least not yet.  I started in the commercial real estate business in February of 1984 so I've been through a few cycles now.

Things will have to get dramatically worse to come close to the 80's/90's. Then, there were only 2-3 groups bidding on property - one of them was that CEO. Prices got ridiculously low - $20.00 per square foot for high-rise office buildings in some cases.  The last company I worked for was one of the other buyers at that time. We bought buildings in the $30's and $40's which later rented for $18 to $22.

Today, there are dozens, if not hundreds, of buyers with war chests in the billions waiting to pounce on distressed assets. That difference by itself should keep prices far higher than the 80's & 90's. Time will tell. Stay tuned.

Bob Gibbons
 

And while the law of competition may be sometimes hard for the individual, it is best for the race, because it ensures the survival of the fittest in every department.  

~  Andrew Carnegie

 

You get the best out of others when you get the best out of yourself.  

~ Harvey S. Firestone

 

A business that makes nothing but money is a poor business.  

~  Henry Ford

Bob wrote a commentary which was published in the Dallas Business Journal on October 23, 2009.  To read it, click here.

 

One of our corporate clients bought land in McKinney on Eldorado Parkway for a future location, but decided not to build after all.

 

So the 1.68 acres of land is now on the market for sale for $399,000.  It would be perfect for professional offices for medical, a CPA, a lawyer, or even retail.

 

Follow this link for a marketing flyer or give Bob a call.

 

In the last couple of months, Bob has spoken to a business networking group and the McKinney Lions Club, and participated in a panel discussion on real estate sponsored by Ameriprise Financial.  He would welcome the opportunity to speak to your business groups, trade associations, networking groups, and service organizations. 

 

You can see his speaker's bio and topics on the Speaker Coop website. Here is a link.