11 THINGS TO CONSIDER WHEN LEASING OFFICE SPACE

October 15, 2013 on 8:36 am | In Fascinating Information, Lease Rates, Lights Camera Transaction, Office Fodder, Uncategorized | 3 Comments

Edited by Jodi Summers

The right work environment makes all the difference. Google, regularly voted the best company to work for in America, seeks to create the perfect work environment. Their design team tests everything, from floor to ceiling. Diner booths, it turns out, can work better than traditional conference rooms.

“Casual collisions are what we try and create in the work environment,” offers David Radcliffe, vice president of Google’s Real Estate & Workplace Services. “You can’t schedule innovation, you can’t schedule idea generation and so when we think our facilities around the world we’re really looking for little opportunities for engineers or for creative people to come together.”

For those of us with businesses aspiring to be as successful as Google, choosing the right office space is the challenge of balancing present and future needs.

Savvy entrepreneurs looking for office space will ask….

1. Is there room for my company to grow?

If your business is not in the position to take extra space for future growth, try negotiating a shorter lease term or add language to the lease that gives you the first right of negotiation on any adjacent space that becomes vacant.

2. Is it the right location for my key employees?

Consider where your key employees live and whether the location is convenient for them. Make them sit too long in traffic, and they’re more likely to jump ship to a business that’s more convenient for them.

“When considering a move, you might want to let your key staff weigh in so you don’t risk losing them,” says Peter Riguardi of Jones Lang LaSalle commercial real estate.

3. Is the location convenient for clients?

You also want your office to be accessible to clients. If you’re located in downtown Santa Monica, your clients are going to be sitting in long lines of traffic, and you’re going to be paying a lot of additional parking costs. Make it too difficult for clients to get there and they will go elsewhere. If you leave an urban location for a cheaper space in the suburbs, consider whether the lower expenses will make up for the possible loss of clients. Even in the age of video conferencing and Skype, it’s important that face-to-face meetings be manageable.

4. Does this office send the right signal?

Think about the message you want to give to your clients when you select your location. Google’s Venice offices – in ultra hip Venice, blocks from the beach – très cutting edge. In the new millennium, an office space is far more than a collection of cubicles; it also will be a sign to others of how much money you’re making. “I’ve seen companies spend for a lavish space they’re very proud of. They invite clients to see it, and the clients wonder if they’re paying them too much for their services,” Riguardi says. On the other hand, if you don’t spend enough, people may wonder about the financial health of your company.

5. Do you need to be green?

Progressive companies are concerned about the environment. Having a “green” office rates well with clients. Green doesn’t mean it has to be LEED platinum, green touches can be as simple as putting the lighting and air conditioning on timers so that energy isn’t wasted when offices are vacant. An office with a light-colored roof can cut back utility costs by as much as 30% in SoCal.

6. What are possible hidden costs? Calculate the full cost of the space–rent, utilities, construction costs, moving expenses, CAM fees, NNN fees, insurance and other costs that may not be obvious. “You have to look at the costs associated with the move, even restoration of the space you’re moving from,” Riguardi recommends.

7. Parking.

We live in L.A.; we know how precious parking can be. Depending upon your location, parking can be a hidden cost. Even new Culver City office spaces are adding in $75+ per month per car. Consider the amount of parking available at your proposed location, as well as the potential cost to employees and customers. If parking is tight, is there a place where employees can park so customers get the most convenient spaces? Negotiating special employee rates and validating customers’ parking tickets are good ideas, but they need to be worked into the budget.

8. Is the office ADA compliant?

In our progressive times, you need to consider how your space works for handicapped individuals. Check to see that the building is in compliance with the Americans with Disabilities Act. For example, the law states that doors to office suites should be at least 32 inches wide and require fewer than five pounds of force to open, while carpeting in areas open to the public must be secured to the floor with a pile of less than half an inch. You can learn something new every day.

9. Consider sharing an office.

Sharing space with another company saves money not only on the office rent, but also on the cost of common areas like kitchens and bathrooms. To best benefit the shared space, it’s ideal to divide the space with complementary businesses > an architect with a builder or a PR firm with a Web designer. Draw up a formal agreement between tenants. This agreement can be flexible.

10. What if I sell my company during the course of the lease?

If you hope to sell your company, make sure the lease is clear about owner responsibility. Some leases are written so that the original company and its owners have liability in the future should the future tenant not perform.

11. Pay attention to the terms of renewal.

The last thing you want is to get established in a space, then find at the end of your lease that your landlord is exercising their option to rent the space to someone else or to drastically raise your rents. Although rental rates are usually negotiated at the time of renewal, you also can try in the original contract to cap any increase at no more than 5%. “Real estate is rebounding in many areas, which means rental rates are rising,” concludes Julie Clark, a founder of SharedBusinessSpace.com, a national online directory. “If you can control how much, it’s a stick in your court.”

We know all about Los Angeles office space, and can assist you in your office needs. Please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – jodi@jodisummers.com or 310.392.1211, and let us move forward together.

http://www.entrepreneur.com/article/226116

http://www.cbsnews.com/8301-505266_162-57565097/inside-google-workplaces-from-perks-to-nap-pods/

http://www.socalofficerealestateblog.com/?p=2365

http://www.dailymail.co.uk/sciencetech/article-2071057/Googles-new-floor-London-office-looks-like-Big-Brother-house.html

http://www.toynuts.com/googles-creative-office-design-in-europe/informal-work-space-in-madrid-googles-office-img-2/

http://blog.flat-club.com/2012/08/flat-club-joins-techhub-and-google.html

http://www.officefinder.com/blog/archives.cfm/category/san-francisco-office-space#sthash.W8W2CRrB.dpbs

http://www.socalindustrialrealestateblog.com/wp-content/uploads/2012/12/GoogleVeniceOffice.jpg

http://integressblog.files.wordpress.com/2011/06/gap1.jpg

http://integressblog.wordpress.com/2011/06/09/creativity-creates-creativity/

http://www.dezeen.com/2011/01/28/google-office-by-scott-brownrigg/

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  1. On average, for every $1 billion increase in stock value of companies in a given area, the median sale price of nearby homes increases by $4,400. That doesn’t sound like much, until you consider an area like Silicon Valley, home to 45 publicly traded companies in this study, and about $1.1 trillion in valuation. When the aggregate stock value of these companies goes up, about three months later, home prices begin to rise at a corresponding rate. This means that an increase in stock value of just 1 percent for these Silicon Valley companies could lead to an increase of median sale price of more than $48,000.

    Comment by Redfin — October 17, 2013 #

  2. The International Monetary Fund (IMF) lowered its forecasts (in purchasing-power parity PPP terms) for the world economy in 2013, as it now expects global growth to be weaker than was anticipated in its July 2013 update. This was the ninth consecutive time that the IMF has lowered its projections. The IMF now projects that the world economy will grow by 2.9% in 2013 versus the July 2013 forecast of 3.2%. The IMF projects the U.S. economy to expand by 1.6% in 2013 (also a downgrade from July’s projection of 1.7%).

    Comment by LAEDC Global Economy — October 20, 2013 #

  3. Riot Games, Inc., maker of the popular League of Legends online game, has signed a full building lease for the entire 284,037-square-foot Element: LA office campus located at the corner of S. Bundy Dr. and W. Olympic Blvd. in Los Angeles.

    Comment by CoStar Group, Inc. — November 23, 2013 #

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